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Differences Between Residential and Commercial Construction

It may seem as simple as “People live in residential properties and they work in

commercial properties.” However, the differences between these two types of

construction are far more varied than simple usage. From materials to laws to

equipment needed to build, there are several differences between residential and

commercial construction.

Construction is never a one-size-fits-all concept, and believing it to be so can lead to

one headache after another. Whether you are building new construction or getting

involved in construction management, understanding the differences between

commercial and residential can help keep you on the right path.

Below is an outline of how the residential and commercial industries differ in


The Law of it All

Before you can begin a project, you must contact the municipality wherein the

building will be located in order to obtain the correct codes and permits required for

the project, whether it’s a commercial or residential venture. Legality and safety are

important factors which must be addressed, regardless of the project type.

One difference between residential and commercial construction is that residential

construction requires far fewer permits and codes. Commercial construction has

more varied elements in the building’s makeup than residential, so there are more

codes and permits connected to it. In a commercial building’s infrastructure, there are

several aspects to keep in mind: development of parking garage or large lots; safety

factors, like elevator certificates; additional electric requirements; and technological

needs like more wiring for more internet.

Overall, commercial construction projects are more complex regarding codes and

permits because the buildings themselves must take into account much more than a

residential project. The restrictions on commercial construction include materials,

construction techniques, electrical systems, plumbing, and even size. While residential

buildings do need to adhere to the building standards, these are usually easier and

simpler to stick to in comparison to commercial projects.

Focus and Function

Obviously, residential and commercial construction projects focus on different things.

Still, it doesn’t hurt to outline the differences for this list. Residential construction

typically refers to the building of a single or multi-family homes, townhouses,

condominiums, and some other housing co-operatives. Apartment buildings are

designed to be residential, but they are considered commercial because the space is

leased out to multiple people as part of a business. See? It’s not as cut and dry as some

may believe.

Commercial construction is far more varied that residential. Hospitals, assembly

plants, office buildings, warehouses, retail space, and any other property used for

business activities (as opposed to personal living), all fall under the umbrella of

commercial construction.

Something often overlooked is a commercial builder’s need to keep in mind the

potential of constructing for several businesses occupying the same building. The

residential builder constructing a single-family home or apartment structure need

only concern themselves with building for one client type.

It’s What’s Inside

The materials used for a commercial vs. residential construction project vary only

slightly. Typically, commercial buildings are structured with steel framing. Steel is

strong, resilient, and allows for taller and larger buildings. However, due to the

extreme cost of a steel frame, most homeowners cannot afford that material and opt

for wood. Wood is cost-effective and structurally sound for smaller buildings.

Because of the size of most commercial construction projects, it is important for

builders to have a quality relationship with suppliers to maintain strict scheduling and

delivery of materials. Hiccups in the supply chain can cause financial issues as well as

scheduling setbacks for builders.

Machinery Required

Commercial construction is large-scale. As such, heavy machinery for bulldozing,

moving earth, and lifting very heavy materials are required for a commercial

construction project. These cranes and other large machines need to be operated by

experienced professionals to ensure project safety and quality. Residential projects do

not require such large-scale work, and specialized skill sets are typically only required

on the most extravagant homes.

With residential construction, DIY and online How-To videos are often sufficient in

providing guidance for completing smaller projects. That would simply not be possible

on a commercial project. Any small mistakes or accidents made on a residential

property are generally much less difficult to fix, and they often don’t end as frequently

in lawsuits.

Getting it Done

As with any project, time is money. However, this statement rings even more true for a

commercial construction project, and the owners and builders on a project usually

want the project completed as quickly as possible. Labor costs and financial

investments are much lower on projects which take a shorter amount of time. So, a

more systemized workflow, larger financial investments, and higher expectations from

the client all help commercial projects move much faster than residential ones.

Homeowners are not usually in a rush to complete a project, so they have the freedom

to make more decisions throughout the process, adding to the overall length of the

construction project. Fewer workers on residential construction teams (who often

have multiple jobs to work on at once), as well as the tedium of working with wood

frames, often make for longer project times for residential construction.

Footing the Bill

From materials to labor to maintaining compliance, the cost of residential and

commercial construction projects can be vastly different, even for projects of similar

size. This is one reason why commercial projects are often funded by a corporation

with bank financing, government agencies, or wealthy developers and residential

projects are paid for by the individual homeowner. Homeowners can use cash or bank

loans to fund projects, but sometimes (in the event of a natural disaster, for example)

insurance or a government agency like FEMA will cover the costs.

On commercial projects, the entity that funds the project will hire a general contractor

who will manage the entire project and hire subcontractors through a competitive

bidding process. Residential projects, however, often schedule the work of contractors

and subcontractors through referrals or marketing, not bidding.

Overall, there are many differences between commercial and residential construction

projects. Commercial projects move quickly, with more funding and larger work

crews. However, residential projects are less complicated, don’t require such large

machinery, and generally cost less in the end.

Do you have a commercial building project in Terre Haute or the Wabash Valley?

Contact Hannig Construction, Inc. today and a representative will reach out to you



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