Effective from March 2024, the New South Wales (NSW) Government has introduced a fundamental shift in how development costs are calculated for Development Applications (DAs). The traditional approach, which used terms like “capital investment value,” has been replaced with a more transparent and standardised system known as the Estimated Development Cost (EDC) methodology. This change is critical for property developers, architects, and professionals in the construction industry, as it directly impacts how costs are reported and approved for planning purposes.
The goal of this post is to explain the significance of these changes, why they were implemented, and how you can ensure your projects remain compliant and on track for successful DA approval.
What Has Changed? The Introduction of the EDC Methodology
The key change here is the introduction of the EDC methodology, which is now the standard approach for calculating development costs across NSW. Previously, terms such as capital investment value were inconsistently applied by developers, leading to potential manipulation of figures and confusion between councils.
The EDC methodology was introduced to:
- Standardise cost reporting: The new method ensures that all development costs are reported using the same consistent rules and format, eliminating discrepancies.
- Close loopholes: Under the old system, some developers could inflate or underreport costs to manipulate levies or project approvals. The new rules provide clearer, enforceable guidelines to prevent this.
- Provide transparency: The new methodology ensures all parties—developers, councils, and the public—can trust that the reported costs accurately reflect the real value of the development.
Beginning in March 2024, any Council Cost Reports submitted as part of a Development Application must follow this standardised EDC framework. Whether your project is a small residential build or a large-scale commercial development, your cost report must provide an accurate breakdown of all project-related costs, excluding GST.
Why Was This Change Introduced? ICAC Deliberations and the Push for Transparency
The change to the EDC methodology didn’t happen in isolation. It was the result of a series of recommendations from the Independent Commission Against Corruption (ICAC), which identified major risks in how capital investment value was being calculated under the old system.
ICAC’s investigation found that the capital investment value was often inflated or inaccurately reported by developers. This created unfair advantages for certain parties, resulting in reduced council levies, skewed project approvals, and an overall lack of transparency in the planning process. The inconsistency in cost reporting led to mistrust in the process, undermining confidence in the fairness of NSW’s development approval framework.
The introduction of the EDC methodology addresses these concerns by:
- Promoting transparency: Developers must now provide detailed, standardised cost reports that give councils a true reflection of the project’s financial scope.
- Preventing manipulation: Clearer, enforceable guidelines reduce the ability to underreport or inflate development costs to avoid higher levies or gain quicker approvals.
- Establishing consistency: All NSW councils now follow the same cost calculation standards, ensuring a level playing field for all developers, regardless of the project’s location.
For developers, this means less flexibility to manipulate figures, but it also ensures fairness, consistency, and faster approvals once the guidelines are followed correctly.
The Role of a Registered Quantity Surveyor in This New Era
With the new EDC regulations in place, it is more important than ever to ensure that your Council Cost Reports and EDC Reports are prepared by a registered quantity surveyor. This is not just a recommendation—it is a legal requirement for any project with costs exceeding a certain threshold, usually $500,000.
Why is engaging a registered quantity surveyor so crucial?
- Compliance with EDC standards: Quantity surveyors are trained to understand and apply the EDC methodology accurately, ensuring that your cost reports meet the standards set by the NSW Environmental Planning and Assessment Regulation 2021.
- Accurate cost reporting: With transparency now a legal mandate, any misrepresentation of costs could lead to severe penalties, project delays, or rejections from the council. A professional ensures that your development costs are calculated correctly and comply with the new regulations.
- Council-specific requirements: Different councils, such as the City of Sydney and Parramatta, may have slightly different formats for cost reports, and a quantity surveyor will ensure that these unique requirements are met before submission.
A registered quantity surveyor provides the expertise and reliability needed to ensure your development application proceeds without complications.
Why This Matters for Developers
If you’re a developer, architect, or project manager in NSW, the new EDC methodology fundamentally changes how you should approach the preparation of Council Cost Reports. Non-compliance could lead to costly delays, financial penalties, or outright rejection of your application.
Here’s why the EDC methodology matters for you:
- Regulatory Compliance: Councils are now stricter than ever about the preparation of cost reports. A non-compliant report is more likely to be flagged, leading to delays or even rejection.
- Transparency: Following the ICAC recommendations, transparency is no longer just a best practice—it is legally required. You need to demonstrate that your development costs are accurate and justifiable.
- Financial Implications: Incorrectly reporting costs could lead to higher Section 7.12 levies or other financial penalties if your project’s expenses are found to be underreported.
- Avoiding Delays: By engaging a registered quantity surveyor early in the process, you can avoid the back-and-forth revisions that often occur when councils request additional information or clarification due to non-compliance.
How We Can Help You Navigate These Changes
At HMS Group, we specialise in preparing compliant Council Cost Reports and EDC Reports that align with the latest NSW Government regulations. Our team of registered quantity surveyors ensures that every report is in full compliance with the new EDC methodology and council-specific requirements.
Here’s how we can assist you:
- Expertise in EDC methodology: We ensure that all development costs are calculated using the new standards, providing accuracy and transparency that councils expect.
- Tailored solutions: We customise our reports based on your project and the unique requirements of your local council, ensuring your Development Application process is smooth and timely.
- Proactive guidance: We don’t just prepare reports; we guide you through the entire regulatory process, helping you avoid common pitfalls and delays.
Contact us today to ensure that your project meets the latest NSW regulations and gets approved without unnecessary setbacks.
Conclusion
The NSW Government’s introduction of the EDC methodology represents a significant shift in how development costs are calculated and reported. These changes, driven by recommendations from ICAC, aim to improve transparency, reduce the risk of manipulation, and create a consistent and fair process for all parties involved in the development application process.
By working with a registered quantity surveyor, you can ensure that your project complies with the new regulations, helping you avoid delays, financial penalties, and the frustrations that come from submitting non-compliant cost reports.
Don’t leave your Development Application to chance—get in touch with us today, and let’s ensure that your next project is a success.
