If you are building, commission the study before you finish

Why records change everything

The IRS audit guide ranks costing methodologies, and the most reliable is a detailed engineering cost estimate built from actual construction records.

On new construction those records exist: the schedule of values, AIA pay applications, change order logs, subcontractor bid packages and invoices. Components can be costed directly rather than estimated, which produces a more precise result and a more defensible one — and takes less time, which lowers the fee.

Involve the study firm during construction

The optimal moment is before substantial completion. Two reasons.

First, the engineer can observe components that will be concealed — in-wall electrical, above-ceiling distribution, underground utilities, subgrade preparation — which after drywall and paving are documented only by inference.

Second, the contractor can be asked to break out the schedule of values in a way that maps to asset classes. That costs the contractor almost nothing during buyout and saves substantial reconstruction later.

Placed-in-service dates

A phased project has multiple placed-in-service dates, and each phase has its own basis, its own convention and its own bonus year. Getting these right at the outset avoids a messy correction later.

The date is when the asset is ready and available for its intended use — not the certificate of occupancy date automatically, and not the date the first tenant moved in.

Section 168(n) for production facilities

If the building will be used in domestic manufacturing, production or refining, the new qualified production property deduction may reach parts of the building shell itself for property placed in service after 4 July 2025 and before 2031, subject to construction-start requirements.

That analysis has to happen during design and construction, not afterwards, because the timing requirements are structural.

Interest capitalisation and indirect costs

Construction-period interest, architectural and engineering fees, permits, general conditions and contractor fee all have to be allocated across components rather than dumped on the building. Doing that correctly is part of the study and part of what makes the reconciliation tie.