The client's construction budget in Germany: setting it, checking it, holding it

This guide does not explain calculation techniques. How costs are structured and determined in stages under DIN 276, how cost control and cost steering work as methods, and which tolerances are debated belong to the topic of cost planning under DIN 276. How works are tendered, awarded and invoiced under the VOB belongs to the topic of tendering and award under the VOB.

The subject here is what the client does with these figures. The client fixes them in writing, checks, approves or rejects them, chooses between alternatives and signs. And the client has rights under the Bürgerliches Gesetzbuch (BGB, the Civil Code), under case law on the Baukostenobergrenze (construction cost cap) and, for federal buildings, under the Richtlinien für die Durchführung von Bauaufgaben des Bundes (RBBau, the federal building guidelines).

Each moment has its own risk and its own lever, and each lever has a legal basis. The last column names the provision or decision the client can rely on.

The first two moments cost least and yield most. Correcting a space programme at the planning basis stage costs one revision; the same correction during construction costs variations, time and often fees.

A feature of the German market makes budget questions harder than they need be: the governing rules use different terms for the same phase. Anyone unaware of this assumes a match that does not exist.

The BGB cost assessment is neither a DIN 276 stage nor an HOAI basic service. The law still requires it while essential design and supervision objectives are not yet agreed. Practical advice follows: record in the contract the accuracy, cost scope and base date the cost assessment must have, rather than leaving its content to chance.

The budget is an instruction to the design, not its result. A client who asks the architect after the preliminary design what it will all cost has already given away the main lever. A client who sets the budget first can require the design to follow it.

Case law supports this lever. On the trend of published decisions, the architect must already in the basic evaluation phase "mark out the economic framework for a building project and take account of [the client's] cost expectations" (BGH, 21.03.2013, VII ZR 230/11, per the BGH press release; unofficial translation, as are all quotations here). These expectations are "relevant even if they do not contain a precise upper limit on the building sum". The architect must clear up doubts about the scope of the cost framework, and, according to the judgment, the Kostenvorstellungen (cost expectations) "at any rate regularly become part of the contract", "if the architect does not object to them".

An agreed cost cap is stronger. If the architect fails to keep a cap agreed as a Beschaffenheit (agreed characteristic) of the work, the design is defective on this line of case law (BGH, 13.02.2003, VII ZR 395/01). A tolerance then only comes into play if the contract indicates the agreed sum was not meant as a strict limit. Which tolerances are otherwise discussed is disputed and set out in the cost planning topic; this guide gives no percentage.

The burden of proof argues for writing. Under BGH, 06.10.2016, VII ZR 185/13, whoever relies on a cost cap must plead and prove it; an architect who claims a later increase must prove that. A budget only mentioned in a meeting is worth little in a dispute.

A recent case shows how far the commitment can reach. The OLG Bamberg (Higher Regional Court, 02.10.2025, 12 U 123/24) treated binding cost expectations as an agreement on characteristics. A budget of around EUR 4.2 million set in the competition brief could not be met with the space programme; the court found initial impossibility, denied the fee claim and ordered repayment of the interim payment. The decision is not final: the OLG did not grant leave to appeal on points of law, and proceedings are pending before the BGH under VII ZR 166/25.

An amount alone is not a budget. To be compared later with a cost estimate, a cost calculation or a tender, a figure needs five items.

The works budget is not the total budget. The architect often designs with the building costs in mind; the client pays for the whole project. The RBBau offers a useful structure, in which the federal project cost target is made up of four types of cost: building costs in cost groups 200 to 600, incidental costs in cost group 700, "forecast construction cost increases", and risk costs. Within risk costs it distinguishes two groups: risks with a very high probability of occurrence, determined per project and listed individually, and further risks determined and justified with sufficient specificity. It is a public sector model, but transfers to private projects.

Risk costs belong on a visible line, not hidden in the items. For the risks with a very high probability of occurrence, which it lists under letter d., the RBBau is clear: "The funds under d. are released by the client only when the risks occur." All risks are documented in a risk register.

The branch Setting the budget before design starts develops these steps. How to word a cap, with cost scope, base date and change procedure, is covered in Agreeing a construction cost cap in the architect's contract.

The client does not prepare the cost determination but checks and approves it. That approval has consequences: what the client accepts without objection becomes the basis for further design.

Since the construction contract law reform, the BGB has a distinct initial phase in architects' and engineers' contracts. Where essential design and supervision objectives are not yet agreed, the contractor must first "prepare a planning basis for determining these objectives" and submit it to the Besteller (the client, in BGB wording) with a "cost assessment for the project" "for approval" (s. 650p(2) BGB).

