{"id":1312,"date":"2023-08-03T13:49:29","date_gmt":"2023-08-03T13:49:29","guid":{"rendered":"https:\/\/clockify.me\/learn\/?p=1312"},"modified":"2026-05-20T14:42:08","modified_gmt":"2026-05-20T14:42:08","slug":"hard-costs-vs-soft-costs","status":"publish","type":"post","link":"https:\/\/clockify.me\/learn\/de\/business-management\/hard-costs-vs-soft-costs\/","title":{"rendered":"Direkte vs. indirekte Baukosten: Definition und Tipps zur Kalkulation"},"content":{"rendered":"\n<p class=\"translation-block wp-block-paragraph\">Are you a general contractor or a builder considering embarking on a construction project? Whether it&#8217;s a new residential project, a commercial building, or a minor remodeling endeavor, understanding the financial aspect is crucial.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\"><em>Why so?<\/em><\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">According to a survey titled <a href=\"https:\/\/www.procore.com\/press\/78-of-corporate-and-public-real-estate-owners-over-budget-on-construction-projects-idc-survey\" target=\"_blank\" rel=\"noreferrer noopener\">Owners At The Leading Edge<\/a>, commissioned by Procore, 75% of construction projects go over the budget or are delivered late (77%) \u2014 or both.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">The said survey discovered that there are, on average, 6 changes to the construction budget per project, resulting in a 15% increase in costs.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">To prevent budget overruns, it\u2019s important to know how to control both hard costs and soft costs in construction.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">But what exactly do these terms mean?&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">In this article, we will break down the concepts of hard costs vs soft costs. We will also equip you with 12 actionable tips to estimate these costs so that you can streamline <a rel=\"noreferrer noopener\" href=\"https:\/\/clockify.me\/blog\/business\/project-cost-management\/\" target=\"_blank\">project cost management<\/a>.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Let\u2019s start.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"600\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Hard-costs-vs-soft-costs-cover.jpg\" alt=\"Hard costs vs soft costs - cover\" class=\"wp-image-1342\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Hard-costs-vs-soft-costs-cover.jpg 1200w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Hard-costs-vs-soft-costs-cover-300x150.jpg 300w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Hard-costs-vs-soft-costs-cover-1024x512.jpg 1024w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Hard-costs-vs-soft-costs-cover-768x384.jpg 768w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><\/figure>\n<\/div>\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<ul class=\"wp-block-list key-takeaways\">\n<li class=\"translation-block\">In construction, hard costs are measurable expenses that are needed for the construction process, like materials, labor, and equipment.<\/li>\n\n\n\n<li class=\"translation-block\">Soft costs are all pre- and post-construction expenses that aren\u2019t directly related to construction activities, like design costs, utility connection, or building permit fees.<\/li>\n\n\n\n<li class=\"translation-block\">There are several methods of construction cost estimation: bid estimates, analogous costing, unit price costing, progress billing, and parametric estimating.<\/li>\n\n\n\n<li class=\"translation-block\">Some of the benchmarks and guides for hard cost estimation are The American Institute of Architects (AIA), RSMeans Data, Craftsman Book Company, BNi Building News, National Association of Home Builders (NAHB), and others.\u00a0<\/li>\n<\/ul>\n\n\n\n<h2 id=\"what-are-hard-costs-in-construction\" class=\"wp-block-heading translation-block\">What are hard costs in construction?<\/h2>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Hard costs or \u2018brick-and-mortar costs\u2019 are tangible expenses associated with the physical construction of the project.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Being easily measurable, hard costs involve the direct costs related to materials, labor, equipment, and services needed for the actual construction process.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">So, what portion of the total project budget do hard costs represent?<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">To understand this, we reached out to Brooks Turner, co-owner of CTX Land Clearing and Forestry Mulching who explains that hard costs make up the largest part of the total budget:&nbsp;<\/p>\n\n\n\n<div class=\"wp-block-columns pro-blockquote is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"1024\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Brooks-Turner-co-owner-of-CTX-Land-Clearing-and-Forestry-Mulching.jpg\" alt=\"Brooks Turner - co-owner of CTX Land Clearing and Forestry Mulching\" class=\"wp-image-1309\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Brooks-Turner-co-owner-of-CTX-Land-Clearing-and-Forestry-Mulching.jpg 1024w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Brooks-Turner-co-owner-of-CTX-Land-Clearing-and-Forestry-Mulching-300x300.jpg 300w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Brooks-Turner-co-owner-of-CTX-Land-Clearing-and-Forestry-Mulching-150x150.jpg 150w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Brooks-Turner-co-owner-of-CTX-Land-Clearing-and-Forestry-Mulching-768x768.jpg 768w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<p class=\"translation-block wp-block-paragraph\">\u201c<em>[T]here is no fixed range or percentage that universally applies to all projects due to their unique nature and complexity levels. However, it is generally recommended that hard costs account for around 70\u201380% of the total budget.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Now, if you\u2019re wondering about the examples of hard costs, we\u2019ve got you covered.<\/p>\n\n\n\n<h3 id=\"construction-hard-cost-1-materials\" class=\"wp-block-heading translation-block\">Construction hard cost #1: Materials<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">All the materials that constitute the physical structure of the building come under this category, such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Concrete\/cement,<\/li>\n\n\n\n<li class=\"translation-block\">Steel,<\/li>\n\n\n\n<li class=\"translation-block\">Lumber,<\/li>\n\n\n\n<li class=\"translation-block\">Roofing materials,<\/li>\n\n\n\n<li class=\"translation-block\">Flooring materials,<\/li>\n\n\n\n<li class=\"translation-block\">Windows and doors,<\/li>\n\n\n\n<li class=\"translation-block\">Insulation materials,<\/li>\n\n\n\n<li class=\"translation-block\">Masonry materials (bricks, blocks, etc.),<\/li>\n\n\n\n<li class=\"translation-block\">Drywall, and others.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Note that this is not an exhaustive list as the specific materials required can vary depending on the project&#8217;s scope and design.<\/p>\n\n\n\n<h3 id=\"construction-hard-cost-2-labor\" class=\"wp-block-heading translation-block\">Construction hard cost #2: Labor<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">When calculating labor cost in construction, you will need to factor in these expenses:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\"><strong>Wages<\/strong> \u2014 the costs of paying workers based on their <a href=\"https:\/\/clockify.me\/hourly-rate-calculator\" target=\"_blank\" rel=\"noreferrer noopener\">hourly rate<\/a> or salary,<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Benefits<\/strong> \u2014 expenses related to employee benefits, such as health insurance, vacation pay, and other statutory benefits,<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Payroll taxes<\/strong> \u2014 employer contributions to Medicare, Social Security, and other payroll taxes,<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Union fees<\/strong> \u2014 if the construction workers belong to a trade union, union fees will apply, and<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Overtime pay <\/strong>\u2014 extra pay for hours worked beyond the regular working hours.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Again, the specific breakdown of labor costs varies based on location, skill levels of the workforce, project complexity, labor agreements, etc.<\/p>\n\n\n\n<div class=\"wp-block-group pro-tip\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<p class=\"translation-block wp-block-paragraph\">\ud83c\udf93 <strong>Clockify Pro Tip<\/strong><\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Enhance your wage estimation accuracy by staying updated with the latest labor laws here:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\"><a href=\"https:\/\/clockify.me\/state-labor-laws\/\" target=\"_blank\" rel=\"noreferrer noopener\">State Labor Laws Guides<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<h3 id=\"construction-hard-cost-3-equipment\" class=\"wp-block-heading translation-block\">Construction hard cost #3: Equipment<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Hard costs in construction also include two types of costs related to equipment:&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">1. <strong>Ownership costs<\/strong> \u2014 the initial investment you make in purchasing or renting the equipment. Adding up these costs will give you the total ownership costs that include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Purchases or rentals of heavy machines, including excavators, cranes, loaders, bulldozers, concrete mixers, and scaffolding,<\/li>\n\n\n\n<li class=\"translation-block\">Hand tool purchases,<\/li>\n\n\n\n<li class=\"translation-block\">Safety equipment rental\/purchase,<\/li>\n\n\n\n<li class=\"translation-block\">The cost of transporting, assembling, and storing the equipment,<\/li>\n\n\n\n<li class=\"translation-block\">Sales tax and insurance, and<\/li>\n\n\n\n<li class=\"translation-block\">Depreciation cost that accounts for the wear and tear of equipment during the construction project.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">2. <strong>Operating costs<\/strong> \u2014 the cost of operating, maintaining, and storing the equipment. While ownership costs are fixed costs, the operating costs can vary based on the actual usage. These costs involve:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Repairs and preventive maintenance,<\/li>\n\n\n\n<li class=\"translation-block\">Wages for operators, and<\/li>\n\n\n\n<li class=\"translation-block\">Consumables, including filters, tires, fuel, oil, and other lubricants.