The NSW Government has implemented a new, simpler, and more transparent method for estimating development costs. Under these changes, the department will adopt the term 'estimated development cost' (EDC) throughout the planning system. This will impact the calculation of fees for local, regional, and state-significant developments, as well as the determination of planning approval processes.
These reforms came into effect on 4th March 2024.
What has changed?
The term 'estimated development cost' will replace previous terms such as 'cost of development' and 'capital investment value.' This change will be applied across the planning system, affecting the determination of development fees and planning approval pathways for various types of projects such as:
- State-significant infrastructure
- State-significant development
- Regionally significant development
- Local development
- Complying development
- Building Sustainability Index (BASIX) certificates
Why was this change needed?
These reforms address recommendations from the Independent Commission Against Corruption's Operation Dasha report, aiming to enhance transparency and mitigate corruption risks.
By introducing a single definition for development costs, the department seeks to simplify calculations and minimize opportunities for manipulation, ensuring a more straightforward and verifiable process across all aspects of development.
How will the department calculate cost under the new EDC definition?
EDC estimates should capture the cost to carry out the development. This includes costs:
- to design and erect a building and associated infrastructure
- to carry out a work
- to carry out demolition of a building or work
- associated with any fixed or mobile plant equipment.
EDC estimates should not include:
- developer contributions or planning agreement costs
- cost of any development that requires separate approval
- land costs
- GST
- costs of ongoing maintenance and use of the development.
What will you require a QS report for?
Individual Councils will set specific requirements although the department recommends that councils require applications with an EDC over $3 million to be accompanied by an EDC report.
All state significant applications, except those covered by the savings provisions, will also be required to provide an EDC Report estimating the EDC.
For applications with an EDC under $3 million, a cost estimate report is recommended.