When considering the vast quantity of items that collectively form a cost estimate for a construction project, it can be easy to accidentally exclude certain pricing considerations. The cost of construction includes the initial capital cost and any subsequent costs associated with operating and maintaining a structure. Breaking down these two cost categories requires a comprehensive examination of the construction process and design plans being utilized on your project.
In this two-part series, the South Florida contractor lawyers from Cotney Construction Law will explore the components of a construction cost estimate. We will explore the initial, capital costs of construction in part one, and the subsequent costs in part two.
Initial Costs of Construction
When weighing the capital costs for a construction project, it’s important to include any and all expenses related to legal expenses, licensing, labor, supplies, and all other elements that contribute to the initial cost of construction. The initial costs of construction include:
Land acquisition: the cost of assembly, holding, and improvement. Before you can commence your construction project, you will need to consider the cost of the land upon which the structure will be built.
Planning and feasibility studies: the cost associated with planning the project and determining whether or not it can be completed.
Architectural and engineering design: the cost of designing the structure from an architectural and engineering standpoint.
Construction: the cost of materials, equipment, and labor.
Field supervision of construction: the cost of hiring supervisors and foremen to ensure that the construction process is proceeding safely and on schedule.
Construction financing: the cost of having your project financed. An important aspect of financing involves obtaining enough funds to cover any expenses between your first expenditure and the time you collect revenue.
Insurance and taxes during construction: includes an array of different costs including health insurance, property taxes, workers’ compensation, and more.
Owner’s general office overhead: typically costs associated with ensuring that your project proceeds according to the contract.
Equipment and furnishings not included in construction: items that aren’t used directly for building purposes, but help ensure the timely completion of a project through an auxiliary role.
Inspection and testing: the cost of testing your structure to ensure it has been built in accordance with updated building codes and meets all legal criteria as governed by the federal government.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.