Professional Fees in a Property Development Budget

Professional fees are what the consultant team charges to take a site from an idea to a set of documents a builder can price and an authority can approve. On a typical Australian residential project they tend to land somewhere between 8 and 15 per cent of construction cost, which on a $12 million build is $1 million to $1.8 million of spending that happens almost entirely before a single brick is laid.

That is the part most feasibility models handle badly. The problem is its shape rather than the number itself: it arrives as fifteen separate engagements rather than one tender, most of it is spent during the period when you are funding the project from your own equity, and a meaningful slice of it is at risk if the approval does not land the way you hoped.

Alongside the consultant fees sit the statutory fees, which behave completely differently. Application fees, levies and certificate charges are set by regulation, published, indexed annually, and not open to negotiation. Your quantity surveyor’s cost plan is where the consultant fee allowances come from, the fee proposals from each discipline are where they get firmed up, and the relevant planning regulation is where the statutory fees come from. This guide covers both, with the state variations that matter.

The figures and thresholds here were current at the date of writing and most of them move on 1 July each year. Every statutory figure below is linked to the government source that publishes it, and that source is where to confirm the current number before you rely on it.

Why do published professional fee percentages disagree so badly?

Because they are measured against different denominators, and almost nobody says which one they are using. The same dollar figure can honestly be described as 12 per cent, 7 per cent or 5.8 per cent depending on what it is divided by, and those three answers all appear in search results as though they are alternatives to each other.

There are three denominators in common use:

• Construction cost. The builder’s price. Fees expressed this way generally run higher, because construction is only part of the total spend.
• Total development cost. Everything you spend, land included. Fees expressed this way run lower, and the number moves whenever the land price moves.
• Gross Realisation Value (GRV). The total sales revenue. Lower again, and it moves with the market rather than with anything you are doing.

Work through a single project and the point becomes obvious. Take a 20-apartment scheme:

At a Gross Realisation Value (GRV) of $25,000,000, that is a development margin on cost of $4,270,000 divided by $20,730,000, or 20.6 per cent.

Now express the same $1,440,000 of professional fees three ways:

• 12.0 per cent of construction cost
• 6.9 per cent of Total Development Cost (TDC)
• 5.8 per cent of Gross Realisation Value (GRV)

All three are correct. Anyone quoting “10 to 20 per cent” and anyone quoting “3 to 8 per cent” could both be describing this project. The disagreement in the published ranges is mostly a denominator problem, not a market problem.

Change one input and the instability shows up. Move the site to a regional location and drop the land price to $2,500,000, holding every other line constant. Total Development Cost (TDC) falls to $19,230,000. The consultant team has not changed and the fees are still $1,440,000, but they are now 7.5 per cent of Total Development Cost (TDC) instead of 6.9 per cent. The percentage moved because the land moved. It tells you nothing about whether your architect is expensive.

The practical consequence is that percentage-of-total benchmarks are close to useless for budgeting a specific project, and percentage-of-construction benchmarks are only slightly better. They are a sanity check at concept stage, not a budget. A budget comes from fee proposals against a defined scope. More on what makes a fee proposal usable further down.

What actually counts as a professional fee in a development budget?

Professional fees cover the fees paid to the consultants who design, document, certify and manage the project, as distinct from the builder who constructs it, the authorities who charge statutory fees, and the agents who sell it.

The conventional grouping in a feasibility separates four things that are often lumped together and should not be:

• Consultant fees. Architect or building designer, planner, engineers, surveyor, quantity surveyor, certifier, and the specialists a particular site demands. Negotiable, scoped, and the subject of a fee proposal.
• Statutory fees and levies. Application fees, planning levies, portable long service levies, certificate fees. Set by regulation, published, and not negotiable.
• Infrastructure contributions. Council and state development contributions. Large, formula-driven, and a separate line from professional fees in any decent model.
• Transaction and corporate costs. Conveyancing, accounting, audit, corporate structuring, valuations for the financier. Real professional fees, but they sit against the land and finance lines rather than the design lines.