<\/li>\n<\/ul>\n\n\n\n<h3 id=\"construction-hard-cost-4-subcontractor-fees\" class=\"wp-block-heading translation-block\">Construction hard cost #4: Subcontractor fees<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Hard costs in construction also include all the fees paid to subcontractors.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Subcontractors can charge different types of fees based on the contractual arrangements and scope of work.&nbsp;&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">You can hire subcontractors or special trade contractors to perform tasks, such as:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Plumbing, heating and air-conditioning,<\/li>\n\n\n\n<li class=\"translation-block\">Electrical work,<\/li>\n\n\n\n<li class=\"translation-block\">Plastering, drywall, and insulation,<\/li>\n\n\n\n<li class=\"translation-block\">Carpentry,&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\">Roofing, sheet metal, sliding,<\/li>\n\n\n\n<li class=\"translation-block\">Concrete,<\/li>\n\n\n\n<li class=\"translation-block\">Excavation, and others.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Here are some common types of charges to expect from subcontractors:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\"><strong>Fixed-price contract <\/strong>\u2014 a fixed price the subcontractor charges regardless of the cost they incur during the project,<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Time and materials <\/strong>\u2014 the charges based on the actual amount of materials used in addition to an hourly labor rate,&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Cost plus percentage contract <\/strong>\u2014<strong> <\/strong>the actual cost incurred, with a fixed percentage or fixed fee added,<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Unit price <\/strong>\u2014 the materials required are estimated and the costs of these materials computed,<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Lump sum <\/strong>\u2014<strong> <\/strong>a lump sum that includes the cost of materials, labor, and other expenses, and<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Change orders <\/strong>\u2014 additional fees for any changes not covered in the original scope of work.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h3 id=\"construction-hard-cost-5-site-preparation\" class=\"wp-block-heading translation-block\">Construction hard cost #5: Site preparation&nbsp;<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">This hard cost category includes the pre-building activities necessary to prepare the construction site before the actual building work begins.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Here are some of the site preparation activities that count as hard costs:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\"><strong>Demolition<\/strong> \u2014 removal of existing buildings or any other obstructions,<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Grading and leveling <\/strong>\u2014 excavation, earthmoving, or foundation work performed to adjust and shape the land,<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Clearing the land<\/strong> \u2014&nbsp; removal of trees, rocks, vegetation, and other objects on the site,<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Earthwork <\/strong>\u2014 soil testing, measures taken to prevent soil erosion, cut and fill operations, and<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Drainage projects<\/strong> \u2014 installation of drainage systems, such as underground pipes or culverts.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Moreover, the cost of site preparation will differ by:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Location,<\/li>\n\n\n\n<li class=\"translation-block\">Project type,<\/li>\n\n\n\n<li class=\"translation-block\">Size of the land,<\/li>\n\n\n\n<li class=\"translation-block\">Accessibility,<\/li>\n\n\n\n<li class=\"translation-block\">Soil type, and<\/li>\n\n\n\n<li class=\"translation-block\">Leveling needs.<\/li>\n<\/ul>\n\n\n\n<h3 id=\"construction-hard-cost-6-mechanical-electrical-and-plumbing-systems\" class=\"wp-block-heading translation-block\">Construction hard cost #6: Mechanical, electrical, and plumbing systems&nbsp;<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Mechanical, electrical, and plumbing systems (MEP systems) account for a significant portion of the overall construction budget.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">These hard costs include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\"><strong>Electrical systems<\/strong> \u2014 power distribution systems, panels, switches, lighting, wiring, and other electrical components,&nbsp;&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Plumbing systems <\/strong>\u2014<strong> <\/strong>water supply lines, plumbing fixtures, drainage systems, water treatment systems, and<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Mechanical systems <\/strong>\u2014<strong> <\/strong>mechanical systems required for elevators, space heating, air conditioning, and ventilation systems.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">The cost of plumbing and electrical systems depends on these factors:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Size of the building\/home,<\/li>\n\n\n\n<li class=\"translation-block\">The type of materials,<\/li>\n\n\n\n<li class=\"translation-block\">Number of rooms\/bathrooms, and<\/li>\n\n\n\n<li class=\"translation-block\">Number and type of plumbing and electrical fixtures.<\/li>\n<\/ul>\n\n\n\n<h3 id=\"construction-hard-cost-7-interior-work\" class=\"wp-block-heading translation-block\">Construction hard cost #7: Interior work<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Hard costs also include the materials required for interior construction and finishes, such as:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Flooring materials,&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\">Lighting fixtures,<\/li>\n\n\n\n<li class=\"translation-block\">Insulation,<\/li>\n\n\n\n<li class=\"translation-block\">Cabinetry,<\/li>\n\n\n\n<li class=\"translation-block\">Countertops, and<\/li>\n\n\n\n<li class=\"translation-block\">Painting materials.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">\n<div class=\"banner banner-light clockify-gradient-templates\">\n    <div class=\"banner-text lg:pr-[6rem]\">\n        <h2 class=\"translation-block text-2xl !mb-4\">Free expense tracker<\/h2>\n        <p class=\"translation-block !text-sm\">The most popular free time and expense tracker for team. Track hours you spend on activities, set rates, and see calculated costs. <\/p>\n\n        <div class=\"banner-buttons d-flex space-x-4 translation-block\">\n            <a class=\"rounded-md px-6 py-2 bg-white\" href=\"https:\/\/clockify.me\" target=\"_blank\">Sign up<\/a>\n\n                            <a class=\"button-2\" href=\"https:\/\/clockify.me\/apps\" target=\"_blank\">Download<\/a>\n                    <\/div>\n    <\/div>\n\n    <div class=\"banner-image banner-image-middle \">\n        <picture>\n            <source srcset=\"https:\/\/clockify.me\/learn\/wp-content\/themes\/cake-learn\/src\/images\/clockify\/banners\/templates@2x.png 2x\" alt=\"Illustration\"  media=\"(min-width: 1022px)\" \/>\n            <img decoding=\"async\" src=\"https:\/\/clockify.me\/learn\/wp-content\/themes\/cake-learn\/src\/images\/clockify\/banners\/templates.png\"  alt=\"Illustration\" \/>\n        <\/picture>\n    <\/div>\n<\/div>\n    <\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Now that you know the different types of hard costs in construction, let&#8217;s shift our focus to soft costs.<\/p>\n\n\n\n<h2 id=\"what-are-soft-costs-in-construction\" class=\"wp-block-heading translation-block\">What are soft costs in construction?&nbsp;<\/h2>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Simply put, soft costs are intangible expenses that are not associated directly with construction activities.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">While hard costs appear during the construction phase, soft costs also include all pre- and post-construction expenses.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">So, what portion of the total project budget do soft costs represent?&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">To get an answer to this question, we also contacted <a href=\"https:\/\/www.linkedin.com\/in\/tracy-allen-65166017\/\" target=\"_blank\" rel=\"noreferrer noopener\">Tracy Allen<\/a>, CPA, CCIFP, and partner at Aldrich CPAs + Advisors. Tracy says that soft costs cover only 20% or 30% of a budget:<\/p>\n\n\n\n<div class=\"wp-block-columns pro-blockquote is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"512\" height=\"568\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors.jpg\" alt=\"Allen Tracy - CPA, CCIFP, and partner at Aldrich CPAs + Advisors\" class=\"wp-image-1308\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors.jpg 512w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors-270x300.jpg 270w\" sizes=\"auto, (max-width: 512px) 100vw, 512px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<p class=\"translation-block wp-block-paragraph\"><em>\u201cThere is no typical range or percentage; it truly depends upon the project itself, the type of work, the type of contract, and the type of contractor. Soft costs can vary as much as 20% up to 35% or more of the budget, depending on these factors.<\/em><\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\"><\/p>\n<\/div>\n<\/div>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Tracy also adds that when contractors neglect soft costs, they can<em> \u201cwork themselves out of business.\u201d&nbsp;<\/em><\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Here are some examples of soft costs in construction.<\/p>\n\n\n\n<h3 id=\"construction-soft-cost-1-design-costs\" class=\"wp-block-heading translation-block\">Construction soft cost #1: Design costs<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">You may need to hire several professionals during the design stage, such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Architects,<\/li>\n\n\n\n<li class=\"translation-block\">Interior designers and decorators,<\/li>\n\n\n\n<li class=\"translation-block\">Feasibility study experts, and<\/li>\n\n\n\n<li class=\"translation-block\">Landscape architects\/designers.