If you’re thinking about creating a new space for your business, you’re probably thinking about what it takes to get the project started. The first thing that you should be determining is your budget for the project. Budgeting for a commercial construction project can be a complex process, involving numerous variables and contingencies. However, the following steps can provide a basic framework for developing a budget:
- Determine the scope of the project: Start by defining the scope of the project, including the type of building, the size, the location, and any special features or requirements. This will help to establish the overall budget range and identify the key cost drivers.
- Develop a detailed project plan: Work with your design team to develop a detailed project plan that outlines the scope of work, the materials and labor required, the timeline, and any contingencies or risk factors. This will serve as the foundation for your budget.
- Estimate the costs: Based on the project plan, estimate the costs of each component of the project, including the site preparation, building materials, labor, equipment rental, permits, and any other expenses. Use industry standards, historical data, and input from contractors and vendors to develop accurate estimates.
- Identify potential cost savings: Look for opportunities to save money without compromising quality or safety. For example, consider using energy-efficient materials, streamlining the construction process, or negotiating better pricing with vendors.
- Add a contingency: Always include a contingency in your budget to account for unexpected costs or delays. A contingency of 10-20% of the total budget is typical for commercial construction projects.
- Review and revise: Review your budget regularly throughout the project and make adjustments as necessary. This will help to ensure that you stay on track and avoid cost overruns.
- Hire your General Contractor: Work with a licensed and insured General Contractor throughout the pre-construction process of the project. You’ll have a reliable source of information to make project-based decisions.
According to CBRE, the expectation is for construction cost escalation in 2023 to be slightly higher than the historical norm but well below that of 2022.
Construction costs soared during the pandemic and following years as the labor market tightened and material shortages became a consistent issues across multiple industries. That’s why budgeting for a commercial construction project requires careful planning, attention to detail, and a willingness to adapt as circumstances change. By following these steps, you can develop a realistic budget that meets your needs and helps you achieve your project goals with your contractor.
While starting a construction project can seem scary, partnering with a contractor that you trust can drastically change the experience. Check out our past projects here or contact us to get the project started.