A full construction budget for a school, office, clinic or other institutional building has seven parts: the building works themselves, external works (drainage, paving, fencing, utilities), professional fees, permits and statutory costs, furniture and equipment, taxes, and a contingency. In Tanzania the items outside the main building contract commonly add 25 to 40 percent to the construction price. Boards and funders who budget only for "the building" run short at the end, when there is no money for desks, a water connection or the final certificate.
This guide is for boards, NGOs, councils and companies preparing a budget for approval or a funding application.
Step 1: Fix the brief before you fix the number
A budget is only as good as the brief behind it. Before anyone estimates, write down:
- The rooms and their sizes, and how many people will use the building.
- The level of finish: basic, standard or high.
- Services: air conditioning, lifts, backup power, water storage, ICT.
- External works: parking, roads, drainage, fencing, landscaping.
- Phasing, if the full scheme will be built over several years.
A vague brief produces a vague budget. Our guides on planning a school and planning an office building list the questions to answer.
Step 2: Estimate the construction cost
Early on, a quantity surveyor estimates cost per square metre using recent similar projects. Once drawings exist, they prepare a Bill of Quantities, which prices every item. The estimate should be updated at each design stage:
| Stage | Estimate method | Typical accuracy |
|---|---|---|
| Idea or feasibility | Cost per m² from similar buildings | ± 20 to 30% |
| Concept design | Elemental estimate (substructure, frame, roof, finishes) | ± 15 to 20% |
| Detailed design | Full Bill of Quantities | ± 5 to 10% |
| Tender | Contractor prices | Firm, subject to variations |
Do not take the first number to the board as final. Say which stage it comes from.
Step 3: Add external works and utilities
These are often forgotten or underestimated:
- Site clearance, levelling and retaining walls on sloping plots.
- Access roads, parking and paving.
- Stormwater drainage.
- Boundary wall or fence and gatehouse. See our boundary wall cost guide.
- Water connection, storage tanks, borehole.
- Sewer connection or septic system.
- Power connection, transformer if needed, generator and solar.
- External lighting and CCTV.
On a greenfield site these can reach 10 to 20 percent of the building cost.
Step 4: Professional fees
You will need an architect, structural engineer, services engineer (electrical and mechanical) and quantity surveyor, and possibly a project manager and environmental expert. Fees vary by project size and scope, and are often set as a percentage of construction cost. Budget for them separately, along with surveys and soil tests. See soil testing before you build and our guide on who does what on a construction project.
Step 5: Permits, approvals and statutory costs
- Building permit fees from the council.
- Fire safety approval.
- Environmental assessment fees, where required. See our EIA guide.
- Utility connection charges from TANESCO and the water authority.
- Project registration with the Contractors Registration Board, which applies to construction projects.
- Land costs, survey and title, if not yet settled.
Step 6: Furniture, fittings and equipment
A building without furniture cannot open. List desks, chairs, boards, laboratory benches, medical equipment, kitchen equipment, ICT and signage. For schools and clinics, this can be a large share of the total.
Step 7: Taxes
Check whether your organisation pays VAT on construction or qualifies for an exemption, and whether withholding tax applies to payments. Get advice from your accountant or the tax authority, and state clearly in the budget whether figures include VAT.
Step 8: Contingency and price changes
Every project meets surprises: poor ground, design changes, price increases. Include:
- A design contingency of 5 to 10 percent while design is incomplete.
- A construction contingency of 5 to 10 percent for unforeseen work.
- An allowance for price changes on long projects, especially for steel, cement and fuel. Our post on building materials prices shows how much they move.
Contingency is not spare money. Control it and report how it is used. See our 8 ways to avoid cost overruns.
A sample budget summary
| Item | Share of total (example) |
|---|---|
| Building works | 60 to 70% |
| External works and utilities | 8 to 15% |
| Professional fees and surveys | 6 to 10% |
| Permits and statutory costs | 1 to 3% |
| Furniture and equipment | 5 to 15% |
| Contingency | 5 to 10% |
These shares are illustrations. Your quantity surveyor should prepare the real figures.
Step 9: Plan the cash flow
Funders and boards need to know when money is needed, not only how much. Contractors are paid against monthly valuations, so spending is low at the start, peaks during the structure and finishes, and drops at the end. Keep a retention (often 5 to 10 percent) until the defects period ends. See our guide on construction handover and the defects liability period.
Common budget mistakes
- Using last year's price per square metre without adjusting. Prices change, and so do specifications.
- Forgetting relocation costs. Moving staff, pupils or patients into temporary space during works costs money.
- Leaving out the defects period. Someone has to manage defects and final payments after handover.
- No allowance for client-side staff time. A board member or officer will spend many hours on the project.
- Spending the contingency early. Once it is used on extras in the first months, there is nothing left for real surprises later.
- Approving the budget before the soil test. Foundations can change a lot once the ground is known. See types of foundations.
Frequently asked questions
What percentage should contingency be?
Commonly 5 to 10 percent of construction cost, higher for renovations or uncertain ground conditions.
Who should prepare the budget?
A quantity surveyor, working with the architect and engineers. Boards should approve the brief and the total, then track spending against it.
Why do institutional projects run over budget?
Usually because the brief changes during construction, external works and furniture were left out, or there was no contingency. See how to reduce construction costs without compromising quality.
Should the budget include VAT?
State it clearly either way. Many overruns come from budgets prepared without VAT when it applies.
Need a reliable budget and builder?
Vika Construction offers project management and building works for institutions across Tanzania. Contact us to discuss your project and budget.
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