One of the challenges of building a commercial property is creating it on a budget and sticking to it. Commercial properties have so many moving parts to juggle, especially if you are working with a large volume of subcontractors. Determining how much the project will cost is a challenging job, but it’s also very difficult to stick to the same defined budget as the project goes on.
There are many factors to consider when developing a budget for a commercial property. Here’s what to keep in mind when building the project budget.
When putting together your budget, you will have to consider what sources of available funding you have, as well as what cash flow will look like when the project is in progress. If the cost of the work doesn’t align with the available funding, you will need to secure other sources to move the work forward.
Planning and Design Costs
To determine the total budget, you will need to have a plan for what the space should look like. This step should be done as early as possible for the project to move forward and keep it on schedule. You need to keep in mind the planning and design will have their own associated costs. Additionally, you will need to pay for assessments and permits before you can even start building.
You cannot have a clear picture of your budget until the planning phase is underway. To get an estimated budget during the planning phase, look at similar construction projects that have happened in your area or over the last few years. You can use their budget as a benchmark while you are in the early stages.
Current Construction Market
It is important to consider the current construction market in the area when making budget decisions and planning your timeline, as every city has its own unique building restrictions, and some cities are more expensive to build as compared to other areas. Labor shortages and supply chain issues are quite common in recent years, so this is important to take everything into consideration.
There are many subcontractors involved in bringing a construction project to life. When developing the budget, you will need to consider who will be working on the project throughout its lifespan and what their labor costs will look like. It is also important to keep in mind that labor costs can keep on changing throughout the project, especially if you encounter an unexpected challenge that can stretch the project timeline. This should be factored into the budget from the beginning to avoid financial constraints in the later stage.
Material and Construction Costs
Finally, you will have to consider the costs of the physical materials that will be used as part of the build, as well as any other related construction costs that you haven’t addressed. Material costs can vary widely depending on the projects you are working on and the vendors you are partnering with. Consider using a value engineering strategy to find more affordable building solutions without compromising their quality. Developing and sticking to a commercial construction budget can be a tricky task. Starting on your budget well in advance can help you to use your funds more efficiently.
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