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">The fees they charge will come under the soft cost category.<\/p>\n\n\n\n<h3 id=\"construction-soft-cost-2-marketing-and-advertising-expenses\" class=\"wp-block-heading translation-block\">Construction soft cost #2: Marketing and advertising expenses<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">When calculating soft costs, it is important to set aside a marketing budget, particularly if it is a commercial project (such as retail stores, factories, or other buildings used for commercial purposes).<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Your marketing and advertising expenses can relate to:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Advertising campaigns (digital and print),<\/li>\n\n\n\n<li class=\"translation-block\">Signage, banners, and other promotional materials,<\/li>\n\n\n\n<li class=\"translation-block\">Website development,<\/li>\n\n\n\n<li class=\"translation-block\">Blogging, and&nbsp;&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\">Marketing software.<\/li>\n<\/ul>\n\n\n\n<h3 id=\"construction-soft-cost-3-utility-connection-and-temporary-services\" class=\"wp-block-heading translation-block\">Construction soft cost #3: Utility connection and temporary services<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">During the construction phase, you may require several temporary services for construction workers, such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Utility connection at the construction site (such as water, electricity, and gas),<\/li>\n\n\n\n<li class=\"translation-block\">Facilities (such as portable toilets, storage, generators, and offices), and<\/li>\n\n\n\n<li class=\"translation-block\">Security measures (fencing, surveillance cameras, and security personnel).<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Despite occurring <em>during<\/em> the construction phase, these expenses still fall under the category of soft costs \u2014 because they are not directly related to the actual construction.<\/p>\n\n\n\n<h3 id=\"construction-soft-cost-4-professional-consultants-and-specialists\" class=\"wp-block-heading translation-block\">Construction soft cost #4: Professional consultants and specialists<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">You may need to hire professional consultants and specialists during the design phase to ensure the building meets the applicable regulatory and environmental standards.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Soft costs will include the fees you pay to specialists who provide support in the following areas:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Environmental impact assessments,<\/li>\n\n\n\n<li class=\"translation-block\">Acoustical engineering,<\/li>\n\n\n\n<li class=\"translation-block\">Structural engineering,<\/li>\n\n\n\n<li class=\"translation-block\">Geotechnical investigations,<\/li>\n\n\n\n<li class=\"translation-block\">Landscape architecture, and<\/li>\n\n\n\n<li class=\"translation-block\">Construction safety.<\/li>\n<\/ul>\n\n\n\n<h3 id=\"construction-soft-cost-5-building-permit-fees\" class=\"wp-block-heading translation-block\">Construction soft cost #5: Building permit fees<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Expenses associated with construction and building permissions also fall under soft costs.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">In addition to the building permit, you may need to factor in permit fees related to the following:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Zoning,&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\">HVAC (heating, ventilation, and air conditioning),<\/li>\n\n\n\n<li class=\"translation-block\">Electrical installation,&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\">Plumbing installation,&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\">Demolition,&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\">Fuel storage,&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\">Fire safety,&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\">Foundation repair, and<\/li>\n\n\n\n<li class=\"translation-block\">Pool installation.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Depending on the location, you may also need a permit for minor projects, such as solar heating unit installation or window replacement.&nbsp;<\/p>\n\n\n\n<h3 id=\"construction-soft-cost-6-training-and-workforce-development\" class=\"wp-block-heading translation-block\">Construction soft cost #6: Training and workforce development<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">From working at elevated locations to dealing with dangerous chemicals, construction workers face a significant risk of on-the-job injuries.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">As a contractor or builder, it\u2019s important to organize safety training for workers to prevent injuries and promote a safety culture. What\u2019s more, safety training for construction workers is also mandatory in most states.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Soft costs can involve expenses related to training and workforce development programs that are necessary for improving safety and project outcomes.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Here are some examples of training-related soft costs:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Training sessions for construction personnel,&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\">Certifications and licenses required for certain trades or roles, and&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\">Professional development opportunities (courses, workshops, seminars, etc.).<\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-group pro-tip\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<p class=\"translation-block wp-block-paragraph\">\ud83c\udf93 <strong>Clockify Pro Tip<\/strong><\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Maximize the performance and productivity levels of your organization with proven workforce management strategies. Check out our blog post:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\"><a href=\"https:\/\/clockify.me\/blog\/business\/workforce-management\/\" target=\"_blank\" rel=\"noreferrer noopener\">What is workforce management and how it works?<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<h3 id=\"construction-soft-cost-7-legal-fees\" class=\"wp-block-heading translation-block\">Construction soft cost #7: Legal fees<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Should you include legal fees as part of your project&#8217;s soft costs?<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Considering that the average value of global disputes in the construction industry in 2021 was $52.6 million according to the <a href=\"https:\/\/www.arcadis.com\/en\/insights\/perspectives\/global\/global-construction-disputes-report\" target=\"_blank\" rel=\"noreferrer noopener\">2022 Global Construction Dispute Report<\/a> \u2014 the answer is yes!<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Now, let\u2019s look at the different ways construction attorneys can charge:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\"><strong>Hourly rate <\/strong>\u2014 A rate that can vary depending on the location, experience level of the attorney, or the legal services you need.<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Contingency fee <\/strong>\u2014 Here, the attorney will only receive payment (a percentage of the recovery) if they recover compensation.&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Flat fee <\/strong>\u2014 A fixed fee offered for specific services or for handling an entire project. Some lawyers also charge a flat fee for specific tasks, such as preparing a contract draft or conducting discovery.&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Retainer fee <\/strong>\u2014 An arrangement where the attorney charges an upfront monthly fee as a retainer. This fee model is suitable for construction firms that hire multiple contractors and subcontractors or want ongoing legal assistance.<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Hybrid fee arrangements <\/strong>\u2014 Different fee arrangements combined. For example, attorneys may charge an initial fixed fee and then charge an hourly rate for ongoing legal services. Or, they may charge an hourly rate of $100 and a 20% contingency fee.<\/li>\n<\/ul>\n\n\n\n<h3 id=\"construction-soft-cost-8-insurance\" class=\"wp-block-heading translation-block\">Construction soft cost #8: Insurance<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Given that construction projects involve risks \u2014 such as property damage, accidents, natural disasters, or liabilities \u2014 you may need to buy several types of insurance policies.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">While certain insurance policies and surety bonds are mandatory in most US states, government agencies also set the minimum policy limits for contractors.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">For instance, <a href=\"https:\/\/dot.ca.gov\/-\/media\/dot-media\/programs\/construction\/documents\/construction-safety-and-insurance\/insurance-requirements.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">The California Department of Transportation<\/a> specifies a minimum general liability insurance cover of $1,000,000 for bid amounts \u2264 $1,000,000.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">These are some of the insurance covers you may need:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Workers&#8217; Compensation,<\/li>\n\n\n\n<li class=\"translation-block\">Surety bonds (bid bonds, payment bonds, and performance bonds), and&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\">Liability insurance (professional liability, builder\u2019s risk insurance, general liability, and business owner\u2019s policy).<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">\n<div class=\"banner banner-dark clockify-gradient-features\">\n    <div class=\"banner-text lg:pr-[6rem]\">\n        <h2 class=\"translation-block text-2xl !mb-4\">Free time tracker<\/h2>\n        <p class=\"translation-block !text-sm\">Time tracking software used by millions. Clockify by CAKE.com is a time tracker and timesheet app that lets you track work hours across projects.