Church Construction 101:
Best Practices for Expanding Your Ministry Space
By Shawn M. Fink, Construction and Facilities
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Church Construction 101
Your facilities are an important tool.
Proper planning for your project will enable
you to reap the benefits of your facilities and
grow your ministry without compromising
the stability of your organization.
“Unless the Lord builds the house,
its builders labor in vain.” Psalm 127:1
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Laying the Foundation | 3
A ministry that has outgrown its space
can be both exciting and daunting.
Should you build or expand? How do you know
should be designed, built, arranged, and equipped
where to start? How much will it cost? It may
to be the best tool and resource to fulfill God’s
seem that there are too many options and no
unique vision for your church.
options at the same time. Regardless of the scope
of your project, expanding your ministry space can
As you consider these factors and define the
be intimidating. The following best practices are
big picture for your ministry, keep all options
designed to help ease uncertainty and guide you
open. Do not close doors based on assumptions
towards a smooth and successful end.
or preconceived notions. Instead, think of your
church facilities as a machine working for the
WHERE TO BEGIN
Kingdom. Machines have many purposes
The place to begin your project may not be where
including increasing productivity, efficiency, and
you’d expect. It has nothing to do with designing
effectiveness. Let the Lord build the machine and
a building, or setting a budget, and it definitely
define its purpose. With His divine direction and
has nothing to do with what another church has
your obedience as a leader, He will orchestrate the
done. Your church is unique. The way you minister
right options in the right time. Psalm 127 is very
is unique. God has given your church an exclusive
clear in this, “Unless the Lord builds the house, its
DNA shaped by its people, history, culture, and
builders labor in vain.”
location, among many other factors. Although
every church shares the Great Commission, the
In summary, identify your DNA, translate it to
methods of fulfilling it are as varied in number as
your ministries, and translate that into what your
our churches. Before you do anything else, gain
facilities should be and do and look like. Once you
clarity as to who you are as a church and what
reach this point and are beginning to implement a
makes you unique. Once that’s defined, make
building program of some sort, your next step is to
every decision through that lens.
define the details.
Now it is time to think about what God has called
BUDGETING AND PROJECT PLANNING
you to do as a church. How does your unique
It is important to go through careful cost planning
calling play out in your ministries? How does that
so you can stay within your construction budget
translate into what your facilities look like? Think
as much as possible. Jesus spoke to this in Luke
beyond a single area of your ministry needing
14:28 when He said, “Which of you, desiring to
more space and look at the big picture. Be
build a tower, does not first sit down and count the
proactive and consider all aspects of the church’s
cost, whether he has enough to complete it?”
facilities. Consider how the building(s) and rooms
Church Construction 101
Evaluating Source and Use
referred to as a contingency factor. The more
Count the cost by planning your budget around
vague the numbers, the larger the contingency
the money you have and comparing it to what
factor should be. A contingency of 15-20% is
you’re planning on spending for your project. This
recommended during the initial stages of your
is often referred to as a source and use calculation
project. That number can be reduced as costs and
where the source is your available funding
other details become more defined.
and the use is how much you intend to spend.
Churches often exceed their budget because
Budgeting Scenario
they over-design, over-build, and/or over-commit
Consider the following scenario. A church has
themselves. Once you’re in the middle of a project,
a source total of $1,000,000. If they take the
these mistakes can be very difficult to correct.
entire source and design a $1,000,000 building,
Planning ahead by calculating your source and use
the project will go over budget because only
will help you stay within your financial boundaries.
the hard costs were considered. Provided
that the estimated soft and FFE costs totaled
Source
$205,000, the project would cost $1,205,000
There are typically three types of building funds
and thus be at least $205,000 over budget.
that make up your total source of funds: money
If, however, the church had followed the best
you have, money you raise, and money you
practice of determining the soft and FFE costs
borrow. It is essential to the continuity of your
first ($205,000), added a 20% contingency
ministry that you keep your project within the
factor ($159,000), the remaining hard costs
confines of your source funds.
for their building would be $636,000. A local
architect or contractor should be able to give you
Use
approximate construction cost per square foot
The use side of the equation also has three parts:
so you can determine how large your facilities
hard costs (construction labor and material), soft
can be within the confines of your hard costs.
costs (professional services, fees, permits, etc.),
For instance, if local costs are running around
and FFE (furniture, fixtures, and equipment).
