BUILDING COSTS

                                                      BUILDING COSTS
Construction cost of a building usually is a dominant design concern. One reason
is that if construction cost exceeds the owner’s budget, the owner may cancel the
project. Another reason is that costs, such as property taxes and insurance, that
occur after completion of the building often are proportional to the initial cost.
Hence, owners usually try to keep that cost low. Designing a building to minimize
construction cost, however, may not be in the owner’s best interests. There are
many other costs that the owner incurs during the anticipated life of the building
that should be taken into account.
Before construction of a building starts, the owner generally has to make a sizable investment in the project. The major portion of this expenditure usually
goes for purchase of the site and building design. Remaining preconstruction costs
include those for feasibility studies, site selection and evaluation, surveys, and program
definition.
The major portion of the construction cost is the sum of the payments to the
general contractor and prime contractors. Remaining construction costs usually consist
of interest on the construction loan, permit fees, and costs of materials, equipment,
and labor not covered by the construction contracts.
The initial cost to the owner is the sum of preconstruction, construction, and
occupancy costs. The latter covers costs of moving possessions into the building
and start-up of utility services, such as water, gas, electricity, and telephone.
After the building is occupied, the owner incurs costs for operation and maintenance
of the buildings. Such costs are a consequence of decisions made during building design.
Often, preconstruction costs are permitted to be high so that initial costs can be
kept low. For example, operating the building may be expensive because the design
makes artificial lighting necessary when daylight could have been made available
or because extra heating and air conditioning are necessary because of inadequate
insulation of walls and roof. As another example, maintenance may be expensive
because of the difficulty of changing electric lamps or because cleaning the building
is time-consuming and laborious. In addition, frequent repairs may be needed because
of poor choice of materials during design. Hence, operation and maintenance
costs over a specific period of time, say 10 or 20 years, should be taken into account
in optimizing the design of a building.
Life-cycle cost is the sum of initial, operating, and maintenance costs. Generally,
it is life-cycle cost that should be minimized in building design rather than construction
cost. This would enable the owner to receive the greatest return on the
investment in the building. ASTM has promulgated a standard method for calculating
life-cycle costs of buildings, E917, Practice for Measuring Life-Cycle Costs
of Buildings and Building Systems, as well as a computer program and user’s guide
to improve accuracy and speed of calculation.
Nevertheless, a client usually establishes a construction budget independent of
life-cycle cost. This often is necessary because the client does not have adequate
capital for an optimum building and places too low a limit on construction cost.
The client hopes to have sufficient capital later to pay for the higher operating and
maintenance costs or for replacement of undesirable building materials and installed
equipment. Sometimes, the client establishes a low construction budget because the
client’s goal is a quick profit on early sale of the building, in which case the client
has little or no concern with future high operating and maintenance costs for the
building. For these reasons, construction cost frequently is a dominant concern in design.