The construction industry is booming! With a growing economy, there has been an increase in commercial projects throughout America. The cost of these buildings rose by 5% last year and it’s not slowing down anytime soon with some markets experiencing growth up to 7%. This uptick can be attributed largely to higher labor costs, but materials also went up because soft costs tend to rise when you add more people or machines into the mix (think equipment rentals). Additionally, construction spending is forecasted to increase by 4.2% this year.
Commercial construction can be a challenging task to estimate. The four main categories of costs are labor, materials, permits and fees or licenses needed for installation (including inspection), any contingencies that arise during the course of work such as unexpected weather problems with rain delays due an impending storm system coming through town which would cause material shortages–this could also include transportation & shipping cost if this is part your project; there may even more than one type depending on where you live.
It’s easy to get lost in the numbers when comparing bids for a commercial project, but don’t forget that you’re also paying per square foot. Make sure any contractor is aware of this and gives accurate quotes based on all costs involved.
Materials
Construction costs can be significantly reduced by substituting materials on your construction estimate. The cost of foundation, structural masonry and carpentry are just some things that you may find when it comes time for an estimate; however, this is also where commercial contractors should consider value engineering principles – recommending specific material substitution will reduce both quality AND price while still maintaining desired qualities in a new space or renovation project.
Labor
The construction industry is undergoing a major labor shortage which is driving up the cost of building projects. As skilled workers are in high demand, commercial contractors rely more heavily on alternative methods like prefabrication and advanced technology to reduce their overall costs without sacrificing quality workmanship or speediness.
Permits and Fees
Construction is always a headache, but it’s not just the construction that can wreak havoc on your wallet. Building permits and inspections are an important part of making sure everything goes according to plan- which means you’ll have some extra dough once these things (and other expenses) are taken care of in addition to what’s required for materials and equipment rental costs alone.
Contingencies
While the commercial construction estimate is exhaustive, it’s not possible to predict with absolute certainty of a project’s cost. It is recommended that at least 5% be reserved for contingencies – those unexpected costs which may arise during building work and require funds from your budget as they come up along the way (or before). For renovations or remodeling jobs on older structures where many potential problems go unrecognized until we start removing them one by one – 10%, 20%, even 50+%.
If you’d like to learn more about the commercial building process or speak with someone about your commercial project, feel free to message me or give us a call: (407) 559-6412.
