Commercial appraisal guide · Early-stage site review
Abnormal costs: how to test them in an early development appraisal
A site's commercial position can change materially when ground, access, drainage or infrastructure costs become clearer. The useful question is not simply “what contingency should we add?” It is what evidence supports each allowance, who must confirm it and how it affects the route to delivery.
This guide sets out a practical framework for landowners and development teams. It is general information, not a cost plan, formal viability assessment, valuation or technical opinion. Site-specific costs should be scoped and confirmed by appropriately qualified professionals.
By David Westwood, Founder and CEO, Manorwest Group. Practical commercial development advice informed by more than 40 years across land, construction, remediation and infrastructure.
What makes a cost “abnormal”?
In an early appraisal, an abnormal cost is a site-specific or scheme-specific cost that needs separate attention because a standard benchmark may not capture its likely scale, timing or delivery risk. The label alone does not establish that a cost is necessary, exceptional or correctly priced. The appraisal should explain the evidence and treatment behind the allowance.
Government planning guidance on viability refers to abnormal costs and site-specific infrastructure costs as matters that may affect development viability. The right allowance for a particular scheme still depends on its evidence, scope and context. See Planning Practice Guidance: Viability.
Common cost areas to examine
Ground and remediation
Historic uses, made ground, contamination, groundwater, geotechnical conditions, demolition, remediation and material movements can affect design, cost and programme. Separate known conditions from items that still need investigation.
Drainage and utilities
Outfalls, attenuation, pumping, diversions, network capacity and connection works may have dependencies beyond the site boundary. Record provider evidence, design stage and any outstanding approvals.
Access and infrastructure
Highway works, access geometry, off-site improvements, structures and delivery sequencing can affect both the cost allowance and the number of units or phases the site can support.
Ecology and other constraints
Survey timing, mitigation, invasive plants, heritage, trees or other site constraints may affect the layout and programme. Ask the relevant specialist what evidence and work are required.
A five-step way to test an allowance
- Describe the scope. State what the cost covers and what it excludes. Avoid a single unexplained “abnormals” figure.
- Record the evidence. Identify the source, date, author and confidence level: for example, a quotation, measured design, survey finding, provider response or early desktop assumption.
- Check responsibility and timing. Confirm who is expected to undertake the work, when it is needed and whether the cost may fall before or after a key funding or land transaction milestone.
- Test a range or scenario. Where the design or cost is unresolved, show how the appraisal changes under reasonable alternative assumptions instead of presenting a provisional figure as certain.
- Update the route. Revisit the layout, phasing, funding, land value and delivery strategy when new evidence changes the cost or programme.
Common appraisal mistakes
- Using a broad contingency to conceal a known but unscoped risk.
- Treating a desktop indication as if it were a designed or priced solution.
- Double-counting an item across build cost, infrastructure, remediation and contingency.
- Ignoring timing, cash flow, access rights or responsibility for off-site works.
- Assuming a grant, contribution or partner will cover a cost before it is confirmed.
- Leaving the land value or programme unchanged after a material risk emerges.
A disciplined appraisal distinguishes what is evidenced, what is assumed and what decision or investigation would reduce the uncertainty.
Turn site evidence into a commercial decision
Prioritise investigations that could change the developable area, abnormal-cost allowance, programme or delivery route. Bring specialist findings into one commercial view, but retain clear boundaries between commercial judgement and professional technical advice.
Related reading: housing site investigation priorities, development site due diligence, and Manorwest's brownfield site review.
Need an early commercial view of site costs?
Manorwest can review known abnormal-cost assumptions, evidence gaps and delivery dependencies within an agreed scope. Tell us the site location, the decision you face and what information is available.
Contact Manorwest — info@manorwest.co.uk