Commercial Construction Company

Budgeting for Warehouse Construction Costs

Warehouse construction projects are big-ticket items, and because there are so many factors that go into estimating the costs — there’s not a universal approach to coming up with a “magic number” for the budget planning. Working with an experienced team of commercial construction pros will ensure that you’re getting return on your investment without cost overruns. In fact, any contractor that gives you an instant quote based solely on size and location is probably a contractor you should stay far away from.

Instead, your contracting team should perform in-person cost estimations taking into account those many factors. They’ll know the current numbers regarding things like labor costs, materials, and equipment rental fees, among other costs, and give you a more accurate picture of what the final price tag will be. Cookie-cutter estimates or online calculator tools can’t account for those nuances.

Warehouse Construction Cost Factors to Consider

Those online quotes also don’t take into account the type of warehouse you want to build. While simple storage warehouses are the most common and the least expensive to construct, prices start to rise if you want a cold storage or temperature-controlled building. That’s a more complex and pricier undertaking. Add automation tools, robotic elements, and conveyor systems to the mix, and the price tag goes up even more.

Something else to keep in mind is the material and method needed during construction. Are you looking for design-build services? Do you have a sustainability initiative to support? Will you be using new or recycled materials? What’s the overall square footage? These questions (and others) need to be asked and answered by your commercial construction team to help determine more accurate cost predictions.

Account for Different Types of Costs

Warehouse construction costs can fall into four categories: Hard, soft, operational, and financing costs. When budgeting for your project, you’ll need to work closely and communicate with your commercial construction contractor about keeping these categories of costs on track.

Hard costs are somewhat predictable and account for things like labor and materials. They’re pretty straightforward at the outset but can fluctuate. Soft costs are a little harder to estimate and may grow as the construction continues; they include the price of obtaining permits, engineering, taxes, and the cost of land for the property. These are the costs that are most likely to lead to overruns.

The capital it takes to operate your warehouse and the money you spend on energy bills can actually end up being more than the actual construction costs. Your contractor team should walk you through analyzing the lifetime cost of operations and make these final numbers a part of your cost estimations. 

The most important cost to keep in mind is the financing cost. Warehouse construction projects are almost always financed, and that process comes with fees — and it also needs to include a margin for budget overruns and foresight on how you’ll pay off the interest on loans.

Adding Value and Reducing Costs

Ultimately, warehouses and distribution centers and the capacity and efficiency they offer become a valuable asset to the company that owns them. Customers are increasingly looking for their products quickly and efficiently, and the quality of warehouses can make or break that expectation.

Efficiency, of course, starts with the overall design of the warehouse. Taking advantage of your commercial contractor’s design-build skills can give you a wider view of the entire project, from the architectural design to the construction. This will put accountability on one point of contact who can streamline communication and get the project done according to schedule — something that goes a long way towards controlling costs.

Warehouses are not all created equal, and that’s important to remember when estimating construction costs. Plumbing, electrical and HVAC systems will vary across industries, usage, and size. Every site is different and every project must still be completed on time and on budget.

One thing that is universal is communication. Warehouse construction projects need to be completed quickly and the construction contractor you work with needs to be thinking steps ahead. At G. S. & S., your project coordinator will work with you from the beginning of the construction process until the end. We’re focused on timeliness and collaboration, but we also know that price is key to success. Get in touch to turn your warehouse construction vision into reality.

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