ON TIME AND ON BUDGET
When we set about putting together our first RedBook Index, examining figures from 1,750 live projects, one of our aims was to address two challenging realities that pervade prime and super prime residential property projects: the fact that costs and timings often overrun. In our report published in November last year, we unveiled our research into how pressures on costs and time so often build up over a project’s lifetime.
The first analysis examined a fundamental misconception: that rule-of-thumb prices quoted to clients capture the holistic all-in costs of the project. They don’t. Often, the quote will cover the raw build. With the introduction of The RedBook Square Foot, we unpacked what £1,000 typically buys and revealed that only £640 goes towards the actual build while the remainder pays for professional fees, preliminary works and contractor OH&Ps—never mind the exclusions, which also need to be accounted for in the final round-up of costs. That buys the equivalent of a silver-level refurbishment in a London project, according to our research. For those looking at a gold specification, the raw build refurbishment costs rise to £885 per sq ft—with all the extra costs and fees on top. As anyone who has completed a project before will know, these are not insignificant.
Architect Ross Sharpe of Yiangou says the RedBook Index is the first time there has been careful analysis of the uber prime market, which finally “kills the myth that doing a prime property project house can cost tuppence ha’penny”. Too often, he adds, “I hear from clients that their friends managed to build a new, highly detailed house for far less than we at Yiangou say it will probably cost—and we’re not in the market of shying away from the truth, even if it risks losing a job. Now, we have RedBook’s illustration as a backup.”
Alireza Sagharchi is the principal of Stanhope Gate Architecture and a RedBook Partner. When advising clients about the costs and time needed for a project, he says that in the simplest terms, embarking on a significant project is like going on a journey where the only two fixed costs are accommodation and transport. It’s the bits in between that can drive things up and down. “There are ways of mitigating these so that they don’t come as a surprise,” he adds. “It’s important to manage the client’s expectations from the inception stage. That’s where RedBook comes in. They have the pulse of the market.”
There will always be a certain number of unknowns when embarking on a significant property project, but here we summarise some ways to keep the majority of elements in check.
Take time, interrogate the design
Something we do at RedBook and many of our Partners also champion is the importance of spending time at the very first stages of a project to tie down all the details. Costs can be driven up unexpectedly if they are not accurately mapped from the outset. This puts the onus on both the designer and the client to do a lot of work before so much as a hammer is picked up. “It’s relatively inexpensive to make adjustments at this stage but as soon as the contractor is on-site, that’s when the expenditure goes skyrocketing,” says Alireza. “The due diligence needs to be done first so that there are few or no surprises down the line.”
Eyes open: examine the building
Many clients come to RedBook having had their fingers burned from a previous property renovation project that went wrong. Once the plaster was off the walls or the boards pulled up from the floors, unforeseen problems introduced further costs and time into the build. Looking carefully at the property, both inside and out, can give clues to the condition and whether or not further funds (and time) should be set aside to tackle these if they are revealed.
Balanced judgement: going to tender
Most professionals advise their clients that the tendering process shouldn’t be a race to the bottom and that a 10% gap between the highest and the lowest figures is normal. It doesn’t always happen. Yiangou cites a recent scenario where there was a £1m gulf between prices quoted for a piece of work based on the same set of drawings. Here’s where retaining a Quantity Surveyor is crucial as they can analyse the returning bids—and see what’s missing. “If a contractor comes into very low, there’s a risk of them trying to recover the money during the work,” warns Alireza.
“A thorough Quantity Surveyor who can interrogate the figures on behalf of the client, and a rigorous Project Manager who can mastermind timings across the full professional team can save a client every penny that they have spent on this extra layer of fees,” says Ross Van Ot of RedBook Partner project management and cost consultancy Davenport Associates.
Stay firm: avoid mid-flight alterations
Clients often change their minds, regardless of what’s said at the outset, and designs can become more elaborate than initially envisaged. This is complicated as it leaves clients and contractors in a position which can become adversarial: the project has begun and one side automatically has the upper hand. Ideally, don’t make changes to the project once it’s gone out to tender. “If the client introduces changes, the cost plans should be updated, which should also include contingencies for elements such as inflation,” says Alireza. “The aim is always to design within the cost expectations.”
Swift decisions: the need for speed
Once a project gets underway, there is a need to have a fluid flow of communications between all parties. Here, things can get held up, particularly when the client is based abroad and doesn’t have a proxy present in person to make the necessary decisions. It’s why we’ve introduced our Redbook Project Guardians and, for those who require an extra level of care, our RedBook Client Representatives.
Be prepared: cost inflation
Luxury property projects, be they significant renovations or new builds, take years, not months, to complete, which opens them up to the impact of inflation. Figures published in our Index demonstrated what happened to prices following labour shortages after Brexit, energy price rises and the squeeze on materials following the outbreak of war in Ukraine. The cost of construction materials rose by nearly 40% between September 2019 and September 2024. The unspoken rule is that inflation will push costs up by at least 10% throughout a project—having Quantity Survey on board from the beginning will mean this is built into the initial estimate. The team at Davenport say they always build in a margin for a degree of cost inflation and that they inform clients if a change in circumstances is likely to impact the overall cost, without leaving it as a nasty surprise at the end.
A real-time reality: planning hurdles
As we demonstrated in the RedBook Index, challenges within the local planning systems continue to prove challenging. Of the projects we surveyed, well over half took longer than estimated to complete, and the majority of these were held up in planning. “Labyrinthine and unpredictable” are adjectives frequently used to describe the current system, with turnover of staff (and with that, sometimes a volte face in amenability towards a project) adding further unpredictability into the timing of projects.
There’s been a noticeable increase in what some might term “bureaucratic oversight” in the past 20 years with projects–particularly in the countryside–requiring reports covering all manner of topics from water management to bats, newts and other ecological and environmental concerns. The team at Davenport adds that working on listed buildings often makes projects more expensive, takes longer to complete and comes with unexpected elements that might force the costs upwards. As layers are peeled away from the property, there are often what they describe drily as “hidden gems” to be found, which have to be resolved (often using artisanal skills or traditional materials), leading to extensions in time and additional costs being incurred.
