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Key Factors Influencing Construction Costs

Key Factors Influencing Construction Costs

When your company needs a new building, there generally is a budget in mind. Not putting limits on costs for a construction project could result in an unwanted surprise when it’s time to pay the bill or calculate your return on investment.

But, how do you determine how much one of these projects will cost and what influences these values? There are several factors that affect construction costs as well as different types of costs that you should understand.

 

How Will You Get An Accurate Estimate?

For the sake of discussion, let’s assume that you want to build a 20,000 sf warehouse. BuildingJournal.com provides an online estimating tool that says this is going to cost just under $850,000 in Charleston. If only it were that simple.

Unfortunately, these are rough estimates that don’t consider many factors, some of which could even save you money. Instead of relying on online tools to make your decisions, it’s better to work with a human estimator that can break down the costs, particularly in today’s shifting market.

 

Key Factors That Influence Construction Costs

Going back to the example of the warehouse, an online estimate likely isn’t accurate because it fails to consider some key factors that influence construction costs. In this case, these would include how the warehouse will be used as well as how it will be built.

A warehouse can serve any number of purposes. It can be a basic, non-climate controlled shell used to store items with little to no security. It can also hold refrigerated items with humidity control systems or have automation workflow in place to quickly move objects from one place to another. Costs will vary significantly based on these factors.

Warehouse construction methods also matter. A warehouse that is constructed on site through traditional design-bid-build methods is the most expensive. Most warehouses, however, are built using pre-engineered metal construction, which is less expensive.

 

Different Types of Construction Costs

When estimating costs for a construction project, whether a warehouse or some other commercial project, there are several types of costs to consider. These include:

Hard Costs. Hard construction costs include foreseeable costs such as materials and labor. While these might seem simple to estimate, market conditions are currently wreaking havoc on both in this sector.

Soft Costs. These costs are often more difficult to project and include engineering, architectural design, permitting, insurance, taxes, and more. When not planned for properly, these types of costs can quickly push a project over budget.

Operational Costs. Operation and energy costs refer to what it is going to cost to operate the building over its lifetime. Also referred to as life cycle cost analysis (LCCA), this measurement can help a company ensure that it is achieving its ROI goals.

Financing Costs. If you intend to finance your construction project, those costs are also a critical factor in your final decisions. There will be interest on your loan as well as any other associated costs.

 

How You Can Reduce Construction Costs and Build Value

As a property owner or project manager, one of your goals is likely to build as much value into your project as possible. Capturing ROI is a critical component to achieving these goals. This can be accomplished with business efficiencies, but it begins with the right construction choices.

A design-build delivery method is one of the best ways to save costs on construction and achieve faster project delivery times. Another is to opt for offsite construction instead of traditional methods. In combination, these choices can produce significant savings of time and cost to your next project.

 

K-Con, Inc. For Your Next Affordable Construction Project

K-Con, Inc. is an experienced team of engineering and construction professionals that specialize in pre-engineered metal building solutions for commercial and government clients. Our turnkey and customized buildings are not only high-quality but also affordable compared to traditional construction methods.

Contact us today to speak with someone on our team about using our proven design-build methods for your next construction project.