Quick read. Nine out of ten construction projects face cost overruns, averaging 28%. The root cause isn’t technical incompetence—it’s a systemic issue involving flawed project briefs, percentage-based fee structures that motivate cost increases, and three widespread myths that prevent inexperienced clients from seeking proper strategic advice. Professional developers now use independent superintendents on a fixed-fee basis to avoid these conflicts, but domestic clients often don’t know this solution exists.
Core Answer:
- The average construction project cost overrun is 28%, with 9 out of 10 projects exceeding their budget.
- The root cause is the “reverse brief” trap—unsophisticated clients struggle to spot gaps in architects’ proposals because they don’t know what they don’t know.
- Percentage-based architectural fees create a conflict of interest: as costs rise, fees increase as well, removing the incentive to design cost-effectively.
- Professional developers address this by employing independent superintendents on a fixed-fee basis who have no financial interest in cost overruns.
- Three misconceptions keep clients from seeking proper help: believing architects can handle full projects, assuming architects have property development expertise, and thinking they can run projects without strategic advice.
I’ve seen much worse than the average of 28%. I’ve watched a $2 million residential project swell to over $6 million—a 300% cost blowout that’s now in the courts.
This wasn’t just an incident of incompetence or bad luck. It’s the foreseeable result of a systemic issue that’s costing clients millions while the industry turns a blind eye.
After 40+ years as a third-generation property developer, I’ve pinpointed the root cause: the brief. Specifically, what occurs when unsophisticated clients face what I refer to as the “reverse brief.”
What Is the Reverse Brief Trap?
A reverse brief occurs when an architect echoes the client’s requirements, adding details to address gaps and clarify uncertainties. It may seem helpful, but it can lead to a risky assumption.
How the Reverse Brief Process Operates
A client approaches an architect wanting a new house. They specify: two stories, 400 square metres, triple garage, wool carpets, marble tiles in wet areas, Gaggenau appliances with stainless steel benches and splashbacks.
They don’t know what more to tell the architect.
The architect asks clarifying questions before presenting a fee proposal that includes the reverse brief.
The client, lacking industry awareness, reads the reverse brief and assumes the architect understands what they’re saying. They agree to proceed.
That’s where the problems start.
Why the Reverse Brief Fails Unsophisticated Clients
The client doesn’t realise what they’re unaware of. They can’t spot what’s missing from the reverse brief because they lack the expertise to see the gaps.
A good architect will guide the client through the reverse brief, explain the process, identify risks, and clarify how they will manage those risks.
A poor architect won’t bother taking that time.
But even good architects work within a system that fosters fundamental conflicts of interest.
Bottom line: The reverse brief appears clear but hides essential knowledge gaps that unsophisticated clients can’t spot on their own.
Why Percentage-Based Architectural Fees Can Lead to Conflicts of Interest
Most architectural fees are calculated as a percentage of construction costs. When the cost rises, the fee increases.
This discourages architects from designing cost-effectively.
The Fundamental Tension of Percentage-Based Fees
The Association of Consulting Architects Australia acknowledges that “percentage fees can create the perception that architects are looking to increase the cost of their client’s projects to increase their fee.”2
This perception mirrors reality. When construction costs rise, architectural fees also rise proportionally, forming a structural disincentive for cost-efficient design.
How the Conflict Worsens During Construction
The conflict worsens during construction. Imagine an architect makes a mistake in their drawings. The builder discovers it after construction has started. Fixing the error costs $15,000.
Does the architect admit the mistake to the client and cover the costs?
Or do they give the variation to the builder and add their percentage fee on top of the $15,000 fix?
The system encourages the latter.
The Extent of Design Errors in Construction
Design errors make up to 70% of rework incidents in construction.
When the person who made those errors also oversees the building and profits financially from fixing them, you’ve created a perfect storm of misaligned incentives.
The Solution to Fee Structure Disputes
I believe percentage-based fees directly connected to construction costs should be illegal.
I also believe a designer should not be permitted to oversee the construction of their own design.
Critical Insight: Nobody should ever oversee their own work because the financial incentive to overlook or profit from errors undermines client protection.
