SI.9 costs for a typical house

by Bregs Blog admin team

house-value-q

We received this contribution on 26th August 2014 from a registered architect on the costs of SI.9 for a typical house.

The Department (DECLG) noted in a Regulatory Impact Assessment in 2012: “..industry sources suggest this requirement could add say between €1,000 to €3,000 per housing unit to the overall building costs” (see links below).

The source and basis of the calculation has been queried by commentators, in the Dáil and by professionals in the industry. There was no Regulatory Impact Assessment completed for SI.9 which replaced earlier versions of SI.80. The Bregs Blog has written directly to the DECLG requesting a breakdown of the stated cost range and await a response. As far as we are aware the DECLG have yet to confirm the methodology and basis for this cost range.

In April 2014 the former Minister of the Environment stated

“Nonsense about €40,000…people should be able to do this for a modest amount of money.. an average of €3000 in rural areas” (read full text here)

The reality is that the cost of SI.9 for a typical house is a multiple of this figure. The cost of SI.9 for a self-builder may well be over 10x the Department’s figures.

The assessment of the cost of SI.9 for a typical dwelling is below. Breg Blog notes are shown [ ]

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Cost of SI.9 for a typical house

I don’t recall seeing an SI.9 cost breakdown for an individual house (or inspection plan/ commencement submission etc!) so this may be of some use to readers.  Recently I was asked to do an assessment as to the likely additional cost exposure for SI.9 on a proposed 3-4 bed house. The owner intended was going to self-build, but called a halt to the project on cost grounds.  For the study I reduced costs right down to industry minimums (€180,000 cost to build a typical house).  This is by no means exhaustive but I have double-checked figures with colleagues and builders.

  • Say typical house €180k cost (based on average rebuild costs in industry for 3-4 bed house)
  • Current professional advice from Orla Fitzgerand [RIAI representative] was that S.I9 will take an extra 18 days [for a €500k project], Shane Santry [RIAI representative at CPD] stated 156 hours for a typical house [see source post below]
  • From certifiers we know that the hourly requirement is about correct [see three certifier posts previously published- links to follow].

In my opinion the additional costs are in 3 categories as follows:

  1. Professionals: 160 hours (18 days) for a €60,000 salary would give a €15,000 cost (tx 2.5) for Design and Assigned Certifier roles.  This includes modest profit and overheads, insurance, travel costs and excludes vat @ 23%. If we assume this is done at cost the figure would be €12,000.  Anything less than this and work would be done at a loss to the practice. So say +7% of the cost of the entire build.
  2. Defensive specifications: possibly +5% (see note below)
  3. Self-builds- Main Contractor’s profit, attendance and prelims etc. +12%

1. Professional Fees

On  a €180,000 project the professional fees (at cost) for design and assigned certifiers alone are €12,000.  This excludes additional fees and costs for other sub-contractor/ ancillary certifiers responsibilities which are all new and will be either borne by sub-contractors or passed onto owners.  All members of the design team have additional paperwork and manufacturers and suppliers will need new insurances also.  Some sub-contractors will be required to provide three certificates under the new system.

  • If we assume SI.9 is done at cost with no practice profit the professional fees are €12,000.

2. Specification Costs

Conservative specifications will increase costs but by how much?  Specifiers will be more “careful” and some estimates suggest these more “defensive” specifications could be 5% extra.  This defensive specification estimate is an average cost taking into account input from other professionals and contractors. If 5% defensive spec. seems too high, remember we have nothing in for additional ancillary certs/ sub-contractor insurance costs etc.

  • A 5% increase in cost due to defensive specifications is + €9,000.

3. Self-Builders

Self builders also must factor in the cost of employing a main contractor to undertake the duties they intended to do themselves.  A self-builder may not do any trade or building work themselves- they may just co-ordinate others.  On larger projects a builder managing sub-contractors is frequently called a ‘management contractor’- this is the role that many self-builders do out of financial necessity.  [On a self-build the owner frequently co-ordinates sub-contractors such as plumbers, electricians, blocklayers, carpenters etc., liaising with engineers and/or architects etc.  This is quite time consuming and is where the big saving is for self-builders.  Obviously where a self-builder is a tradesman they also do other work themselves. Frequently family members help out etc.]

A normal cost to employ a management contractor (builder) for a residential project would be in the region of 12%.   A breakdown of this cost is as follows: a main contractor will normally charge 5% on top of all sub-contractors costs for co-ordination (called attendance); preliminary costs vary from 5-10% cover insurances, scaffolding, site facilities, signage, insurance etc. This cost is for contractors profit, attendances, co-ordination costs, salaries for foreman (or his salary), preliminaries and insurances etc. A standard performance bond cost also may be required.

This 12% total additional cost for the involvement of a main contractor is reasonable and not inflated. For a self-builder this is in addition to professional fees.

  • The cost to employ a main contractor is 12% of total cost + €21,600.

Conclusion

These costs are not exhaustive, but even with margins of error, serious discounts, economies of scale for multiple units, real-world costs for SI.9 are a multiple for those quoted and reiterated by the Department and the previous Minister.

  • SI9 cost for a typical house where there is a main contractor could be + €21,000 (12k prof fees + 9k defensive spec cost)
  • SI9 cost for a typical house for a self-builder could be double at + €42,600 (prof fees + spec costs + 21.6k builder costs)

I recently discussed completion and phasing issues with a speculative residential developer.  The Law Society have advised that each house may require separate commencement, completion and inspection paperwork-  this was noted in recent Law Society advice [in April 2014].  This is a huge administrative burden on spec builders and may affect phasing (e.g. repetitive discounted cost of €6,000 per house x 100 units = €600,000). This large developer (in Nama) I met was aware of additional SI.9 costs and they intended to employ an in-house certifier to minimise the cost impact. I can’t see how this situation affords any protection for homebuyers.

Blog Note

The former Minister of the Environment suggested the cost range of between €1k – €3k was appropriate and used the compared SI.9 to the Building Energy Rating (BER) system. However we can see from the above reasonable assessment that it is pretty easy to get over €40k for a self-build, and over €20k for a normal house where a main contractor is employed.

This is a huge increase in costs for little additional consumer protection or any technical improvement in building.

Other posts mentioned in the above opinion piece:

Specialist Ancillary Certifiers, Template Inspection plan & form, 7 day notice

The Engineers Journal: how BC(A)R SI.9 works in practice 

Ombudsman Complaint- Minister and Fee Fixing: SI.9

Copy of Morning Ireland transcript of  28th February 2014 (Phil Hogan)

Copy of Regulatory Impact Assessment (SI.80) 2012

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