What is the construction cost?

Construction costs (sometimes called “hard costs”) are costs associated with the contractor and anything the contractor purchases. In other words, these are the costs of labor and materials. These costs may include: Contractor fees. Subcontractor fees.

Construction costs form part of the overall costs incurred during the development of a built asset such as a building. Very broadly, construction costs will be those costs incurred by the actual construction works themselves, and on some projects may be determined by the value of the contract with the main contractor.

Actual cost, in the construction industry, refers to the accurate amount reasonably spent on a project. This includes every expense incurred during the planning, development, and execution phases.

Construction Cost Summary is a written summary prepared by Landlord detailing the total cost to install or prepare the Landlord's Work which cost shall include the total cost (i) to prepare the Space Plan, Working Drawings and other Construction Documents, (ii) of the Contract Sum, and (iii) of any Tenant's Work ( ...

The four types of costs involved in a construction project are direct, indirect, fixed, and variable costs.

Projected costs are estimated costs based on the previous period's sales and expenses. While actual costs are the actual amounts spent during the period. At the end of that period, companies will compare the actual vs the projected costs and see if they overspent.

8 steps in construction estimating

Fundamental Factors Of Construction Cost

Overall, project costs are the total funds needed to monetarily cover and complete a business transaction or work project. Project costs involve: Direct costs — Direct costs are those directly involved with the project and necessary in order to complete said project.

Labor and materials are among the most significant costs construction companies incur.

Among these various components of a project's total “cost stack,” by far the largest share of a project's total cost comes from materials and labor—or hard costs.

Construction Method

Actual Cost Calculation

The PMBOK defines BAC as “the sum of all budgets established for the work to be performed.” In simple terms, the BAC is the total budget that has been estimated for all the work that needs to be completed over the project's duration.

Estimate the Type of Expenses:

To keep confusion at bay, it is better to gain a detailed understanding of the 5 different types of cost in Project Management: Direct Cost. Indirect Cost. Fixed Cost.

5 Contract Costing

To work out the cost of a contract undertaken we employ contract costing. So it will help us track the costs of a specific contract with a specific customer. These methods of costing are mainly used for construction contracts, like the construction of complexes, highways, bridges, dams etc.

Cost estimation helps you determine your project's budget, schedule the work necessary and manage new resources. Cost estimates are also very crucial when it comes to winning new business. Property owners also use cost estimates to assess the feasibility of their projects before embarking on actual construction.

Capital costs are fixed, one-time expenses incurred on the purchase of land, buildings, construction, and equipment used in the production of goods or in the rendering of services. In other words, it is the total cost needed to bring a project to a commercially operable status.

The components of construction costs consist of the resource factors (labour, materials, plant and subcontractors); project factors (profit margin, overhead costs, supervision/management, finance, transportation and exchange rates); and the cost of legislative requirements (professional fees, transaction costs and ...

Planning Your Construction Budget

Costs are broadly classified into four types: fixed cost, variable cost, direct cost, and indirect cost.

Variable costs

If a project demands larger investment from the company, the costs associated with the project as it grows—cost of labor, material, etc. —are considered variable costs.

The project budget is the sum total of the cost required to complete all the tasks in a project and contingency reserves for the known risks. It can be simply calculated by aggregating the lower-level cost estimates in a WBS.

Overhead is the cost of running a business. In construction, overhead includes both direct costs, which are tied to specific jobs, and indirect costs, which include operational costs required to run a business. Some examples of direct costs would include equipment rental or temporary office structures.

To calculate your construction overhead, add up the monthly fixed costs of running your business. Some find it easier to add up your annual costs, and then divide by 12 to get your monthly expenses. The resulting figure is the amount of money you must make each month to keep your business alive.