Hard Costs vs Soft Costs In Construction: Definitions & Examples

Hard Costs vs Soft Costs In Construction: Definitions & Examples

Creating a detailed budget is key to successful construction project management. To create a realistic budget, it is important to differentiate between hard and soft costs. Hard costs are costs that are directly related to the construction project, such as the structure, construction site and landscape, while soft costs are tangible and revolve around labor and materials. Examples of hard costs include building materials, utilities, cement, life safety systems, equipment, paving, grading and heating, ventilation and air conditioning (HVAC) systems.
Construction costs include landscaping, interior, life safety systems, LEED certification for commercial real estate projects, and soft costs. Landscaping costs include planting trees and grass, adding mulch to the site, flowers, bushes, etc. Site improvements include walkways, gazebos, permanent or fixed benches, and other outdoor furnishings. Interior costs include wallpaper, paint, trim, flooring, etc. Life safety systems include fire alarm and sprinkler systems, fire escapes, and other related systems.

Soft costs are costs that are indirectly related to materials, labor or the physical building of the project. These intangible costs can persist long after the project has been completed and can occur anytime in the life cycle of a project. When forecasting a budget, it is important to be thorough and think through everything from pre- to post-construction. Soft costs should be 25 to 75 percent of the total construction budget.