# Construction Cost

The proposed budget for a new school building is as follows: land: \$2,000,000; building: \$18,000,000; and furniture and equipment: \$1,000,000. There will also be additional soft costs associated with the project that are estimated to be an additional 30% of the construction cost.

What should the total proposed budget be?

\$

Incorrect - the answer is 26400000

\$18,000,000 x .3 = \$5,400,000. \$5,400,000 + \$2,000,000 + \$18,000,000 + \$1,000,000 = \$26,400,000.00

Here is the question from PPD module 3. I checked with Problem seeking, P104, which indicates that construction cost including A. building cost B Fixed Equipment C. Site Development.

I confused for the calculation of soft cost, why only use 18,000,000 *0.3 instead of using (18,000,000+2,000,000+1,000,000 )*0.3???

Any reference I can check according to construction cost? I had different types of questions in the exams, but I don’t know any resources I can rely on most.

Many thanks,
Jun

Hey @jguo, good question.

@cat.heard9 or @heatherrivera, either of you know of any references that Jun can use here?

Hi Jun,

Good question!

You mention that building cost, fixed equipment, and site development all contribute to the construction cost. While I do not have the source in front of me that you cite, I believe the “fixed equipment” they mention is mechanical equipment and building system equipment (plumbing fixtures, etc). The “site development” they mention is not the cost of the land, but rather the work done to the land, including grading, hardscape and landscaping.

So why did this equation only use the 0.3 multiplier in the building cost (18,000,000)? The land is a set fee and only includes procuring the property. The furniture and equipment is also a different bucket from the construction cost. It is the furnishings of the school - that is movable furniture, fixtures and equipment that have no connection to the actual building. If you see a drawing set or talk to a vendor, this area is usually referred to as “FF&E” or “furniture, fixture, and equipment.”

I hope that helps. Keep up the awesome studying!

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Thank you so much Heatherrivera. It is a very clear explanation. I guess I really need to get an understanding of each term truly stands for.

Thank you!

Jun

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Anytime, Jun!