New Construction Budgets
The budgets for a new construction project must include the four main categories of work:
1. Land Costs
2. Hard Costs
3. Soft Costs
4. Sales Costs
The land cost is easy to calculate as this is generally the planned cost for the land plus some miscellaneous closing costs usually in the 2% range.
The Hard Costs are difficult to perform and is usually done by an expert with project management experience or construction experience. The hard costs often range from $200 to $275 per square foot. Most estimates will have the breakdowns according to the Uniform Building Code which separates the work by trade. Sometimes this work is called, “Bricks and Sticks” as it applies directly to the work of the contractors. It also includes site work, general conditions, and the overhead and profit for the general contractor.
The Soft Costs may be the most difficult estimate to perform due to the number of variables that must be anticipated. This area takes into consideration the duration of the project and interest rates. The breakdown often includes the following:
- Design fees
- Permitting fees
- Financing fees and other carrying costs
- Utilities connections
- Legal fees
- Accounting fees
- Insurance
- Management
The Sales Cost includes the carrying costs for the duration of the sales, interest, taxes, and real estate commissions. This typically costs around 7%
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