<\/p>\n\n        <div class=\"banner-buttons d-flex space-x-4 translation-block\">\n            <a class=\"rounded-md px-6 py-2 bg-white\" href=\"https:\/\/clockify.me\" target=\"_blank\">Sign up<\/a>\n\n                            <a class=\"button-2\" href=\"https:\/\/clockify.me\/apps\" target=\"_blank\">Download<\/a>\n                    <\/div>\n    <\/div>\n\n    <div class=\"banner-image banner-image-middle \">\n        <picture>\n            <source srcset=\"https:\/\/clockify.me\/learn\/wp-content\/themes\/cake-learn\/src\/images\/clockify\/banners\/features@2x.png 2x\" alt=\"Illustration\"  media=\"(min-width: 1022px)\" \/>\n            <img decoding=\"async\" src=\"https:\/\/clockify.me\/learn\/wp-content\/themes\/cake-learn\/src\/images\/clockify\/banners\/features.png\"  alt=\"Illustration\" \/>\n        <\/picture>\n    <\/div>\n<\/div>\n    <\/p>\n\n\n\n<h2 id=\"what-are-the-differences-between-soft-costs-and-hard-costs\" class=\"wp-block-heading translation-block\">What are the differences between soft costs and hard costs?<\/h2>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">While hard costs are tangible and directly tied to construction activities, soft costs are intangible and include various indirect expenses throughout the project&#8217;s lifecycle.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">This table summarizes the key differences between hard costs vs soft costs:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th><\/th><th><strong>Hard costs<\/strong><\/th><th><strong>Soft costs<\/strong><\/th><\/tr><\/thead><tbody><tr><td><strong>Definition<\/strong><\/td><td>Tangible expenses directly related to physical construction activities<\/td><td>Indirect expenses linked to non-construction activities, such as administration and insurance<\/td><\/tr><tr><td><strong>Examples<\/strong><\/td><td>&#8211; Materials<br>&#8211; Labor<br>&#8211; Equipment<br>&#8211; Subcontractor fees<br>&#8211; Site preparation&nbsp;<br>&#8211; MEP<br>&#8211; Interior work<\/td><td>&#8211; Design costs<br>&#8211; Marketing and advertising<br>&#8211; Utility connection and temporary services<br>&#8211; Professional consultants and specialists<br>&#8211; Building permit fees<br>&#8211; Training and workforce development<br>&#8211; Legal fees<br>&#8211; Insurance<\/td><\/tr><tr><td><strong>Timing<\/strong><\/td><td>Appear during the construction phase<\/td><td>Appear throughout the project&#8217;s lifecycle (from planning to post-construction)<\/td><\/tr><tr><td><strong>Calculation<\/strong><\/td><td>Estimators use different methods of estimation (such as, unit costs, bid estimate, and material takeoff)<\/td><td>Estimators add up the expenses in each soft cost category (insurance, utility fee, etc) to arrive at the total cost<\/td><\/tr><tr><td><strong>Impact<\/strong><\/td><td>Directly affects the project budget<\/td><td>Indirectly affects the project&#8217;s timeline and overall success (for example, legal disputes or accidents on the site can delay the project and impact the costs)<\/td><\/tr><tr><td><strong>Management<\/strong><\/td><td>Managed through procurement, negotiation, and cost control<\/td><td>Managed through planning and strategic decision-making<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 id=\"tips-for-estimating-hard-and-soft-costs-in-construction\" class=\"wp-block-heading translation-block\">Tips for estimating hard and soft costs in construction<\/h2>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Before determining hard costs and soft costs, it is important to gain a thorough understanding of all aspects of the project.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">While experienced contractors can rely on historical data for cost estimation, new contractors can follow these tips to accurately estimate both hard costs and soft costs.<\/p>\n\n\n\n<h3 id=\"tip-1-define-the-scope-of-work\" class=\"wp-block-heading translation-block\">Tip #1: Define the scope of work<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Start by reviewing the project requirements and design specifications.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Be sure to review the following:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Project size and complexity,<\/li>\n\n\n\n<li class=\"translation-block\">Site conditions,<\/li>\n\n\n\n<li class=\"translation-block\">Prevailing wages,<\/li>\n\n\n\n<li class=\"translation-block\">Design,<\/li>\n\n\n\n<li class=\"translation-block\">Bid documents,<\/li>\n\n\n\n<li class=\"translation-block\">Industry and market conditions,<\/li>\n\n\n\n<li class=\"translation-block\">Project timeline and scheduling, and<\/li>\n\n\n\n<li class=\"translation-block\">Risks.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">This can help you understand the project\u2019s viability, specific requirements (approvals, permits, etc.), and constraints early on.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">To find out how industry professionals define the scope of work, we reached out to John Ward, co-owner of Austin Iron Fences, a construction company. He stresses the importance of conducting a feasibility study early on, to understand the scope of work:&nbsp; <\/p>\n\n\n\n<div class=\"wp-block-columns pro-blockquote is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"1024\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/John-Ward-co-owner-of-Austin-Iron-Fences.jpg\" alt=\"John Ward - co-owner of Austin Iron Fences\" class=\"wp-image-1310\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/John-Ward-co-owner-of-Austin-Iron-Fences.jpg 1024w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/John-Ward-co-owner-of-Austin-Iron-Fences-300x300.jpg 300w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/John-Ward-co-owner-of-Austin-Iron-Fences-150x150.jpg 150w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/John-Ward-co-owner-of-Austin-Iron-Fences-768x768.jpg 768w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<p class=\"translation-block wp-block-paragraph\"><em>\u201cIt is crucial to thoroughly analyze project requirements early on by conducting detailed feasibility studies with input from all relevant stakeholders involved, including architects, engineers, contractors, etc. This ensures comprehensive understanding before embarking upon any estimations, which reduces potential discrepancies later down the line.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n<h3 id=\"tip-2-know-the-different-methods-of-construction-cost-estimation\" class=\"wp-block-heading translation-block\">Tip #2: Know the different methods of construction cost estimation<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Contractors and cost estimators use different methods of construction cost estimation based on the extent of information they have. In some cases, you may also need to give a rough estimate to understand whether the project is feasible before going ahead with a detailed estimation.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">So, to know what type of estimation you need for your project, it is important to know what information is available, or the \u2018level\u2019 of cost estimation.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">According to <a href=\"https:\/\/www.costengineering.eu\/component\/users\/?view=login&amp;Itemid=101\" target=\"_blank\" rel=\"noreferrer noopener\">The Association for the Advancement of Cost Engineering<\/a> (AACE), there are <strong>5 levels of cost estimation.<\/strong><\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Each of these levels indicates the amount of information (related to design, scope, labor, and material costs) available.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Here are the levels of cost estimation:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li class=\"translation-block\"><strong>Order of magnitude<\/strong> \u2014 at this level, there are minimal design details available and are used to prepare rough estimates,<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Study estimates <\/strong>\u2014 as more design details become available, you can better understand the project\u2019s feasibility,&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Preliminary estimates<\/strong> \u2014 data on material costs is available at this stage,&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Definitive estimates <\/strong>\u2014 more detailed information on design and unit costs are available, and<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Detailed estimates<\/strong> \u2014 complete information on design, labor, and material costs is available.<\/li>\n<\/ol>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Based on the amount of information you have (or the level you are at), choose a method of cost estimation \u2014 here are some of them:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\"><a href=\"https:\/\/www.cmu.edu\/cee\/projects\/PMbook\/05_Cost_Estimation.html\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Bid estimates <\/strong><\/a>\u2014 contractors prepare bid estimates by adding up the direct construction costs and a markup, using a combination of these approaches:\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Subcontractor quotations,&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\">Quantity takeoffs, and<\/li>\n\n\n\n<li class=\"translation-block\">Construction procedures.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\"><a href=\"https:\/\/www.dau.edu\/acquipedia-article\/analogy-cost-estimation-method\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Analogous costing<\/strong><\/a> \u2014 estimators use similar projects as a reference point to estimate the costs of the new project,<\/li>\n\n\n\n<li class=\"translation-block\"><a href=\"https:\/\/www.procore.com\/library\/unit-price-contracts\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Unit price costing<\/strong><\/a>\u2014&nbsp; contractors arrive at the total price of the project by estimating the price of specific portions or \u201cunits of work,\u201d&nbsp;&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Progress Billing<\/strong> \u2014 American Institute of Architects (AIA) progress billing is a <a href=\"https:\/\/clockify.me\/learn\/business-management\/construction-accounting\/\" target=\"_blank\" rel=\"noreferrer noopener\">construction accounting<\/a> method used to estimate costs based on the progress made on the project, and<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Parametric estimating<\/strong> \u2014 mathematical models developed using historical data are used to estimate project costs.