Keeping those apart matters for more than tidiness. Two of them are inputs to the statutory calculations, which is covered below, and only one of them is something you can influence by negotiation.

The other split worth carrying is design fees versus delivery fees. Design fees are spent producing documents. Delivery fees are spent managing time and money once construction starts: the superintendent, the project manager, the certifier’s inspections, the bank’s quantity surveyor doing progress claims. They land in different periods of the cashflow and they behave differently if the programme blows out.

Which consultants does a development actually engage, and what drives each fee?

The team scales with the approval pathway and the building class, not with the dollar value. A three-lot subdivision in a straightforward zone might need four consultants. A class 2 apartment building in New South Wales will need fifteen or more before it gets to a construction certificate.

The core team on almost every project

Architect or building designer. Usually the largest single consultant fee and often the one quoted as a percentage of construction cost, commonly in a range from around 2 per cent at the simple end to 8 per cent or more for complex or heavily documented work. Fee structure varies a great deal, and the choice between an architect and a building designer affects both the fee and what you get for it. The fee tends to be staged across concept, design development, documentation, tender and contract administration, so a project that stops at approval has only paid part of it.

Town planner. Prepares the statement of environmental effects or planning report, manages the authority relationship, and runs the response to requests for further information. Hourly rates commonly quoted for town planners sit in the region of $150 to $300 an hour, with senior metropolitan practitioners at the upper end. Where this fee blows out is almost never the initial report. It is the second and third round of council information requests, and any appearance at a panel or tribunal.

Quantity surveyor. Prepares the cost plan, and in several jurisdictions prepares the cost report the authority requires before it will accept your application. Typically a smaller fee than the design disciplines, often quoted as a lump sum per report rather than a percentage. Worth noting that you may end up paying for two quantity surveyors: yours, and separately the one your financier appoints to certify progress claims, whose fee is usually passed through to you.

Structural, civil and hydraulic engineers. Each discipline commonly sits in the region of 1 to 3 per cent of construction cost, sometimes quoted together as an engineering package. Site conditions drive this line more than building size. Reactive soils, a sloping site, poor ground or a difficult stormwater discharge point all add engineering hours, and they add them before you have a geotechnical report telling you how bad it is.

Land surveyor. Detail and level survey up front, then identification survey, set-out and the final plan of subdivision. Usually a modest fee individually, but it recurs across the project life rather than being a single engagement.

Certifier or building surveyor. Assesses compliance with the National Construction Code (NCC), issues the construction certificate or building permit, carries out mandatory inspections, and issues the occupation certificate. Fee is usually a lump sum tied to the number of inspections, which means a project that runs long can generate additional inspection charges.

The specialists a site or a class of building demands

These are the line items that get missed at feasibility stage, because their necessity is not obvious until someone tells you.

Acoustic, traffic and parking, waste management, landscape architecture, arborist, bushfire, flooding, geotechnical, contamination assessment, heritage, access and disability, wind, overshadowing and view analysis, energy and sustainability assessment, and a building services engineer for mechanical, electrical and fire. Not all of them, but more of them than a first-time budget assumes.

Two of these are worth calling out because they are triggered by rules rather than by site conditions:

Energy and sustainability assessment. Most jurisdictions now require a compliance certificate or assessment before approval, and the assessor’s fee is small next to the design changes the assessment can force. The trap is sequencing. An assessment run after the design is fixed can send you back to the architect.

Design compliance work under the New South Wales scheme for regulated buildings. Where a project involves a regulated building in New South Wales, currently a class 2 apartment building, with class 3 and 9c buildings being brought into the scheme on a staged basis, designs for building elements and performance solutions have to be prepared by a practitioner registered under the Design and Building Practitioners Act 2020 (NSW). That practitioner makes a design compliance declaration, and Building Commission NSW states that “regulated designs must be lodged on the NSW Planning Portal before any building work relevant to the designs can start”. The obligations, and the commencement dates for each building class, are set out in the New South Wales Government guidance on design practitioner obligations for regulated buildings. The budget consequence is that the documentation standard for an apartment building in New South Wales tends to be materially higher than for a comparable building elsewhere, and the fees reflect it.

