How to Create a Construction Cost Analysis Sheet?
Along with cost-benefit analysis and cost-estimate, a construction cost analysis is a crucial process in every construction project. It’s a breakdown of all the expenses or costs incurred by the construction company for a specific project or activity. According to Rider Levett Bucknall’s First Quarter 2019 North American Quarterly Construction Cost Report, there’s a 5.7% rise in construction costs in the USA. And the number could go up. Here are various factors that you need to consider when creating an accurate construction costs analysis.
1. Labor Costs
Manpower is the most essential element to complete your construction project. You have to consider the cost of living of your workers, the demand and supply, and productivity.
2. Construction Material Costs
Regardless if it’s a building or residential construction, material costs should be given priority. Although you don’t want sub-standard materials, you need to do a comparison between your labor costs and materials costs.
3. Construction Financing
In order to begin a project, there has to be a fixed financing scheme. Make sure to decide how do you plan to finance a construction project.
4. Constructions Service and Utility Costs
These include real estate or building management systems, power supply, energy allocation, fire protection, lifts, and escalators, building ventilation, water system, plumbing system, lighting, and security.
5. Overhead and Profit
Although they’re two different elements in construction costs, they always come together. Overhead costs are the regular expenses of your project such as accounting fees, legal fees, and insurance. Profit is what the general contractors make after accounting for all construction expenses.
What is the Difference Between Construction Cost Analysis and Cost-Estimating?
These two may sound the same, but they are actually distinct from each other. Construction cost analysis is the process of breaking down all expenses incurred in your project. Cost estimating analysis is the process of forecasting expenses.
Why is Construction Cost Analysis Important?
Construction cost analysis is important for it will determine not only the budget but also the profitability of your construction company. So in every construction project, conducting a cost analysis is crucial.
What is the Purpose of Construction Cost Analysis?
The purpose of a construction analysis is to provide an analysis of expenses and study on various factors. It’s a tool that will help contractors whether or not the resources and money for the project are spent wisely.
What Software Programs Can I Use to Create a Construction Cost Analysis?
When it comes to computations, the spreadsheet in Microsoft Excel or Google Sheets will allow you to analyze and calculate numerical data. Moreover, you can also create your construction project chart in these software programs to compare various data.
Is it Difficult to Create a Construction Cost Analysis?
If you’re new to this, then it can be hard creating a construction cost analysis. But as time goes by, you’ll get better at it. Just remember the factors you need to consider. There are sample templates available online to guide you.