Hard Costs

Hard costs, also known as "brick-and-mortar costs," refer to the direct costs associated with the physical construction of a building or real estate project. These costs typically make up the largest portion of a project's total budget.

Hard costs are usually tangible assets that you need to acquire to complete the construction project. They include:

Labor: This includes the wages and benefits for the workers on the construction site, from the general contractor and subcontractors to the laborers and tradespeople.

Materials: This includes all the physical materials needed for the project, such as concrete, lumber, metals, insulation, finishes, etc.

Equipment: This includes the cost of renting or buying construction equipment like cranes, forklifts, scaffolding, etc.

Site Work: This includes the cost of preparing the site for construction, such as excavation, grading, and the installation of utilities.

Hard costs are typically more predictable than soft costs (which include architectural design fees, legal fees, permitting fees, etc.) because they are easier to estimate at the beginning of a project. However, they can still fluctuate due to changes in labor costs, material prices, or unforeseen construction challenges.