A similar registration logic applies to engineers in Victoria, where registration of engineers working in the building industry moved to the Business Licensing Authority under the Professional Engineers Registration Act 2019, covering civil, structural, electrical, mechanical and fire safety engineering. A registered engineer is not a cheaper engineer.

The management layer

On anything beyond a few dwellings there is usually someone being paid to run the project, and whether that is a development manager or a project manager changes both the scope and the fee basis. Development management fees are commonly quoted as a percentage of total development cost, project management fees more often as a percentage of construction cost or a fixed monthly rate over a defined programme. The trap with a monthly rate is obvious and worth stating: a programme that runs six months long costs six more months of management fee, and that fee sits outside the builder’s contract, so no liquidated damages clause recovers it for you.

How are consultant fees structured, and what does each structure do to your risk?

Four structures are common, and each one puts the risk of a longer or more complicated project on a different party.

Percentage of construction cost. Traditional for architectural and engineering work. The mechanic that catches people out is that the fee is usually recalculated against the final construction cost, not the cost estimated when the fee was agreed. A build that comes in 15 per cent over its original estimate also delivers a 15 per cent larger architectural fee, at exactly the moment the feasibility can least absorb it. Whether the percentage is applied to the estimate, the contract sum or the final cost is a term worth reading closely.

Lump sum. A fixed fee for a defined scope. Clean for budgeting and the reason it is common for quantity surveying, certification and single-report specialists. The risk moves to scope definition: the fee is fixed, so everything outside the scope is a variation, and the scope is usually described in a short paragraph.

Hourly or time charge. Typical for planners, and for anything where the amount of work genuinely cannot be known up front. Honest, but uncapped. A capped time charge, where hours are billed as incurred up to an agreed ceiling, sits between the two and is a common compromise.

Stage-based. The total fee is split across defined stages with a percentage attached to each, so a project that stops at the end of a stage has a defined liability. This is the structure that matters most for a project with real approval risk, because it determines your exposure if the answer is no.

The question that decides your exposure is not which structure is cheapest. It is what happens when the project takes longer or changes shape, because on a development it usually does both.

What is actually in a fee proposal, and where does the budget leak?

The leak is almost always in the exclusions, and the exclusions are usually on the last page.

A fee proposal that is safe to put in a feasibility identifies, at minimum:

• The deliverables, by name and quantity, and the drawing set or report each stage produces.
• The number of design iterations included before a change becomes a variation.
• How many rounds of authority information requests are covered.
• Whether attendance at pre-lodgement meetings, panel hearings or tribunal proceedings is included, and at what rate if not.
• Whether disbursements are included or charged at cost, including printing, plotting, travel, searches and report purchases.
• The hourly rates that apply to work outside the scope, by seniority.
• Whether expert evidence, should it come to that, is inside the fee.

Three exclusions do most of the damage:

Redesign after a council response. The initial fee usually covers one coordinated response to a request for further information. A council that comes back twice, or that responds to a neighbour objection by asking for a reduced envelope, generates design work nobody budgeted.

Redesign to meet a cost target. When the tender comes in over budget and the scheme has to be value-managed, that is architectural and engineering work, and it is almost never inside the original fee. Budgeting a fee allowance with no provision for one value-management round is optimistic on most projects.

Appeal and review work. Preparing for and appearing at a planning tribunal or panel involves expert evidence from several disciplines at rates well above their design rates, plus legal fees. This is the single largest professional fee risk on a contested application, and it does not appear in any of the percentage benchmarks, because those benchmarks describe projects that were approved.