How Professional Developers Steer Clear of Cost Overruns
Professional developers adopt a fundamentally different approach: independent superintendents on fixed fees.
What Is an Independent Superintendent?
Professional project management consultancy firms offer independent superintendents—qualified professionals in construction management or engineering who oversee construction work without any conflict of interest.
These superintendents are employed on a fixed fee basis, not a percentage of construction costs.
Therefore, they consistently report all mistakes to the client and do not gain any financial benefit from cost increases.
Why Domestic Clients Avoid Using Independent Superintendents
The domestic property development sector does not adopt this approach.
Why?
Because unsophisticated clients are unaware of its existence, architects promote their ability to take on the entire role, and these clients see this as an easy way to manage the project when they do not know how to run one themselves.
It’s like going to the dentist and asking them to fix your haemorrhoids. Just because they work in the medical field doesn’t mean they’re an expert in everything.
Key Difference: Professional developers separate design from supervision and pay fixed fees to eliminate conflicts of interest, while domestic clients unknowingly accept structures that incentivise cost overruns.
What Are the Three Fictions Costing Clients Millions?
When I thoroughly investigate a property situation to separate facts from fiction, I consistently come across the same three beliefs.
Fiction #1: Architects Can Oversee Your Entire Project
The Fiction: Architects can assist you throughout your project.
The Reality: They can’t. Decades ago, project management was a key part of the architecture degree. Now it’s only briefly mentioned because project management has become a standalone degree in its own right.
Architects aren’t trained as project managers. The skills needed are quite different.
Fiction #2: Architects Possess Property Development Expertise
The statement: Architects possess knowledge of property development.
The truth is, they don’t. Property developers employ architects; they are not property developers themselves.
The expertise needed for strategic property development goes well beyond architectural design.
Fiction #3: You Can Manage a Project Without Strategic Advice
The Fiction: You can manage a project from start to finish without property development advice.
The Reality: You can’t—at least not without costly lessons. Only 31% of construction projects stay within 10% of their budgets. Poor communication causes one-third of construction project failures.
These aren’t just random stats. They’re the expected results when clients try to handle complex projects without proper strategic know-how.
The Tragic Irony
The people who most need strategic property development advice are the least likely to seek it because they believe these three myths.
The Pattern: Unsophisticated clients don’t seek proper advice because they don’t know what they don’t know—creating a cycle where those most at risk avoid the solutions that would protect them.
How Do Clients Find Out About These Problems?
Unsophisticated property developers become sophisticated very quickly—but the education comes at a high cost.
When the “Aha” Moment Arrives
The realisation sinks in when they realise architects only understand architecture. The way they come to this realisation differs:
- The project is taking way too long.
- The budget keeps blowing out.
- They have a dispute for reasons they don’t understand.
- Another issue that should have been handled much better.
When it occurs, education becomes costly.
Why Experts Should Remain in Their Fields
In my book “From Building WORRIER to Building WARRIOR: Taking the WORRY out of Building,” I’ve been accused of promoting consulting services from various consultants. The accusation is true, but critics overlook the real reason why.
When you begin, you require experts to assist you. However, they must be specialists in their own fields and should not encroach into other areas.
Why should an architect be permitted to do a project manager’s work when a project manager isn’t allowed to do an architect’s work?
“Horses for courses” really does make perfect sense.
The Cost of Learning: Most clients only learn these lessons after experiencing project failures, which makes acquiring knowledge more costly and painful than it needs to be.
What Is the Regulatory Solution?
The NSW Building Commissioner is exercising and applying powers to enhance the quality of design and construction in medium- and high-density residential and aged care developments.
The home building sector requires similar support.
Licensing for Property Developers
I believe property developers should be licensed similarly to building contractors.
For small-scale and new residential property developers who cannot demonstrate experience, they should be required to engage a licensed property development consultant to assist them.
Benefits of Licensing Requirements
Licensing property developers to showcase their expertise isn’t a bad thing. Also, assisting less experienced developers to deliver projects without going “bust” is beneficial.
The last thing we need is more problematic projects where developers go broke owing multiple people and builders money.
Sometimes, more red tape is preferable to less. This is one of those cases.
Regulatory Impact: Mandatory licensing and the use of licensed consultants would safeguard inexperienced developers from costly errors while lowering the systemic risk of project failures.
