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Understanding and estimating construction costs can be difficult. There are a variety of factors affecting costs, including what are called life-cycle costs. Asphalt shingles cost little over the short term, but need to be replaced at regular intervals, while a slate roof will last the life of the building. It is also wise to consider energy costs --for example, high-efficiency furnaces or low-E glass. They cost more now, but save money later.
Design is a major and often-underestimated factor in the cost of construction. For an extreme example, consider two houses. Both have the same area. Both have two bathrooms and three bedrooms. But one has a common rectangular shape while the other is round. Clearly, the round house is more difficult to build and therefore costs more.
The building site itself is a powerful determinant of construction costs. Sloped sites cost more to build on than level sites. Sites with poor soils often require special (and expensive) construction methods.
Materials greatly influence the cost of construction. Brick and stone cost more than composite siding. A tiled shower costs more than a fibreglass shower. An inlaid hardwood floor is more expensive than a carpeted floor. For almost any building material, there is a wide range of prices.
Location is another important factor. Location -- as opposed to the specific site of the structure -- influences design; a building that is appropriate for the tropics will be inadequate for the arctic. Location also determines material cost and availability as well as labour prices.
Construction adheres to the law of supply and demand. Building during times of low demand will cost less than building during times of high demand. This is particularly true of materials such as timber. Timber is a commodity, and prices can change daily.
Within a given location and a given trade, labour prices tend to vary little. If one wants to lower labour costs on a construction project, the best method is to consider materials with lower labour costs -- for instance, using plasterboard instead of plaster.
Quality costs money. Better materials are usually more expensive, and more-skilled craftsmen command a higher wage. Nonetheless, over the life of a building, higher quality is a bargain.
In auto racing there is a saying: "Speed costs money. How fast do you want to go?" This is also true in construction. If your project has a tight schedule, it's going to cost more.
- "Residential Buildings and the Cost of Construction: New Evidence for the Efficiency of the Housing Market"; Stuart S. Rosenthal; The Review of Economics and Statistics Vol. 81, No. 2 (May, 1999), pp 288-302
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