Embarking on a construction project in the Cook Islands is an exciting venture, but it comes with its own set of financial challenges.

While sticking to a construction budget is indeed possible, it requires more than relying solely on square meter cost estimates. Some key basic knowledge is necessary at the start of your project to avoid financial pitfalls and ensure your project stays on track.

In the construction industry, it is common to hear costs described in terms of square metres. This method involves applying a dollar value per square meter, such as a rate of $3,000/m² might be used for a 100 m² house, suggesting a base cost of $300,000. While this is normal business industry custom and is helpful for feasibility studies as a rough cost indicator, it’s not the full story. A common misconception is that the square meter rate covers all expenses.

Builders, adhering to industry norms, naturally focus on core construction costs and often ‘tag out’ various other necessary expenses, which may not be included in initial estimates. These overlooked expenses can lead to financial challenges. To prevent this, it’s essential to understand and account for the full scope of costs, ensuring a comprehensive and effective budget. Below are some key factors and additional expenses to consider.

Getting the Budget Right Before You Start

Rates based on $/m2 are generic and indicate an average cost of a building type. Cost can vary significantly even within the same type of building such as a residential home here in the Cook Islands. According to Quotable Value Ltd of New Zealand, standard industry practice cost include 9% for builder’s onsite overheads, 3% for margin and a contingency of 1.5%. However, the following needs to be added to the base rate:

• Account for any structural and building code requirements such as cyclone ratings over category 3 or lifting of foundations for tidal surges.
• Account for air- conditioning, where considered necessary and not included – frequently not included in initial budgets.
• Account for additional allowances for work in difficult to access areas.
• Adjust rates for factors such as sloping sites, foundation problems, higher wall-to-floor ratios, unusual building shape, small or cramped site, firewalls to boundaries, infrastructure upgrades to; TAU, ICI or TTV services, and any special design factors where costs can vary from the range given.
• Account for any other factors deemed to be necessary for the completion of the project.

What’s Not Included

The following items are not often included in base construction rates and construction budgets however will need to be included in your over all project budget:

• Land.
• Demolition of existing structures on the site.
• Additional costs due to building code changes and increased structural requirements.
• External works, such as preparing sites, shaping contours, landscaping, driveways and parking areas.
• Utilities – power, water, gas, drainage, phone/ data mains from public connection to 3m from building.
• Balconies and covered ways.
• Loose Furniture, Fittings and Equipment (FF&E).
• Professional and legal fees.
• Building permit/consents.
• Value Added Tax (VAT)

Where to Start?

While the above knowledge is key to understanding cost in construction projects, every project is unique, requiring a tailored approach to define its full scope accurately. Consulting a professional is crucial to ensure every aspect is considered and budgeted for effectively. Jeff Tikitau Elite Management (JTEM) stands ready to assist, offering expert project management services that guide you from start to finish. With JTEM’s support, you can confidently manage your project, ensuring it stays on schedule, within budget, ultimately leading to a successful outcome that satisfies both builder and owner. https://jefftikitaurealestate.com/