Construction Costs

The cost of a project is determined by four factors, three of which are determined by the client and one by the builder. The first three factors are scope, quality, and complexity.

Scope refers to the actual size and extent of a project. Quality pertains to the nature of building materials and levels of skill and craftsmanship. Complexity denotes the level of effort, in addition to skill, required by the project scope. As such, a small project built by less skilled labor that is very simple is, by nature, less expensive than a big project built by highly skilled workers that is very complex. The fourth component is equally important, and that is the price a specific builder will charge a client to execute their project.

At the start of construction, the construction contract will often include a lump sum, or very firm estimate, for the first part and a set of allowances for the second.