<\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-group pro-tip\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<p class=\"translation-block wp-block-paragraph\">\ud83c\udf93 <strong>Clockify Pro Tip<\/strong><\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Looking to learn more about parametric estimation and its benefits? Check out our blog post:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\"><a href=\"https:\/\/clockify.me\/blog\/business\/parametric-estimation\/\" target=\"_blank\" rel=\"noreferrer noopener\">Parametric estimation in project management<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<h3 id=\"tip-3-research-industry-benchmarks-and-guidelines\" class=\"wp-block-heading translation-block\">Tip #3: Research industry benchmarks and guidelines<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Before getting started with hard cost and soft cost estimation, it&#8217;s important to know the latest guidelines, standards, and cost indices applicable to construction cost estimation.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">For that purpose, Tracy Allen advises construction professionals to leverage a wide array of resources:<\/p>\n\n\n\n<div class=\"wp-block-columns pro-blockquote is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"512\" height=\"568\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors.jpg\" alt=\"Allen Tracy - CPA, CCIFP, and partner at Aldrich CPAs + Advisors\" class=\"wp-image-1308\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors.jpg 512w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors-270x300.jpg 270w\" sizes=\"auto, (max-width: 512px) 100vw, 512px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<p class=\"translation-block wp-block-paragraph\"><em>\u201cThe American Institute of Architects (AIA) has some good resources for helping contractors understand the difference between hard and soft costs as well as the overall life cycle of costing a project. In addition, look to your strong construction association for resources such as AGC, CFMA, NUUCA, and others. These associations often have benchmarking surveys and other information available to assist contractors.\u201d&nbsp;<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Let\u2019s look at some of the resources for hard cost<s> <\/s>and soft cost estimation.<\/p>\n\n\n\n<h4 id=\"benchmarks-and-guides-for-hard-cost-estimation\" class=\"wp-block-heading translation-block\">Benchmarks and guides for hard cost estimation<\/h4>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">From construction publications to cost databases, there are multiple resources available for hard cost estimation.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\"><strong>The American Institute of Architects (AIA)<\/strong><\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Here are some of the resources available for construction professionals:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Construction cost estimation guide,<\/li>\n\n\n\n<li class=\"translation-block\">MasterSpec\u00ae, a design and specification software, and<\/li>\n\n\n\n<li class=\"translation-block\">Industry best practices.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\"><strong>RSMeans Data&nbsp;<\/strong><\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">RSMeans is a widely recognized source of updated construction cost data and estimating tools. Here are some of the resources it offers:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Online database of updated construction costs,<\/li>\n\n\n\n<li class=\"translation-block\">Cost estimating tools,<\/li>\n\n\n\n<li class=\"translation-block\">Detailed price breakdowns for labor, material, and productivity, and<\/li>\n\n\n\n<li class=\"translation-block\">Cost data books.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\"><strong>Craftsman Book Company<\/strong><\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Craftsman publishes a variety of cost-estimating books that cover 80 different building types and construction trades.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\"><strong>BNi Building News<\/strong><\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">BNi Building News offers a range of construction cost databases and books such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">General Construction 2024 Cost Book,<\/li>\n\n\n\n<li class=\"translation-block\">Mechanical\/Electrical 2024 Cost Book, and<\/li>\n\n\n\n<li class=\"translation-block\">Standard Estimating Practice.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\"><strong>National Association of Home Builders (NAHB)<\/strong><\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">The NAHB offers various resources to assist with construction cost estimation:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">The Cost of Construction Survey report,&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\">Market analysis reports, and<\/li>\n\n\n\n<li class=\"translation-block\">Education and training.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\"><strong>The National Institute of Building Sciences (NIBS)<\/strong><\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">The non-profit organization develops the national standards and guidelines to implement BIM (Building information modeling) technology that can help construction professionals in these areas:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Design and construction,<\/li>\n\n\n\n<li class=\"translation-block\">Asset management,<\/li>\n\n\n\n<li class=\"translation-block\">Scheduling, and<\/li>\n\n\n\n<li class=\"translation-block\">Integrated construction specifications.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\"><strong>Construction Financial Management Association (CFMA)<\/strong><\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">The CFMA offers plenty of resources and insights on strategic planning, construction accounting, and other topics, such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\"><strong>Construction Financial Benchmarker<\/strong> \u2014 a comprehensive analysis of financial performance metrics within the construction sector,<\/li>\n\n\n\n<li class=\"translation-block\"><strong>State Tax Law Guides<\/strong> \u2014 compilation of tax laws from all 50 states and Washington, D.C., and<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Financial Management and Accounting for the Construction Industry <\/strong>\u2014 construction financial management guide covering <a href=\"https:\/\/clockify.me\/blog\/apps-tools\/best-accounting-tools\/\" target=\"_blank\" rel=\"noreferrer noopener\">accounting<\/a>, insurance, cash management, and so on.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h4 id=\"benchmarks-for-soft-cost-estimation\" class=\"wp-block-heading translation-block\">Benchmarks for soft cost estimation<\/h4>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Soft costs are relatively challenging to determine as they vary widely based on many factors, such as location and project scope.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">We contacted <a href=\"https:\/\/www.linkedin.com\/in\/tom-zauli-2202581\/\" target=\"_blank\" rel=\"noreferrer noopener\">Tom Zauli<\/a>, Senior Vice President of SOFTRAX, to understand the variance. He explains that soft costs can grow \u201cexponentially\u201d based on the complexity of the project:<\/p>\n\n\n\n<div class=\"wp-block-columns pro-blockquote is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"513\" height=\"674\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Tom-Zauli-1-Senior-Vice-President-of-SOFTRAX.jpg\" alt=\"Tom Zauli 1 - Senior Vice President of SOFTRAX\" class=\"wp-image-1311\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Tom-Zauli-1-Senior-Vice-President-of-SOFTRAX.jpg 513w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Tom-Zauli-1-Senior-Vice-President-of-SOFTRAX-228x300.jpg 228w\" sizes=\"auto, (max-width: 513px) 100vw, 513px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<p class=\"translation-block wp-block-paragraph\"><em>\u201cThe soft costs for the construction of a single home would most likely have a lower variance than those for the development of an office park, for example. The office park would require more \u201csoft costs\u201d to get it leased and fully functioning, and these soft costs could spiral, depending on the size of the office park.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">And, as there are no benchmarks and guidelines for soft cost estimation, construction professionals need to look at multiple sources to get an idea of what to expect.For instance, NAHB\u2019s <a href=\"https:\/\/www.nahb.org\/-\/media\/NAHB\/news-and-economics\/docs\/housing-economics-plus\/special-studies\/2023\/special-study-cost-of-constructing-a-home-2022-february-2023.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">2022 Construction Cost survey<\/a> reveals the breakup of hard costs and soft costs for a single-family unit measuring 2562 square feet which are 92.6% and 7.4% respectively:<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"1300\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Pie-chart-hard-costs-vs-soft-costs.png\" alt=\"Pie chart hard costs vs soft costs\" class=\"wp-image-1327\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Pie-chart-hard-costs-vs-soft-costs.png 1200w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Pie-chart-hard-costs-vs-soft-costs-277x300.png 277w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Pie-chart-hard-costs-vs-soft-costs-945x1024.png 945w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Pie-chart-hard-costs-vs-soft-costs-768x832.png 768w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><\/figure>\n<\/div>\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 id=\"tip-4-seek-expert-advice-on-cost-estimation\" class=\"wp-block-heading translation-block\">Tip #4: Seek expert advice on cost estimation<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Industry experts possess valuable knowledge and experience in cost estimation techniques, factors, and trends specific to the construction industry.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Their insights can help you accurately estimate both direct costs and indirect costs.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">As we are talking about construction cost estimation, one of the first experts to consult would be an accountant.