In the last few years, the world has watched the cost of everything rise, and the construction industry has felt it more than most. In Australia, disrupted supply chains, labour shortages, and rising material prices have pushed the construction cost per square metre higher across residential and commercial projects. From timber and steel to piping and fixtures, costs continue to climb while demand shows little sign of slowing.
As margins tighten, getting construction costs accurate and staying on budget is more critical than ever. Yet estimating has become increasingly stressful and unpredictable in a market that refuses to settle. Price volatility means estimates can’t afford to be rough guesses or absorbed by last-minute blowouts.
So how do you stay competitive while protecting profitability? It starts with understanding how to calculate building construction costs properly - breaking down labour, materials, overheads, and risk to produce estimates that are realistic, defensible, and scalable for long-term business growth.
How Much Does a New Building Cost in Australia?
The cost of constructing a new building in Australia can vary significantly depending on location, building type, materials, site conditions, and the level of finish. While square-metre pricing is not a substitute for a detailed estimate, it remains a useful benchmark for early planning and budgeting.
On average, the construction cost per square metre in Australia typically ranges from $1,300 to $4,000+, with commercial and industrial projects often sitting outside residential ranges due to compliance, services, and structural requirements.
Average Construction Costs in Australia (Cost per Square Metre)
The table below shows indicative construction cost per square metre benchmarks across common project types and regions. Figures are compiled from Australian government data and reputable industry sources and should be used as guide prices only, not fixed estimates.
Important note: Cost-per-square-metre figures are indicative only. Material prices, labour availability, site conditions, compliance requirements, and optional inclusions can significantly impact final build costs. For accurate budgeting, these benchmarks should always be paired with a detailed, itemised estimate tailored to your specific project.
Breakdown of Building Construction Cost
When learning how to calculate building construction costs accurately, it’s critical to understand where money is actually spent. Construction budgets are made up of a mix of direct costs (materials, labour, equipment) and indirect costs (design, permits, insurance, risk buffers), all of which must be accounted for to protect margins and keep projects viable.
Below are the most significant cost drivers that influence the construction cost per square metre across residential, commercial, and industrial builds.
Materials and storage
Materials are the single largest cost component in most construction projects.
- Materials typically make up around 50% of total construction costs
- Prices are highly sensitive to supply chain disruption and market demand
- Leaving a contingency buffer is essential
Indicative material-driven build costs per m² include:
- Timber construction: $1,300–$1,500 per m²
- Steel frame construction: $1,300–$2,000 per m²
- Brick veneer or double brick: $1,600–$2,400 per m²
Storage, transport, and on-site security should also be factored in. High-value materials left unsecured can quickly erode margins through loss, damage, or theft.
(Sources: Australian Bureau of Statistics construction price analysis; CO-Architecture; DB Construction VIC)
Labour
Labour is the second-largest construction expense and continues to rise due to skilled trade shortages across Australia.
Labour costs are driven by:
- Number of workers required
- Hourly rates
- Total project duration
Typical hourly rates include:
- Bricklayers: $50–$100 per hour
- Carpenters: $50–$120 per hour
- Excavation equipment: $100–$300 per hour
Projects with complex designs or specialised materials often require higher-skilled trades, increasing overall labour costs.
(Sources: AS Estimation; Build Together PM; industry trade rate benchmarks)
Design
Design decisions shape construction costs long before work begins on site.
- Design and pre-construction typically represent 5–10% of total build costs
- Custom or bespoke designs increase consultant fees and estimating & quoting complexity
- Off-the-shelf or repeatable designs are generally more cost-effective
Finishes specified at the design stage have a direct impact on cost per square metre, with pricing increasing significantly from basic to premium inclusions.
(Sources: CO-Architecture; Build Together PM)
Site works
Site conditions can materially impact the total cost of a build, particularly in early stages.
Indicative site work costs include:
- Small, flat site: ~$5,000
- Medium site: $10,000–$15,000
- Large or sloping site: $25,000+
Site works typically cover soil testing, excavation, service connections, drainage, clearing, and termite protection. Poor ground conditions or restricted access can add 20% or more to total project costs if not identified early.
(Sources: Build Together PM; CO-Architecture; Australian residential build guides)
Other costs
Several additional costs should always be factored into construction estimates:
- Permits and approvals – Vary by council, location, and building type (local council and state planning authorities)
- Equipment and site services – Plant hire, vehicles, power, water, security, and amenities (industry PM benchmarks)
- Insurance and liability – Mandatory coverage for builders and tradies (Australian construction insurance providers)
- Weather and environmental risk – Delays caused by rain, heat, bushfire, or flooding (ABS climate and construction impact analysis)
- Contingency allowances – Essential buffers for variations, delays, and price fluctuations (quantity surveying best practice)
Accounting for these cost components ensures your estimates are realistic and better aligned with your project delivery.
How to Calculate Building Construction Cost
Keeping the construction costs and considerations above in mind, you can start to make realistic cost assumptions - even though it’s not possible to know every expense upfront. These assumptions are typically based on the project design, chosen materials, standard labour rates, and expected site conditions. The more accurate your construction pricing inputs, the more reliable your estimate will be.
When learning how to calculate building construction, there are two common approaches: estimating the total construction cost or using a construction cost per square metre. The square-metre method is often preferred during early planning, as it allows costs to scale easily based on project size.
To estimate the overall construction cost using this approach, multiply the cost per square metre (SQ) by the total project size (P):
SQ × P = Construction cost
This method provides a practical starting point for budgeting and comparison, especially before detailed plans and itemised estimates are finalised.
Construction Cost Calculators: Are They Accurate?
Figuring out how to calculate building construction costs is a skill that develops over time. It relies on experience, market knowledge, and an understanding of how materials, labour, and site conditions interact across different projects.
Construction cost calculators can be useful for generating a quick estimate and providing a general sense of expected pricing. They’re designed to deliver a ballpark figure based on average construction cost per square metre, typically factoring in standard material rates, labour assumptions, and basic overheads.
While calculators can support early-stage planning, they should be treated as a starting point rather than a final pricing tool - particularly for complex or site-specific builds.
Building Success with Cost Estimator Software
As you’ve seen, accurate costing can be a real challenge. It’s essential to refine budgets carefully, account for all overheads, and still remain competitive on price. While experience plays a major role, construction costs fluctuate constantly, and no two job sites are ever the same.
With so many moving parts, job quoting software can be a genuine asset. Instead of juggling spreadsheets, permits, and pricing documents across multiple systems, the right tools allow you to manage everything in one place. Using cost estimator software helps streamline how you calculate building construction costs, maintain consistent pricing, and reduce the risk of errors as projects evolve.
With software like AroFlo, you can access estimates, costs, and job details directly from your device, giving you the flexibility to work wherever the job takes you, without losing control over accuracy or margins.
Want to see how it works in practice?
Book a demo to explore how AroFlo helps simplify estimating, improve accuracy, and keep your construction projects on track from quote to completion.
.png)
