Commercial projects come with a range of expected (and unexpected) costs. And of course, every commercial architecture project has its own unique design, particular site, distinct stakeholders, ideal timeline, financial and regulatory constraints, and more. 

That’s why, if you’re a business owner or developer pondering or planning a commercial construction project, it’s helpful to understand the most common factors likely to influence the overall cost of your project before architectural and interior design planning even begins. 

To help you set realistic expectations at the outset — and also, ideally, a realistic project budget — we’ve rounded up some of the major cost considerations you’ll need to plan for. Let’s take a look…

Hard Costs vs. Soft Costs in Commercial Building Projects

If you’ve been involved at a high level with a commercial construction project before, you know that some costs are associated with very tangible, visible aspects of the project, such as the physical building materials, labor costs for workers on site, construction equipment costs, and more. These are called hard costs and, on a commercial construction project, typically account for the vast majority of expenses. (A rough estimate is anywhere from 65-80% of the total expenses.) 

The other broad category of costs, which are more “invisible,” are considered soft costs. Anywhere from 20-35% of the total, these costs are also essential and may include expenses for architectural and engineering fees, financing costs, permitting and regulatory fees, insurance, legal and accounting fees, and more. Without proper planning, these are more likely to be overlooked on the front end, especially if you’re new to commercial design and construction.

The bottom line: setting realistic expectations and a realistic project budget requires planning for both hard and soft costs. 

Want more specifics on how these two categories break down? Here’s a pretty thorough overview of hard vs. soft costs. 

Key Areas Impacting Commercial Project Budgets the Most

In addition to considering both hard and soft costs, it’s also important to understand which project areas might have the most influence on the overall project budget. 

Materials Costs

Naturally, this category (a hard cost) makes up a large chunk of most commercial building budgets. Unfortunately, it’s also an area that can fluctuate a fair amount and has risen significantly in recent years, especially since 2020.

Planning for this budget category is a balancing act of choosing high-quality construction materials while working within the specific financial constraints of your project, plus building in some buffer for cost changes during the project. A good architecture and design partner will help make materials choices with these considerations in mind. 

Site Conditions

To some degree, site conditions will always be a major driver of the design for commercial projects — and therefore, both the material selection and overall hard costs. There are many variables to account for: What type of drainage will be necessary? How will your site accommodate parking? How difficult is the site to access? How do the characteristics of the site affect access to the various required utilities? All of these questions and more will inform your building design and, ultimately, the associated costs. 

Code Requirements

The exact location and use of your spaces will determine the specific code requirements for the project, which will also likely influence materials and labor costs. An experienced, collaborative architectural firm can help you plan for these things from the beginning to minimize “surprise” requirements and expenses in this category later. 

Scope Changes

Nothing causes commercial architecture project costs to balloon quite like increasing the project’s scope. That’s why it’s important to get clear on the scope from the very beginning — ideally, before architectural designs are drawn.

Start by defining a clear vision and outlining specific needs and goals. At this point, it’s also a good idea to come up with a ballpark figure of a total project cost that makes financial sense for your business or brand. With those in mind, you’ll be better positioned to have effective discussions with architecture and interior design professionals who can help determine project scope and prevent any unwelcome adjustments further down the line. 

How Effective Commercial Architects Manage Costs

Here at George Armour Ewart, Architect (GAEA), we believe an experienced architecture and design group is a business’s best chance at setting realistic expectations, a precise budget, and managing your commercial project costs — not just during the design phase, but until the project is 100% complete! 

We consider it to be the architect’s responsibility to guide you from start to finish, which includes managing costs every step of the way. Here are a few ways Team Ewart does this: 

• Clear communication & collaboration – between you, the client, and our team and partners on the project
• Smart design – making the most of your commercial space; balancing form and function
• Value engineering – optimizing your budget to meet your needs without compromising on quality
• Proactive planning – from the outset, we consider the key factors above (and much more!) to bring your commercial space to life while minimizing surprise costs

Questions to Ask When Budgeting for a Commercial Project

It’s clear there’s a slew of factors to consider when planning financially for a commercial construction project. Here’s a quick recap of what you need to ask yourself and/or your architectural partner as you budget and eventually move into the design phase: 

• What hard costs and soft costs can be expected?
• What amount of buffer should I build into my budget for unexpected costs?
• What should I budget for materials?
• How will the project site influence design, and therefore cost?
• How might building codes and regulations influence cost?
• How can we avoid scope changes down the line?

Lastly, and crucially, if you’re still deciding on an architecture firm to partner with, ask potential candidates about their project management methods so you know what level of involvement and guidance you can expect.

Want to learn more about how we can help on your next project? Reach out to our team of architects, interior designers, and project managers — we’d love to help make your next project a success from start to finish.