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Cost Estimation Principles and Construction Management
An average commercial steel building costs between $16 and $20 per square foot. That includes building package elements such as I-beams, purlins, and girts, along with delivery and foundation expenses and the cost of construction. But many retail and commercial buildings require additional finishing, like insulation or façade customization, which can increase the total cost of construction to as much as $30 or $40 per square foot.
Costs often arise over the entire life cycle of a project, which means estimation is often easier said than done. Each project presents risks, and those risks frequently translate to unexpected costs. Good cost estimation can mean the difference between a successful plan and a failed one.
Estimating Commercial Build Costs
While it is impossible to predict construction expenses for building projects down to the penny, assessing the following factors allows a general contractor to generate reasonably accurate cost assessments:
- Establish building quality class (Class A, Class
- B or Class C)
- Calculate the square footage of the first floor
- Multiply this figure by per sq ft cost estimates (includes: class, size, materials, labor, and shipping)
- Add total mechanical and electric fixture costs
- Repeat the square foot cost calculation process for each additional floor
- Include elements like equipment bays, service garages, or staffed fire stations in the final cost
Quality Class and Size Considerations
Quality, class, and size are the most critical variables in determining commercial buildings’ construction costs per square foot. Naturally, more extensive building projects, especially urban high rises, will have higher construction costs than smaller ones. Likewise, included amenities and exterior aesthetics influence costs, with Class A buildings featuring top-tier finishes and fixtures demanding higher construction costs per square foot than Class C buildings.
"Good cost estimation can mean the difference between a successful plan and a failed one."
Other Cost Drivers
Other cost drivers that figure into construction costs per square foot include labor costs, the project’s location, architectural design, and building materials. Projects featuring more ornate architectural design, and those located in areas with higher costs, such as New York City, will have higher costs per square foot than projects in outlying areas. Likewise, labor costs are often 2% to 6% lower for projects outside major metropolitan areas. Materials costs drive square footage estimates, and taxes and shipping charges also add to the overall cost.
Other Cost Drivers
Wallace Construction Group has over 100 years of combined construction experience on our team, with more than 200 total construction projects and more than 50 AHCA certified construction projects. Contact us to discuss how our cost estimation services help you plan and execute your next construction project.
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Construction Estimation Trends to Watch
Cost estimation in commercial construction project management is the process by which a general contractor forecasts needed financial and related resources to complete a project within its defined scope. This involves accounting for all elements of a building project to calculate a working figure for the project budget.
For a commercial construction contractor, holding the line on expenses is essential. An accurate estimate reduces the hazard that the contractor will lose money on a project. Owners use bidding along with the cost estimation process to select a contractor who will fulfill the requirements of a building project for the lowest possible cost. Owners rely on accurate cost estimations to determine a project’s feasibility and avoid overpaying for a contracted building project.
Elements in Cost Estimation
The accuracy of cost estimations for building projects relies heavily on each of the factors listed below.
- Project plan quality and cost information accuracy
- How extensively the estimator defines a project
- Estimator skill and the quality of the estimator’s tools and procedures
Trends in the Commercial Construction Process
In the past, an estimator would develop only one or two versions of an estimate as a final bid or for a negotiated contract. While this approach still applies to hard bid projects, this is no longer the case with most building projects. Increasing reliance on Building Information Modeling (BIM) and design-build project delivery methods often results in nearly continuous project plan modification by building owners and designers alike. As a result, large projects can generate hundreds or even thousands of estimates before their ultimate completion.
"For a commercial construction contractor, holding the line on expenses is essential."
Generating Accurate Cost Estimates
Wallace Construction Group has more than 100 years of combined construction management experience. Our team has completed 200 construction projects since we started, including more than 50 AHCA certified construction projects. Contact us to discuss how our cost estimation services can help you plan and execute your next construction project.
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Project and Construction Management
Effective construction management is essential to the ultimate success of commercial building projects. Commercial project management involves mastering many tasks, including cost estimation, maintaining a project timeline while dealing with multiple change orders, and ensuring that the finished project fulfills the owner’s requirements.
