The SCSI is the leading professional body for chartered surveying professionals working in the property, construction and land sectors across Ireland. In addition, it operates the statutory register for the protected title of quantity surveyor and building surveyor. In addition to promoting the highest standards in surveying, we undertake research on a wide range of economic, industry and practice-related issues in the public interest to produce regular reports including relating to construction costs. Some committee members are serial attenders at our briefings.
In recognition of this construction cost expertise and the independence of the SCSI, we were requested by the Minister for Housing, Local Government and Heritage, Darragh O’Brien, to provide construction cost information for the Government’s defective concrete blocks grant scheme in late 2021.
The terms of reference were agreed upon between the Department and the SCSI on 7 February 2022. These terms set out the parameters within which the SCSI would produce an independent, stand-alone construction cost report for the demolition and rebuilding of homes affected by defective concrete blocks, which was option No. 1 in the terms of reference, and also propose a cost methodology for partial remediation, which were options Nos. 2 to 5. It should be noted that the report is based on the parameters of the defective concrete blocks grant scheme as announced on 30 November 2021. The SCSI had no role in setting the parameters of the grant scheme, including, for example, in respect of which building regulations apply and the exclusion of foundations, etc., and also no role in the setting of the grant amount. The SCSI report on construction costs for the defective concrete block scheme was published on 3 March 2022 and was welcomed by all stakeholders, including the Minister, Deputy Darragh O’Brien, and the MICA Action Group. The SCSI undertook this extensive work pro bono in the public interest and was supported by a significant number of our volunteer chartered quantity surveyor and chartered building surveyor members. Hundreds of volunteer hours were involved.
Turning to the report methodology and key findings, the SCSI produced a bespoke, stand-alone report on the full demolition and rebuild costs, in the context of remediation option No. 1, for homes affected by defective concrete blocks in the north west as of February 2022. As per the terms of reference and the parameters of the scheme, while the SCSI position is that it is best practice to build to current building standards, the costs in the report are based on new for old without betterment, on pre-2008 building regulations and on excluding new foundations. Consideration of the 2014 Building Control (Amendment) Regulations, BCAR, was included, because that standard is central to quality assurance as it is of particular importance that building regulations are adhered to for all developments to ensure defective building issues are not repeated. The costs do not include fees for the scheme itself, as noted in table 2 on page 8 of the report.
Regarding the methodology, the pricing schedules were drafted by an SCSI expert working group and issued to chartered quantity surveyors based in the north west, primarily in Donegal, with direct professional experience of residential development and mica-impacted homes. The completed schedules were returned in February to provide up-to-date, relevant cost data for the report. These returns were analysed by the working group, with further input from additional chartered quantity surveyors experienced in the field. Additional cost data from the Department and the MICA Action Group were also reviewed as part of the consideration of average rebuild costs. Average rebuilding rates for eight house types, including typical estate-type homes and one-off homes, were provided, ranging from €145 per sq. ft to €165 per sq. ft, priced at February 2022 material and labour rates.
It is particularly important to note and stress that the costs outlined in our report are average costs based on agreed unit sizes and on an agreed specification, as outlined in detail in our terms of reference. In addition to option No. 1, the full demolition and rebuild approach, the SCSI considered options Nos. 2 to 5, concerning partial remediation, of the grant scheme as part of this report. The report includes a non-exhaustive list of ancillary items that would inform the construction costs. We found these elements to be extremely site-specific; therefore, we believe estimates based on gross floor area were inappropriate. I mean that expressing estimates for remediation work based on cost per sq. ft is inappropriate. A site-specific cost exercise will have to be undertaken for the specific elements to be replaced, incorporating the additional items affected in the context of those elements referred to above. The determination of how such a site-specific remediation scheme would be established is a policy matter. A model similar to the I.S. 465 register of chartered engineers, as referred to earlier, may provide a blueprint for establishing a panel of appropriately qualified professionals to undertake such work.
Regarding the impact of construction cost inflation, we were pleased to engage with this committee at the end of last month on this issue and our submission to that meeting set out our views on the current uncertainty impacting the sector. Of note is the fact that some commentators discussing residential construction cost inflation refer to the SCSI tender price index and our house rebuild calculator. These aspects, however, are not appropriate reference points for the defective concrete block scheme as the tender price index relates to commercial property, while the house rebuild calculator is intended for insurance purposes for individual estate-type houses only. For this reason, the SCSI undertook to produce a stand-alone, bespoke report for the defective concrete block scheme.
The input costs of delivering residential developments, be they single or multi-unit developments, are wide-ranging. They include hard costs, which are the construction costs, and soft costs, such as planning, enabling works, utility connections and charges, building control regulation and other statutory costs. The primary drivers for the current price inflation, though, are high price volatility across a range of building materials, particularly insulation, cement, plasterboard, metals, fuel and labour cost increases, as well as the extremely high demand for projects underway across many tiers as the industry continues to readjust in the wake of the Covid-19 crisis. Furthermore, regarding the first half of 2022, it is clear that Russia’s invasion of Ukraine has impacted the price of materials previously sourced from that region, especially steel and base metals, while it has also led to a dramatic increase in fuel and energy costs.
Despite the volatility in construction costs, only a short time has passed since the SCSI defective concrete block report. If there is a requirement to determine the impact, if any, of current construction cost inflation on the rebuild figures from February, we believe that the most accurate way to do this would be to re-do the entire cost exercise in full for all eight house types. For our part, and this is noted in our report, we have undertaken to review these costs and update them in March 2023. I note as well that we previously offered to re-cost the current study that the members have in the context of applying current standards and including new foundations when required.
The SCSI welcomed the opportunity to contribute to the resolution of this critical issue. We appreciate its gravity, and we undertook this extensive work in good faith and in the public interest. We are pleased that the report has been generally positively received by stakeholders. We thank all those that contributed and we wish the committee well in its ongoing scrutiny.