A 20-year cost comparison for steel versus traditional construction

Getting value on your investment and a good return are two of the biggest considerations when planning a building project. Get insight into the costs involved over the long term.

By Darren Sperling

One of the most crucial decisions to make when embarking on a construction project is the choice of building material engineering system. Steel and traditional construction methods, such as wood or concrete, each have their unique attributes. Clients should be aware of the detailed cost analysis comparing the initial costs, maintenance expenses, energy efficiency savings and long-term return on investment (ROI) between steel and traditional construction over a 20-year period.

The team at Summit Steel Buildings obviously favors the advantages and benefits of pre-engineered metal structure construction. We wanted to outline what clients should need to know as they embark on their building project. Having a good understanding of all the variables and costs helps set realistic expectations so clients can partner with the best fit for their individual business and construction needs. 

Please note: All figures mentioned in this article are rough estimates based on historical prices from the spring of 2024. Specific installation costs have fluctuated over the last several years due to inflation, material shortages and changes in the construction market. Be sure to get several (at least three) quotes from different building suppliers for accurate and current pricing. As always, Summit Steel Buildings is happy to provide a free quote specific to your building size and needs, and even preliminary drawings to help you visualize what your finished structure will look like.

Initial material costs

Pre-engineered metal structures

Metal building construction uses steel framing and insulated steel panels that are manufactured to exact specifications ahead of time and shipped to the jobsite for final assembly. This pre-engineered process creates immense costs savings in materials and eliminates waste. Steel’s high strength-to-weight ratio also allows for less material use to reduce costs. According to industry reports, steel building kits for commercial purposes range in the $10 to $25 per square foot range for building materials.

Labor costs through pre-engineering and metal prefabrication are reduced because fewer people can get more accomplished on the jobsite. Materials arrive pre-drilled and pre-assembled so installation can lead to quicker final assembly times. Installation is usually separated out as its own cost in the range of $10 to $20 per square foot.

So, for a pre-engineered steel building project, clients are looking at a total initial investment in the $120,000 to $250,000 range for a typical 10,000 square foot structure (depending on complexity and customization). Greater initial building costs can be achieved as the size of structure increases. Larger footprints yield higher economies of scale to allow for a much larger building at a lower overall costs. Metal buildings are able to provide a much greater savings on a per-square-foot basis than any other form of construction. 

Check out our article about how we price our steel buildings for you…

Traditional construction

Wood, brick and concrete buildings often require more material. Wood framing costs around $35 per square foot on average (without including the additional siding or brickwork supplies), while concrete can go up to $50 per square foot.

Using traditional construction typically involves bigger teams of labour and much more time, especially if using concrete, which requires curing times. As with all construction projects, labour prices are additional to materials, so higher payroll and longer deadlines lead directly to significantly higher costs. In terms, of total initial investment, comparable wood construction may cost between $350,000 and $500,000, while concrete buildings could range from $500,000 to $700,000 for the same size.

Maintenance expenses

Steel construction is tougher and more durable while being resistant to pests, moisture and extreme weather conditions, generally requiring less maintenance and repairs. Your average annual maintenance costs should be estimated at 1% of the total initial cost, equating to around $1,500 to $2,500 annually for the 10,000 square foot building.

With porous organic materials that are subject to greater wear and tear, average annual maintenance costs (including painting and replacement) is much higher. Wood is susceptible to termites, rot and warping, while concrete is prone to cracking. Owners should expect to spend roughly 2-4% of the initial construction cost, which would translate to $7,000 to $20,000 annually.

And that doesn’t include the surprise of unanticipated but realistic disaster that come with traditional construction. For instance, wood-framed buildings in Ontario can face $30,000 in termite damage repairs, which very few ever budget for.

Energy efficiency savings

Insulation and energy use is much reduced thanks to pre-engineered steel construction materials. Most buildings incorporate insulated metal panels to serve as a thermal barrier that can be very energy efficient, especially when combined with its passive heating design. Your estimated annual energy savings are 10-20% on energy bills. For a modest commercial setup, a steel building might save $2,000 to $5,000 per year.

Energy efficiency with traditional construction lag steel despite how modern technology has improved. Wood, mortar, plaster and brick, with their seams and joints, simply can’t create the same level of energy-saving design. Estimated annual energy savings are generally lower, potentially saving $1,000 to $2,500 annually.

Long-term return on investment (ROI)

Steel structures maintain heir value over time. Their modular design is versatile and easy to expand or modify for future growth or changing needs, appealing to future buyers. Potential resale value increases by 20-30% over a 20-year period in addition to the actual appreciation of the property valuation. Between initial building costs savings, energy savings and its compounded value over 20 years, the projected financial outcome gives you savings of $40,000 to $100,000. In total, you can expect total costs of approximately $350,000 for a 10,000 square foot facility, including all expenses and operating costs using pre-engineered steel building systems.

One of the advantages with traditional construction is its market perception: buyers can be drawn to traditional aesthetics despite higher maintenance needs and costs. However, for commercial enterprises, the numbers matter, and construction using wood or brick is just much more expensive, both today and in the future. Total return can be lower compared to steel due to higher maintenance and remodeling costs, reducing the ROI. You total 20-year costs using traditional materials is $670,000 to $1.1 million, considering all factors. 

When the leadership team needs to make a financial decision about their building project, let the financial outcome be the determining factor. With pre-engineered steel buildings, your payback period is also much shorter on your initial investment. With the yearly maintenance savings and energy savings that are compounded over 20 years, building with pre-engineered metal systems significantly improves your overall ROI.

Metal buildings offer incredible present and future value

When evaluating the true cost over 20 years, steel construction offers more substantial long-term savings and benefits. With lower maintenance expenses, greater energy efficiency and an equally higher resale value, steel buildings provide a compelling financial proposition compared to traditional construction methods.

While the initial cost of a steel building might seem comparable or even more affordable, the long-term savings, resilience and affordable expandability make it a smart choice for forward-thinking projects. Let your investment work for you both now and as your business grows.

For a precise quote suited to your specific location and need, please contact us either by webform or email or by telephone at 877-417-8335 and receive your free quote and preliminary drawings.