Sizing this is difficult honestly, because there is no government source that publishes what a contested approval costs. It is enough to say that on a contested application the professional fee line can move by a material multiple of the original allowance, and that the place to size it for your own project is the fee proposals themselves, with the appeal rates asked for in writing before you sign.

Which fees are set by regulation and cannot be negotiated?

Statutory fees are published, formula-driven and indexed. They are also, on most projects, considerably smaller than the consultant fees, with the notable exception of infrastructure contributions, which are a separate line and a separate subject.

New South Wales

Three things drive the numbers.

The estimated development cost sets the fee. The consent authority determines the estimated development cost of a proposal under clause 256 of the Environmental Planning and Assessment Regulation 2021 (NSW), and that figure then drives the development application fee, the approval pathway and several application requirements. The New South Wales Department of Planning confirms that estimated development cost is used “for determining development approval pathways, calculating assessment fees, and for applying development application (DA) requirements”, and that it replaced the older cost of development and capital investment value measures across the planning system.

A quantity surveyor is compulsory above $3 million. On the department’s published position, a project with an estimated development cost over $3 million must submit an estimated development cost report, and for state significant projects it “must be prepared by a chartered quantity surveyor” who is a member of the Australian Institute of Quantity Surveyors or the Royal Institution of Chartered Surveyors, following the institute’s practice standard and dated within 30 days of submission. Councils apply their own graduated version of the same idea. Northern Beaches Council’s published guidance, for instance, sets out that work up to $100,000 may be estimated by the applicant, work between $100,001 and $3,000,000 should be prepared by a building industry professional, and work over $3,000,001 must be prepared by a quantity surveyor who is a member of one of those bodies. That is a professional fee created directly by a regulation, and it is not optional.

Your own consultant fees are inside the number the fee is calculated on. This is the piece that surprises people. Councils’ published guidance on what belongs in the cost of works generally includes the design professional fees. Northern Beaches Council lists, among the items to include, “professional fees as part of the design: architects and consultants fees; charges and fees: GST, Long Service Levy, Development Application fee, construction approvals”. So the architect’s fee is not just a cost. It is part of the base on which the application fee is struck.

The department is specific about what stays out of an estimated development cost report: developer contributions and planning agreement costs, the cost of any development requiring separate approval, land costs, Goods and Services Tax (GST), and ongoing maintenance and operating costs. It also notes that for local and regional development under Schedule 4 of the regulation, Goods and Services Tax (GST) must be added to the estimated development cost before certain development fees are calculated, while for state significant projects the figure excluding Goods and Services Tax (GST) is used. Showing both totals as separate line items in the report is the department’s own recommendation, and it saves an argument.

Two further New South Wales items belong in the budget:

The long service levy. The Long Service Corporation states that “the levy rate is 0.25% of the cost of building and construction works of $250,000 or more (including GST)”, and that building work can only start after it is paid, with a council or certifier only able to release a construction certificate or complying development certificate once it has been. Instalments may be available where work costs over $10 million and will take more than 12 months. The current rate, thresholds and exemptions are published on the New South Wales long service levy page. On a $13 million cost of works including Goods and Services Tax (GST), that is $32,500, and because the levy base includes design professional fees under the councils’ published inclusions, the levy rises slightly as your consultant fees do.

Planning portal service fees. Small, fixed and easy to forget, but there is one on nearly every lodgement. For the 2026/27 financial year the department publishes a construction certificate portal fee, occupation certificate portal fee, subdivision certificate portal fee and modification of consent portal fee of $47 each, a complying development certificate portal fee of $43, a certificate registration fee of $6 for each certificate, and $6 for lodging a planning agreement or paying development contributions. The full table sits on the planning portal service fees page, and the department notes these fees change on 1 July each year in line with the consumer price index.

Victoria

Victoria publishes its planning permit fees as a schedule of classes, set under regulation 9 of the Planning and Environment (Fees) Regulations 2016 for applications under section 47 of the Planning and Environment Act 1987. The fees are expressed in fee units and converted to dollars each financial year.