The best commercial construction project managers have problem-solving and negotiation skills and a deep understanding of the construction field. Knowledge in finance, law, and business is also useful, along with a basic grasp of the fundamentals of different construction types – residential, commercial, industrial, or institutional.
Fundamentals of Effective Project Management
Construction project management involves overseeing every phase of a building project, from preparation to execution and completion. Significant emphasis is placed on analyzing project risk factors, maintaining preventative supervision and review of time schedules, setting and maintaining the budget, and overseeing designs, specifications, bids, work arrangements, and contracts – all before work on a building project even begins. The process of analysis and overview helps ensure that a project stays on track - and on budget - for completion within a specified timeline.
Digital Trends and Construction Management
Commercial construction management is increasingly associated with mobile and online software. Mobile-friendly technology allows work to be managed and tracked from anywhere with a high-speed internet connection. With the ongoing coronavirus pandemic, this capability has proven essential, and all indications point to a growing trend in this direction.
"Partnering with our clients means working with the community, including giving back by providing pro-bono services."
The Wallace Way
For John L. Wallace, the founder of Wallace Construction Group, your word was your bond. Only a handshake was needed to seal a deal. Today, this is still the Wallace Way of doing business. Partnering with our clients means working with the community, including giving back by providing pro-bono services. Our company has always been family-oriented, and we bring that attitude to every customer and project.
Do you have questions about your next project? Email us today at info@wallacebuilt.com – we’ll be happy to provide the answers you’re looking for.
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What Is Commercial Construction?
A commercial construction contractor handles a broad range of projects over the course of a career. A wide range of expertise is required to successfully handle each type of project. Commercial building projects can include offices, manufacturing plants, medical centers, and retail shopping centers. These projects and businesses vary in size and scale and each is unique. But commercial building projects can be generally categorized as small, medium, or large-scale.
Small-Scale Commercial Projects
Small-scale commercial construction is also known as light commercial construction. These types of building projects usually involve rebranding or refreshing the look of a structure. Small-scale projects often focus on renovating the interior spaces, such as adding new floors or reconfiguring their technological configuration.
Medium-Scale Commercial Projects
Many companies aren’t ready to move to a new location but still wish to restructure, expand, remodel, or redesign their existing spaces to give them a fresh, new look. These types of medium-scale commercial projects represent a cost-effective way to achieve significant results. They address how a business needs or wants to restructure, expand, or redesign. Commercial renovation and remodeling are often medium-scale commercial construction projects.
"Did you know that 85% of the Wallace Group’s work is with repeat clients? We believe in building relationships that last. It’s the Wallace Way."
Large-Scale Commercial Projects
Unlike small-scale and medium-scale construction projects, large-scale projects involve ground-up construction. Examples of large-scale building projects include high-rise buildings, warehouses, and dams. These projects involve complex details in coordinating budget, labor, and scheduling and ensuring that the project complies with local building codes and ordinances. A general contractor must possess a high level of expertise and diligence to execute these complex projects successfully.
From Drafting Table to Grand Opening
From the drafting table to the grand opening of a new project, Wallace Construction Group works with our clients to exceed expectations. Our clear communication, purposeful design, and expert team who knows your industry set us apart. We work to ensure seamless cooperation from concept to completion, regardless of the size or nature of the project, including pro-bono projects.
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Understanding the Commercial Construction Process
Understanding the commercial construction process from start to finish highlights the importance of utilizing the services of skilled project managers and general contractors. Commercial building projects of all sizes involve multiple steps, with issues at each phase that can derail a project altogether. While each project is unique, commercial building projects follow a general timeline of planning and development, design, and construction. The entire process also requires collaboration and good communication among professionals from several disciplines to maintain the project timeline and ensure that the project remains on budget.
Planning and Development
Establishing a budget is one of the first phases of a commercial building project. Commercial building costs typically average between $16 and $20 per square foot. However, the ongoing pandemic has created supply chain shortfalls and higher prices. Construction costs for buildings projects that include insulation and other additional finishing can be as high as $30 to $40 per square foot.
