A cost projection and the follow-up cost control regularly prepared and submitted by the architect (planner) are of elementary importance for investment decisions and their implementation:
Cost objectives of the builder
- The compliance with cost objectives is especially important for the principal for economic and possibly existential reasons (refinancing, rentability, rate of return when responsible to third parties, etc.)
Construction cost overruns
- Many architects (planners) do not have cost management under control even though current methods enable reasonably reliable cost information and control.
Architect liability for cost estimates and cost controls
- The architect (planner) is liable to the principal for a reliable cost estimate (tolerance +/-10% / unforeseen costs +/-5%) and or careful and prompt cost controls.
Cost limits and guaranteed construction sum budget as an alternative
- Because of the lack of cost reliability among architects (planners), certain principals – similar to general and total contractors – have shifted to demanding cost limits or construction sum guarantees from architects.
During the course of construction, individual cost information can be characterised as follows:
- Cost information before awarding contract (updating for rolling contracting)
- Cost information during the execution phase
- Cost information after construction completion