Commercial and Residential Construction Differences Explained
Commercial construction and residential construction vary in nearly every way from the building materials used to the equipment required, and even the way funding is secured.
The differences start with the way residential properties are used compared to commercial properties.
Residential refers to buildings that are designed to be lived in.
- Single Family, Detached Homes
- Duplex, Triplex, Fourplex
- Some housing co-operatives
While Apartment Buildings are designed for residential use, large-scale apartment complexes are considered commercial property because space is leased out to others as part of a rental business.
Commercial buildings are much more varied than residential properties. While residential properties are exclusively used for private living quarters, commercial refers to any property used for business activities.
Commercial refers to hospitals, assembly plants, storage warehouses, shopping centers, office spaces, or any other location for a business enterprise.
Popular types of commercial property include the following:
- Land Investments
- Large-Scale Multifamily Housing
- Office Buildings
- Retail Space
- Storage Units
- Industrial Buildings
Commercial and Residential properties have significant key differences including Building Materials, Codes, Cost, Construction Equipment, and Construction time.
Read on to learn the nuances to both commercial and residential construction and how they can affect your current or future construction project.
Building Materials Used in Commercial vs. Residential
Every project requires certain materials to meet the demands of a building design.
In general, the materials used for residential construction are much different from those used in commercial buildings.
The average home uses timber frame construction because timber is considered the most cost-effective and structurally appropriate for smaller-sized buildings.
Companies that specialize in residential construction are best-suited to complete traditional timber frame construction projects.
While some architecturally designed homes implement steel framing into construction, the average homeowner generally can’t afford to invest in a steel-frame home.
Commercial construction projects have larger, more complex design requirements that demand different materials than the timber commonly used for residential properties.
Steel frame construction is most commonly used for commercial projects because it is a more resilient material and allows for larger and taller buildings with greater longevity.
It is essential to consider the quality and rating of steel and the construction techniques that will be used before signing a contract.
Codes & Permitting
Commercial buildings have stricter regulations than residential. Both require adhering to specific codes and obtaining permits from the municipality in which the structure is being constructed.
However, commercial properties have different rules and regulations for:
- Building materials
- Electrical systems
- Construction techniques
Construction management professionals for commercial projects are well-versed in the relevant local and federal building regulations that are necessary for commercial projects.
Additional standards are in place for commercial buildings to protect against safety concerns related to elevators, IT concerns, handicap accessibility, parking lots or parking garages and others.
Commercial codes and permits are complex and require experienced professionals to ensure compliance.
While residential buildings also adhere to building standards, these requirements are considered simpler and easier to comply with than commercial construction.
Significant Cost Differences
The costs for residential and commercial developments are vastly different, even for buildings of comparable size.
These cost differences stem not only from the materials and compliance standards explained above but also from costs related to overhead, labor, and equipment.
The number and quality of workers and the use of specialized equipment can drastically effect final project costs. Labor is often secured through a bidding process; the job goes to the lowest-price, capable bidder for completion.
In contrast, residential properties can rack up significant bills for overhead, labor, and equipment, but because residential construction is on a much smaller scale, these cost differences are rarely comparable.
Funding for commercial versus residential construction is completed using different protocols.
Commercial projects are often funded by:
- A corporation with bank financing
- A government agency
- A wealthy owner or developer
The entity that funds the project will then hire a general contractor who manages the entire project and hires and schedules subcontractors using a competitive bidding process.
Residential projects are typically paid for by the homeowner using a bank loan.
In some cases, insurance loans or cash may be used to complete the purchase, or in the event of a natural disaster, the residential construction may be covered by a government agency, such as FEMA.
Residential construction projects are paid for with the following methods:
- Bank loan
- Insurance loan
- Government Agency/Non-profit
Residential projects include extensive interaction between homeowners, contractors, and subcontractors. Work is often scheduled through referrals or marketing rather than bidding.
The large-scale nature of commercial construction requires specialized equipment to complete most projects. Heavy machines including earth moving equipment and cranes are necessary to construct many commercial building designs.
These machines must be operated by experienced professionals to ensure job safety and project quality.
While residential construction requires specialized skill, only the most extravagant houses demand industrial-scale construction equipment.
Furthermore, many elements in a residential construction project are undertaken by DIYers using advice from friends or How-To videos online with impressive results.
This would not be possible on a commercial project.
Mistakes and accidents that are made on residential projects are often much easier to remedy than those in commercial construction and don’t lead as easily to a lawsuit.
Time is money when it comes to building construction; builders and owners want to complete the project as quickly as possible.
However, owing to higher construction costs and a more systematized workflow, commercial projects tend to move at a much faster pace than an average home builder.
For companies, faster construction means lower labor costs and a smaller financial investment in the overall project. This motivates commercial builders to work as quickly as possible.
Homeowners tend to make more decisions throughout their residential construction which adds time to the project. Construction teams for residential projects also have fewer workers and often work on multiple projects at one time which makes the build take longer.
These factors, combined with the more tedious nature of working with wood frames, makes for a longer overall project.
Choosing the Right Company for Your Construction Project
In general, commercial construction tends to be quicker than residential, but is more expensive and holds to stricter building codes. On the other hand, residential construction tends to take longer to complete than commercial, but is less complicated.
Residential construction primarily utilizes wooden materials and demands less specialized equipment than commercial.
The construction company you choose to manage your large or small scale construction project should come highly recommended with a reliable track record of project success.
If you are looking for a commercial construction company to manage and complete your large-scale project, CDMG is a reputable design group that is industry-famous for expedited design services that never cut corners.
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