Commercial Construction Budgets
The main difference between commercial and residential is that there will be much more involvement by the agencies to ensure that public safety is addressed. This means a much bigger emphasis on Fire Safety and handicap related issues.
The budgets for a new construction project must include the four main categories of work:
1. Land Costs
2. Hard Costs
3. Soft Costs
4. Sales Costs
The land cost is easy to calculate as this is generally the planned cost for the land plus some miscellaneous closing costs usually in the 2% range.
The Hard Costs are difficult to perform and is usually done by an expert with project management experience or construction experience. The hard costs often range from $200 to $275 per square foot. The breakdowns will be according to the Uniform Building Code which separates the work by trade. It also includes site work, general conditions, and the overhead and profit for the general contractor.
The Soft Costs takes into consideration the duration of the project and interest rates and often is budgeted at 50% to 70% of the Hard Costs. The breakdown includes the following:
1. Design fees
2. Permitting fees
3. Financing fees and other carrying costs
4. Utilities connections
5. Legal fees
6. Accounting fees
7. Insurance
8. Management
The Sales Cost includes the carrying costs for the duration of the sales, interest, taxes, and real estate commissions. This typically costs around 7%.
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