What describes "soft costs" in construction?

In the context of construction, "soft costs" refer specifically to costs that are not directly tied to the physical construction of a building but are essential for the overall project. These costs include project management fees, architectural and engineering services, legal fees, permit costs, insurance, and financing charges.

These expenses can significantly impact the total project budget and timeline, as they often arise before the actual construction begins and can continue throughout the life of the project. Soft costs are distinct from hard costs, which refer to the direct physical expenses related to labor and building materials. Understanding the distinction between these cost types is critical for effective project budgeting and financial planning in construction projects.