Why a single number misleads
A cost per square metre found online mixes very different things: a simple structure and a complex one, basic finishes and premium ones, a flat plot and a hillside, and sometimes only the construction and sometimes the whole project. Two houses of the same area can have very different costs.
A budget you can rely on comes from the actual designs. Until you have them, work with ranges and keep them separate by component.
The parts of the budget
| Component | What it includes | Main cost drivers |
|---|---|---|
| Land and preparation | Purchase, access, services, earthworks, retaining walls | Location, slope, distance to utilities |
| Design and permits | Architectural and engineering designs, studies, permit fees | Size and complexity, number of studies |
| Direct construction costs | Foundations, structure, masonry, roof, installations, finishes | Structural system, level of finishes, size |
| Indirect costs | Administration, unforeseen items and profit of the builder (often expressed as AIU) | Contract type, risk allocation |
| Contingency | Reserve for the unexpected | Completeness of designs, site uncertainty |
| Supervision and management | Independent oversight, project management | Duration and complexity |
| Outside the construction | Utility connections, furniture, landscaping, taxes and fees | Choices and local rules |
Each row should be visible in the budget. When a proposal shows only a total, ask for the breakdown before you compare it with another one.
Direct costs
Direct costs are the materials, the labour, the equipment and the transport needed to build each part of the work. They are organised by items such as excavation, concrete, steel reinforcement, masonry, roofing, electrical and plumbing installations, and finishes. Each item has a quantity and a unit price, and the unit price comes from an analysis of its components. Our APU guide explains that structure.
Indirect costs and AIU
Builders in Colombia commonly add to the direct cost a percentage for administration, unforeseen items and profit, known as AIU. The percentages and what they cover should be written in the contract. Check that costs are not charged twice, once in a unit price and again in the administration.
Contingency
Even a good design leaves uncertainty: ground conditions, price changes and small design adjustments. A contingency is a reserve for that. Our sample budget format uses a 10% contingency line, and we adjust it to how complete the designs are. A budget with no contingency is not more economical, it is less realistic.
Currency and price changes
If you pay from abroad, the contract is in pesos and your cost in dollars or euros changes with the exchange rate. Prices of materials and labour can also change during a long project, and contracts handle this in different ways: a fixed price, or a price with adjustment conditions. Understand which one you have signed.
We present every budget in COP, USD and EUR, and we record the exchange rate used in each report:
| Item | COP | USD | EUR |
|---|---|---|---|
| Land / property | — | — | — |
| Design and permitting | — | — | — |
| Construction | — | — | — |
| Contingency (10%) | — | — | — |
The table is a format; the figures are calculated for each project.
Public reference data
The national statistics office (DANE) publishes indices on the cost of construction that are used as public references for price trends. They do not replace a budget for your project, but they help you understand whether a cost change is in line with the market.
How to keep costs under control
- Finish the design before you contract the work. Changes during construction cost more than changes on paper.
- Compare proposals like for like. Same scope, same specifications, same exclusions.
- Tie payments to verified progress, not only to dates.
- Review every change order for its effect on cost and schedule before approving it.
- Track the budget against actual costs throughout the project.
An independent construction cost audit does steps 2 to 5 for you. To see where cost decisions fit in the project, read building a house in Colombia.