8 Project Expenses That You Have to Know, Outside of the Construction Cost
Building a structure or space takes a good amount of financial resources—but for many first-time clients, projected expenses often center around the cost of construction (a.k.a. the amount of money needed to purchase materials and to pay for the labor of building the structure). To ensure an organized and well-managed budget, it’s important to be aware of all the expenses one may incur for a project.
1. Your Design Team’s Fee.
To initially envision your project and plan out the functional elements needed to bring it to life, you will need to enlist an Architect or an Architecture Firm. They will lay out your space in relation to what it will be used for and the characteristics of the lot, and work with various Allied Professionals to ensure all your needs as a client are met. The law also requires an Architect’s signature for you to proceed with a Building Permit for structures, so they are without a doubt a necessity. An Architect’s services come with a corresponding Design Fee, which varies depending on many factors. You can read more about that here.
2. Construction Bonds and Administration Fees for Design Reviews.
Residential-type projects are often situated inside a private village or condominium complex. And whether it’s for simple renovations or a complete overhaul of the space, certain permissions need to be acquired from their respective administration offices. Keep in mind that payments may need to be made to get a go-signal for work to begin. These will vary depending on the scope of the project and the regulations of the concerned office/s.
To get into further detail, a Construction Bond is the bond that you give to the subdivision/village before you start building. If any penalties are incurred during construction, it will be deducted from this bond. Think of it as a deposit, since this will be refunded to you (minus penalties) once the project is completed.
On the other hand, not all residential administration offices have Administration Fees for Design Reviews. But in essence, the admin office or a third-party consultant will review the design to see if it’s in line with their restrictions, and this review has corresponding charges. Unlike the Construction Bond, this fee is non-refundable.
3. Association dues.
Certain residential communities may collect association dues, even while your project is still under construction. Association dues go toward the expenses that keep your community running, such as the electricity and water for common areas, wages for security and maintenance personnel, administration fees, and the like. These are collected monthly, so you will also need to keep track of due dates to avoid late payments.
4. Tax declarations.
A tax declaration is a document maintained by the local government where your property is located. It indicates the market/assessed values of your property, and this is used as a basis for collecting Real Property Tax (more on this later). This document also has other functions, such as tracing the history of the property’s ownership and accurately zoning the property. This important document, combined with the Transfer Certificate of Title, can show one’s proof of ownership of the property. Several payables are needed to acquire this document, such as your Real Property Tax, Community Tax Certificate (cedula), and transfer taxes, among others. When construction on your project is finished, you will also need to apply for tax declaration for the improvements made over your property at the City Assessor's Office. To get more specific details, proceed to the corresponding City Hall of where your project is located.
5. Real Property Tax.
Real Property Tax (RPT) is a tax that is calculated by your local government based on the current and fair market value of your property. If, according to Section 234, Republic Act No. 7160, your property is not exempted from paying the RPT, then this is an expense you must expect to pay every year. Some local governments allow installments to make it easier on the pocket. Remember to pay on time, as missing your due dates will incur interest fees.
6.Building permits and connection fees.
Before work on your project can begin, you will need to pay for one or more of the following: the Barangay Permit, Locational Clearance, Fire Safety Evaluation Clearance, Building Permit, and Ancillary Permits, among others.
Utilities such as water and electric will also come with their own fees for installing meters—and sometimes even electric posts—at the site. You will also need to apply for a sewage connection.
If the structure necessitates an Internet connection, then the initial deposit and installation fee will need to be considered as well.
Finally, when construction is finished, you will need to pay permit fees for the Fire Safety Inspection Certificate (FSIC), Certificate of Final Electrical Inspection (CFEI) and Occupancy Permit.
The cost of fencing is usually separated from the cost of the actual structure. If fencing is factored into your project cost, the floor area of your structure will become a bit smaller, or the quality of the finishes used in your structure may be lower (if your budget is fixed). Therefore, it is more ideal to keep fencing costs separate. Depending on your project type, the need to fence the area may be optional (or no longer necessary).
8. Landscaping and site development costs.
Just like fencing, landscaping and site development should ideally be separated from the cost of the actual structure. If you’d like to prioritize payments for the structural aspect of the project first, you have the option to enlist a Landscape Architect later on.
Whether you end up encountering just some or all of the expenses listed above, it’s always better to be aware of your project’s payables. If you don’t have an overview, you may end up spending more on things that are not important to you. Knowing what’s coming up next will help you as a client navigate the Design Process with a clear budget framework—and allow you to prioritize more efficiently as well.