In commercial construction budgets, what are 'hard costs'?

Hard costs refer specifically to the direct expenses that are tied to the physical construction of a project. This includes all the materials required to build the structure, such as concrete, steel, lumber, and finishes, along with the labor costs for construction workers who perform the work on-site. These costs are tangible and can be easily quantified, as they directly relate to the actual building process.

Understanding hard costs is crucial for accurately budgeting a commercial construction project, as they typically represent a significant portion of the overall expenses. Proper management of these costs is essential for ensuring that the project remains within budget, making it a critical focus area for construction managers and financial planners. This differentiates them from other cost categories such as indirect costs, management fees, or design fees, which, while also important, do not directly contribute to the physical construction of the building itself.