For development other than a single dwelling, the 2026-2027 fees published by Planning Victoria are:

Single dwelling classes run from $233.10 for development costing $10,000 or less up to $1,744.30 where the cost is more than $1,000,000 but not more than $2,000,000. A permit to subdivide land sits at $1,537.00 per 100 lots created. The full schedule, including amendment fees and the fee unit values, is published on the Planning Victoria fees page.

The thing to notice in that table is the step at $15,000,000. A scheme that lands at $15.1 million of development cost pays nearly three times the application fee of one at $14.9 million. That is a real cliff, and worth knowing exists when a cost plan is hovering near it, though it is obviously not a reason to misstate a cost.

The metropolitan planning levy. Victoria charges a levy on planning permit applications in metropolitan Melbourne above an indexed threshold. Planning Victoria states that “the levy is set at $1.30 per $1,000 or 0.13% of development value”, that it “must be paid prior to lodging a planning application”, and that there is “no refund of the levy except where there has been an error in calculating the amount”. The State Revenue Office publishes the threshold, which is adjusted by the consumer price index on 1 July each year, and on its published figures the threshold rose from $1,311,000 to $1,344,000 from 1 July 2026. Confirm the current figure on the State Revenue Office metropolitan planning levy page before lodging, because the certificate has to be obtained before the application, not after.

The sequencing is the trap rather than the amount. You cannot lodge without a current levy certificate, so a levy overlooked in the programme delays lodgement, and on a $12 million development the levy itself is $15,600.

Queensland and the other states and territories

Queensland works differently. Rather than a single state-set fee scale, councils set development assessment fees under a cost recovery model and publish them in a register of cost recovery fees, reviewed and indexed periodically in line with the Queensland Government indexation policy. The practical consequence for a budget is that the fee has to be looked up for the specific council rather than derived from a state table, and that some councils also reserve the right to on-charge external consultant fees incurred in assessing an application. Brisbane City Council’s development application fees page is the pattern.

South Australia, Western Australia, Tasmania, the Australian Capital Territory and the Northern Territory each run a state-set or council-set fee schedule tied in some way to the value of the proposed development, with the same annual indexation habit. The structural position is genuinely similar across all five: a scaled application fee driven by a cost of works figure, plus certificate and referral fees, plus a portable long service levy scheme in most jurisdictions. What differs is the scale and the thresholds. Look up the current schedule for the relevant authority rather than carrying a figure across a border.

New Zealand

New Zealand’s approach to consent fees is the one that most often breaks an Australian developer’s budget assumptions, because the council charge is not a fixed fee at all.

Councils charge a deposit when an application is lodged and then recover their actual processing time. Wellington City Council describes the mechanic plainly: “When you submit your resource consent application, you’ll need to pay a deposit. We call this your initial application fee”, and “when we’ve processed your resource consent and it’s ready to be issued, we may invoice you for additional fees if we spent more time processing the application than was covered by the initial application fee. This is more likely for complex applications or if information was left out of your application and we had to make a request for information”. Where external specialists are involved, the council notes that “where the cost of the external resource involved exceeds the Wellington City Council rates, it will be charged at cost”. Its published schedule is on the Wellington City Council resource consent fees page.

Auckland Council runs the same model with its own numbers, publishing deposits and hourly rates by officer seniority on its resource consent fees and deposits page. The deposit for a notified application is an order of magnitude above a non-notified one, which is why the notification question dominates a New Zealand consent budget.

The budgeting consequence: a New Zealand consent cost is a function of how much council time your application consumes, so an application that arrives incomplete pays for the council’s time spent asking for the rest of it. That is the opposite incentive to a fixed-fee jurisdiction, and it is an argument for spending more on the planner and less on hoping.