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Our earlier speaker, Tom Zauli, stresses the importance of consulting an accountant in the planning stages in addition to using industry resources:<\/p>\n\n\n\n<div class=\"wp-block-columns pro-blockquote is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"513\" height=\"674\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Tom-Zauli-1-Senior-Vice-President-of-SOFTRAX.jpg\" alt=\"Tom Zauli 1 - Senior Vice President of SOFTRAX\" class=\"wp-image-1311\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Tom-Zauli-1-Senior-Vice-President-of-SOFTRAX.jpg 513w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Tom-Zauli-1-Senior-Vice-President-of-SOFTRAX-228x300.jpg 228w\" sizes=\"auto, (max-width: 513px) 100vw, 513px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<p class=\"translation-block wp-block-paragraph\"><em>\u201cMy advice is to use these guides in tandem with an accountant experienced in the specific type of construction project you are undertaking. The accountant will have a wealth of real-world \/ what-if scenarios to consider based on what he\/she has seen. Ideally, the combination of a guide and an accountant will help to estimate soft costs accurately.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">The other experts who can guide you in the planning stages include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Architects,<\/li>\n\n\n\n<li class=\"translation-block\">Engineers,<\/li>\n\n\n\n<li class=\"translation-block\">Real estate professionals,<\/li>\n\n\n\n<li class=\"translation-block\">Attorneys,<\/li>\n\n\n\n<li class=\"translation-block\">Experienced contractors and subcontractors, and<\/li>\n\n\n\n<li class=\"translation-block\">Construction association members.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Wondering if your competitors are willing to guide you? Tracy Allen believes that most professionals in the construction industry are willing to guide newcomers:&nbsp;&nbsp;<\/p>\n\n\n\n<div class=\"wp-block-columns pro-blockquote is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"512\" height=\"568\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors.jpg\" alt=\"Allen Tracy - CPA, CCIFP, and partner at Aldrich CPAs + Advisors\" class=\"wp-image-1308\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors.jpg 512w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors-270x300.jpg 270w\" sizes=\"auto, (max-width: 512px) 100vw, 512px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<p class=\"translation-block wp-block-paragraph\"><em>\u201cMost members of the various construction associations are willing to provide guidance and education to new contractors because it helps the entire construction industry. Your competitors won\u2019t give away their \u2018secret sauce\u2019 but they will provide guidance.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">\n<div class=\"banner banner-dark clockify-gradient-landing-1\">\n    <div class=\"banner-text lg:pr-[6rem]\">\n        <h2 class=\"translation-block text-2xl !mb-4\">Track budget &amp; estimates<\/h2>\n        <p class=\"translation-block !text-sm\">With Clockify by CAKE.com, you can track project progress and see how much of the budget was spent by setting estimates in monetary terms.&nbsp;<\/p>\n\n        <div class=\"banner-buttons d-flex space-x-4 translation-block\">\n            <a class=\"rounded-md px-6 py-2 bg-white\" href=\"https:\/\/clockify.me\" target=\"_blank\">Sign up<\/a>\n\n                            <a class=\"button-2\" href=\"https:\/\/clockify.me\/apps\" target=\"_blank\">Download<\/a>\n                    <\/div>\n    <\/div>\n\n    <div class=\"banner-image banner-image-middle \">\n        <picture>\n            <source srcset=\"https:\/\/clockify.me\/learn\/wp-content\/themes\/cake-learn\/src\/images\/clockify\/banners\/landing-1@2x.png 2x\" alt=\"Illustration\"  media=\"(min-width: 1022px)\" \/>\n            <img decoding=\"async\" src=\"https:\/\/clockify.me\/learn\/wp-content\/themes\/cake-learn\/src\/images\/clockify\/banners\/landing-1.png\"  alt=\"Illustration\" \/>\n        <\/picture>\n    <\/div>\n<\/div>\n    <\/p>\n\n\n\n<h3 id=\"tip-5-calculate-the-cost-of-materials-equipment-and-labor\" class=\"wp-block-heading translation-block\">Tip #5:&nbsp; Calculate the cost of materials, equipment, and labor<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Now, let\u2019s look at the steps to calculate the labor, materials, and other hard costs.<\/p>\n\n\n\n<h4 id=\"step-1-review-the-bid-documents\" class=\"wp-block-heading translation-block\">Step #1: Review the bid documents<\/h4>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">This step involves a careful evaluation of the project documents, measurements, and the construction site.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\"><strong>Review project documents <\/strong>\u2014 carefully examine the project documents, including architectural drawings and specifications. Thoroughly understand the scope of work, construction methods, timelines, and other requirements,<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Visit the site <\/strong>\u2014<strong> <\/strong>you may need to visit the site to understand the site conditions, such as accessibility, drainage, or soil type, all of which can impact the hard costs, and<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Identify measurement units <\/strong>\u2014 selecting the appropriate measurement units for each item or component is important to get your costing right. For example, linear feet for piping or square footage for flooring.<\/li>\n<\/ul>\n\n\n\n<h4 id=\"step-2-break-the-project-down-into-smaller-components\" class=\"wp-block-heading translation-block\">Step #2: Break the project down into smaller components<\/h4>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Dividing the project into smaller work packages or components can help streamline hard cost estimation.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">For instance, you can group projects by trade, such as electrical or plumbing.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Or, you could break up the project into specific areas, such as walls or floors. Either way, breaking down your project into smaller pieces will make the work more manageable and less stressful.&nbsp;&nbsp;<\/p>\n\n\n\n<div class=\"wp-block-group pro-tip\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<p class=\"translation-block wp-block-paragraph\">\ud83c\udf93 <strong>Clockify Pro Tip<\/strong><\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Learn the art of deconstructing your projects into smaller components and boosting productivity. Check out our blog post:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\"><a href=\"https:\/\/clockify.me\/blog\/productivity\/break-project-into-tasks\/\" target=\"_blank\" rel=\"noreferrer noopener\">How to Break a Project Down into Tasks<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<h4 id=\"step-3-perform-material-takeoff\" class=\"wp-block-heading translation-block\">Step #3: Perform material takeoff<\/h4>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Material takeoff is a process where the contractor makes a list of all the materials needed for the project and estimates their cost.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Before calculating the cost of each material, you need to first estimate the amount of materials, and then organize the data.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">One way to do this is to use standard formats, such as MasterFormat.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Developed by the <a href=\"https:\/\/www.csinstallers.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Construction Specifications Institute<\/a> (CSI), MasterFormat is a widely used system to organize construction data.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">In this system, the building elements are classified into <a href=\"https:\/\/www.nj.gov\/dca\/njht\/documents\/programs\/preservenj\/CSI_CODES.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">groups, subgroups, divisions,<\/a> and sections that cover various aspects of the project. You can find all the materials you need for your project in this list and then use a cost database to calculate the cost of each material.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">To <strong>calculate subcontractor fees<\/strong>:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">List the specific tasks that you want to subcontract,<\/li>\n\n\n\n<li class=\"translation-block\">Contact multiple subcontractors and obtain quotes with a detailed breakdown of costs, and<\/li>\n\n\n\n<li class=\"translation-block\">Find out if the subcontractor charges hourly rates or a fixed fee. If they charge hourly rates, multiply the hourly rate by the estimated hours for the project.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">What are the typical subcontractor fees that you can expect?<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Like other hard cost categories, the fees can vary based on many factors, according to Tracy Allen:<\/p>\n\n\n\n<div class=\"wp-block-columns pro-blockquote is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"512\" height=\"568\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors.jpg\" alt=\"Allen Tracy - CPA, CCIFP, and partner at Aldrich CPAs + Advisors\" class=\"wp-image-1308\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors.jpg 512w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors-270x300.jpg 270w\" sizes=\"auto, (max-width: 512px) 100vw, 512px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<p class=\"translation-block wp-block-paragraph\"><em>\u201cGeography, type of contractor, and other factors all play a role in subcontractor fees. It also depends on how much work the contractor self performs as well. For a general subcontractor doing most of the work, subcontractor costs are likely 70-75% of the total costs of a project.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h4 id=\"step-4-factor-in-labor-costs\" class=\"wp-block-heading translation-block\">Step #4: Factor in labor costs&nbsp;<\/h4>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">To calculate labor costs, follow these steps:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\"><strong>Know the labor rates <\/strong>\u2014 list the labor rates for all workers involved in your project, such as carpenters, plumbers, machine operators, and others,<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Estimate labor hours<\/strong> \u2014 consult industry experts or look into historical data to assess the labor hours (note that factors, such as skill levels and complexity of tasks can impact the labor hours),<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Account for overtime<\/strong> \u2014 modify the labor rates and hours if the project involves overtime work, and<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Calculate total cost <\/strong>\u2014 calculate the labor costs using this formula: Number of workers x Labor rates x Number of hours<em>. <\/em>For example, if a task takes 8 hours to complete for 20 laborers with the labor rate being $30 per hour, labor cost = (20 x 8 x $30) = $4800.