Four methods, four levels of precision
Estimating a project is not done the same way at concept stage as at tender. The four methods below correspond to four levels of design development and four levels of precision.
| Concept stage | A global ratio per square metre of floor area. Precision ± 20–30 %. Source: published references and recent site data. Purpose: to check the feasibility of the brief against the budget. |
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| Outline design | An estimate by trade with ratios per square metre. Precision ± 10–15 %. Allows the coherence of the brief to be checked and the structuring architectural choices to be guided. |
| Developed design | A quantitative estimate based on preliminary measurement. Precision ± 5–10 %. The basis of the planning application and of the financial structuring. |
| Tender documents | An estimate on the pricing schedule with detailed quantities. Precision ± 3–8 %. The basis on which the contractors' offers are compared. |
What a contractor actually charges: the fundamental equation
To estimate a project correctly, one must first understand how a contractor builds its selling price. Too many estimates stop at the cost of materials and direct labour, which is to forget a substantial share of the real expenditure.
The fundamental equation reads as follows.
ℹ Selling price = net cost + site overheads + operation costs + head office overheads + risk and profit
| Net cost | Costs directly attributable to the works: materials, purchased and delivered; productive labour, gross wages plus employer contributions; and plant. This is the basis of the calculation. |
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| Site overheads | Expenditure specific to the site but not attributable to a particular item: site set-up, cabins, fencing, signs, the crane, its erection and hire, temporary services, and supervisory staff. Typically 5 to 15 % of the net cost. |
| Operation costs | Costs specific to the operation: ground investigation, surveying, technical control, site insurance, and the as-built and maintenance files. Typically 2 to 5 % of the net cost. |
| Head office overheads | The firm's costs not tied to a specific site: rent and running costs of the head office, administrative management, IT, vehicles, accounting, communication. Generally 8 to 12 % of the selling price. |
| Risk and profit | A provision covering two things: the profit expected, set by the management according to its financing needs and competitive pressure; and the risk, a safety margin on the site's inherent uncertainties. Generally 6 to 10 % of the selling price. |
The selling price coefficient
In practice a contractor calculates its selling price by applying a multiplier to the net cost.
ℹ Selling price = the coefficient × the net cost
The coefficient is calculated by the firm from its own statistics and cost structure. To determine it, the firm solves the fundamental equation by substitution. A typical example:
ℹ A worked example A plastering firm has the following parameters: site overheads at 8 % of net cost, operation costs at 2 %, head office at 10 % of the selling price and risk and profit at 7 % of the selling price. Selling price = net cost + 0.08 + 0.02 of net cost + 0.10 + 0.07 of selling price. That gives selling price = 1.10 net cost + 0.17 selling price, so 0.83 selling price = 1.10 net cost, and the coefficient is 1.10 / 0.83 = 1.33, each euro of net cost becomes 1.33 € invoiced.
The coefficients observed in the sector vary considerably with the type of firm and market conditions:
| Craft firms and small finishing trades | 1.25 to 1.45. Low site overheads, with little heavy plant, but substantial travel costs. |
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| Structural contractors | 1.20 to 1.40. Heavy investment in plant, crane, formwork, charged to site overheads. |
| Main contractors | 1.15 to 1.35. Head office overheads spread across a large turnover. |
| Very competitive markets | The coefficient can fall to 1.10–1.15, with risk and profit cut to 3 or 4 %. The firm limits its margin to win the work. |
For the construction economist, understanding this coefficient is essential: it explains why the price of an item is never simply its materials, and it allows early-stage estimates to be calibrated on a coefficient consistent with the local market.
From the works to the elementary item: the pricing schedule
Breaking down into elementary items
The pricing schedule structures the pricing by package and by elementary item, the smallest unit of work whose cost and quantity can be calculated independently. For example:
- Structural package → reinforced concrete wall 180 mm thick, in square metres; reinforced concrete strip footings, in linear metres; reinforced concrete raft, in square metres.
- Plastering package → metal-stud plasterboard partition 72 mm thick, in square metres; suspended plasterboard ceiling, in square metres.
For each item the contractor breaks down the components: materials, with elementary quantities allowing for waste and offcuts; labour, in hours per unit; and plant. That calculation is the price build-up.
The extras: the items that do not appear on the drawings
A well-written specification lists the extras, items that do not appear explicitly on the drawings but are necessary for the works to be finished to the rules of the trade. Examples: incorporating electrical conduit within plasterboard partitions, protecting partition bases around wet rooms, protecting external corners. These must appear in the pricing schedule as distinct items, on pain of becoming a source of dispute during construction.
The forgotten items that send estimates off course
A frequent error confuses the works cost, what contractors invoice, with the total cost of the project to the client.
| Design fees | 10 to 16 % of the works cost excluding VAT according to complexity. Never to be included in the works cost; it is a distinct item. |
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| Technical control | 0.3 to 0.8 % of the works cost. Mandatory for buildings open to the public, apartment buildings and certain facilities. |
| Health and safety coordination | 0.1 to 0.3 % of the works cost. Mandatory as soon as several contractors are involved. |
| Structural warranty insurance | 1 to 3 % of the works cost. Mandatory for any building developer, and to be taken out before the site opens. |
| Contingency | 3 to 10 % of the works cost according to the stage. Indispensable to absorb the inevitable overruns. |
| VAT | 10 % on residential renovation, 20 % on new build. Forgotten in appraisals written too quickly. |
| Index updating | The BT01 all-trades index moved from 111.8 in January 2020 to 134.7 in January 2026, a rise of 20.5 % over six years. An estimate not brought forward under-states the budget by as much. |
The tools and data sources
| Commercial price databases | Databases of price build-ups by trade, updated annually. The most widely used professional reference in France, available by subscription. |
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| The BT indices published by INSEE | BT01 for all trades, BT02 for earthworks, and a specific index for particular packages. Published monthly. Used to bring forward ratios from earlier sites and to calculate price revisions in contracts. |
| References from comparable sites | The best source for ratios per square metre. Requires maintaining an internal database of real costs, trade by trade. |
| Bills and schedules from past tenders | Contractors' responses to tenders are the most recent and precise market data for similar projects. |
Related articles: cost per square metre by building type · Expenditure items on a construction site · The effect of materials on the budget · Construction costs and estimates
Cost estimates, pricing schedules, development appraisals, summary notes. Produce in minutes the deliverables you prepare manually today. First project free. → quostra.com
The nature of the figures quoted
The percentages and amounts quoted on this page are orders of magnitude for framing, not measurements. They illustrate mechanisms and proportions, and they substitute neither for a tender exercise nor for an estimate prepared on drawings.
The percentages given for the coefficient and its components are orders of magnitude drawn from French professional practice. They vary with the type of firm, the region, market conditions and the nature of the project. Principal technical source: Widloecher and Cusant, Manuel de l'étude de prix, Eyrolles, 5th ed. 2020.
Sources: the BT construction cost indices published monthly by INSEE on its 2010 base, used to update the figures · construction cost statistics from SDES, the statistical service of the ministry responsible for construction · regulatory texts published in the Journal officiel and consolidated on Légifrance for the requirements cited.