The building levy. The Ministry of Business, Innovation and Employment states that “the building levy is paid by building owners or developers on successful building consent applications for projects that are worth more than the prescribed threshold of $65,000 (including GST)” and that “the building levy rate is $1.75 (including GST) per $1,000 and part $1,000, effective from 1 July 2020”. The threshold moved from $20,444 to $65,000 including Goods and Services Tax (GST) on 1 July 2024; the rate did not change. The levy applies to each $1,000 or part $1,000, rounded up, and for an amendment the rate and threshold in force at the original grant date apply rather than the current ones. The figures and the worked example are published on the building levy page.

An application must also be accompanied by an assessment of environmental effects. The Ministry for the Environment is clear that engaging a planner is a choice rather than a requirement, noting that “you may wish to engage a resource management planning consultant to help with the preparation of your application”, while also setting out that the assessment “describes all the environmental effects of your proposed activity and the ways that any negative effects are to be mitigated”, with the matters to be included outlined in Schedule 4 of the Resource Management Act. On anything of development scale, that is consultant work.

One further New Zealand point for anyone budgeting beyond the next 12 months: the Resource Management Act is mid-replacement, the current status is published by the Ministry for the Environment, and a consenting cost assumption written today may be describing a system that is about to change.

When do professional fees actually hit the cashflow?

Early, and mostly from equity. That is the single most important thing about this cost line, and the one a percentage benchmark completely hides.

Map the spend against the project phases and the pattern is consistent:

Pre-acquisition. Due diligence, a concept test, a preliminary planning opinion, a first-pass cost estimate, survey, and legal review of the contract. Small in the scheme of things but entirely at risk, because it is spent before you own anything.

Acquisition to lodgement. The heaviest concentration of design and specialist consultant spend. Full design documentation to application standard, the whole specialist report suite, the planning report, and the cost report. On many projects this is half or more of the total professional fee line, and it is spent before you hold an approval.

Lodgement to determination. Information request responses, amended drawings, any pre-lodgement or panel appearances, and any appeal. Highly variable and the hardest period to budget.

Determination to construction start. Construction documentation, certification, the levy, and the shop drawing and coordination work that turns an approval into something a builder can price and build.

Construction. Contract administration, superintendent, inspections, progress certification, and as-built documentation.

Completion. Final certification, plan of subdivision registration, defect inspections and handover documentation.

Two consequences follow.

The first is funding. Most development facilities do not draw until there is an approval, a builder, a contract and often presales. Everything spent in the first three phases is therefore equity, and it is equity spent at the point of maximum uncertainty. A model that spreads professional fees evenly across the project life understates the equity requirement, and a development cashflow model that gets this wrong will understate peak equity exposure in the pre-construction period.

The second is that this spending pattern is what makes approval risk a cash risk rather than just a timing risk. You do not find out whether the approval lands until after you have spent most of the design fee.

What happens to professional fees if the project does not proceed?

They are mostly gone, and the amount that is gone depends on how the engagements were structured rather than on how far the project got.

A stage-based fee agreement with a defined termination point limits the liability to the completed stages plus work in progress. A lump sum with no stage structure may be payable in full on a scope that was substantially delivered even if the project stops. A percentage-of-construction fee where construction never happens sits in an awkward place, and the fallback provisions in the agreement are where that gets resolved.

The questions that determine the answer are worth asking before signing rather than after: what is payable on termination for convenience, what happens to fees for a stage started but not completed, and who owns the copyright and licence to use the drawings if you stop and sell the site with an approval attached. That last one is not academic. On a site sold with a development approval, the value transferred to the buyer is largely the approval and the documents behind it, and whether you can licence those to a buyer is a term in the architect’s agreement rather than a given.

There is also a live risk running the other way. If an engagement is terminated mid-stream and a dispute follows, consultants in most Australian jurisdictions can pursue unpaid fees under the relevant security of payment legislation, which is a fast statutory process rather than a conventional debt claim. A project that stops does not make the invoices stop.