<\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-group pro-tip\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<p class=\"translation-block wp-block-paragraph\">\ud83c\udf93 <strong>Clockify Pro Tip<\/strong><\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Learn how Clockify helps you accurately calculate the cost of labor.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\"><a href=\"https:\/\/clockify.me\/labor-based-pricing-cost-calculator\" target=\"_blank\" rel=\"noreferrer noopener\">How to calculate labor cost + labor cost calculators<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<h3 id=\"tip-6-learn-how-to-calculate-and-present-soft-costs-in-your-bids\" class=\"wp-block-heading translation-block\">Tip #6: Learn how to calculate and present soft costs in your bids<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Before learning how to present soft costs in your bids, you need to know how to calculate the soft costs accurately.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Remember that some soft costs, such as temporary utility connections, are one-time expenses, while others, such as insurance, are recurring.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Here are some tips to calculate soft costs:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\"><strong>List the soft cost categories <\/strong>\u2014 make a list of all the applicable categories of soft costs for your project,<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Collect cost information<\/strong> \u2014 to get the latest cost information, you can refer to market research reports, consult experts, or obtain quotes from vendors, and<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Calculate the total cost <\/strong>\u2014 estimate the costs for each soft cost category (insurance, design, or legal fees).<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Once you have arrived at the total hard and soft costs, don\u2019t forget to add a markup. While the profit margin (the percentage of profit you add to the total construction cost) depends on your business goals, here are some numbers to aim for.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">According to the State of <a href=\"https:\/\/publicsharedfiles.s3.ap-southeast-2.amazonaws.com\/APBSORCIReport2023.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Residential Construction Industry<\/a> (SORCI) report, 69.7% of construction professionals said their gross profit margin was between 15% and 33% in 2022.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">But, how to present soft costs in your bids?<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Tracy Allen explains that you can include soft costs in fixed price contracts or in your schedule of values (a list of all items used in construction and their cost):<\/p>\n\n\n\n<div class=\"wp-block-columns pro-blockquote is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"512\" height=\"568\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors.jpg\" alt=\"Allen Tracy - CPA, CCIFP, and partner at Aldrich CPAs + Advisors\" class=\"wp-image-1308\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors.jpg 512w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors-270x300.jpg 270w\" sizes=\"auto, (max-width: 512px) 100vw, 512px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<p class=\"translation-block wp-block-paragraph\">\u201c<em>Certain types of contracts such as gross maximum price (GMP) may allow you to allocate, or cost in, more soft costs and in turn allow for a markup. A lump sum may be harder to allocate soft costs into, but knowing your owner and what those costs are will help devise the best strategy in your schedule of values. It is also possible that your company will need to bury the soft costs in other lines on the schedule of values or in general conditions.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 id=\"tip-7-set-aside-a-contingency-budget\" class=\"wp-block-heading translation-block\">Tip #7: Set aside a contingency budget<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Including contingencies in the hard cost and soft cost estimates can help account for potential unforeseen expenses or changes in the project.&nbsp;&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Contingency budgets are often based on historical experience while new projects can take into account the expected difficulty or risks involved in the project.&nbsp;&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Here are some factors that can cause the construction budget to deviate:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Changes to the construction schedule,<\/li>\n\n\n\n<li class=\"translation-block\">Scope or design changes,<\/li>\n\n\n\n<li class=\"translation-block\">Unexpected site conditions,&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\">Material price fluctuations,<\/li>\n\n\n\n<li class=\"translation-block\">Workforce availability,<\/li>\n\n\n\n<li class=\"translation-block\">Permits or regulatory delays, or<\/li>\n\n\n\n<li class=\"translation-block\">Natural disasters, accidents, or emergencies.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Commonly used contingency percentages range from 10% to 15% of the total project cost, according to a study titled <a href=\"https:\/\/www.researchgate.net\/publication\/347790643_Construction_Contingency_Determination_A_Review_of_Processes_and_Techniques\" target=\"_blank\" rel=\"noreferrer noopener\">Construction Contingency Determination: A Review of Processes and Techniques<\/a>.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">However, there is no \u2018typical\u2019 contingency percentage.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Tracy Allen weighs in on the factors that influence contingency planning:<\/p>\n\n\n\n<div class=\"wp-block-columns pro-blockquote is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"512\" height=\"568\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors.jpg\" alt=\"Allen Tracy - CPA, CCIFP, and partner at Aldrich CPAs + Advisors\" class=\"wp-image-1308\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors.jpg 512w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors-270x300.jpg 270w\" sizes=\"auto, (max-width: 512px) 100vw, 512px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<p class=\"translation-block wp-block-paragraph\"><em>\u201cBuilding in contingency and the amount that can be built in is dependent on the current economic market, bidding strategy, and understanding how your competitor might bid, along with many other factors. Due to those reasons, there is no typical contingency bucket size.\u201d&nbsp;<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n<h3 id=\"tip-8-set-construction-cost-estimates-and-track-spending\" class=\"wp-block-heading translation-block\">Tip #8: Set construction cost estimates and track spending<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Since most hard costs and some soft costs are predictable, you can set estimates for them. This allows you to align your estimates with the project&#8217;s budget and ensure costs are managed effectively throughout the construction process.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">An easy way to <a href=\"https:\/\/clockify.me\/help\/projects\/project-budget\" target=\"_blank\" rel=\"noreferrer noopener\">set and track estimates<\/a> for fixed-fee projects is to use smart project budgeting software, such as <a href=\"https:\/\/clockify.me\/\" target=\"_blank\" rel=\"noreferrer noopener\">Clockify<\/a>.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"778\" height=\"815\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Project-budget-.png\" alt=\"Project budget\" class=\"wp-image-1346\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Project-budget-.png 778w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Project-budget--286x300.png 286w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Project-budget--768x805.png 768w\" sizes=\"auto, (max-width: 778px) 100vw, 778px\" \/><figcaption class=\"wp-element-caption\">Budgeting in Clockify<\/figcaption><\/figure>\n<\/div>\n\n\n<p class=\"translation-block wp-block-paragraph\">To set your fixed project budget, click on \u2018Estimate\u2019 under project settings and select Project budget.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">There are two ways to set a project budget in Clockify:&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li class=\"translation-block\"><strong>Manual option<\/strong> \u2014 you can set an overall project budget, including hard costs and soft costs.&nbsp;&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Task-based option<\/strong> \u2014 you can choose to set a budget for individual tasks (design, site preparation, rentals, etc).<\/li>\n<\/ol>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Some tasks, such as site preparation, may repeat each month. In this case, you can also choose to reset the estimate every month in the Project\u2019s settings tab.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"450\" height=\"225\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Budget-reset.png\" alt=\"Budget reset\" class=\"wp-image-1333\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Budget-reset.png 450w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Budget-reset-300x150.png 300w\" sizes=\"auto, (max-width: 450px) 100vw, 450px\" \/><figcaption class=\"wp-element-caption\">Resetting the budget for repetitive tasks<\/figcaption><\/figure>\n<\/div>\n\n\n<p class=\"custom-btn translation-block wp-block-paragraph\"><a href=\"https:\/\/app.clockify.me\/en\/signup\" target=\"_blank\" rel=\"noreferrer noopener\">Sign up for Clockify by CAKE.com<\/a><\/p>\n\n\n\n<h3 id=\"tip-9-invest-in-the-right-tools\" class=\"wp-block-heading translation-block\">Tip #9: Invest in the right tools<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">In addition to project budgeting and tracking tools, here are some of the useful software tools to invest in to streamline construction cost estimation:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\"><strong>Cost calculators <\/strong>\u2014 tools, such as RSMeans, offer cost databases, quantity takeoff capabilities, and cost breakdown structures.