$100 per square foot, it is feasible to plan for a
Building projects often exceed the construction
roughly 6,000 square foot building. Keep in mind
budget because the soft and FFE costs are not
that a cost per square foot factor is only a guide.
considered in the equation. As a best practice,
There are many factors that can quickly affect
estimate the soft and FFE costs first, and then
that number. Monitor the costs by continually
design the project around the remaining budgeted
estimating the project as it is being designed.
hard cost amount.
Master Planning and Phasing
Contingency Factor
It is not uncommon for the final goal of the
It is difficult, if not impossible, to foresee every
facilities to exceed your available funding. This
cost in a building project. That is why it is
can be resolved through master planning and
important to plan for unexpected costs. This is
phasing. Your master plan can be defined as the
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Budgeting | 5
Sample Source and Use Calculation
Total Sources of Funding
$150,000 Cash $250,000 Campaign Proceeds $600,000 Loan Amount/Debt Capacity
$1,000,000 Total Source
Use - Soft & FFE Costs Estimate
($70,000) Architectural/Engineering
($10,000) Permitting/Fees
($100,000) Audio/Video/Lighting
vision God has given your church translated into
what facilities you will need to best accomplish that
vision. Because this is a long-term, flexible plan, it
can be done without financial consideration. After
you determine your master plan, break it down into
phases or attainable steps. Each step should be
somewhat self-contained so that you have small
accomplishments as you work towards completing
your master plan. Your greatest need and current
funding should determine the priority and order of
your building phases. Working towards your master
plan through phasing will not only enable you to
meet your greatest needs first, but will also make
($25,000) Chairs
your project easier to fund and manage throughout
($205,000) Total Soft & FFE Costs Estimate
the process.
Contingency Equation
Re-evaluating Your Contingency Factor
$1,000,000 Total Source
Your master plan and phases function as your
($205,000) Total Soft & FFE Costs Estimate
project outline. Now you can begin the design
$795,000 x 20% =
phase. As you enter this phase, continue to
$159,000 Contingency Factor
precisely evaluate and estimate costs while also
adding a contingency amount. As discussed earlier,
Use – Hard Costs Equation
a larger contingency (15-20%) is recommended
$1,000,000 Total Source
early in the process. However, that number can
($205,000) Total Soft & FFE Costs Estimate
be reduced as your project and associated costs
($159,000) 20% Contingency Factor
becomes more defined. Your final contingency
$636,000 Preliminary Hard Cost Budget
factor should be 10% of the sum of all your final
bids and contracts. This additional amount in your
Balanced Budget
budget will allow you to account for unexpected or
$1,000,000 Total Source
unforeseen expenses. Make sure that your final bids
($205,000) Total Soft & FFE Costs Estimate
clearly define all work, cost, and timeframes. Don’t
($636,000) Preliminary Hard Costs
start a project on assumed cost factors. Get firm
($159,000) 20% Contingency Factor
bids or quotes on everything you plan to do.
$0 Balanced Budget
Exceeding Your Budget
The larger or more complex the project, the less
likely it is that you will be able to foresee every cost.
As a result, it is not uncommon to spend more than
Church Construction 101
your projected budget. That is why you plan for
should be the set that is approved by the local
unexpected costs. Try to minimize them and have
building authority. Often, projects are bid and a
a plan in place for how you will handle those you
contractor is secured prior to the city review of the
can’t avoid. This is why the 10% contingency factor
architect’s plans. The reviewing entity may (and
is imperative. Cost overruns typically originate from
almost always does) have additional requirements,
three sources: owner, contractor, and local building
which would lead to a change to the contractor’s
authority. They come in the form of change orders
contract. In cases where there is not a general
(changes to the plans or agreed upon work or
contractor, but the church is directly hiring trade or
material), cost overruns (spending more on an item
subcontractors, the principle is the same – confirm
than budgeted), or a failure to count the cost of
the scope and the contract amount.
certain components of the project.