What Is the Missing Link in Construction Projects?
The construction industry possesses plenty of technical expertise.
It is missing three essential elements:
- The analytical framework that distinguishes facts from fiction in property development decisions
- The strategic oversight that stops conflicts of interest from disrupting projects
- The regulatory framework that safeguards inexperienced clients from costly advice
What Happens With Proper Strategic Advice
When a straightforward client receives proper property development advice from the start, the situation is quite different.
- Projects remain within budget
- Timelines hold
- Disputes are avoided
- Property values are rising.
The Ongoing Challenge
The challenge? Unsophisticated property developers fail to recognise the value of this advice. They buy into the three fictions. They prefer costly education over strategic advice.
Until they no longer have a choice.
Why the Brief Is Most Important
The brief remains the most vital document in the entire project. Get it wrong, and everything built on it becomes unstable. Get it right—with proper strategic guidance, independent oversight, and aligned incentives—and you eliminate guesswork from decision-making.
That’s not marketing language.
That’s 40 years of experience watching the same patterns repeat while the industry pretends the problem doesn’t exist.
The client’s blind spot isn’t a mystery. We know exactly what it is, where it originates, and how to fix it.
The question is whether the industry will keep profiting from client ignorance or begin to prioritise client outcomes over percentage-based fees.
The core issue: The industry has the technical ability but lacks the structural safeguards and client education needed to prevent foreseeable, avoidable cost overruns.
Frequently Asked Questions
What is the typical cost overrun in construction projects?
The average cost overrun on construction projects is 28%, with nine out of ten projects going over budget. Some projects are much higher—I’ve seen a $2 million residential project balloon to over $6 million (300% overrun).
What is a reverse brief in construction?
A reverse brief happens when an architect, or other consultant, repeats to the client what they need, adding details to cover gaps and clear up uncertainties the architect considered in their fee. While this seems useful, it can cause a risky assumption because inexperienced clients may not recognise what’s missing due to their lack of industry knowledge.
Why are percentage-based architectural fees problematic?
Percentage-based fees pose a conflict of interest because when construction costs rise, the architect’s fee also increases. This diminishes the motivation to design cost-effectively. When architects supervise their own work and financially benefit from correcting their own mistakes, it creates a perfect storm of misaligned incentives.
What is an independent superintendent in construction?
An independent superintendent is a qualified professional in construction management or engineering who oversees construction work impartially. They are hired on a fixed-fee basis, not a percentage of the construction cost, ensuring they report all errors to the client without omission and do not benefit financially from cost increases.
Can architects oversee an entire construction project?
No. While architects claim they can handle the entire role, they are not trained to be project managers. Decades ago, project management was a significant part of an architecture degree, but now it is only briefly covered because project management has become a specialised degree on its own. Architects should focus on designing; project managers should focus on managing.
Do architects possess property development expertise?
No. Architects work for property developers, but they aren’t property developers themselves. The skills needed to develop property strategically go well beyond architectural design. It’s like going to a dentist and asking them to fix your haemorrhoids—just because they work in healthcare doesn’t mean they are an expert at everything.
Should property developers be licensed?
Yes. I believe property developers should be licensed in a manner similar to building contractors. For small-scale and new residential property developers who cannot demonstrate experience, they should be required to engage a licensed property development consultant. This would safeguard inexperienced developers from costly mistakes while decreasing systemic project failures.
What is the key document in a construction project?
The brief is the most crucial document in the entire project. Get it wrong, and everything built on it becomes unstable. Get it right—with proper strategic guidance, independent oversight, and aligned incentives—and you eliminate guesswork from decision-making.
About the Author
Steve Chandler is a third-generation property developer with over 40 years of practical experience in the construction and property development industry.
Professional Experience
Since starting his career in 1980, Steve has been involved in a wide range of projects including residential, commercial, industrial, medical, infrastructure, and public buildings. Over four decades, he has realised that residential development—particularly projects with 30 to 80 apartments—is his area of expertise.
Steve has held the position of:
- CEO of his own property development firm
- Lecturer at University of NSW from 2012 to 2020, teaching property development.
