It is always a good idea to do cost estimating prior to beginning any type of real estate or construction project. In order to do this effectively and to get a comprehensive budget for your project, you can use one of several methods.
Square Footage Method
This method involves calculating the cost of construction by multiplying square footage of the structure by the construction cost for that particular building. With this method, you need to have done some preliminary research to understand the amount per square foot that you plan to spend. This preliminary research should include hard costs, expenses directly associated with the construction of the building (labor, materials, etc.) and soft costs, expenses not related to the physical construction process (permits, architectural fees, etc.)
This method is more detailed and can therefore be more accurate. Here, you provide a cost for each material involved and multiply that cost by the amount of the material that you need. So, if you need 1,000 square feet of dry wall, you need to find out the cost of buying, installing and finishing the dry on a per square foot basis, and multiply that number by 1,000 square feet.
Quantity Survey Method
The quantity survey method is the most detailed method. This requires you to break down all of the components of a building and estimate the cost of the material and installation separately.
This is a quick method to give you a ballpark of your construction costs. In order to use this method, you must first know the original construction cost of the building. You can then multiply that cost by a number that takes into account the increase in construction costs since the building was built, also known as, the “index.” National companies that do this kind of research publish these numbers.
This method does not take into consideration the type of building being built or the finishes, local conditions etc.