Hidden Costs of Construction

No one ever said that construction was easy – or cheap. In fact, there are several hidden costs that can pop up during any construction project, if you’re not careful. The list of potential pitfalls is long, from permitting and inspections to material waste and labor overruns.

One can say that there are no hidden costs, per se, only costs that are unknown to you personally. You can easily run into construction projects that may bust your budget with all those costs you did not know about but then all that comes down to your experience level. To keep hidden costs in check and to provide a cover for your business, insurance in construction projects should never be ignored.

We will take a closer look at some of the most common hidden costs of construction, and how you can avoid them.

Poor Design

This is one of the most common and also one of the costliest, hidden costs in construction. A poorly designed project can lead to a host of problems, from material waste to safety issues. The best way to avoid this cost is to work with a qualified architect or designer who can help you create a well-thought-out plan.

Most of the time, the design aspect of any construction project is not in the hands of the contractor, and they are basically given a design to implement. This is the contractor’s responsibility to check the design before taking on the project. If in the haste of securing a contract, you neglect design or are unable to see it through, then a single poor design has the potential to bankrupt a company.

It is advised to just step away from anything that you and your team cannot understand or you have doubts over the capability of your team to implement any design.

Inadequate Project Management

Another hidden cost of construction is inadequate project management. This can manifest itself in several ways, from missed deadlines to poor communication between the various parties involved in the project. The best way to avoid this cost is to make sure you have a qualified project manager who is experienced in managing construction projects.

Hiring an experienced and successful Project manager may fall heavy on the budget but that decision alone can save your business from a lot of trouble and make every project profitable.

Construction quality issues are so prevalent in today’s construction industry and there should be a lot more focus on quality of work that just meeting deadlines.

Unforeseen Circumstances

One of the most frustrating hidden costs of construction is unforeseen circumstances. Here is a list brief list of these obstructions that will only delay your project,

  • Bad weather
  • Vendor failures
  • Change of scope
  • Labor Strikes
  • Poor Execution

The best way to avoid this cost is to plan for the unexpected and build a contingency into your budget.

Last-Minute Changes

As you were about to hand over the site, there came additional requests and changes that will not only eat up a lot of your time but will also fall heavy on the budget. These can include everything from design changes to material substitutions. The best way to avoid this cost is to have a well-thought-out plan that takes into account all potential changes that could occur during the project.

Most experienced contractors can sense these changes coming from miles and would make necessary considerations during the construction.

Unrealistic Timelines

Though an unrealistic timeline itself is not a hidden or an additional cost it opens doors to so many costs that your project may well be declared a failure. Due to tight scheduling, most of the time contractors are forced to cut corners, which results in damages, and fixing those damages is way costlier than getting them right the first time.


Though we wish you may never run into any accidents they are bound to happen in any construction project. From breaking tools to machinery there are hundreds of possibilities of anything going rogue. Now if you are not covered with insurance for some reason, this cost may eat up all of your profits. Hence, it is necessary to have proper insurance coverage for all aspects of your construction business. Read Insurance in Construction to understand what you may have at stake.

Excavation and Landscaping

Excavation and landscaping are two of the most important aspects of any construction project, but they can also be two of the most expensive. Proper site surveys and accurate cost estimations are needed to avoid these additional costs.


Now, this is something that may halt your project even at the kick-off phase. In many jurisdictions, you need to obtain a permit before you can begin any work on a construction project. The cost of the permit itself can be significant, and in some cases, you may also need to pay for inspections as well.

Besides federal laws and requirements, you have to abide by the state rules and regulations. A proper understanding of all these rules and regulations is necessary for you to even take on a project.

Billing and Taxes

Contractors overspend over 8% on materials due to billing mistakes and improper taxation. The implication of federal and state taxes on different materials would confuse anyone and usually, accountants are the ones who make these judgmental errors.

For that purpose, most of the contractors who have just entered into business, feel comfortable staying in one state. However, by taking services from a taxation firm you can easily overcome this issue and avoid future mistakes.

Labor Wastage

Thousands of labor hours are wasted while waiting for something to happen. This could be waiting for the materials or waiting for the new instructions. Usually, labor wastage is associated with individuals but most of the time this happens while labor is willing and ready to take on the next task.

Labor waste can easily be avoided with proper communication and by setting up a mall set of processes and goals.


Construction is a complex and expensive process, but by being aware of the hidden costs, you can avoid them and save yourself a lot of money. Do your research, create a realistic budget, and have contingency plans in place to avoid any surprises. You can ensure that your construction project stays on track and within budget with careful planning.

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Nicholas Hurd

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