City-Driven
Owner-Driven
City-driven overruns are the most common and
Owner-driven overruns stem from you and your
unavoidable, and often the most expensive. The
church. Owner change orders are caused when
local building authority, local utility, or other
the church requests a change to the plans, scope
governmental agency may enforce additional
of work, or material that changes the cost. This
work or requirements that were not part of the
can be avoided by simply not making changes.
plans or contract, but will be required to complete
Do your due diligence in the design and planning
the project. Again, the best you can do is pre-
phase of the project to ensure that what you want
construction due diligence and count the cost. The
is reflected in the plans and contracts. Also make
contingency factor is there to provide for these
sure that project decisions do not cost more than
types of surprises.
what is allowed in the budget for that item. A final
owner-driven expense occurs when a costly item
CONTRACTING
is overlooked altogether. Be aware throughout the
Church projects are completed in different ways.
planning process so you can minimize these costly
This is referred to as the project delivery method.
owner-driven mistakes.
Each method has a unique set of advantages
and challenges.
Contractor-Driven
Contractor-driven change orders or overruns
Project Delivery Methods
originate with the contractor. These overruns can
be avoided by having a clear, fixed-price contract
Design-Bid-Build
in place that is based on the plans and intentions
The most traditional arrangement is referred
of the church. Contracts that are “cost-plus” or
to as design-bid-build. Using this method an
“time and material” in nature are not advised as
architect is hired to design a project to the
they do not require the contractor to commit to a
owner’s specifications. The architect then puts
fixed cost. When the contractor bids a set of plans
that design out to bid among multiple contractors.
and arrives at a contract number, those plans
The advantage of this method is that it allows for
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Contracting | 7
competitive bidding. However, it can be somewhat
Contractor Options
cumbersome to keep a project in budget as the
In addition to delivery methods, there are also
architect is designing the project without knowing
options as to who builds the project.
whether or not it meets the budget criteria.
Consequently, the architect must revise the
General Contractor
design if the bids come in higher than the owner’s
A General Contractor (GC) is probably the most
prescribed budget. While this method can take
common arrangement. While they may use some
extra time, it allows for more competitive bids.
of their own employees to perform limited work
This approach can also be modified by including
on a job, they will mostly hire subcontractors to
cost analysis during the design process to keep
complete the project from start to finish. One of
the project in check with the budget.
the biggest advantages to using a GC is that their
contract will be a fixed price, “turnkey” agreement.
Design-Build
This means that you will be guaranteed a certain
With a design-build approach, the designer and
price and schedule for the job. This agreement
contractor are a single entity or at least work
should be based on a set of plans that have
closely together as one entity. It may be a firm
been reviewed and revised according to the
with a portfolio of services that includes both
local building authority so that the plans the
architectural and/or engineering capabilities as well
GC is building from match city building codes
as construction services. This method allows the
and requirements. Assuming that you have a
desires of the owner to be communicated directly
solid contract with well-defined parameters that
to the builder/designer, theoretically allowing for
are based on an approved set of plans, using
design that meets both the budget and the vision
a General Contractor is typically the least risky
for the project. The main criticism of this method is
arrangement for a church. One of its greatest
that the advantage of competitive bids can be lost.
advantages is that it places the burden of the
The design/build approach can also be modified to
project on the contractor and minimizes the
allow for other bidding opportunities.
church’s liability.