How are professional fees treated for Goods and Services Tax (GST) and income tax?

This is a question for your accountant on your own facts, and the answers below are the general positions published by the Australian Taxation Office rather than advice on your project.

Goods and Services Tax (GST). The ATO states that you can claim a credit “for any GST included in the price you pay for things you use in your business” where you “intend to use your purchase solely or partly for your business, and the purchase does not relate to making input-taxed supplies”. On property specifically, the ATO states that a developer registered for GST “can generally claim GST credits for your construction costs and purchases related to the sale”. The timing matters for a cashflow model: on a non-cash basis the credit arises in the period an invoice is issued or part payment is made, and on a cash basis in the period of payment. A four-year time limit applies to claiming credits. The general rules are set out on the ATO’s page on when you can claim a GST credit.

The consequence for the feasibility is that professional fees are usually modelled net of Goods and Services Tax (GST) as a cost, with the Goods and Services Tax (GST) itself running through the cashflow as a timing item rather than a permanent cost.

There is a trap that catches developers who change plan mid-project. The ATO warns that where residential premises are not new and are sold after being rented out, the sale is input-taxed, and “if you have claimed GST credits on construction costs and related purchases of non-new premises, you will have to make adjustments that reverse these credits”. A scheme that starts as build-to-sell and becomes build-to-hold can therefore put previously claimed credits, including those on professional fees, into reverse.

Income tax. Where property is held as trading stock in a development business, the ATO states that “property sales (including subdivided land) that are part of a property development business will be treated as ordinary income”, and that for an asset to be trading stock “there must be a ‘substantial purpose’ of sale at a profit”, with the profit-making purpose not needing to be the dominant one. Notably for this topic, the ATO treats the engagement of professionals as an indicator of income-account treatment, saying a sale is more likely to be ordinary income where “professional third-party experts (such as architects, developers and consultants) act on your instructions” because “their business activities are taken to be your activities”. That guidance sits on the ATO’s page on tax consequences on sales of property.

Feasibility and project costs. The ATO publishes that “you can claim a deduction for certain capital expenses directly related to a project, such as feasibility studies or environmental assessments”, which “can be allocated to a pool and written off over the effective life of the project using the diminishing value method”, subject to a carve-out that matters here: “the costs must not be deductible under any other part of the tax law nor form part of the cost of a depreciating asset or of land”. That last clause is doing a lot of work on a development, where much of the pre-approval professional spend is arguably attached to the land. The general position is on the ATO’s page on other capital asset and expense deductions.

Which of your professional fees are deductible when incurred, which are absorbed into the cost of trading stock, and which are capital, is not something that can be answered generically. It turns on the entity, the intention at acquisition, whether the land is trading stock, and whether the project proceeds. That is why it is on the accountant’s question list below rather than answered here.

How should professional fees be modelled in a feasibility?

As individual lines with individual timings, not as a single percentage applied to construction.

The percentage approach is fine for a first pass on a site you are deciding whether to inspect. It stops being fine the moment the number is load-bearing, for three reasons: the percentage is measured against a denominator that is itself uncertain, it produces a single lump that gets spread evenly across a programme when the real spend is front-loaded, and it hides the disciplines entirely, so nobody notices that no acoustic consultant was allowed for.

What tends to work better:

• One line per discipline, even where several are allowed at a round number, so that a missing discipline is visible as a blank rather than absorbed.
• Timing attached to each line, by stage rather than by month, so that the equity profile is right.
• A separate professional fee contingency. The construction contingency covers construction risk. It does not cover a second round of council information requests or a value-management redesign. Carrying a separate allowance against the professional fee lines keeps the two risks legible, and means a design overrun does not quietly consume the construction contingency before construction starts.
• Escalation on time-charged lines, because a project running a year longer pays a year of rate increases on anything billed hourly.
• Statutory fees as their own group, sized from the published schedule for the relevant jurisdiction rather than from a percentage, since they follow a formula you can actually look up.

