Profit analysis on Construction of 1000 sq. ft building with 3 bathrooms and 800 sq.

ft building
with 2 bathrooms @ price of Rs.2200 per sq. ft.

Basically, the decision of selecting a construction project is based on cost and incomes of that
particular project.

If the sale price of per sq. ft. of the project is same in both the case then there will not be much
benefit arising based on the returns.

The decision of selecting a project is purely based on the cost or expense made on that project if the
price is same of the project

For calculating the profit, we need to check with many factors of that particular project as
mentioned below,

• Location of the project since the Construction's material cost is tend to change between area
to area, for example construction cost in village is not equal to the construction cost in City.
• Labour cost made on that project
• Material cost made on the project since material costs will not be same at each point of
time, due to inflations the price may vary time to time during the construction periods
• Rates and taxes to be made on the project for construction are also one of the main factors
to be noted while choosing a project.
• Even the location of land makes many discharges of the profit since the delivery of materials
should be ease so that we could purchase the materials in large quantity which directly
promotes some cost benefits of the purchases
For this case
Let fixed Civil labour cost be 450 per sq. ft. for construction
Let fixed material cost excluding plumbing, paints and carpentry works be 1200 per sq. ft.
Let cost of other expenses be Rs.120000 and Rs.150000 for 800sq ft and 1000 sq ft
respectively
Others like rates and taxes be Rs. 100000 in both the cases
Estimated profit margin be 10% on fixed cost
profit calculation for both the case:

Particular For 800 sq. ft. For 1000 sq. ft.

Sale price 1760000 2200000
Less:
Fixed Cost of material 960000 1200000
@ 1200 per sq. ft.
Fixed Cost of labours 360000 450000
@ 450 per sq. ft.
Cost of other expenses 120000 150000
like plumbing,
painting, and
carpentry (Approx)
Others like rate and 100000 100000
taxes
PROFIT 300000 220000
ESTIMATED PROFIT 165000 132000
Excess Profit 135000 88000
% of Excess Profit 45% 40%
 1000 sq. ft. construction

Profit, 300000
Others, 100000

Other expenses,
150000
Labour cost,
Material cost, 1200000
450000

800 Sq.ft. construction

Others, 100000 Profit, 220000

Other expenses,
120000

Material cost,
Labour cost, 960000
360000

1 2 3 4 5

Both the construction Will be result in Profit only since our ultimate aim is to earn profit in any of the
Business Activity but for choosing the Best project we need to check with the profit percentage
arises from the projects which result in Good business Performance .
From the above comparison we could estimate that % of excess profit arising from the respective
projects are 45% and 40%

So, from this we can clearly get an idea of choosing the project of 1000 sq. ft. which gives us more
profit than the estimated profits and so I will personally choose that project.

And also, if the Construction is made in floors the profit will be increasing with respect to the
floors added since the cost for construction in floor will be less when compared with the cost for
Ground floor construction

Further if we need more clear idea of choosing the projects we need additional data regarding
Correct Location, actual Prices, Quality basis price structure and Legal charges to be made on
statutory compliances, etc.