What are Construction Soft Costs

March 1, 2020

The flooring, cabinets, fixtures, and other items inside a building can really make your construction costs skyrocket. However, did you know that you must be well-prepared for the items that are considered construction soft costs as well?

What are Construction Soft Costs

Construction soft costs are any of those items that are not tangible. These items include inspection fees, real estate, fees, project management fees, design work, and even taxes. The construction soft costs of your project can reach approximately 30%, which is quite a bit of money.

A List of Specific Construction Soft Costs

Architectural Fees and Design Fees

One of the first construction soft costs that you will experience is architectural fees and then it will turn into design fees. These fees are for the feasibility studies, design work, master planning, and any other cost that is related to those items. The construction soft cost for these items will vary, depending on the size of your project.

Cost of Land and Real Estate

The cost of land and real estate covers the acquisition of the land, appraisals, assessments, the real estate factor, the entire legal process, and even improvements that are needed for the land. You may also find yourself paying for surveying the land, any research that is needed, and the costs for any right of ways and easements.

Cost of Construction Equipment, Tools, and Rentals

Not every construction company has everything they need to complete a project, so be prepared to add some of those to your construction soft costs. A few items within this category include office supplies and equipment, rental of certain construction equipment, and even the staging area for equipment and an office trailer.

Inspection Fees

All your permits and building inspections are considered construction soft costs. You must have these items and there is no way to negotiate the price for either of them.

Taxes – Both Local and State

All construction projects can be taxed on both the state and local levels. It is all dependent on the amount of money that is invested during the project. If you end up being taxed on your labor and materials, the cost of a project can increase significantly.

Accounting Fees and the Loan Interest

Every time you make a financial transaction in construction, there is a fee that needs to be paid. In addition to those transaction fees, your loan interest, accounting expenses, and even accounting software is considered a construction soft cost.

Insurance for Construction and Professional Dues

There are many insurances required within the construction field and this category includes those as well as payment bonds, performance bonds, and any fees and dues for bid bonds that are completed.

Project Management

When it comes to project management and soft costs, this category includes quite a bit staff-wise. All your soft costs in project managements will include safety staff, temporary staff, security, runners, and any other staff that is supporting the project.


When it comes time to market your business and construction projects, you can spend a small fortune on brochures, marketing campaigns, and even public relations. All these items will cause your construction soft costs budget to be higher than you may want.

The Extras

There are a few other things that are usually included within the soft costs and they are surveys, testing consultants, and health and safety consultants, startup fees, environmental studies, and additional estimates when it comes to costs.
You may think that all these things will not add up to much for a construction project, but as we mentioned above, you should plan on 30% of the overall cost. We recommend planning for these costs in the beginning, so you are not shocked when you go over budget later on.

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