Project budgets

This guidance details the tasks, legal requirements, and responsibilities for project managers to manage project budgets.

Level of compliance Main audience Other


  • Boards
  • Principals and Tumuaki
  • Project Managers
  • Project Control Group


The board will be provided with funding for its property project from one of the Ministry’s capital funding programmes. The budget will be an item in the project brief.

As the project manager, you manage the budget, which involves:

  • creating a budget for the project
  • advising the board about factors that may affect the budget, like site conditions
  • keeping the board informed of the status of the budget at all stages of the building project
  • keeping the project within budget
  • advising the board what to do if the project is going over budget
  • getting board approval and paying the project invoices.

The project budget must include all project costs (excluding GST) and these are:

  • construction costs, including prime cost and provisional sums
  • all consultants' fees
  • local council consent charges
  • a contingency sum to cover any unexpected costs during construction.

Manage estimates and provisional sums

The contract must clearly define both prime cost and provisional sums and what work they apply to. Before spending these sums, communication between all parties is essential. The project brief should set out the process for spending these sums.

Firm cost estimate

Work with a quantity surveyor to help create the budget for the project. A quantity surveyor trained in construction methods and costs can use the design drawings to work out the materials and labour needed and costs involved.

Many factors can affect the budget, including:

  • Site conditions: Is there adequate access for construction vehicles?
  • Site and building services: Can the project be connected to the existing electrical system or are new connections needed?
  • Design and compliance issues: Will the project affect neighbouring properties?
  • Construction issues: Are there any health risks, like asbestos or lead-based paints?

Work with the quantity surveyor to make an assessment that's as comprehensive as possible. However, some conditions can't be foreseen. The contingency sum is set aside for this reason.

Prime cost sum

The budget may include a fixed prime cost sum for smaller costs such as hardware and light fittings. With the board, choose items as needed during the project based on this budget.

Provisional sum

The budget may include a provisional sum, which is an estimate if the cost of something is unknown. For example, for floor preparation when completing vinyl replacement where the full amount required is not able to be determined. But it's best to avoid provisional sums if possible. They can add expensive extras to the budget.

Pay invoices

Getting an advance to pay the design consultant’s fees

If the project will cost more than $100,000, ask for board approval to apply to the Ministry for a 10% advance of the project budget to pay the design consultant. After the design phase is completed, there can be a period of time to complete procurement before construction starts and the board can draw down Ministry funding.

We won’t advance these fees unless all of the following conditions are met.

  • The total project must be over $100,000 of Ministry funds.
  • You must provide a scope of works and a timeline for releasing the fees.
  • The project must be in the school’s current 10 Year Property Plan (10YPP).
  • There must be an approved project budget.
  • The Ministry’s procurement process must be followed as appropriate for the type of project.
  • You must use the design fees release to pay for the design consultant’s fees.

If the project doesn't go ahead the board must repay the advance to the Ministry. We don’t advance designers’ fees for projects under $100,000 because they're likely to proceed more quickly. If you need support paying design fees on projects under $100,000, then contact your Ministry Property Advisor. 

The design fees release form can be found on the project management forms page.

Design fees release

Applying for the advance

To apply for an advance, prepare:

  • a design fees release form
  • a school tax invoice.

Design fees release

The fees release form includes a declaration which must be signed by a board representative with appropriate delegation. In making the declaration the representative is certifying that the board will:

  • undertake the project described in the application
  • repay the fees advanced if the construction doesn't go ahead
  • follow the Ministry’s project management requirements for your project.

Ministry’s payment of invoices

We'll pay invoices once the design fees release is approved. All invoices should include the school’s:

  • terms and conditions
  • bank account details
  • unique invoice number.

During the construction period, we pay invoices up to 90% of the project’s value after approval of opening project paperwork. We hold back at least 10% as a contingency sum that we only release when you submit closing project paperwork.

The invoice template can be found in the project management forms page.

Project management forms 

Legal requirements for paying construction invoices

The Construction Contracts Act 2002 sets out fair and equitable procedures for paying construction contract invoices.

Construction Contracts Act 2002(external link) 

The Construction Contracts Act:

  • protects sub-contractors against inequitable payment terms and practices of anyone higher up the contractual chain
  • has quick and simple dispute resolution procedures
  • has remedies for recovering money due under construction contracts.

The Construction Contracts Act states what payments can be withheld from a contractor. The board may want to withhold a payment, for example, if the quality of work is poor. Check what you can do under the Act before taking this step.

For more details visit Consumer NZ website:

Consumer NZ website(external link) 

Schools that hold retentions on their construction projects will have to comply with the new requirements of the 2023 Amendment Act from 5 October 2023.

Construction Contracts (Retention Money) Amendment Act 2023 [PDF, 156 KB]

More information on contracts for school-led property projects and maintenance are available on our website.

Contracts for school-led property projects and maintenance

Manage cashflow

A successful project is completed within the approved budget. To control the budget, you must control the project’s scope and schedule.

Manage the cash flow by:

  • matching payment dates to when the board will receive money from us
  • calculating how much money is needed to pay consultants and contractors
  • preparing a schedule showing when progress payments are made and the amount
  • checking payment claims are correct that is, the work is done and to the specified standard
  • budgeting any variations against the contingency sum.

Adjust the budget

If the project looks like it is going over budget, you'll need to talk to the board and the school's Ministry property advisor. Options to manage any overspend may include:

  • using uncommitted funds from board funding
  • working with the design consultants to re-scope the project, identifying ways to reduce costs
  • asking the board to review its 10YPP to re-prioritise other work.

Use the contingency sum

The contingency sum cannot be used on any other work except unexpected costs. It cannot be used to:

  • fix poor planning
  • upgrade the project once it is accepted, such as to buy better quality products or add extra work.

We pre-approve the contingency sum when the project is approved and the board will have to account for expenditure against the contingency at the end of the project.

The board can only spend the contingency sum on the project that it’s allocated to. It must return any unspent funds, including the contingency sum, to the Ministry at the end of the project.

Receive the contingency

We'll release the required amount of the 10% contingency sum when we receive:

  • a copy of the Code Compliance Certificate
  • the Occupancy Use Certificate
  • the Construction Observation Certificate
  • confirmation that all outstanding requirements for the project have been met.

The contingency sum can be considerable for a very large project. For example, it would be $70,000 if the value of the project was $700,000.

You can ask the board to contact the school’s Ministry property advisor to apply for a smaller contingency.

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