A special right of termination attaches to this submission. Once the documents are submitted, the client may terminate; the right lapses 2 weeks after submission (s. 650r(1) BGB). For a consumer client, the right only lapses after the 2 weeks if the architect has informed the client in text form of the right, the period and the consequences. After termination, the architect can only claim pay for services rendered up to then (s. 650r(3)).

The right cuts both ways. The architect can set a reasonable deadline for approval and terminate if the client refuses or stays silent (s. 650r(2)). So approval is not a formality but the project's first real budget decision. If the cost assessment does not fit the budget, this is the cheapest moment to change the programme or withdraw.

The HOAI fixes where the designer determines and compares costs. For buildings and interiors, Annex 10 lists these basic services among others:

The client checks comparability, not by recalculating. Four questions usually suffice. Same cost scope as the budget? Same base date? Quantities from the same design status? Every variance explained, split into price, quantity and programme? How the stages build on each other belongs to the cost planning topic; what counts here is that the client approves no stage with an unexplained variance.

If the design breaks an agreed cap, published case law tends to open several claims to the client. In VII ZR 185/13 the BGH allowed damages under s. 634 no. 4 and s. 280(1) BGB and held the fee calculable only on the basis of the cap. If the design is unusable, the fee claim may lapse under VII ZR 230/11. Each case turns on its facts; no general rule follows.

What weakens the client is almost always the same: a budget not recorded in writing, a programme that grew during design without a trace, and approvals given despite a known variance. The rights and their limits are covered in When the architect exceeds the cost limit: the client's rights.

The cheapest moment to correct is before award. Under s. 2(6) VOB/A, a public contracting authority should only tender "when all tender documents have been completed", and s. 2(5) VOB/A forbids procedures "for the purpose of market research". Testing the market with an overpriced design is not an option in the public sector.

The order of levers matters. Programme and floor areas first, then standard, options, phasing and lots, prices last. Every design change the client requests is a change order to which, under s. 650q(2) BGB, the HOAI fee rules apply where the services fall within its scope. A design saving therefore has a price in fees. The branch Checking the designer's cost estimate details these checks, including the target-finding phase, the independent third-party cost review and the decision paper on a budget overrun.

Award decides whether the cost calculation becomes the contract price. Public and private clients have very different levers. The public client is bound by a procedure allowing clarification and cancellation, but negotiation only in certain procedure types. The private client can negotiate and requote freely, but must ensure comparability itself.

No contract may be awarded on an inappropriate tender. Section 16d(1) no. 1 VOB/A says so: "The contract may not be awarded on a tender with an inappropriately high or low price." If a price looks inappropriately low and the documents do not allow an assessment, the authority requests clarification of the pricing in text form (s. 16d(1) no. 2).

If all tenders exceed the estimate, the Aufhebung (cancellation of the procedure) is the central lever. Section 17(1) VOB/A allows it if no compliant tender was received, if the documents must be fundamentally changed, or if "other serious reasons exist". Applicants and tenderers must be told without delay in text form, with reasons (s. 17(2)). There is no separate category for tenders that are too expensive.

Whether lack of funding is a serious reason depends on the quality of the authority's own estimate. In a published decision of the OLG Düsseldorf (29.08.2018, VII-Verg 14/17, above the EU thresholds), lack of funding can be "a serious reason". On that view it must not be attributable to the authority, must not have been foreseeable and must not be insignificant, and the estimate must have been a methodologically sound, current forecast for the same scope as the bill of quantities, with a safety margin. A poor cost estimate can thus close the door to cancellation.

The procedure the public client may choose depends on the estimated contract value, and the limits vary. For the federal government, under the decree of the Federal Ministry for Housing, Urban Development and Building of 15.12.2025, these values net of VAT apply since 1 January 2026: restricted tender without prior competition up to EUR 150,000, Freihändige Vergabe (direct negotiated award) up to EUR 100,000, direct order up to EUR 50,000.

These values do not automatically bind the Länder (states) and municipalities. Rhineland-Palatinate, for instance, expressly marks the 2026 federal values as not applying; according to the information notice of its Aufsichts- und Dienstleistungsdirektion (ADD, supervisory directorate) dated 4 May 2026, construction works limits are EUR 250,000 for restricted tender without prior competition, EUR 100,000 for direct negotiated award and negotiated award, and EUR 10,000 for a direct order. A budget planned around a given procedure must know which state law applies.

Above the EU threshold, European rules apply. For works contracts it is EUR 5,404,000 since 1 January 2026 (Federal Gazette notice BAnz AT 18.12.2025 B4), previously EUR 5,538,000.

The public client cannot negotiate price in every procedure. Where the procedure forbids it, the only route after cancellation is a revised design and a new procedure. Where it allows it, for example direct negotiated award within the thresholds, negotiation can narrow the gap without delaying the project. Choosing between cancelling, negotiating and retendering is covered in Tenders above the estimate: cancel, negotiate, retender.

