What are 'soft costs' in commercial construction?

'Soft costs' in commercial construction refer to expenses that are not directly tied to the physical construction of a building, but are essential for the project’s completion. This includes costs such as architectural and engineering fees, project management fees, legal expenses, insurance, and permits.

Choosing the option that identifies these costs highlights the financial considerations that are critical in the planning and permitting stages of a project. Soft costs are often a significant part of the overall budget and can impact project timelines and funding requirements. Understanding soft costs is essential for anyone involved in project budgeting and financial planning in commercial construction, as they can represent a substantial portion of total project costs.

In contrast, options referring to direct construction costs, labor, and materials do not accurately represent what soft costs entail, as these are categorized as 'hard costs.' Additionally, costs incurred after project completion are typically not classified under soft costs since they arise from post-construction activities rather than the planning and implementation stages.