8 Hidden Costs Of Running A Construction Business

Starting a construction company is undoubtedly a profitable adventure to begin. It’s always going to be an essential industry and is required all over the world. However, before you get started, it’s crucial that you really take a look at all of your initial costs. You need to sort out all of your finances and create a business budget before you can even think about taking on any projects. Below we are going to take a look at just six hidden costs of running a construction business so that you can prepare for them. Sound interesting? Then let’s get started.

Project Delays

One of the most frustrating things about construction is that no matter how hard you try and stick to a schedule, there are always going to be delays. It could be that you discovered a design flaw, a piece of business equipment broke, or that mother nature decided to rain for three days. Whatever it is, you have to be aware of those setbacks and any costs that could result from them.

To avoid project delays, ensure that you have the proper construction equipment:


While you might be worried about getting the latest tools and equipment for your business, you can’t forget the technology too. The right software is not only essential in the design process but can improve collaboration, productivity and ensure the safety of your team. A few of the different types you will need include:

Unexpected Changes

You could spend hours perfecting a design, but once you actually get to the job site, things can change. Every project experiences unexpected alterations, and this is something that you’ll need to prepare for. While some won’t have much of an impact on your budget, others could incur additional costs. Before you go changing anything, you’ll need to make sure that you can afford it first.

Construction Permits

You should already know that a lot of construction, whether it be residential or commercial, usually requires a permit. However, not many people remember to factor the cost of these into their project budget. They can range from a few hundred dollars to a few thousand, so make sure that you calculate it.


Like permits, insurance is one thing that you have probably already prepared for. However, what you might not realize is how many types of it you will need. In fact, there are around eight must-haves, which include:

  • General liability insurance.
  • Professional liability insurance.
  • Pollution liability insurance.
  • Auto insurance (business and commercial vehicles).
  • Inland marine insurance.
  • Workers compensation insurance.
  • Cyber insurance.
  • Contractor license bonds.

Land Preparation

Of course, the last hidden cost that you need to prepare for is island preparation. In most cases, you’re not going to be able to pull up to a site and start construction straight away. While you won’t always be responsible for excavations and clearing the project site, it’s still important to clarify this in your contract. Otherwise, you will be hit with an unexpected cost.

Accidents & Delays

Moreover, construction business owners need to account for the hidden cost of unforeseen accidents and delays. Construction procedures require specialty tools, manual labor, and technical machinery. Accidents can routinely occur that cause site damage, trigger timeline delays, or lead to bodily harm. Of course, accidents are not the only factor that can lead to serious delays. In fact, your project timeline can be significantly disturbed by weather events, natural disasters, or employee strikes. Certainly, accidents and delays are a major hidden cost of running a construction business.

Legal Documents

Furthermore, legal documents are another hidden cost to successfully run a construction business. These organizations are unable to operate without properly-filed permits, licenses, and renewals. The cost of obtaining these documents largely vary based on state and municipal regulations. Of course, modern construction companies can expect to pay just under $1 per square foot. At the same time, legal licensing can cost a few hundreds of dollars on an annual basis. Definitely, permits and licenses are a hidden cost to keep in mind when running a successful construction business.

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