One modelling point that bites specifically: if the architectural fee is a percentage of construction cost, it is not independent of the construction cost line. A sensitivity that moves construction up 10 per cent and leaves professional fees flat is modelling something that will not happen. Linking the fee lines that genuinely are percentages to the construction line, and leaving the rest fixed, produces a sensitivity that means something. The same logic applies to how the fee lines flow through to total development cost and from there into every metric built on top of it.

What to ask your quantity surveyor

• Which disciplines has your cost plan allowed for, and which have you excluded because they depend on a site investigation we have not commissioned yet?
• What construction cost figure are you using for the estimated development cost report, and does it include the design professional fees that the authority’s guidance says belong in the cost of works?
• What is the report going to show as the figure excluding and including Goods and Services Tax (GST), and which of those does this authority use to strike its fee?
• How close is our cost plan to a fee band threshold in this jurisdiction, and what movement would push us over?
• If the scheme is value-managed after tender, how much of your work is repeatable and what does the re-run cost?
• Are you also able to act as the financier’s certifying quantity surveyor, or does that need to be a separate appointment, and is there a conflict if it is the same firm?

What to ask each consultant before signing a fee proposal

• How many design iterations and how many rounds of authority information requests does the fee cover, and what is the rate beyond that?
• Is the fee a percentage of the construction estimate, the contract sum, or the final construction cost?
• How is the fee staged, and precisely what is payable if the project is terminated part-way through a stage?
• Are disbursements inside the fee or charged at cost, and what counts as a disbursement?
• Is attendance at pre-lodgement meetings, panel hearings and tribunal proceedings included? If we end up at appeal, what are your expert evidence rates?
• Who owns the copyright in the drawings, and can that licence be transferred to a buyer if we sell the site with the approval?
• What insurance do you hold, at what limit, and is it claims-made or occurrence-based?
• What is the price and lead time to update this documentation if approval takes a year longer than programmed?

What to ask your development manager or project manager

• Is your fee a percentage of total development cost, a percentage of construction, or a monthly rate, and on which base is the percentage struck?
• If the programme runs six months long, what does that cost us in management fee, and is any of it recoverable under the building contract?
• Which consultant appointments do you hold and which do we hold directly, and who carries the risk if a consultant underperforms?
• What is in the consultant scope schedule that nobody has been appointed to do yet?

What to ask your accountant

• For this entity and this project, are our professional fees deductible when incurred, absorbed into the cost of trading stock, or capital?
• Does our intention at acquisition make this land trading stock, and what does that do to the treatment of the pre-acquisition consultant spend?
• If this project does not proceed, what is the treatment of the fees already incurred, and does anything change depending on whether we still own the land?
• We are registered for Goods and Services Tax (GST). Are the credits on our professional fees safe on the current plan for the site, and what would change if we moved from selling to holding?
• On our reporting basis, in which period do we claim the credit on a consultant invoice, and does that match how our cashflow model assumes it?
• Which of these fees, if any, sits inside the cost base rather than being deductible, and what documentation do we need to be keeping now to support that later?

The short version

Professional fees tend to run 8 to 15 per cent of construction cost on an Australian development, but that range is only useful as a sanity check, because the published percentages disagree mostly about what they are dividing by rather than about the market. A real budget comes from fee proposals against a defined scope, read carefully for what is excluded.

The two things that most often go wrong are timing and exclusions. Most of the fee is spent from equity before an approval exists, so a model that spreads it evenly understates the peak equity requirement. And the budget leaks through the parts of the fee proposal that describe what is not included: second-round council responses, value-management redesign, and anything that ends up at a tribunal.

Statutory fees sit alongside the consultant fees and behave in the opposite way. They are published, formula-driven, indexed annually, and can be looked up exactly for your jurisdiction before you write a number down. There is no reason to estimate them, and every one of them changes on 1 July.