From works budget to total project cost

The works budget covers what the contractors will invoice, excluding VAT. It is the limit for design: the code of ethics of the Ordre des architectes (Order of Architects) of 16 November 2022 (art. 16) requires the architect to design "within the limits of the brief set in the appointment and of the budget" (unofficial translation).

The total project cost covers everything the client pays out for the building to be built, permitted, insured, connected and financed. It is the client's own limit, and often the one set by its lender or its board.

The classic mistake is to compare one with the other. An architect's estimate "within budget" can push the total cost over if the items outside the works have never been costed. The items a price per m² leaves out are listed in what a price per m² never includes.

Item	Who invoices it	When it becomes known	Where its value comes from
Works (excl. VAT)	contractors	at award, then at the final account	estimate, then tenders, then interim valuations
Architect's fees	architect	when the agreement is signed	negotiation (no fee scale)
Engineers' fees (structure, building services)	engineering consultancies	on their appointment	tender or agreement
Health and safety coordination	design-stage and construction-stage coordinators	on their appointment (by the client from 500 m²)	coordinator's tender
PEB or EPB assignment	responsable PEB (Wallonia), EPB-verslaggever (Flanders)	on appointment	provider's tender
Insurance	insurers, or included in providers' prices	before the works begin	policies and certificates
Utility connections	network operators	late, often during the works	operator's quotation
Planning taxes and charges	municipality or region	when the permit is issued	regional and municipal rules
VAT	collected by each provider	once the applicable regime is established	the project's tax conditions
Finance costs	bank or lender	when the financing is signed, then as drawdowns are made	loan agreement and payment schedule
Price adjustment	contractors	during the works	adjustment clause and indices
Contingency	nobody (internal reserve)	released up to the final account	identified risks

Read this table by its third column. Fees are known early; the works become certain at award; connections, charges and price adjustment stay open for a long time. At any date, the budget must therefore carry a certain part and an estimated part, and the second must shrink.

Fees are the first certain amounts in the project. The 2022 code (art. 20) requires a written agreement "at the latest when the appointment has been defined": by that date, the amount or the way it is calculated is fixed.

There is no longer a fee scale. The Order's former scale was sanctioned by the European Commission on 24 June 2004, and the 2022 code contains none: fees are negotiated. How they are calculated matters as much as their level. Fees expressed as a proportion of the works amount rise when the estimate rises, which is worth reading before signing. Orders of magnitude are covered in the article on fees and ancillary costs.

Engineers come next. Structure, building services, acoustics depending on the brief: they are often appointed later than the architect, and their cost is only certain at that point. Until they are appointed, the item is an estimate.

Involving an architect is compulsory for works that need a permit, subject to exemptions (Act of 20 February 1939, art. 4, a federal law applicable in all three regions). This item therefore cannot be optimised by removing it, only by defining the appointment.

Some required participants go into the client's budget, even when the client does not appoint them. That is the case for health and safety coordination and the energy performance assignment.

Health and safety coordination. On temporary or mobile construction sites where several contractors are involved, the Act of 4 August 1996 requires a coordinator to be appointed for the design stage and one for the construction stage (art. 16 and 21). The Royal Decree of 25 January 2001 specifies who appoints them: the client for a structure with a total area of 500 m² or more (art. 5 and 15), and below that the designer and then the party in charge of supervising execution (art. 4bis and 4decies), roles held by the architect where the architect's involvement is compulsory (Act, art. 14). A health and safety plan is drawn up before the site opens (Act, art. 16, 2°), replaced on some small sites by a written agreement between the parties involved (Decree, art. 29), and a file for subsequent works is compiled. The cost is that of the coordinators' tenders; it is known as soon as they are appointed, which must happen early for design-stage coordination.

The PEB or EPB assignment depends on the region. In Wallonia, an approved responsable PEB (energy performance adviser) must be appointed; the initial PEB declaration is attached to the permit and the final declaration follows the works. In Flanders, the bouwheer appoints an EPB-verslaggever (energy performance reporter) before the works begin. In Brussels, for a new build or a major renovation, the declarant appoints a conseiller PEB (energy performance adviser) under the Brussels Code of Air, Climate and Energy Management. The item is costed on the basis of a tender, and the differences between regions are covered in how the region changes the budget.

The works amount becomes certain at award, not before. Until then, it is an estimate whose margin of uncertainty narrows from stage to stage: that is the subject of contingency by project stage. Even once awarded, it stays open until the final account: extras, quantity variances and price adjustment are added to it.

In public procurement, estimating is a legal obligation and the estimate is expressed excluding VAT. The Act of 17 June 2016 on public procurement (art. 16) requires the value of the contract to be estimated and specifies that its amounts are understood excluding value added tax. The pouvoir adjudicateur (contracting authority) must therefore add VAT to its budget itself.

Insurance is checked before the works begin. For housing whose construction requires an architect, the Act of 31 May 2017 requires contractors, architects and other providers to hold ten-year civil liability insurance, in force since 1 July 2018; the certificate is provided before the works begin (art. 12). This cost is borne by the providers and appears in their prices. Likewise, the professional civil liability insurance of the Act of 9 May 2019 covers architects, coordinators and the sector's other intellectual service providers. What remains with the client is the insurance it takes out itself, depending on its contract and its financing. The detail of these regimes is in the article on compulsory insurance.

Price adjustment is decided at tender stage and paid during the works. In public works contracts, the adjustment clause is compulsory, unless the estimated value is below 120,000 euros and the initial period is below 120 working days or 180 calendar days (general implementing rules, Royal Decree of 14 January 2013, art. 38/7). In private contracts, everything depends on the contract. In both cases, the budget must carry a line, even an estimated one, as soon as the clause exists.

Utility connections come late. Water, electricity, gas where relevant, drainage, telecommunications: network operators' quotations are often requested when the project is already well advanced, sometimes during the works. Until they are received, the line remains an estimate and must be labelled as such.

Planning taxes and charges depend on the region and the municipality. They are only known when the permit is issued, and their rules differ between Brussels, Wallonia and Flanders. They cannot be costed from a national ratio.

VAT is not a percentage to apply automatically. Its regime depends on the nature of the project, the use of the building and conditions that must be checked project by project. Rates and their conditions are covered in the article on VAT on construction and its conditions. For a client who cannot recover VAT, it is part of the cost; for a VAT-registered client who recovers it, it weighs mainly on cash flow.

Finance costs follow the payment schedule. Interim interest, arrangement fees, the cost of a guarantee: their amount depends on the pace of interim valuations, and therefore on the programme. A project that slips also costs more in finance.

Each line carries a status: certain or estimated. A line becomes certain when a document commits it: a signed agreement, an accepted tender, an awarded contract, an operator's quotation, an issued permit. As long as no document exists, it is estimated, with its source and its value date.

The contingency is read against the estimated column. The larger the estimated share, the larger the contingency must be. As items become certain, part of the contingency can be released, or reallocated, by a written decision of the client.

Three checkpoints are enough for most projects. On signing the architect's agreement; on submitting the permit application; on awarding the works. At each one, the total cost is recalculated line by line, and the variance against the initial budget is explained item by item, not as a whole.

Checkpoint	Lines that become certain	Lines still estimated
Architect's agreement	architect's fees	works, engineers, coordination, PEB, charges, connections, price adjustment
Permit application	engineers, design-stage coordination, PEB assignment	works, charges, connections, price adjustment
Award of the works	works (base amount), planning charges if the permit has been issued	connections, price adjustment, extras

The budget is a dated document. Each version carries its date, its value date and the list of assumptions. That is what later makes it possible to show that an overrun comes from a named item and not from a general drift.