June 27, 2024

Budgeting for Any Commercial Project: 17 Pricing Aspects to Consider

Commercial construction projects involve layers of complex planning and coordinating. They include various teams of professionals walking a tightrope of timelines and managing schedules. There are so many moving parts to the commercial build process to consider. However, the budget is the one aspect of your project that might carry the most weight. Understanding and overseeing your project’s various expenses and estimates can be challenging. 

As your premier partner for commercial construction projects throughout the Lehigh Valley, we’re here to shed light on the complex nature of budgeting your build. Keep reading to explore what pricing aspects to consider, along with influences that can warrant budget changes along the way. Knowing what to expect with your project spend will help you better prepare for a realistic budget strategy.

Importance of Proper (and Realistic) Budgeting

Your commercial project’s success depends on your ability to also follow a budgetary blueprint that guides every effort. A well-planned and realistic budget will include expected, anticipated, and unforeseen expenses. With the right roadmap for spending, you can realistically prioritize your resources and manage expectations more effectively. And great project budget management sets financial parameters for transparency and accountability, as well.

Key Budgeting Components to Consider with Your Project

When developing a budget for your commercial project, it’s important to start by identifying the key pillars or components of the project that will drive costs. By focusing on these core elements first, you can ensure that your budget accurately reflects the most critical aspects of the project and avoid overlooking any major expenses. Once you have a handle on these key pillars, you can then begin to factor in additional costs related to marketing, overhead, and other miscellaneous expenses that may arise. These core components typically include:

1. Construction Costs

This encompasses costs usually related to labor, materials, equipment rental, and subcontractor fees. Think of these as the construction activities with associated costs, like excavation, foundation work, framing, roofing, electrical, plumbing, HVAC, finishing, and landscaping.

2. Inspections and Permits

Be sure to tally the costs associated with obtaining building permits, zoning approvals, environmental assessments, and other regulatory requirements. There will be fees for inspections and compliance checks throughout the construction process to consider as well.

3. Engineering and Architectural Costs

Allocate enough funds for professional design services, including architectural drawings, structural engineering, mechanical, electrical, and plumbing (MEP) plans. Remember, too, revisions or modifications requested during the design development phase will also come with additional costs.

4. Project Management Oversight

Project management personnel, construction supervision, and site supervision will also come with attached costs. These professionals are must-haves in coordinating with subcontractors, suppliers, and regulatory authorities. So be sure to reserve enough of a budget for them, ensuring project adherence to specifications, schedules, and quality standards.

5. Insurance and Bonds

Factor in any insurance premiums, liability coverage costs, workers’ compensation, builder’s risk insurance, or performance bonds. These requirements are essential to protect against potential risks, liabilities, and losses associated with your construction project.

6. Project Conditions

Budget for general conditions costs. These might include temporary facilities, site preparation, security measures, utility installation, site cleanup, waste disposal, and other miscellaneous expenses. Generally, these condition-related costs ensure safe work environments.

7. Soft Cost Considerations

Don’t forget to account for soft costs with your budgeting plans. Soft cost examples include any legal fees, permit expediting services, design consultants, surveys, testing and inspection services, architectural renderings, or marketing expenses. 

8. Financing Fees

Include interest payments, loan origination fees, construction loan interest reserves, and other financing-related expenses associated with securing and managing project financing throughout the construction phase.

9. Contingency Funding

Setbacks happen. So, set aside a contingency reserve to cover unforeseen expenses, like scope changes, design revisions, weather delays, material shortages, labor disruptions, and other unexpected circumstances.

By considering these key components and allocating funds accordingly, stakeholders can develop a comprehensive and realistic commercial construction budget. Start here so you’re confident that you’re accounting for all anticipated expenses.  

Factors that Influence Commercial Construction Costs

Planning for project expenses is one thing. But really, preparing for the unknown shifts in budgeting is just as important. There are several factors that contribute to project cost fluctuations. Here are just a few to consider and keep on your radar:

10. Scope and Size of the Project

The scale and complexity of your Lehigh Valley construction project will significantly impact costs. Larger projects with extensive square footage, intricate designs, specialized features, and high-end finishes, for example, are going to call for more resources and incur higher expenses compared to smaller, simpler projects.

11. Building Materials and Finishes

The quality, type, and availability of building materials and finishes influence construction costs. If you’re going with premium materials, custom features, and specialty finishes, then expect those to come with higher price tags. You might consider swapping out for more standard materials and finishes to be more cost-effective.

12. Labor and Skill Level

Labor costs, including wages and benefits, vary based on local market conditions, labor availability, and skill levels required for the project. Skilled tradespeople and specialized subcontractors often command higher rates, especially for complex tasks or specialized trades.

13. Location and Site Conditions

The location of your commercial construction site will influence your project’s budget. For example, site-specific factors such as accessibility, terrain, soil conditions, environmental regulations, zoning restrictions, and utility infrastructure can impact construction costs. Higher land values, limited space, and stringent building codes can also impose changes to your project’s overall budget.

14. Design Complexity and Architectural Features

Whether you’re building an office complex, a new church, or a retail storefront, the design features will need to be considered as part of the budgeting process. Innovative designs, intricate details, custom elements, and sustainability features may require additional resources, expertise, and materials, resulting in higher project costs.

15. Regulatory Compliance and Permitting

Compliance with building codes, zoning regulations, environmental standards, and permitting requirements adds administrative costs to any Lehigh Valley commercial project. They might also lead to design revisions, site modifications, or mitigation measures to meet regulatory mandates. 

16. Project Management and Contingency Planning

Effective project management, coordination, and contingency planning are essential for controlling costs and mitigating risks throughout the construction process. Budgeting for unforeseen circumstances, change orders, delays, and unforeseen site conditions helps minimize cost overruns and maintain project viability.

17. Economic Factors and Market Conditions

Economic trends, inflation rates, construction market dynamics, material prices, labor shortages, and fluctuations in supply and demand impact construction costs. Market volatility, geopolitical events, and global supply chain disruptions can also influence material availability and pricing, affecting project budgets and timelines.


Consider these influencing factors and conduct thorough cost assessments and feasibility studies to estimate where you can and plan ahead. Doing so means you can develop realistic budgets, anticipate potential build challenges, and make informed decisions to optimize construction project costs and achieve your project objectives.

Additional Tips for Optimizing Your Project’s Budget

In our years of experience, we can offer a few additional insights and methods for maximizing your commercial project’s budget.


  • Negotiate contracts and manage vendor relationships.
  • Monitor costs ongoing and throughout the project’s life cycle.
  • Implement tools and systems for tracking financial performance.
  • Conduct regular budget reviews and variance analysis.
  • Use technology to streamline time-consuming tasks and processes.
  • Be an avid communicator with all your stakeholders.
  • Take advantage of competitive bidding opportunities.
  • Leverage value engineering.
  • Control your project’s risks to better control costs.

Trust Jerdon Construction to Help

If you’re looking for additional help with budgeting, planning, and executing your commercial construction project in 2024, trust our experts at Jerdon Construction! With decades of experience building commercial projects throughout the Lehigh Valley, we know how to develop and stick to realistic build budgets. Whatever project you’re planning this year, contact Jerdon Construction to help!