Integrated Project Delivery (IPD)
Limited Scope General Contractor
IPD allows for collaboration with the architect
A limited scope GC is a general contractor
and builder and also brings representation to the
whose contract is limited to a certain level of
design process of almost every other trade or
completion or portion of the building rather than
discipline involved in the construction, outfitting,
the entire project. The contract looks much the
and operation of the building (acoustical, HVAC,
same, but the contractor is only responsible for
controls, lighting, video, production, etc.). While
a portion of the building rather than the entire
this method may not be the most cost-effective
thing. Many churches find success with this type
approach, it can be very beneficial for larger and/or
of arrangement. They may have a GC handle the
more complex projects as it allows for more varied
up-front site development, concrete, shell building
expertise throughout the process.
and MPE (mechanical, plumbing, electrical)
Church Construction 101
work and then use volunteers or directly hired
benefits and check with your lending institution if
finish contractors to complete the project. With
you are considering this option.
this approach, the church is liable for any work
completed outside of the GC’s contract including,
Volunteer Labor
but not limited to, scheduling, oversight, cost
Volunteers play a crucial role in church construction.
control, warranty, etc.
However, the pros and cons of volunteer labor
should be weighed like any other decision in your
Design-Build Contractor
building project. As you plan for volunteer labor,
A design-build contractor is the builder or general
keep the following factors in mind. First of all, a
contractor in a design-build project delivery
volunteer workforce makes it very difficult to have
method. Many churches find this arrangement
firm numbers for cost, schedule, etc. The cost of
very beneficial and successful as it creates a
your materials will typically be higher. Contractors
partnership, collaboration, and direct connection
may be able to purchase materials at a discounted
between the provider (builder) and the user
price and will also have more experience
(church). Most design-build church projects result
estimating how much and what materials are
in a project that satisfies ministry needs and stays
needed. As you make decisions about what areas
within budget.
your volunteers will complete, remember that you
will have to arrange work around their schedule,
Construction Manager
not yours. Your volunteer base will also have
A construction manager (CM) is a builder who
strengths and weaknesses. Determine what your
simply organizes the project and oversees the
volunteers are truly capable of accomplishing, and
subcontractors and the work. The subcontractors
then plan on hiring specialists for the remaining
are hired by the owner but managed by the CM.
work. Be mindful that there may be a difference
Typically, a CM provides no warranty as to the
in the quality of work between a professional and
price or timeframe on a project. The church carries
a volunteer. This option has potential for both
all risk and liability.
great rewards (ownership, team building, etc.) and
great risks (liability, damaged relationships, etc.).
Self-Contracting
Keep both in mind as you define what areas your
Some churches choose to act as their own
volunteers will complete.
contractor. Through this method the church, rather
than a GC or CM, hires all subcontractors directly
Choosing the Right Method
and oversees the workers and the work. Self-
There is no single answer as to what method is
contracting can be a very risky approach as there
right for a church. The most important factor is
are no assurances as to the final construction
to make sure you count the cost as you weigh
costs or timeframe. Once again, all liability and
your options. A guaranteed maximum price for a
responsibility is on the church. Because of the risk
turnkey job always carries the least risk. Place the
involved, your lending institution may not allow
responsibility to deliver a certain scope of work for
self-contracting. Be sure to weigh the risk versus
a fixed price on others whenever possible.
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Conclusion | 9
As you go through the process of hiring a
contractor, try to check references beyond the
ones listed on their reference list. Ask who their
last three or four clients were and how to contact
them. Check with the local building official’s
office. Does the contractor have a good reputation
with the local inspectors for quality work? Does
their work pass inspections? Follow these steps
whether you are hiring a general contractor or a
subcontractor directly. Another key to avoiding
and managing contractor issues is in the contract.
All expectations on the part of the church should
be clearly articulated in the contract. If it is not in
the contract, do not expect the contractor to do it.
CLOSING THOUGHTS
As you begin the exciting process of building your
church, keep in mind that your facilities are an
important tool for you to accomplish what God
has called you to do. Proper planning for your
project will enable you to reap the benefits and
grow your ministry without compromising the
stability of your organization.
About Foundation Capital Resources
Foundation Capital Resources was created with
a unique purpose—to help build the Kingdom by
providing mortgage financing to churches and
ministries. Since 2000, we have provided more
than 900 loans with $1.4 billion in financing. As
one of the nation’s largest ministry lenders, we
partner with you in the financial growth of your
ministry. Our support of ministry doesn’t stop
with lending. A portion of each interest payment
is directed towards planting new churches and
growing faith-based community programs.
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