Keeping a Design Within Budget: A Worked Example of Cost Checks

Designs drift above budget gradually. A calculation showing how staged cost checks catch it while correction is still cheap.

Almost every project that arrives at tender above budget got there gradually, through accumulated decisions each of which seemed minor. Staged cost checks make the accumulation visible while it can still be reversed.

The situation

An owner has a construction budget of SAR 1,200,000 and wants to understand how cost drift occurs and where it can be caught.

Assumptions (illustrative)

• Construction budget: SAR 1,200,000.
• Concept stage estimate: SAR 1,180,000.
• Developed design estimate: SAR 1,310,000.
• Pre-tender estimate: SAR 1,420,000.
• Tender return: SAR 1,485,000.
• All figures are illustrative assumptions used to demonstrate the method.

Step 1: Concept stage

Estimate SAR 1,180,000 against a budget of SAR 1,200,000.

At this point the project is within budget and the design is still flexible. This is the cheapest moment to change anything.

Step 2: Drift during developed design

The estimate rises by SAR 130,000, roughly 11 per cent, through specification upgrades and added area.

Nobody made a large decision. Several small ones accumulated, which is how design drift always happens.

Step 3: Drift to pre-tender

A further SAR 110,000 as details are developed and quantities become precise.

Detailing reveals cost that earlier estimates approximated, which is normal and is why the contingency exists.

Step 4: Tender return

SAR 1,485,000, which is SAR 285,000 or 24 per cent above budget.

At this point the options are to cut scope under time pressure, redesign at additional cost, or increase the budget.

Step 5: Cost of correcting at each stage

Correcting at concept costs drawing time. Correcting at developed design costs redrawing. Correcting at tender costs redesign, delay and a second tender.

The same correction becomes several times more expensive at each successive stage, which is the argument for checking early and often.

Step 6: What a check at developed design would have achieved

Catching the SAR 130,000 drift at that point would have required modest adjustments to specification and area.

A review taking a few days would have prevented a problem that now requires weeks to resolve.

What changes the answer

• Market price movement during a long design period affects the tender return independently of design decisions.
• A design with many bespoke elements drifts more than one using standard construction.
• Owner-initiated changes during design are the most common cause of drift.
• A thorough concept stage estimate reduces the size of later surprises.

What the numbers tell you

• Require a cost check at the end of each design stage, not only before tender.
• Treat any drift above a defined threshold as a decision point rather than as information.
• Record what each change adds, so the accumulation is visible as it happens.
• Keep a priority list from the brief, so that when reduction is needed the decisions are already ranked.

Limits of this example

Every figure above is an illustrative assumption used to show the method, not a quote, valuation or market rate. Costs, rates, fees and regulations change and must be confirmed with the relevant authority, lender or supplier before you commit.

If you are starting a design, Domira can help you write the brief, review the drawings and keep the design aligned with the budget before it reaches a contractor.