Soft construction costs are the indirect costs of a project that do not go into the physical structure itself, such as design, permitting, financing, insurance, legal and project management.
They sit alongside hard costs to make up total project cost. On parking structures, soft costs are commonly estimated as a percentage of hard costs, with the share depending on project size, complexity, financing and the delivery method.
What they include
- Architecture, engineering, traffic and parking consulting fees.
- Permits, plan review, impact fees and utility connection fees.
- Financing costs, including construction interest and loan fees. See municipal bonds.
- Insurance, legal, accounting and owner project management.
- Testing, inspection and commissioning.
How to control them
- Settle the program early; design changes are the most common source of soft-cost growth.
- Choose a delivery method that fits the project. See design-build and progressive design-build.
- Carry soft costs explicitly in early estimates rather than assuming they are included. See rough order of magnitude.
The Parkonomics view
Soft costs are where schedule delays and indecision show up on the budget. A clear program and a decisive owner are the cheapest cost controls available.
Related terms: Hard Construction Costs, First Cost, Budget Pricing, Rough Order of Magnitude, Design-Build, Financial Feasibility Study