Construction Budgeting

A Primer - Part 2

We will be referring to the Construction Budget.pdf file in this article,
feel free to download a copy for your personal use.

The Major Cost Categories - Generally speaking, there are two major cost categories associated with a construction build-out; Soft Costs and Hard Costs.

Architects ScaleSoft Costs are those expenses that deal with Architectural, engineering and legal fees; all document charges (i.e., surveys, floor plans, title reports, etc), any permit expediting or necessary licenses and any environmental remediation that you do (although you should never, ever touch any environmental problems, that’s the owner’s responsibility!).  

Hard Costs include the General Contractor’s expenses, your fixtures and equipment (which includes your lighting and signage) and the materials and labor required to build the project out.

Our downloadable budget* deals with the costs associated with the latter, the Hard Costs. There, you will notice that there are three sub- categories of materials and expenses (“General Conditions”, “Building” and “Site work” ) and we’ve found that they pretty much will cover many small to medium construction projects.

*Please Note:
Our Construction Budget is provided to you as an example and may not be
a complete list and/or may not suit your individual needs.
You should always consult with your own development specialists
for the best assessment of your particular situation.

Line Item Definitions

General Conditions are kind of a catch-all for the GC. It covers his expenses of providing insurance to the job site, any demolition work, construction dumpsters, temporary electric so their tools work, stuff like that. Basically; it’s the expenses related to getting the space ready for the subcontractors to start swinging their hammers.

Some budgets may contain a line item titled “Contingencies”. Contractors usually plan for the various small expenses that can affect nearly every construction project by creating a line item for it. However, because it has the biggest potential to be misused or even overestimated, if applicable, this item should be discussed with your GC at every meeting. 

You might also notice a line item for “Job Supervision”. Just to answer the question for you…no, your General Contractor might not always be on the job site. While they're off doing other construction stuff (like picking up materials, attending architect meetings, deer hunting, etc) they sometimes employ a Job Super to watch over things. You should always discuss who will be supervising your job site while interviewing GC’s and meet with their Job Supervisor, if it applies, just to make sure you get along.

The Building section deals with the materials and expenses relating to the physical improvements to the inside of the building. These line items cover everything from pouring the foundation to the installation of the HVAC system and signage package. Since it’s not uncommon for the GC to subcontract out a lot of this work, your final budget will determined, in part, by the numbers they receive from the bidding subs.

It’s important to note that although this estimate includes your fixtures (sinks, refrigeration, etc) and finishes (paint, trim work, etc) it does not include the costs of any furniture that you might want to install.

The final section, Site Work covers those expenses relating to improvements to the outside of the building. Of course, if you are part of a larger building (whether office of retail) you probably will not need to be concerned with these items, but as we said earlier, this is a generic form, so feel free to ignore it.

Lastly, at the bottom of the budget is where you will enter all of your subtotals of the line item categories, make any adjustments for union labor (if applicable), any applicable state and/or local taxes and of course; the bottom line is the bottom line…your Grand Total.

We can not stress enough for you to take your time while developing both your preliminary, as well as Final Budgets, and always make it a point to discuss it with your GC as the job progresses.

The construction phase can be some of the most exciting times of the entire process, but also can be the most stressful. Although some problems can never be planned for or avoided, if you start with a good preliminary budget and nurture it from there, it can be an enjoyable experience.

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