In new housing development projects, one of the primary considerations, aside from the demand and the location, is the cost. That is why if you are a property developer, it is very important to know the factors that contribute to the total construction development cost of the project you are planning to do. Here is known property developer, Dan Greenhalgh, sharing with you the factors you should consider in estimating cost of developing a new housing.
What are the things contributing to the cost of developing new housing?
Cost of construction materials
The first thing to consider in estimating the cost of property development is the cost of the materials you will use in the project. This includes the prices of the materials itself, applicable taxes, and shipping fees, if applicable.
Another important consideration is the price of labor. How much will you have to pay to the people who will be working on your project? Take note that labor wages are mandated by law and varies from place to place. It also changes in just a matter of few months, so if the construction project will last for at more than three or four months, you should not only base the estimate labor cost on the current local wage.
Condition of the construction site
The condition of the construction site plays a huge role in determining the cost of developing your property. This includes soil conditions, conflicting utilities like buried pipes and electric cables, environmental sensitivity of the area, presence of rivers and wetlands nearby, and existence of contaminating materials. Addressing such issues will surely add up to the cost of construction, as well as on the project duration.
Schedule of the project
The longer the duration of the project is, the higher its cost will be. More months of work means higher labor cost and other direct expenses. Adjustments in the project timeline may also cause additional indirect fees you may have to shoulder.
Obtaining permits or approvals from regulatory agencies of the government may likewise entail some cost. This includes the fees, as well as the transportation expenses in arranging the requirements.
If you want to save yourself from greater unwanted expenses, you better allot some budget on the insurance requirements. This includes insurance for tools, equipment, and workers, as well as general insurance such as contractors’ general liability and performance bonds.
In estimating the cost of the new development, do not forget to allot a 10-% contingency fund. This is for unprecedented instances and inflation factor, especially if the project will run for several years.
These factors are only few of the things needed to be considered in estimating construction development cost according to Dan Greenhalgh. Personal preferences like the quality of work and the credentials of the engineers and architects to be hired may also be added to the list.
As real estate developers, it is important to estimate the construction cost of your projects with precision to ensure that it will be accomplished efficiently.