The formula you are referring to was established in High Court ruling so it is pretty much the law. Nobody can force you to go down that route but it leaves you (collectively) open to a legal challenge if a current or future owners feels they have been dudded.
I thing the key word in all this is “agreed”. The physical costs of the renovation will be whatever they will be, as will the costs of architects, lawyers and surveyors. Now, what you have to get to is a “reasonable” figure for the increased value of the property.
To be fair, the renovators are benefitting in a way that will, over time, increase in value so they shouldn’t be looking for a free ride on this. On the other hand, it should be worth their while.
So how about including in the calculations something like an “agreed” fee for disruption of their lives. Something that at least 75 per cent of owners can agree on, so that you can move on and everybody in the building can benefit.
And on that note, don’t forget to look at redistributing the unit entitlements so the the improved units are paying more in levies.