The budget is an input
The Grand-Ducal Regulation (règlement grand-ducal) of 17 June 1992 laying down the professional code of conduct for architects and consulting engineers makes the budget a design reference. Its Article 9 provides that the architect and the consulting engineer "shall ensure that they submit designs which remain within the limits of the brief set in the commission and of the budget deriving from it, in accordance with the agreement concluded between the parties" (unofficial translation).
Three consequences follow. The budget must exist before the commission, since it is the agreement that carries it. It derives from the brief, which means the two have to be written together. And any significant change to the brief must be the subject of a supplementary agreement (convention additionnelle) "which shall state its financial impact": without a written starting budget, that impact has nothing to be measured against.
Four decisions before the first sketch
A budget only works as a reference if it answers four questions, put by the client rather than left to each party's interpretation.
| Decision | Question asked | What happens if it is missing |
|---|---|---|
| Scope | works only, or total project cost? | the architect compares their estimates with a works envelope, the client with their total cost |
| Base date | which month's prices does the figure reflect? | it becomes impossible later to separate project drift from price movements |
| Contingency | what reserve, for which risks? | every unforeseen event is experienced as an overrun |
| Written form | which document fixes the amount? | the budget remains a verbal intention that is hard to prove |
Scope first. The works envelope is only part of the total project cost: fees, surveys and studies, taxes, utility connections, financing costs and other ancillary costs come on top. They are set out in the article on how a construction budget is built up and in the one on ancillary costs and their weight. The client's decision fits on one line of the architect's agreement: does the amount the architect must respect cover the works only, and is it stated excluding or including VAT?
Then the base date. A figure with no reference month cannot be compared either with the preliminary design estimate or with tenders received 18 months later: every version of the budget carries its date.
Finally, the contingency, and then the written form. A reserve tied to named risks prevents the envelope from being used up without a decision. The written form is the architect's agreement (convention d'architecte), which Article 8 of the 1992 Regulation requires to be signed at the latest once the commission has been defined.
The steps that change the cost including VAT
For housing, part of the final cost depends on tax formalities that must be started before the works. The approval (agrément) on which the applicable VAT regime depends has to be applied for in time; forgetting it cannot be put right on site. The subject is covered in the article on obtaining approval before the works. For the budget decision, it is enough to know whether the amount set is excluding or including VAT, and on which assumption about the regime.
The public client
For a municipality or for the State, setting the budget is not a matter for a single decision-maker. The municipal council (conseil communal) decides the principle, approves the designs and provides the appropriations before any contract (Grand-Ducal Regulation implementing the public procurement law, Art. 144); above a certain cost, a State project must be authorised by a law (amended law of 8 June 1999, Art. 80). The public budget is therefore a voted ceiling, and exceeding it means going back to the body that voted it.
What weakens a budget from the outset
Three practices drain the budget of its force: communicating it verbally without carrying it into the architect's agreement; expressing it as a range without saying which end binds the architect; changing it during the design without a supplementary agreement. In all three cases, the client loses the reference needed to require the design to be adapted. The decision remains the client's: reduce the brief or raise the envelope, and do so before the drawings, while it still costs nothing.
The articles in this branch
- The article on writing the budget into the architect's agreement sets out the useful entries (amount, scope, base date, assumptions, contingency, change procedure) in the light of Articles 8 and 9 of the 1992 Regulation.
- The article on contingency by project stage distinguishes estimating uncertainty, construction risks and the client's own reserve, and explains how to release it stage by stage.
- The article on the budget of a public project follows the path of a municipal or State project: decision in principle, appropriations, detailed final design, special law and final account.
This article describes the rules as they stood on the date of checking and is intended as professional guidance. It replaces neither legal advice nor an examination of the specific case.