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Real estate is an expensive endeavor, and anyone attempting to calculate the cost of factors affecting the construction cost of an office or building a house should be aware of the difficulties involved in the process. Typically, there are numerous variables that affect construction costs, and externalities can have a big impact.

After experiencing a drop of 12.3% in 2020, the Indian construction industry is predicted to increase by 15.9% annually in real terms in 2021.

According to the Ministry of Statistics and Program Implementation, the construction industry in India experienced year-over-year (Y-o-Y) growth of 68.3%  in real terms in Q2 2021 despite the onset of the second wave of the Coronavirus (COVID-19) pandemic (MoSPI).

The industry experienced an unprecedented decline of 49.5% YoY in Q2 2020 as a result of the nationwide lockdown and travel restrictions. As a result, the industry experienced growth in Q2 2021 with a very low base effect. Additionally, a rise in industrial activities helped the sector’s output in Q2 2021.

A building plan must be in place before you can start estimating the factors affecting construction cost of a house. Without a strong building design, it would be difficult to undertake a cost analysis. The plan of your home should be developed by an experienced architect, since this will greatly aid in determining the most accurate calculations.

Factors that influence construction cost

Know here the factors that affecting construction cost in India:

The price of the building supplies

Construction costs are made up of the costs of raw materials, shipping, and taxes. However, the price of each of these three elements may vary depending on where the project is being carried out. Additionally, the project’s scale is quite important. For instance, a larger project will require more raw materials, and vice versa.


The cost of building is significantly influenced by the project’s quality and design factors affecting cost of building. Whether you want to include modern facilities or keep things basic, the project’s quality has a big impact on how much it will cost to build. High grade projects also use high quality raw materials.

A Building site

Construction expenses for a project can be significantly influenced by the project’s sites. The cost of the project could rise as a result of site considerations such as poor soil, the presence of pipes, uneven terrain, archaeological sites, water bodies, and environmentally dangerous locations. They must consequently be factored into construction costs in a significant way.

Size of the undertaking

A sizable undertaking necessitates a sizable crew and more resources. As a result, the cost of building would greatly vary depending on the project’s size. A 500 sq ft house, for example, will cost less to build than a 5000 sq ft one.

Wage for labor

States have different labor costs. Additionally, the payment for labor payments may be made on a daily basis in some locations vs an hourly basis in others. Understanding labor standards is essential in order to accurately estimate the cost of construction.

Requirements for the regulator and insurance

The regulatory bodies’ approval could be expensive and time-consuming. The cost of home insurance must also be taken into account because it has the potential to drastically outstrip your budget.

Conditions on a construction site

Construction costs may rise as a result of project site conditions. If these variations are not taken into account during estimation, site conditions like poor soil, wetlands, contaminated materials, conflicting utilities (buried pipe, cables, overhead lines, etc.), environmentally sensitive areas, ground water, river or stream crossings, heavy traffic, buried storage tanks, archaeological sites, endangered species habitat, and similar existing conditions, among others, may increase the project cost during the construction phase.

How do delays affect building costs?

The speed of a project affects its construction costs as well. Unexpected events that cause construction delays might have a significant impact on the budget.

Delays in building may lead to a number of issues, such as:

  • A rise in equipment rental rates
  • Bonds, securities, and insurances for building are being expanded
  • The pay for workers and contractors could increase.
  • Using equipment inefficiently could lead to overhead costs
  • Since raw materials cannot be left out in the open, their storage costs may cause material prices to increase in the interim.

Importance of Management

Getting the owner and the contractor involved early is one of the best strategies to keep construction expenses under control. Although it might seem clear, under the conventional way of construction delivery, the owner hires an architect or engineer to create the plans and specifications before choosing a contractor separately through negotiation or open bidding at a later stage of the project’s development. This may cause the owner a variety of issues.

Can the design be built within the required timeframe and budget? How much time will be lost if the project needs to be started over? What if the contractor and the architect don’t agree? What number of contracts must be managed?

By comparison, using the design-build project delivery technique is the most efficient way to achieve early contractor engagement. Through a single contract between the owner and the design-build team, design-build streamlines project delivery while fostering communication and teamwork between the designers and the construction team.


There are several variables that affect construction costs. Land acquisition, obtaining permissions, and building fees are a few that come to mind. Then there are the life-cycle expenses, which are the costs incurred over time to maintain, repair, and replace the facility and its systems. In this line of business, you need to partner with trusted and genuine people. Nidhi Aggarwal, founder of SpaceMantra, is one of the most trusted brands in construction. They provide construction materials and interior products easily and efficiently.