Understanding the difference between costs, markups, and add-ons is vital in the construction industry. This article provides a detailed insight into hard costs, including construction-related expenses, mobilization, staging logistics, and the importance of including these costs in your project's budget.
Key Insights
- Hard costs refer to the direct expenses related to the construction of a project, such as permits, fees, mobilization costs, and costs related to field office and staffing.
- It's critical to take into account both obvious and often overlooked elements like staging logistics, which can involve additional stocking areas and maintaining sufficient emergency vehicle access, to avoid unexpected fines or penalties.
- Continual and final cleanups are a necessary aspect of project costs to maintain safety throughout construction and should be factored into the budget before applying any markups and add-ons.
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So let's talk about costs versus markups and add-ons. Your costs can be considered as a hard cost. That's what it's actually going to take to build the project.
Hard costs include all the costs related to construction of a project, including but not limited to permits and fees as applicable. Also check and make sure that you are responsible to provide costs for permits and fees. Sometimes the owner will actually pick up those costs separately.
Mobilization. This is what it takes to actually get out there and get the project set up initially and then also finish up and clean up at the very end. The fewer the mobilizations that you will actually have to go out there on site, the lower your costs will be.
Field office and staffing. Stormwater pollution prevention program, or often referred to as SWPPP. This is vital.
It seems like a simple task, but it's vital to make sure that those costs are included, whether it be as a hard cost or you show it as a separate line item after the fact. Staging logistics. This is something that can often get overlooked by not providing enough resources for it.
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Staging could require extra areas for stocking, for building materials, for egress to get your equipment around the project. And also make sure that you always provide egress for emergency vehicles to get around the entire project site. If you don't have this identified and you get visited by an inspector, they can actually fine you by not allowing enough egress for emergency vehicles around your construction site.
Owner and safety meetings. Another hard cost. Make sure you factor these in.
Check with your owner to see if they have any additional requirements other than what you're going to be providing. Demolition. Very often demolition is required before you can even put a out there on site.
Self-perform work. Subcontractor contracts and expenses. Construction site maintenance.
And always make sure that you have final cleanup. Even if you do cleanup on a regular basis on a project, which you have to do for safety purposes, still add money in there for final cleanup at the very end. Estimating hard costs should be determined before any markups and add-ons are applied.
