You should expect that it will vary between $15B to $20B for a semiconductor fabricator, to below a million dollars for a simple assembly operation. The exact amount it will cost to build a factory in the United States will depend on what you intend to manufacture.
Nevertheless, note that the average commercial construction cost in the United States is around $490 per square foot. However, a construction of this magnitude comes with a high price tag, and companies that take them on must have a clear cost estimate prior to getting started.
It can be quite difficult to stipulate the exact amount it will cost to build a factory especially since determining factory setup costs goes beyond just the product type.
To ensure you make the right estimates, you need a thorough understanding of the intended factory production volume, equipment costs, and process flow and decorations.
In addition to these requisite factors noted above, you will want to have a detailed insight into what the expected sales will be especially since it is critical to pricing out the manufacturing business.
Factors That Determine the Cost to Build a Factory
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Location
Truth be told, the location you intend to build your factory will always have an impact on your factory construction costs.
Please note that places where living and working are in high demand — places like Washington or New York City — are normally costlier to build and this can be attributed to limited space. Also, note that your location of choice will also impact total labor costs.
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Building Permits
There are permissions and authorizations you will need prior to embarking on projects this massive in the United States.
According to experts, permits will account for less than 3% of the total construction cost for commercial projects, but they are still a necessary factor in your budget.
Aside from the fact that the exact permits or authorizations you need will vary from one city to another, note that the amount you can expect to pay for a commercial building permit will depend on the city you’re building in, so be sure to check the local laws and regulations in advance.
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Building Quality
You have to understand that factories can have varying quality standards and this will as well determine construction costs.
Factories with higher quality coupled with top-tier fixtures, amenities, and mechanical systems are classified under class A quality standards and are referred to as the most expensive to build. Howbeit, factories within class B or C tend to cost less to build but offer fewer modern fixtures and amenities.
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Labor Costs
Labor costs are another very important factor especially since it has ways of determining the total cost per square foot and can account for above 40 percent of a project’s budget. You will want to take into account costs such as the wages, taxes, benefits, and training of skilled workers.
Nevertheless, note that these expenses might as well vary depending on how labor-intensive the work is. The project timeline coupled with the cost of living in the area can also impact labor costs.
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Decoration and Finishing
Finishing is another facet of the construction that will massively increase a project’s budget. As such, when calculating the total cost to build your factory, it is necessary to account for interior and exterior finishes, such as lighting fixtures, insulation, flooring, ornamentation, appliances as well as other decorative elements.
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HVAC and Electrical Systems
The HVAC, plumbing, and electrical systems of your factory will take up a very cumbersome portion of a project’s total cost.
To ensure that you can make installing these systems more cost-effective, it is recommended you work with mechanical and electrical contractors to ensure you get the most functional and energy-efficient options.
- Building Materials
The exact amount you will spend to build your factory will vary depending on the types of building materials used to construct the project.
For instance, a modular construction project will take less cash especially when put in contrast to building a factory requiring unique, highly fabricated steel.
Also, note that constructing your factory in warmer climates and using recycled or eco-friendly materials might indeed work to reduce project costs.
- Building Type
Factories are known to come in varying shapes and sizes. Note that bigger factories will prove to be more expensive to build than smaller ones. The bigger the building, the more engineering planning, labor, time, materials, and safety features would be required.
Conclusion
While it can be difficult to stipulate the exact amount you have to budget for a construction project, once you have added all these costs noted above, it is recommended you add a further 20% to the costs. This 20% will take care of any unforeseen issues that might come up.
These can be issues with price increases on essentials, delays, etc. As you go on, it is possible to find ways to reduce costs, but don’t underestimate the importance of having a 20% buffer.