Selecting a site for a project requires more than choosing a location. Zoning and possible replatting considerations must also be taken into account and ensure that the site has or can be fitted out with the proper utilities and infrastructure to support the project. A property line surveyor determines the boundaries for the project site.
The Design Phase
There are two steps to the design phase of a commercial building project. The pre-design stage is when the goals of the project are set. This is also when either an architect, general contractor, or design-build firm is selected to oversee the project. Ensuring adequate utility connections, code compliance, and setting the project timeline all occur during pre-design.
Engineers are brought into building projects during the actual design phase. Civil engineers evaluate drainage of the site while mechanical engineers determine the appropriate HVAC scheme. Electrical and structural engineers also provide input at the design phase.
"Ensuring adequate utility connections, code compliance, and setting the project timeline all occur during pre-design."
The Construction Phase
Bids, permits, and insurance must be obtained before actual construction can begin. A construction team is assembled, and construction materials are procured. Only then can the actual excavation, foundation laying, and building process begin, along with landscaping. The final construction phase involves developing the punch list of final deficiencies that must be addressed before issuing a substantial completion certificate and having the building undergo its final inspection.
The Wallace Way
By developing long-term, positive relationships with our subcontractors, Wallace Construction Group ensures that our projects run smoothly and that the final work product meets or exceeds our client’s expectations. Every step of the way, our team is available to help our clients make informed decisions, overcome unexpected challenges, and finish their projects on time and within their budget. That’s the Wallace Way. Contact us at (727) 520-0700 to learn more about our cost estimation services, and discuss your next project.
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Common Types of Commercial Construction Projects
Commercial construction projects have varying requirements depending on many factors, including location, scale, and whether it’s new construction, a renovation, or an expansion. Differences in local regulations and factors such as bond claim laws, labor laws, and mechanics lien requirements can be very different from one project to the next. A commercial construction contractor must have a good understanding of the fundamental aspects of several common types of commercial building projects:
Banking
Security for bank workers, currency, and sensitive financial documents carry the utmost priority. With a renovation, clients often want fresher, updated aesthetics. Other times, the desire is to “go green.” With an expansion, the challenge is to construct and fit-out the additional space while causing as little disruption as possible to business operations.
Food & Beverage
Eating and drinking establishments are not just structures with tables and chairs. Restaurant and tavern owners also frequently want to create an ambiance that invites customers to linger and interact with one another. At the same time, they also need the infrastructure to facilitate a professional grade kitchen.
Healthcare
Healthcare projects involve a number of moving parts, including the need to accommodate essential equipment, along with ample space for medical personnel, patients, and even visitors. Given the nature of healthcare facilities, providing maximum accessibility and accommodation is an absolute must.
"At Wallace Construction Group, our mission is to deliver projects that develop long-term relationships, ensure financial trust, and emphasize timely construction from breaking ground to completion."
Industrial
The overriding factor associated with industrial construction projects is space. Whether the need is storing inventory, loading bays for shipping trucks and containers, or accommodating an assembly line, industrial projects require large spaces for both heavy equipment and large numbers of workers. High ceilings and excellent ventilation are also important for safety and health considerations.
Parking Garages
Parking garages present safety and security challenges, along with accessibility considerations. Wayfinding is another important consideration, especially for large, multi-level structures. Many localities demand that parking garages look more like regular buildings and less like stacked concrete blocks, affecting both the design and the construction.
Retail & Hospitality
Many retail construction projects want corporate branding incorporated into the design. Retail shopping establishments need to accommodate a steady flow of customers while remaining aesthetically attractive. Likewise, operators of hospitality establishments want to inspire customers to both linger and make return visits.
The Wallace Way
At Wallace Construction Group, our mission is to deliver projects that develop long-term relationships, ensure financial trust, and emphasize timely construction from breaking ground to completion. That’s the Wallace Way of doing business. Contact us to discuss how we can help you plan and execute your next construction project. Email us today at info@wallacebuilt.com
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