Development costs outside the contract are everything the scheme requires that the contractor does not provide. They are a substantial proportion of total development cost and they sit outside every construction cost plan by definition.
The gap causes real problems, because a construction figure gets carried into an appraisal as though it were the development cost, and the difference emerges when somebody has to pay for it.
Professional fees
Architect, structural engineer, services engineer, cost consultant, project manager, principal designer, and any specialists the scheme requires: acoustic, fire, sustainability, transport, arboricultural, ecological, archaeological.
Fees are frequently estimated as a percentage of construction cost, which is workable as a first pass and unreliable on unusual schemes. A refurbishment with heavy survey requirements or a scheme with a difficult planning history carries far more fee than a percentage suggests.
Fees also continue after practical completion, through defects resolution and final account settlement, and those tails are commonly omitted.
Surveys and investigations
Topographical, measured building, ground investigation, contamination, asbestos, drainage, utilities, structural appraisal, party wall, rights of light, tree survey, ecology.
Each is modest individually and the total is not. They also arrive early, before any funding is drawn, so they are usually equity rather than debt.
Skipping them to save cost at the front end is the most reliable way to create a larger cost later, which is set out in pricing site abnormals before you buy the land.
Statutory and planning costs
Planning application fees, building control, community infrastructure payments, section agreement costs and the associated legal fees, highways agreements, and the commuted sums that come with adoption.
Utility connections and diversions belong here too, and they are frequently assumed to be in the building contract when they are not. Incoming capacity, substation provision and service diversions are provider led and priced by the provider.
The timing is as important as the amount. Several of these have to be paid before commencement and cannot be funded from a construction facility.
Finance and holding costs
Arrangement fees, exit fees, interest through the build and through the sales period, monitoring surveyor fees, valuation fees and the legal costs of the facility.
Interest is the largest and the most sensitive to programme. A scheme running six months late carries six months of additional interest that no construction cost plan contains.
Holding costs on unsold or unlet stock after completion belong in the appraisal too, along with rates, insurance and service charge on empty units.
Sales, letting and the rest
Marketing, show units, agents' fees, legal fees on disposals, and any incentives offered to purchasers or tenants.
Insurances the client carries rather than the contractor, warranties and latent defects cover, and the client's own staff time where it is being accounted for.
Fit out contributions, landlord works and any obligations under agreements for lease, which on a mixed use scheme can be substantial and are frequently discovered late.
Stating the boundary
A construction cost plan is not wrong for excluding these. It is wrong when it does not say so, because the reader will assume the number is the development cost unless told otherwise.
One sentence on the front page stating what the figure covers and what it excludes prevents an entire category of misunderstanding, and it costs nothing.
Where we are asked for a development cost rather than a construction cost, the two are presented separately and reconciled, which is set out under what we do for the borrower side.
What this means for you
Build the list for your own scheme rather than applying a percentage. On most developments these costs are a large enough share that a conventional allowance is a poor approximation.
Then check the timing as well as the amount, because a substantial proportion falls before any facility can be drawn and has to be funded from equity. The failure mode is described in hidden cost exposure.
Building an appraisal and unsure what sits outside the contract?
Tell us the scheme and the funding structure. We will set out the full development cost, not just the construction.