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Key Differences Between Residential and Commercial Construction

VA Loan Texas
December 01 2022 | By Elevation Construction
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Construction encompasses a wide range of activities, including both residential and commercial construction. So how do residential construction and commercial construction differ? It is advisable to familiarise yourself with the differences so that you can choose the ideal construction specialists for your next project. Read on to learn more about the crucial differences between residential construction and commercial construction; Here are seven differences between residential and commercial construction:
1. Equipment: Typically, commercial construction is a much larger project and a much larger building. This means that equipment for residential and commercial projects will differ significantly. For example, commercial properties usually require powerful machinery, large cranes, and other specialized equipment.

In contrast, residential projects will not require such extensive machinery or large equipment. Because specially trained personnel are required to operate the equipment, you will usually only see this type of machinery and these team members on large commercial projects. The reason for this is that the cost of commercial projects can justify the equipment and additional skilled labor.

2. Materials: Commercial buildings usually have steel frames, while residential projects use mostly wood. The main reason for this is that commercial projects can justify the cost and investment of using steel. Residential construction, on the other hand, needs to be more affordable for smaller projects and wood is a less expensive material.


Typically, commercial construction companies have long-term relationships with their suppliers, which means materials are consistent across projects. However, with residential projects, you have more choices when it comes to selecting the right materials. Also, small projects have more flexibility when it comes to selecting materials. However, this can cost more due to uncertain relationships with suppliers.

3. Use: Commercial construction is used by businesses and includes projects such as building offices, industrial plants, and other business facilities. Residential construction, on the other hand, takes place where people live, such as in apartments, houses, and other homes.

Generally, residential construction projects are commissioned by property owners or tenants. Commercial construction projects are based on business decisions. For this reason, residential construction companies typically have only one point of contact, whereas a commercial construction company may need to interact with multiple individuals or a panel of stakeholders.

4. Required permits: While both residential and commercial construction require permits and building code compliance, commercial construction typically has a greater number of regulations and permits due to the use and nature of the building. Commercial properties are typically more complex construction projects that include aspects such as elevator access, complex power solutions, and parking and garages. A residential project, on the other hand, typically has fewer elements to consider.

5. Work pace: Commercial construction companies often have a large workforce and must work quickly to meet business deadlines and ensure maximum efficiency for higher profits. Businesses typically have stricter schedule expectations than the average homeowner. In addition, commercial construction projects operate in a multi-task environment, while residential projects may not have the resources or space to do so.

Residential projects tend to work much slower than commercial construction projects. This is due to less efficient equipment and a smaller workforce. Commercial projects, however, tend to take longer because of the complexity and scale of the work.

6. Functionality: Another aspect that shows the difference between commercial and residential construction is the functionality of the building. While residential projects have limited functionality geared toward domestic use, the functionality of commercial buildings can be extensive.

Commercial buildings can include stores, warehouses, factories, clinical laboratories, hospitals, theatres, sports facilities, municipal buildings, and more. With increased functionality comes the need for specific services such as the installation of fire protection equipment, escalators and elevators, security, access control, data and server rooms, lighting, and HVAC.

7. Funding: Commercial and publicly funded construction projects are typically more expensive than private construction projects, which must be cheaper to meet the homeowner's budget. Since the typical private customer has a stricter limit on the price they are willing to pay for projects, contractors must adjust their prices accordingly for both sectors.