Final answer:
The main factors that influence construction cost include the traditional factors of production like land, labor, and capital. Additionally, the cost of inputs, proximity to suppliers and customers, infrastructure quality, governmental factors, and environmental regulations play critical roles in determining these costs.
Step-by-step explanation:
When exploring what factors influence construction cost, it's important to consider the factors of production such as land, labor, and capital. These are essential for building and running businesses, and their costs greatly impact overall construction expenses. In particular, manufacturers must carefully analyze these costs in the decision-making process associated with industrial site location analysis. This analysis has to take into account a variety of elements:
- Labor and financial capital costs
- Proximity to suppliers and customers
- Transportation, communications, and power infrastructure quality
- Local government competence and honesty
- Level of taxes
- Environmental regulation costs
Additionally, changes in the cost of inputs, like raw materials, can significantly change the supply and influence construction cost. Other factors, such as natural disasters, the advent of new technologies, and decisions made by governments can also have a profound effect on cost of production, thus affecting the supply that firms can provide at a given price.