&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Integrated project management systems <\/strong>\u2014 in a 2023 <a href=\"https:\/\/assets.kpmg.com\/content\/dam\/kpmg\/xx\/pdf\/2023\/06\/familiar-challenges-new-solutions.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">KPMG Global Construction survey<\/a>, construction professionals named integrated PMIS (Project Management Information System) as the technology that offers the highest return on investment. The right software allows you to manage project documents, collaborate with project stakeholders, monitor resource utilization, and generate customized reports on project status,<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Accounting<\/strong> \u2014 some key features commonly found in accounting software for construction companies include job costing, financial reporting, project management integration, tax management, etc.,<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Bidding software <\/strong>\u2014 these tools allow you to automate repetitive tasks, build estimates, run price calculations, and analyze subcontractor quotes, and<\/li>\n\n\n\n<li class=\"translation-block\"><strong>Time tracking software <\/strong>\u2014 <a href=\"https:\/\/clockify.me\/construction-time-tracking\" target=\"_blank\" rel=\"noreferrer noopener\">Construction time tracking software<\/a> can help you track crew hours accurately. This helps you calculate the labor cost based on the number of hours worked and the wage rates of the workers.<\/li>\n<\/ul>\n\n\n\n<h3 id=\"tip-10-prioritize-risk-management\" class=\"wp-block-heading translation-block\">Tip #10: Prioritize risk management&nbsp;&nbsp;<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">From change orders and environmental concerns to natural disasters and inflation, many factors can, and will often, cause project budgets to deviate from initial estimations.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">While you cannot anticipate every possible risk, you can consult industry experts and review historic data to identify potential risks and develop mitigation strategies.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Tracy Allen explains that construction is a risky industry:<\/p>\n\n\n\n<div class=\"wp-block-columns pro-blockquote is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"512\" height=\"568\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors.jpg\" alt=\"Allen Tracy - CPA, CCIFP, and partner at Aldrich CPAs + Advisors\" class=\"wp-image-1308\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors.jpg 512w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors-270x300.jpg 270w\" sizes=\"auto, (max-width: 512px) 100vw, 512px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<p class=\"translation-block wp-block-paragraph\">\u201c<em>Any construction comes with risk. Construction is the only profession willing to estimate millions of dollars for a project that could last years and hope that we have thought of all the \u201cwhat if&#8217;s\u201d to be able to hit our projected margins.\u201d&nbsp;<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Tracy also adds that communication and education play a vital role in avoiding challenges:<\/p>\n\n\n\n<div class=\"wp-block-columns pro-blockquote is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"512\" height=\"568\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors.jpg\" alt=\"Allen Tracy - CPA, CCIFP, and partner at Aldrich CPAs + Advisors\" class=\"wp-image-1308\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors.jpg 512w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Allen-Tracy-CPA-CCIFP-and-partner-at-Aldrich-CPAs-Advisors-270x300.jpg 270w\" sizes=\"auto, (max-width: 512px) 100vw, 512px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<p class=\"translation-block wp-block-paragraph\"><em>\u201cChallenges arise when there is a lack of experience in estimating, a lack of strong reporting, a lack of understanding of historical projects, etc. Educating the estimating team and project managers, creating strong relationships between operations and finance, and providing strong information flow and reporting, along with post mortem on jobs and past performance can all help eliminate those challenges. Communication and education are key.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n<h3 id=\"tip-11-track-every-dollar-throughout-the-project-lifecycle\" class=\"wp-block-heading translation-block\">Tip #11: Track every dollar throughout the project lifecycle<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Staying on top of your project timelines and budget can be challenging, particularly for complex projects.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">By utilizing tools that offer a <a href=\"https:\/\/clockify.me\/help\/projects\/tracking-project-progress\" target=\"_blank\" rel=\"noreferrer noopener\">tracking progress and estimates<\/a> feature, such as Clockify by CAKE.com, you can not only track your project but gain insights into your team&#8217;s performance and <a href=\"https:\/\/clockify.me\/help\/projects\/tracking-project-profitability\" target=\"_blank\" rel=\"noreferrer noopener\">project profitability<\/a>.<\/p>\n\n\n\n<h3 id=\"tip-12-plan-ahead-to-stay-within-budget\" class=\"wp-block-heading translation-block\">Tip #12: Plan ahead to stay within budget&nbsp;<\/h3>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Now that you have a good grasp on how to estimate and track hard costs and soft costs, you can implement the same process for your upcoming projects.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">A project forecasting software helps you schedule future tasks, set up project assignments, and publish schedules for your team members. You can then use your current data to predict future performance and budget.&nbsp;&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">The right project forecasting software will also help you track progress and provide valuable insights into how close you are to the estimated project completion based on tracked and scheduled hours.&nbsp;&nbsp;<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"778\" height=\"676\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Forecasting.png\" alt=\"Forecasting\" class=\"wp-image-1335\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Forecasting.png 778w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Forecasting-300x261.png 300w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2023\/08\/Forecasting-768x667.png 768w\" sizes=\"auto, (max-width: 778px) 100vw, 778px\" \/><figcaption class=\"wp-element-caption\">Track progress based on scheduled hours<\/figcaption><\/figure>\n<\/div>\n\n\n<p class=\"translation-block wp-block-paragraph\">This way, you can make informed decisions throughout the project lifecycle.&nbsp;&nbsp;<\/p>\n\n\n\n<div class=\"wp-block-group pro-tip\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<p class=\"translation-block wp-block-paragraph\">\ud83c\udf93 <strong>Clockify Pro Tip<\/strong><\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Discover an easy way to control project costs and predict their future performance. Explore this feature within Clockify:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\"><a href=\"https:\/\/clockify.me\/project-forecasting\" target=\"_blank\" rel=\"noreferrer noopener\">Project forecasting software<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<p class=\"custom-btn translation-block wp-block-paragraph\"><a href=\"https:\/\/app.clockify.me\/en\/signup\" target=\"_blank\" rel=\"noreferrer noopener\">Get started with Clockify<\/a><\/p>\n\n\n\n<h2 id=\"conclusion-estimate-hard-costs-and-soft-costs-accurately-through-effective-planning-and-tracking\" class=\"wp-block-heading translation-block\">Conclusion: Estimate hard costs and soft costs accurately through effective planning and tracking<\/h2>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">As you can see, construction costs are not set in stone.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">While it can be challenging to accurately estimate hard and soft costs, we hope that this article has equipped you with the information you need to get started with construction cost estimation.<\/p>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">Here are the key takeaways:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Differentiate between hard costs (materials, labor, etc.) and soft costs (permits, design fees, insurance, etc.),<\/li>\n\n\n\n<li class=\"translation-block\">Seek advice from experts and leverage industry benchmarks to gain insights into expected costs,<\/li>\n\n\n\n<li class=\"translation-block\">Use reliable cost databases and budgeting software for accurately estimating costs, and<\/li>\n\n\n\n<li class=\"translation-block\">Continuously track estimates throughout the project and monitor changes to ensure project success.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block wp-block-paragraph\">With time, patience, and a willingness to adjust, you can improve the accuracy of your hard cost and soft estimation.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Vergleiche direkte und indirekte Baukosten (Hard Costs vs. Soft Costs) und erfahre, wie sie dein Projektbudget beeinflussen. Hol dir Experten-Einblicke und 12 Tipps f\u00fcr eine pr\u00e4zise Kalkulation.<\/p>","protected":false},"author":21,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4,11],"tags":[],"class_list":["post-1312","post","type-post","status-publish","format-standard","hentry","category-business-management","category-freelancers-contractors"],"acf":[],"_links":{"self":[{"href":"https:\/\/clockify.me\/learn\/de\/wp-json\/wp\/v2\/posts\/1312","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/clockify.me\/learn\/de\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/clockify.me\/learn\/de\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/clockify.me\/learn\/de\/wp-json\/wp\/v2\/users\/21"}],"replies":[{"embeddable":true,"href":"https:\/\/clockify.me\/learn\/de\/wp-json\/wp\/v2\/comments?post=1312"}],"version-history":[{"count":55,"href":"https:\/\/clockify.me\/learn\/de\/wp-json\/wp\/v2\/posts\/1312\/revisions"}],"predecessor-version":[{"id":5621,"href":"https:\/\/clockify.me\/learn\/de\/wp-json\/wp\/v2\/posts\/1312\/revisions\/5621"}],"wp:attachment":[{"href":"https:\/\/clockify.me\/learn\/de\/wp-json\/wp\/v2\/media?parent=1312"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/clockify.me\/learn\/de\/wp-json\/wp\/v2\/categories?post=1312"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/clockify.me\/learn\/de\/wp-json\/wp\/v2\/tags?post=1312"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}