Factors that change the cost of construction per square foot

Now that we know the average cost of construction per square foot, it’s important to understand some of the factors which can affect that price. Some of the most common factors which impact construction costs are

Location of the project:

A view of a building

If the property is located in a developing country costs are generally lower than in developed countries.

The building design and type:

A man wearing a uniform

There are different construction materials, designs, structure methods that will affect cost. For example: if the floor area is not more than 200 square feet concrete block building construction method can be used instead of normal bricklaying which will reduce cost by about 20-25%.

Project timeline during the year:

this factor mostly affects housing projects as it involves constructions work for a longer period. Normally low-cost housing projects should be taken by developers during low prices seasons like the first quarter or last quarter of every year. They should avoid taking such projects during price-touching seasons like the middle quarter of every year. The same is applicable to construction companies.

Location in city or country:

Generally cost are lower in developing countries than developed due to simpler project specifications which result in reducing the building time, labor cost, and overhead expenses.

Nature of work involved :

Some projects are very complicated when compared to general construction projects, so they required more man-hours. For example, in case high rise buildings normal brickworks can be finished within 2 -3 months but for this type of complex structure made by using concrete blocks, it will take 5 months at least even with maximum efforts by builders because constructors do not have experience` & expertise if it’s their first project. So extra man-hour increases Cost.

Business and market:

Market and business capacity is a very important factor that affects the cost of construction. If experts, constructors, vendors know that they will get customers all the time then they will never increase costs as their confidence level increases.

The material used in construction:

Normally Construction material price has a direct relation with world market prices so it changes every now and then. For Example, if we take steel bars which are very much required for making concrete structures according to the latest building standard IS 456, its price is touching the sky due to high demand but when its supply increases then it will come under control. So basically supply and demand decide the cost of materials.

 Labor cost:

Labor cost is one of the main factors which decides the overall construction cost. This comprises skilled and unskilled labor charges, their food, accommodation, and other allowances. The current market scenario is such that there is high demand for skilled laborers in the market, so their charges are comparatively higher than the unskilled ones.

Taxes and duties:

Government levies different taxes and duties on various construction materials. For example, VAT (Value Added Tax) is charged on the purchase of most of the construction materials in India. There are also other taxes like Service Tax, etc., which affect the total cost of construction.

Project management cost:

This includes various expenses related to project management like wages of foremen, supervisors, site engineers, accountants, etc.


All these factors decide the cost of construction per square foot. As a thumb rule, it is always advisable to add about 15-20% extra amount in the total estimated cost to avoid any last-minute surprises.

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