- Property development strategist and consultant
Expertise and Approach
Steve specialises in advisory, consultancy, strategy, and training for property development. His approach involves thorough analysis of property situations to differentiate facts from fiction, removing guesswork from decision-making.
He considers the complexities of a project’s landscape, how it fits into the broader community, and how it meets the requirements of local and state authorities. His recommendations focus on increasing property values and helping clients enjoy the financial rewards of property development.
Published Author
Steve is the author of “From Building WORRIER to Building WARRIOR: Taking the WORRY out of Building,” a detailed guide that tackles systemic problems in construction project management and promotes proper expert involvement across specialised fields.
Industry Advocacy
Steve regularly champions industry reform, including:
- Licensing requirements for property developers comparable to building contractors
- Mandatory involvement of licensed property development consultants for inexperienced developers
- Elimination of fee structures based on percentages that lead to conflicts of interest.
- Separation of design and construction supervision responsibilities
Why Steve’s Perspective Matters
As a third-generation property developer, Steve combines multi-generational industry knowledge with direct experience managing projects from start to finish. His 40+ years in the industry offer firsthand insight into the systemic issues causing the 28% average cost overrun affecting 9 out of 10 construction projects.
Unlike consultants who focus on only one aspect of development, Steve’s broad experience across residential, commercial, and industrial projects—along with his academic background as a university lecturer—gives him the strategic perspective needed to identify and tackle the root causes of project failures.
His focus is on helping people avoid the costly education of learning property development through expensive mistakes, instead offering strategic guidance that safeguards client interests and project results.
Key Takeaways
- Cost overruns are systemic, not random: 9 out of 10 construction projects experience cost overruns averaging 28% because of structural issues, not individual incompetence.
- The reverse brief causes a knowledge trap: Unsophisticated clients can’t spot gaps in what architects suggest because they don’t know what they don’t know.
- Percentage-based fees encourage increased costs: When architects earn more as expenses go up, they have no financial incentive to design cost-effectively or acknowledge mistakes.
- Independent oversight removes conflicts: Professional developers employ independent superintendents on fixed fees who have no stake in cost overruns.
- Three misconceptions keep clients vulnerable: Believing architects can handle complete projects, possess property development expertise, or that clients can run projects without strategic advice leads to costly lessons.
- Nobody should oversee their own work: The individual responsible for designing something should never supervise its construction because the financial incentive to ignore or profit from mistakes weakens client protection.
- The project brief is key to success: It is the most crucial document—ensuring it is accurate with proper strategic guidance prevents issues later on.
References
1 Propeller Aero. (2024). “10 Construction Project Cost Overrun Statistics You Need to Hear.” The study analysed construction project data and found that 9 out of 10 projects experienced cost overruns, with an overall average overrun of 28%. This finding is corroborated by multiple industry sources, including the International Journal of Innovation, Management and Technology and Contimod construction industry analysis (2025).
2. Association of Consulting Architects Australia. (2022). “Architectural Fees: what, how and where to…” The ACA acknowledges that percentage-based fee structures create a perception—and reality—that architects may be incentivised to increase project costs to inflate their own fees. The article notes that, since the ACCC deemed the Australian Institute of Architects’ fee scale anti-competitive, there has been no clarity on architects’ fees, with market forces pushing fees to unsustainable levels. Architectural Fees: what, how and where to… | ACA
Conflict-of-Interest & Commercial Disclosure: LEFTA Corporation Pty Ltd advises clients across Australia and may seek future joint-venture opportunities at some of the sites discussed. Views expressed are personal and do not represent any current client mandate.
General Advice Disclaimer: This article is based upon the personal experiences of the Author. No portion of this article is intended to provide legal, financial or professional advice. The information contained herein is not a substitute or replacement for the services of qualified professionals, legal, financial and insurance experts. The Author, its publisher, agents, servants, contractors, employees and representatives will, under no circumstances, be liable for any special or consequential damages that result from the use of, or any attempt to use, the information contained herein. You are solely responsible and accountable for any actions, decisions and results by your use of the information contained herein. You agree not to attempt to hold the Author and LEFTA Corporation Pty Ltd liable for any such decisions, actions or results, at any time, under any circumstances.
