When working in the world of construction, it can certainly be a lucrative industry to build a career in. In fact, because more and more people are getting into the tech industry, it’s creating a demand for more skilled individuals in construction. But in order for your construction company to become a lucrative one, there are a few things you need to do first.
For one, you’ll need to get licensed for the state you’ll be working in. For example, in order to obtain a Tennessee contractor’s license, you’ll have to pass two exams, including business and law and the construction/trade exam. Secondly, you’ll have to endure the legalities of it all like forming your LLC or partnership, obtaining worker’s comp insurance, etc.
Now, once you’ve followed are the necessary steps to become a legal and licensed contractor in your state, you can then start working towards profiting off the projects you take on. As a contractor, regardless of what area you work in, it’s also important to know the factors that will impact your construction costs.
Some things will be completely out of your control, whereas, other things can happen due to poor planning. But the more you’re aware of these occurrences from the beginning, the more you can prepare for them to potentially prevent them from happening. And as you know, time is money, so if making yourself aware of these factors will help your company become more lucrative, then here are the top factors that can impact your construction costs.
Factors All Contractors Need to Be Aware of That Can Impact Construction Costs
Project Schedules and Deadlines
The amount of time it takes for you to complete a project plays a significant role in construction cost estimates. Let’s say you take on a home construction project and you quote a client eight weeks to complete; Well, if there’s any type of delay that causes you to need more time to complete the project, it’s going to impact your construction costs, not to mention aggravate your client as well.
Unexpected delays in projects raise construction costs simply from indirect construction costs. So, at all costs, do everything in your power to stay on schedule and meet all deadlines associated with your projects… This will not only save you money but also start a good brand reputation for your company, which will lead to more clients.
Cost of Construction Materials
Well, you can’t complete a project without the right materials. The costs of the actual materials and shipping charges and taxes will have a major impact on the costs of all your projects. Now, if the materials you need are locally sourced, then your overall costs of materials will be much lower than if they needed to be shipped.
In order to complete a project in the estimated time frame you give your clients, it’s going to require a team effort; you can’t do it all on your own. For one, you don’t have the expertise in every area of construction. Secondly, you won’t have all the necessary equipment or licenses because you don’t specialize in all areas of construction.
For example, if you’re working on a residential project you will need the services of a licensed electrician, and unless you have a separate license for that, you can’t go anywhere near any type of projects involving wiring without the necessary license… That’s why you’ll need to hire other contractors to assist you with certain projects, and it will impact your construction costs.
Hiring labor for projects in urban areas will typically cost you more because the cost of living there is more expensive versus rural areas.
The factors listed above aren’t necessarily hidden costs that impact your construction costs but they are factors that contractors (especially new contractors) don’t dig deep enough into to have a more accurate estimation of project costs, which in turn will cost their business even more money.
By becoming more aware of these factors, and the intricacies that impact these factors, you’ll be more knowledgeable on which projects you can take on and which ones are out of the means or expertise of your company.