Formula
WhereSum every cost line below the revenue line. TDC is the denominator of profit on cost.
Why it matters
TDC is the denominator of profit on cost, the most-quoted residential feasibility metric. Understate it and the deal looks better than it is; overstate it and you walk away from work that would have made money.
Worked example
For the same Waterloo scheme:
- Land acquisition: $7,200,000
- Construction (28 units × $4,200/m² × ~2,900 m² GFA): $12,180,000
- Professional fees (8% of construction): $974,000
- Statutory contributions and authority fees: $1,150,000
- Finance costs: $1,420,000
- Marketing and selling: $580,000
- Contingency (5% of construction): $609,000
TDC = $24,113,000.
Related terms
Connected ideas in the glossary.
- Gross realisation value (GRV)Total revenue from selling every dwelling in the project.
- Profit on costThe headline ratio for a residential feasibility.
- Development marginProfit divided by revenue rather than cost.
- Development management feeThe cost line for running the project.
- Soft costsAll non-construction development costs.
- Finance costsInterest, fees and line charges on senior and junior debt.
- Construction contingencyAllowance for scope and pricing risk on construction cost.
Questions
Frequently asked
Does TDC include the developer's profit?
No. TDC is cost only. Profit sits below TDC and is the difference between net realisation and TDC.
Should land be in TDC?
Yes. Land acquisition cost is part of TDC. Stamp duty and legal costs sit alongside land in the same group.
What's the right contingency to apply?
5–7.5% on construction is typical for residential apartment work in Australia. Lenders often impose their own minimum.
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