Saturday, July 29, 2023

How to estimate your budget for building a house in India - 2022

Building development and construction involves a number of challenges. The number one challenge is to manage your construction budget to safeguard your finances.

The best way to tackle this challenge is to fix a budget by creating a detailed estimate of expenditure.

Usually, there is lack of awareness about cost estimation, causing neglect of development costs. This may result in an eventual cost-escalation or lower construction quality.

Breakdown of costs

People often worry about having to pay the entire construction cost and professional fees upfront. However, it is a misconception.

There is no need for you to pay all the fees and costs together.

The payment structure is broken down into different stages at which you need to pay.\ These costs are towards the AEC (Architecture, Engineering, and Construction) professionals and entities.

Stages at which payment is to be made

Professionals’ fees

The professionals involved in the process are Architects, Engineers, Contractors, and Interior Designers.

These professionals’ fees often range from 7% to 15% of the total budget for construction.

However, the charges can also be as per the area of construction.

For example, generally, architects can charge INR 40-120 per sq. ft. for designs and blueprints.

Government Bodies- legal work, permits, sanctioning

Building permits and sanctioning is a crucial step in the pre-construction process. The cost for these depends upon the local government body that issues building permits. The costs vary from city to city.

NOTE: Sanctioning drawing, BOQ and estimate of the project is needed for a home construction loan from any bank.

Building regulations are laws set down by the government bodies to regulate a city’s growth. They vary from location to location, hence causing variations in project deadlines and construction costs.

For example, if your plot of land is on an agricultural land as per the latest development plan, a permit for construction needs to be issued by the local municipal body or the gram panchayat, whoever has jurisdiction over that land.\ Getting this permit could result in cost overruns and may disturb the project timeline.

Some cities also have strict development rules that need to be followed for getting approval.\ For example, if you plan to build a two-storied house in Delhi, providing a stilt parking is necessary. Without this provision, the municipal body would reject the plan.


Contractors provide the labour and the materials sourced by the vendors. They have their own network for all materials and labour needed to execute a project.\ Hence, the materials, site workers, and all the resources needed are managed by the contractor. The contractor’s work is supervised by the site supervisor, whose job is to maintain the quality of the project. The site supervisor may be appointed by the project owner, or the architect.

The construction costs can be considered to be 1400-1600 INR/sq.ft. with a 15-20% margin of error.

\ As per the rate, generally, 60% of the total construction costs are for the materials, 30% is the labour cost, and 10% is the contractor’s fee.

One important part of construction is finishing and fixtures. This is where your costs can surpass the budget.

For every fixture and finish, there are different manufacturers, who produce different grades and quality of each. This affects the prices of these fixtures and finishes.\ Higher the quality, higher the prices.

For example, the cost of a cement door frame will be significantly lesser than a teakwood door frame.

Interior Designing

If you plan to hire an interior designer, they will charge you 5% to 15% of the total budget for your interiors, or generally, INR 50-200/sq.ft.

The total budget heavily depends upon Grade, finish, quality of materials, furniture, etc.

Ways to set your construction budget

The construction cost of a house depends on two things - civil work and the finishing work.\ \ The civil work in a project includes the construction of the structure of the building.\ The finishing work entails the doors, windows, wooden cupboards, flooring, roofing, wall designs

In India, the construction costs (civil work + finishing work) can range from INR 1300-2500 sq.ft. at average.

The finishing costs also involve labour, such as electrician, plumber, tile mason, carpenter, painter and polisher.

The best way to get an estimate for yourself is by deciding the quality of construction materials to be used. An architect or contractor can also provide construction cost estimates according to the building requirement.

An estimate of construction cost can be derived by segmenting material cost based on its quality i.e. Top, Medium, and Average, or Class A, B, and C.

Class A: Top class construction quality

Top Class construction quality means using premium, high quality of materials.\ These will incur a construction cost of INR 2500-4000 per sq.ft. One can go as premium as they want if their budget allows it.

Hence, for a 1000 sq.ft. house, the total construction cost of building will be around 1000*2500= 25 lakhs.

As mentioned above, consider a 15-20% margin towards miscellaneous and unforeseen expenses, which makes up your contingency fund.\ So 20% of 25 lakhs for the contingency fund=5 lakhs\ \ For the overall cost estimation, add architect's fees to the total building cost, which can be considered as 10% of the construction cost (25 lakhs)= 2.5 lakhs.

Hence the total cost estimation will be\ = (architect's fees + construction cost + contingency fund + sanctioning)\ = 2.5 lakhs + 25 lakhs + 5 lakhs + sanctioning\ = 32.5 lakhs + sanctioning

NOTE: Sanctioning process needs additional budget consideration. However, this amount can only be calculated and confirmed by the sanctioning authority of your location. This is because the cost for sanctioning varies from place to place, and depends on factors like the building type, size, etc.

Refer to the pie chart below.

Class B: Medium construction quality

Similarly, a medium quality material will have a lesser construction cost of approximately INR 1800-2200 per sq. ft.