The private client is bound by no award procedure. It can negotiate, cut scope, divide lots differently and requote. Its danger lies elsewhere: tenders resting on different versions of the specification, comparable only in appearance. Every amended specification gets a version number, and all tenderers receive the same one.

The contract type is also a budget decision. Under a unit price contract, the quantity risk stays with the client. A lump sum only protects what the specification actually contains. With separate trade contracts, interfaces and coordination stay with the client; with a general contractor, they are paid for. For consumers, the pre-contractual building specification also becomes part of the contract, and doubts about the work owed go against the contractor (s. 650k BGB).

When payment is made matters almost as much as how much. The contractor can claim Abschlagszahlungen (interim payments) up to the value of work performed and owed under the contract, shown by a statement (s. 632a(1) BGB); if the work does not conform, the client may withhold a reasonable part. Under the VOB/B 2016, interim payments fall due within 21 days of receipt of the statement (s. 16(1) no. 3).

One cost line professional private clients can easily miss: the builder's security. The contractor can demand security for agreed, unpaid remuneration, including ancillary claims, which "are to be set at 10 per cent of the remuneration claim to be secured" (s. 650f(1) BGB). Public law bodies are exempt, as are consumers under consumer construction or developer contracts (subs. 6). The cost of this security belongs in a commercial client's budget. The branch Tendering without losing the budget develops these points, including contract type and payment plan.

From signature on, only one question counts: what will the project cost in the end? The monthly invoice does not answer it. The client needs a forecast of total cost, updated with every interim invoice.

A reliable forecast separates the certain from the open. These lines have proved their worth:

A disputed variation does not leave the forecast because it was rejected. It stays at its likely amount until settled. Whoever enters it at zero discovers the budget problem at the final invoice.

The split of tasks with the designer is clear. In LPH 8, under Annex 10 HOAI, the designer owes "cost control by checking the invoicing of the contractors against the contract prices" and the final cost statement. Decisions on variations and on releasing the reserve stay with the client, just as the RBBau has the client release the funds for risk costs under letter d. only when the risks occur.

The BGB gives the client under a construction contract a right to order changes. Section 650b(1) distinguishes "a change to the agreed result of the work" and "a change necessary to achieve the agreed result of the work". The parties seek agreement on the change and the additional or reduced costs; the contractor must make an offer. Without agreement within 30 days of receipt of the change request, the client may order the change in text form (s. 650b(2)).

Pay follows a statutory formula: actual costs required plus reasonable mark-ups for overheads, risk and profit (s. 650c(1)). The contractor can rely on an original costing deposited as agreed; updated pay on that basis is then presumed to match the formula (subs. 2). There is much to be said for the client agreeing the deposit of the original costing at signature, since it underpins every later price discussion.

Interim payments follow an 80 per cent rule. Absent agreement on the amount, the contractor can bill 80 per cent of the extra pay stated in its offer in interim payments; overpayments are repaid with interest (s. 650c(3)). Disputes over orders and pay can go to summary proceedings: once construction has begun, urgency need not be shown (s. 650d). How the client uses the mechanism without losing the budget is covered in Ordering changes under section 650b BGB without losing the budget.

Where the VOB/B is agreed, two systems coexist and their relationship is unsettled. The VOB/B 2016 reserves to the client the right to order changes to the building design (s. 1(3)) and provides a new price for changed work, to be agreed "before execution" if possible (s. 2(5)). For work not provided for in the contract, the contractor is entitled to special pay but must announce it "before beginning to carry out the work" (s. 2(6) no. 1).

A published decision of the LG Hechingen (Regional Court, 02.11.2021, 2 O 305/21) held s. 1(3) and (4) VOB/B invalid under the review of standard terms where the VOB/B is not agreed as a whole. As at this review, there is no BGH ruling on it. The client should state in the contract which system applies and document both routes for every change: dated change request, offer, change order in text form.

Under a VOB/B unit price contract, quantity variances shift the final cost beyond a threshold. Within 10 per cent of the estimated quantity, the contract unit price applies; for any excess beyond that, a new price is agreed on request, and for a shortfall of more than 10 per cent the unit price for the quantity actually executed is raised on request, unless the difference is offset through other items or in another way (s. 2(3) VOB/B 2016). The forecast should therefore project item by item, not just roll forward the sum of interim payments.

