Why you should be tracking your construction soft costs

0
construction soft costs

Why you should be tracking your construction soft costs

When you ask people what makes up the cost of building a house, they mention materials, equipment and the cost of labor. These are the hard costs, direct costs, or brick and mortar costs. They cover the physical products and the services needed for the actual building of the project. Most people don’t consider the other costs associated with a successful, legally compliant house build – the soft costs. Firstly, we will look at what soft costs are, why you should track them, and then we’ll look at a how to monitor, review and account for these indirect costs.

Soft costs

We’ve already talked about hard costs covering the things needed during the actual building stage, such as material and labor. Basically, everything else is a construction soft cost. They include:

  • Design fees – these include architect and engineer fees.
  • Permits, licenses and legal fees – there are licenses and permits that are essential for every project and some projects may require more.
  • Surveying costs – for site surveillance, topography mapping, etc.
  • Rent – including office rental, site offices, and lease vehicles.
  • Finance, insurance, bank, loan, and accounting fees – basically any dealings you have with banks, financial institutions, and insurance companies will include fees.
  • Project management fees – such as estimating and construction management software.
  • Marketing – whether it is a sales team or pamphlets that you use o promote your business, they cost money and should be included in soft costs.
  • Post-construction costs – such as future maintenance.
  • Security and safety – including safety consultants, security fencing, or patrols.

As you can see, construction soft costs can begin to add up and can not be ignored or under-appreciated.

Tracking soft costs

A project’s indirect costs could be 25-50% of the project’s overall cost. That could be a lot of money that comes out of your profit margin if you haven’t considered soft costs in your building quote or construction estimate. Just as every project doesn’t have the same hard costs nor does everyone have the same soft costs. By tracking what your soft costs are you can build a historical picture of the costs of similar builds, making it easier to predict what these costs will be for future projects.

Management software

The best way to ensure your profit margin is to use estimating and construction management software. It is a user-friendly, affordable, cloud-based platform that tracks your soft costs, where you can manage and review them. You can budget for them and possibly even reduce them. Sometimes these costs become out of sight out of mind, but with estimating software they are not forgotten.

Tracking construction soft costs is just one of the features of the Buildxact construction software that will save you time and money. It will also build your business, win you bids, improve your customer satisfaction, and it can be accessed on-site or in the office from any smartphone, computer, or tablet with internet connection. Try it for yourself with a 14-day free trial or book a demo and stop losing money today.

LEAVE A REPLY

Please enter your comment!
Please enter your name here