Hence, for a 1000 sq.ft. house, the total construction cost of building will be around 1000*1800= 18 lakhs.\ Considering a 20% of 18 lakhs, margin for contingency fund=3.6 lakhs

Also, the architect's fees of 10%= 1.8 lakhs

Hence the total cost estimation will be\ = (architect's fees + construction cost + contingency fund + sanctioning)\ = 1.8 lakhs + 18 lakhs + 3.6 lakhs + sanctioning\ = 23.4 lakhs + sanctioning.

Class C: Average construction quality

Average quality material will incur a cheaper construction cost of approximately INR 1300-1500 per sq.ft.

Hence, for a 1000 sq.ft. house, the total construction cost of building will be around 1000*1300= 13 lakhs.\ The 20% margin of error, i.e. the contingency fund= 2.6 lakhs

Also, the architect's fees of 10%= 1.3 lakhs

Hence the total cost estimation will be\ = (architect's fees + construction cost + contingency fund + sanctioning)\ = 1.3 lakhs + 13 lakhs + 2.6 lakhs + sanctioning\ = 16.9 lakhs + sanctioning.

The Factors that Affect Construction Cost

Apart from the materials costs, construction cost depends on various factors such as labour, time of delivery, etc.

Hence the best way to keep a check on all costs is to hire an experienced architect who can help figure out the construction cost as well as timeline of construction alongside designing the house.

The 10 major factors affecting construction costs are:


The construction cost is directly related to the location of the plot.
If the plot is in a prime location of a metropolitan city, in the vicinity of a market, school, etc., then the price of construction will be comparatively higher than on a plot in the rural area.


The construction costs, charged as per the square feet area of the project, are directly proportional to the size of the building to be constructed.

Land Excavation

The cost for excavating the land for laying of foundation depends upon the following factors:

- Nature of work (digging, clearing, etc.)

- Type of land, i.e. contoured land, flat land, etc. (determined through land survey)

- Amount of soil to be dug and remove

- Season (summer, rainy, winter)

Foundation & Framing

After excavation, the foundation is laid. The building frame is to be built over it, which includes RCC and metal works.

This cost varies depending upon:

- Type of land, soil
- Distance between columns
- Type of foundation


As 60% of total project costs depend upon the materials, these will pivot the entire construction budget.

All factors influencing the material costs are interrelated. These factors are:
- Type and size of the house
- Availability of the materials in that location (hence procurement costs)
- Grade, quality, and finish of the materials

Labour Cost

Labour costs vary as per the size and detailing of your building. Generally, 30% of the overall project cost are labour costs.

Availability of labour, as well as unforeseen labour strikes can cause delay in construction, hence an increase in construction cost.

Architectural elements, Amenities, Services

MEP (Mechanical, Electrical and Plumbing) systems- the planning of these services, and hence the quality & quantity of the materials used in the project, decide the price.

Additional architectural elements like a swimming pool, double height rooms, mezzanine floors, etc., will cost you a bit more, depending upon the availability and quality of materials involved.


The costs vary as per the number of floors/storeys of the building. The more the storeys, the more the cost.

However, in terms of cost per square feet, the rate will be the same for each storey or floor.

Constructing a double storey structure is always a smart way to utilise the space and money compared to a single-storey structure.


There are two types of finishing- exterior and interior.
Exterior finishing includes the elevations (how buildings look from outside), i.e. the outer walls, roofing, and installing doors and windows.\ The quantity of items, like doors, windows, and the quality of the materials, surface treatment, roofing, etc, affects this cost.
Interior finishing includes painting, lighting, flooring, etc.\ This cost depends upon the grade, quality, finish, and availability of materials/products in the market.

Construction delays

There can be a delay in timeline due to mismanagement of the professionals, or unforeseen circumstances such as increased rental costs of the building equipment and inefficient use of equipment.
The delay hence causes an increase in the overall project budget.
Though these situations may or may not arise, it is always better to be prepared with a 15-20% margin of error to ensure a stress-free process.


Hiring competent, experienced architects and contractors who are well aware of all things construction will be your safest choice.

Civil construction involves several challenges. There could be situations where the work stops due to issues in the construction process.

Lack of knowledge and experience may lead to uncalled delays or expense due to restructuring or over usage of raw materials.

Hence, hiring the right professionals is the most important part of building construction.\ A good architect not only provides accurate designs of high quality for building construction as per your budget, but also provides great assistance in finding a good contractor, high quality materials at lower costs, etc.

A reputed architect hence also utilised the plot area strategically, designing a more usable area than wasting space. This saves a lot of money that could go wasted.

This is where Builtdesign steps in.\ Builtdesign is a new age centralised platform, providing Architecture, Interior designing and construction services, all across India.

With the latest remote design technology and state-of-the-art systems, Builtdesign’s team of architects helps you with your budgeting, as well as making your dream home a reality.

The Builtdesign team publishes content to make consumers aware of the industry. Our articles also focus on helping the community learn about recent trends.