soft, you can more clearly see what expenses your project management team can firmly apply cost-control measures to, and which expenses are less under your control. When you think of your costs in terms of hard vs. You can get a better sense of all your expenses in either category, and it becomes easier to identify any potential costs you may have accidentally left out. Compared to hard costs, soft costs are more difficult to estimate because service fees tend to fluctuate.ĭividing your construction budget into these two categories at the outset helps you better manage your budget. Soft costs are essentially all of the other expenses that do not fall into this category. Because hard costs are tangible - physical products with a fixed cost - it's usually easier to estimate and control costs in this category. Also known as “brick and mortar” expenses, hard costs are expenditures that are directly related to the physical construction of the building, road, bridge or whatever project is in question. The other 70 percent of a construction project’s budget is attributed to hard costs. Also known as intangible expenses, soft costs typically account for 30 percent of a construction project’s total budget. You can think of these as any services you need pre- and post-construction. In accounting terms, a construction project’s soft costs are any expenditures that aren’t directly related to the physical building of the project. One of the most common and proven ways to plan a construction budget is to divide expenses between hard and soft costs. There are many ways you can plan a project budget, and typically experience determines what method works best.

Budgetary planning