In part one of this two-part series, the Dade County construction attorneys at Cotney Construction Law explored the price of construction and examined some of the cost variables used by cost estimators to provide accurate estimates to contractors and investors. Now, we will discuss the subsequent costs of construction that have a direct effect on your investor over time.
Cost estimations are an integral tool of the construction industry, but you want to be certain that you have aligned yourself with a tactful, professional cost estimator to avoid any potential disputes. If you need a construction law expert to review your contracts, contact a Dade County construction attorney.
Subsequent Costs of Construction
When considering the price of construction, it’s important to consider the operation and maintenance costs that will accrue over subsequent years through the life of a project. These expenses can be difficult to estimate, but it’s always advisable to calculate these costs as accurately as possible as a contingency for future expenses. Subsequent costs of construction include:
Land rent, if applicable: the cost of renting the land upon which the structure has been built. This cost is contingent on whether or not your investor purchases the land or not.
Operating staff: the cost of hiring and maintaining an operating staff for the structure.
Labor and material for maintenance and repairs: the cost of any provisions of labor or materials required to maintain or repair the structure. Depending on the quality of your team’s work, this cost can vary greatly. Defective construction can add significant costs for maintenance and repairs, and lead to a legal dispute.
Periodic renovations: the cost of any renovations or updates required to maintain profitability or fix an existing issue with the structure.
Insurance and taxes: the resulting insurance costs and applicable taxes associated with owning and operating a structure.
Financing costs: the cost associated with any further financing necessary to recoup expenses and achieve profitability.
Utilities: the cost of water, electricity, gas, and any other utility costs throughout a project’s lifetime.
Owner’s other expenses: any necessary expenses determined by the owner.
Important Considerations for Cost Estimators
Every project is different, so naturally, the significance of these cost components will be directly affected by the nature, size, and location of the project in question. Investors are always interested in cutting costs to maintain profitability; however, this can not take precedence over safety considerations. Ideally, the cost of a project will align with the owner’s objectives, but this isn’t always the case.
As a contractor, you understand the importance of accurate cost estimates. Working with a cost estimator can either be a gracious experience or an absolute nightmare depending on their level of commitment and the feasibility of your project.
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.