What does "soft costs" refer to in construction estimating?

"Soft costs" in construction estimating refer to the non-tangible costs associated with a construction project that are not directly related to physical construction aspects. This includes expenses like design fees, permits, financing costs, legal fees, and administrative expenses. These costs are essential for project planning and success, but they do not contribute to the physical structure itself. Understanding soft costs is crucial for creating a comprehensive budget that reflects all financial obligations associated with a project.

Identifying soft costs helps ensure that all necessary financial factors are considered, aiding in accurate project forecasting and financial management. This also highlights the importance of careful planning and budgeting beyond just tangible elements of construction, as overlooking these costs can lead to significant budget overruns.

Other choices, such as physical costs related to materials and labor, are considered hard costs and do not encompass the broader range of expenses classified as soft costs. Negative impacts on project timelines and costs arising only during project delays do not define soft costs either. Instead, they refer to delays and contingencies that can arise throughout the construction cycle, which may affect the overall project but are not representative of soft costs.