For developers and site buyers
Abnormal Costs in Construction: Why Real Build Costs Kill Development Deals
Sviatoslav JerdetchiiCEO & Founder of Craftex. Updated , 5 min read
The short answer
Abnormal costs in construction are the site-specific costs a standard build rate leaves out: ground, demolition, neighbours, utilities, access and safety rules.
- They are one of the most common reasons a site that looked profitable on paper loses money.
- Most can be found before you buy, with the right surveys and a builder on site.
- Price them line by line, then add a contingency. We usually advise 5% to 10% of construction cost, depending on complexity.
- Set your land price only after the abnormal costs are known.
Ask why a development lost money, and the answer is often not the sales values but the cost of building on that particular site. The ground was worse, the neighbour's wall needed propping, the substation had to be upgraded. Nobody had priced it when the land was bought.
Those are abnormal costs in construction. As builders, we price them on every scheme. This guide explains what they are, which ones break deals, and how to find them before you buy.
Looking at a site with unknowns? Book a site visit and we will price them with you.
What abnormal costs in construction are
An early appraisal uses a standard build rate: a cost per square metre for a typical building of that type. That rate assumes a typical site. Flat, clear, good ground, easy access, services at the boundary, no awkward neighbours.
Abnormal costs are everything your site needs that a typical site does not. They are not mistakes. They are real costs that a generic rate cannot see.
The problem is timing. A standard rate is used to set the land price. The abnormal costs are found later, by surveys and by builders. By then, the price is agreed.
The abnormal costs that break development deals
Under the ground
- Weak or variable ground. Piled foundations or ground improvement instead of standard footings.
- Contamination. Testing, removal and disposal on former industrial or commercial land. A tax relief may help on some sites: see land remediation relief.
- Basements and retaining walls. Excavation, temporary works, waterproofing and monitoring.
- Old foundations and services. Buried structures and redundant drains found when you dig.
- Groundwater and flood risk. Pumping, tanking and flood mitigation.
On and around the site
- Demolition and asbestos. Surveys, licensed removal and controlled demolition.
- Neighbours. Party wall agreements, propping and monitoring. See the Party Wall Act for developers.
- Rights of light. A design change or a settlement with a neighbour. See rights of light for developers.
- Access and logistics. Narrow streets, no storage, crane limits, traffic management and restricted hours. See construction logistics plans in London.
- Trees, ecology and biodiversity. Protection, surveys and biodiversity net gain on small sites.
Services and infrastructure
- Electricity capacity. A new substation or a supply upgrade.
- Water and drainage. New connections, capacity upgrades and surface water attenuation, which holds rainwater back so it drains away slowly.
- Highway works. New crossovers (dropped kerbs for vehicle access), footways and agreements with the highway authority.
The costs that are not "abnormal" but still go missing
Some costs are normal on every job, yet early appraisals still leave them light. For the wider picture, see why construction is so expensive in the UK.
- Preliminaries. Site management, scaffolding, welfare, insurance and security for the whole programme.
- Design development. Planning drawings become construction drawings. Structure and services always grow.
- Building safety requirements. Residential buildings at least 18 metres or 7 storeys high, with at least two homes, need Building Safety Regulator approval before work starts. The median approval time was 23 weeks in data to 5 October 2026.
- New rules. From 30 September 2026, new building control applications must follow the guidance calling for a second staircase. It covers blocks of flats with a storey at 18 metres or more. The Building Safety Levy applies to applications made from 1 October 2026 for schemes of 10 or more homes in England.
- Inflation. The government's material price index was up 6.4% in August 2026 on a year earlier. Structural steel was up 21.2%.
- Contingency. For what nobody can know yet.
Why build costs are underestimated so often
It is not only missing information. People are optimistic about their own projects, and the evidence says so.
Even Treasury guidance tells public bodies to adjust early estimates upwards for optimism bias. We cover the evidence in why construction projects go over budget.
On the private side, three habits make it worse.
- The land price is set first. Every later cost has to fit inside a number that is already agreed.
- The person costing the scheme does not build. A valuer or agent uses published rates, not a price for this site.
- Nobody wants to be the one who kills the deal. So the first number tends to be the hopeful one.
How to find abnormal costs before you buy
| Abnormal cost | What points to it | How to check |
|---|---|---|
| Poor ground or piling | Clay, made ground (old fill, not natural soil), nearby basements | Desk study, then trial pits or boreholes |
| Contamination | Past industrial or garage use | Phase 1 desk study (a review of past uses and records), then testing |
| Asbestos | Built or refurbished before 2000 | Refurbishment and demolition survey |
| Party walls and propping | Shared or close neighbouring walls | Measured survey and structural review |
| Utility upgrades | More homes or a bigger load | Capacity enquiries to the network operators |
| Flood risk | Low-lying land, nearby rivers | Environment Agency flood risk report |
| Access and logistics | Narrow street, no storage space | Site visit by a builder, council highways advice |
| Building safety | 18 metres or 7 storeys, 2+ homes | Check height and use against the rules |
Most of these checks cost little next to the price of finding the problem after exchange.
How we price abnormal costs
We price every scheme unit by unit internally, element by element, the way we would build it. Abnormal costs get their own lines, not a hopeful lump sum. Then we add a contingency, which we usually advise at 5% to 10% of construction cost, depending on complexity.
Our guide to how much contingency a construction project needs explains why the figure should change by stage. If the price is still too high, our cost plus contract guide shows how an open-book build can share the risk.
What to do with the numbers
- Add the abnormal costs to the appraisal. Line by line, not as a round number.
- Recalculate the land value. What the land is worth is what is left after costs and a fair profit.
- Negotiate with evidence. A survey and a cost plan are hard to argue with.
- Walk away if you must. A cheaper site can be worth more.
Our guide on how development sites are oversold shows how a missing abnormal line changes the land price. For the full set of checks, use our development site due diligence checklist.
Most abnormal costs can be found before you buy, if someone looks. Before you agree a price, book a site visit and we will price them with you, through our development feasibility and site appraisal service.