A budget without a base date compares with no tender. For federal buildings, form 225 of the VHB (federal procurement manual) governs the material price escalation clause. Per the Federal Building Ministry decree of 20.06.2023, the general rules have applied again since 1 July 2023, including price changes "to a particular extent", a longer period between tender and execution, and material costs "of at least one per cent of the estimated contract sum". The consolidated reading version of the VHB 2017 (as at 2023), as available from the Fachinformation Bundesbau (federal building information portal) on 21 October 2026, sets out these conditions unchanged in the guideline on form 225. For the budget, price adjustment gets its own line.

Termination is not a savings plan but an expensive option. The client may terminate at any time until completion (s. 648 BGB; under the VOB/B, s. 8(1)). The contractor keeps the agreed pay less expenses saved, and is presumed entitled to 5 per cent of the pay for the part not yet performed. On termination for good cause, pay is limited to the part performed and damages remain possible (s. 648a(5) and (6)). Every termination of a construction contract must be in writing (s. 650h).

Fictitious example: on a contract sum of EUR 1,000,000, work worth EUR 400,000 is done when the client terminates at will. The 5 per cent presumption on the unperformed EUR 600,000 gives EUR 30,000. On that presumption the client pays the original contractor EUR 430,000, plus what a new contractor charges to finish. Termination only pays off if that total is below the forecast for carrying on. The branch Forecasting the final cost during construction details the dashboard, the right to order changes, the variation register, quantity variances, price adjustment and termination.

Responsibility for the budget cannot be delegated; the work on it can. The RBBau puts the federal principle in one sentence: "The client is responsible for the building project." The idea holds for private clients too.

Four roles must be kept apart. The client sets the budget, decides and approves. The architect designs within the cost expectations and determines and controls costs within the basic services. A Projektsteuerer (project controller) takes on delegable client tasks. A cost planner or reviewer produces and checks figures independently of the designer.

The line between Projektleitung (project management) and Projektsteuerung (project control) is professional practice, not law. In the common view, project management is a line function with decision-making power, project control a staff function covering delegable client functions. Some tasks stay non-delegable, or the client would lose decisive influence over the project: setting the budget, releasing the reserve, deciding variations.

The HOAI has no service description for project control. Its scope and pay are purely contractual. In practice, booklet 9 of the AHO series (March 2020) serves as a guide; it describes, among others, a field of action "costs and financing". It is a private publication with no normative force.

Who signs what should be fixed before the project starts. Approving the cost assessment under s. 650p(2) BGB, approving each cost determination, a change order under s. 650b and instructing each variation are client decisions. A project controller can prepare them and an architect recommend them; they are given by whoever answers for the budget.

The RBBau is a worked-out model of budget responsibility. The project cost target is "the decisive steering figure for carrying out the building project" (C.8). It is set provisionally with the initial project documentation at cost framework level, and finally with the final project documentation at cost calculation level. Compliance is to be sought; "only the steering level decides on changes that substantially alter the framework of the project" (E 3.3). Where deviations from deadlines and cost targets loom, the client must be told without delay, with proposed alternatives (D.4). A private client can borrow three things: a budget treated as a steering figure, not an estimate; a reserve released only when a documented risk occurs; and one clear body that alone decides substantial changes.

Consumers have protections that act directly on the budget. The Verbraucherbauvertrag (consumer construction contract) requires text form (s. 650i(2) BGB). The pre-contractual building specification becomes part of the contract, which must give binding information on the completion date or construction period (s. 650k). Interim payments may not exceed 90 per cent of the agreed total pay, and with the first interim payment, 5 per cent security is due for timely completion without material defects; if pay rises by over 10 per cent through change orders or other contract changes, further security of 5 per cent of the extra pay is added (s. 650m).

Under a Bauträgervertrag (developer contract), the only lever is the signature. Section 650u(2) BGB excludes, among others, ss. 648, 648a and 650b to 650e. The buyer thus has neither the s. 650b right to order changes nor the s. 648 right to terminate at will. What is not in the contract can hardly be added later at a predictable price. The branch Who manages cost for the client develops the allocation of roles, project control and the specific rules for consumers and buyers from a developer.

The method sums up the guide in six rules that apply to any building project in Germany. They follow the order of the five moments:

1. Set the budget in writing before design, with amount, cost scope in cost groups, gross or net, base date, and whether it is a strict cap or a target.
2. Treat approval of the cost assessment as a decision, within the period of 2 weeks under s. 650r BGB, and change the programme or withdraw while it costs least.
3. Approve no cost determination with an unexplained variance, split into price, quantity and programme, on the same cost scope and base date.
4. Correct before tendering, not after, programme first, prices last; in the public sector, according to published case law, a sound, current cost estimate is also a precondition for supporting cancellation for lack of funding.
5. No change without a trace: dated change request, offer, change order in text form, and the deposit of the original costing agreed at signature.
6. Update the total cost forecast with every interim invoice, keep disputed variations at their likely amount and release the reserve only when a documented risk occurs.