The twelve items everyone forgets when budgeting

The figure you were given is the cost of the works. The cost of the project is a different figure, and the difference is not a rounding.

Almost every item on this list is paid before the first bag of cement arrives, several are a condition of the building permit being issued, and not one of them appears in a budget drawn up per square metre. Not because anybody is hiding them: because a works budget, by definition, budgets the works.

1. The soil survey

The geotechnical survey defines the foundations, and the foundations are one of the most expensive and least visible items in the works. It gets forgotten because it shows up on no handsome drawing and because the seller of the plot never mentions it.

The permit requires it: for projects of greater complexity the application has to be accompanied by the geotechnical and soil studies, and in every case the curador urbano — the private official who issues building permits in Colombia — or the municipal authority reviews those studies as part of the procedure. And it is signed by a civil engineer with a postgraduate degree in geotechnics or more than five years in geotechnical design of foundations. It is not a laboratory test: it is a study with a signature and liability behind it.

2. The technical designs

The architectural design is nearly always allowed for. The others, hardly ever. The permit application asks, on top of the architectural project, for the calculation memorandum and the structural drawings and the design memoranda for the non-structural elements; the plumbing and drainage services and the electrical services have technical regulations of their own and a signatory of their own.

Each of those designs is a separate contract, with a different professional and a different professional registration. They get forgotten because the client hires "the architect" and assumes everything comes inside that.

3. The curaduría charges

This is what the curador urbano charges for studying and deciding the application. Since Decreto 1890 de 2021 they are assessed in tax value units, with a fixed charge and a variable charge affected by the stratum or use, by a municipal factor and by the area.

Two details that change the cash flow and that hardly anybody sees coming:

• —The fixed charge is paid on filing. It is a condition of the application being filed at all, not something paid at the end.
• —It is not refunded if the permit is refused or if you withdraw. The rule says so expressly.

4. The urban delineation tax

It gets confused with the curaduría charges and has nothing to do with them. The charges are the remuneration of a private party exercising a public function; delineation is a municipal tax, and each council sets its own base and its own rate. That is why there is no national figure, and why building the same thing costs different amounts on either side of the municipal boundary.

The national rule separates the two clearly and adds the fact that matters for cash: the taxes, levies, duties, participations and contributions associated with the permit are independent of the charges, and the curador may issue the permit only once the applicant proves they have been paid, with thirty working days to do so from the moment of being required to.

5. The utility connections

Water supply, drainage, electricity and gas do not reach the property merely because the plot sits inside the urban perimeter. Availability of services — which is what the utility company certifies — means that connecting is technically feasible, not that the connection has been made or that it has been paid for.

The permit rule itself provides for the developer to bear the cost of the connections to the trunk mains needed to serve the project. That cost exists, it belongs to the project, and it appears in no budget drawn up per square metre.

6. The earthworks

Stripping the topsoil, excavation, cuts, fills, carting away the surplus and disposing of that surplus at an authorised site. It gets forgotten because the budget begins, in the mind, at the foundations, and this happens before that.

And it carries a procedural component that catches people out: the authorisation of earthworks and swimming pool construction with more than three metres of excavation is a separate application before the curador, with a charge of its own assessed by volume. It is not included in the permit.

7. The temporary site enclosure and the two notice boards

The site has to be fenced off for as long as the works last, with everything that implies: materials, labour, maintenance and taking it down again. And to that you add the site huts, the materials store, the temporary water and electricity supply and the sanitary facilities for the workforce. None of it is left standing at the end, and that is why it gets forgotten: it does not show in the finished house.

The compulsory notice boards are two, and they are different:

8. The insurance bonds

Performance, stability of the works, third-party liability, wages and employment benefits, and contractors’ all risks. On public works they are compulsory under the procurement regime; on private works no general statute imposes them, and that is where the problem sits: because nobody demands them, nobody budgets for them, and when something goes wrong there is nobody to claim against.

Anyone who hires a third party to build and does not require a performance bond and a stability bond is financing the builder’s risk out of their own assets. The premium is a small fraction of the contract; the absence of the bond can cost the whole of the works.

9. The laboratory tests and the technical supervision

Compaction tests, concrete cylinders, strength of materials, pipe tests, watertightness tests. They get forgotten because they are spread out over time and are individually cheap, which is what makes nobody add them up.

The rule orders them at two levels, according to size:

• —Above two thousand square metres of built area that the plot allows to be reached, the building has to be subject to technical supervision independent of the builder. It is a separate contract, with a professional of its own.
• —Below that threshold, there is no independent supervision, but the builder remains obliged to carry out the minimum quality controls the statute and its regulations require, having available during the works the participation of the structural designer and of the geotechnical engineer, whose queries and clarifications must be recorded and documented.

10. The contingencies

This is not a cushion for covering up errors of estimation. It is the item that covers what could not be known before opening up: ground that turns out different from the trial pit, a buried service that was on no drawing, the rain that stopped the pour.

It gets forgotten because including it means admitting that the budget is not exact, and that, in a negotiation, reads as weakness. A budget with no contingencies is not more precise: it is less honest.

11. The administration and the profit

Everything that makes the works run and does not end up built into them: the site director, the resident engineer, the storekeeper, the accounting, the social security contributions of the administrative staff, the transport, the stationery and the share of the office that project consumes.

And the profit, which is the builder’s remuneration for taking on the risk. It gets forgotten — or disguised by spreading it through the unit rates — because naming it means having to defend it. The side effect of disguising it is worse: two budgets stop being comparable, because one shows it and the other hides it.

12. The financial cost of time

It is the largest of the items nobody writes down. The project takes time, and while it does there is money committed that earns nothing, rent that carries on being paid, interest running and prices moving.

• —The opportunity cost of the capital tied up, from the purchase of the plot to handover.
• —The rent on wherever you live in the meantime, if the works are your own home. Multiplied by the real months, not by the promised ones.
• —The interest on the loan, and the gap between what was expected to be drawn down and when it is actually drawn down.
• —The rise in prices during the works, which in construction is not spread evenly: labour and materials do not move at the same rate, and a budget updated with a single general index understates the component that rises most.

How to build a budget that does not fall over

1. 1Keep three budgets apart, not one: pre-investment (surveys, designs, procedures and taxes), the works, and the cost of time. Adding them up is easy; keeping them apart is what lets you see which of the three ran away.
2. 2Date everything. A budget with no reference date cannot be updated or argued over six months later.
3. 3Write down what it does not include. It is the most useful section of any budget and the one that is almost never there.
4. 4Ask for the twelve items explicitly, even if some of them come in at zero. A declared zero is information; an absence is not.
5. 5Compare structures before totals. Two final figures cannot be compared if there are two different scopes behind them.

The obligations quoted are transcribed from the articles in force. The last three items are imposed by no rule: they are trade judgement, and that is why they are stated without figures.