The Hard Truth About Hard and Soft Costs

It’s been so fun to see people’s reactions when we share our Garden House plans with people. We often get peppered with a barrage of questions but one that always comes up, and rightfully so, is, “how much does it cost?” For anyone in the construction industry this question is always a bit of a wince because there are so many moving parts that contribute to the final cost of any new construction.

It is hard to know what surprises might jump out before you see the site and have an up do date price on all materials. In the moment, then, we are either left doing lots of ham-handed equivocating about how hard pricing is, or we just throw out a number we know can work, but is often way more expensive than it has to be.

In order to demystify the process of cost estimating, we created a brief overview of the many costs that go into construction and how we break them down.

Hard and Soft Costs a Brief Explainer

There are essentially two main categories of direct cost, that when combined, create an overall project cost.

The first are the costs of construction, also known as “hard” costs. These are those costs that relate specifically and exclusively to the construction of the house, and are typically the amount of money paid to a general contractor(s), including the sub-contractors working with the general:

  • Site preparation around the house, grading for driveways/parking//pool/accessory buildings/retaining walls, trenching for utilities
  • All materials required for construction
  • All labor required to assemble the building materials
  • All overhead and profit of the contractor(s)
  • All equipment and furnishings that are physically attached to the house, such as heating and cooling systems, benches, cabinetry and countertops, floor and wall finishes, etc.
  • Basic site improvements such as landscaping/irrigation systems, on-grade parking and walkways/decks
  • General conditions of the construction process such as warranties, permits, insurance,  and shop drawings

The second category of cost are other cost factors, often referred to as “soft costs”. These are costs particular to your design process, features of your site, moveable furnishings/equipment/systems, and any applicable taxes – this is where sales tax is itemized as a specific cost.

Since soft costs will occur before, during and after construction, it’s useful to line each of these costs up with a dollar amount assigned to each one, following the timeline of the project. That way, it’s easier to anticipate and track the costs. Not all the following will necessarily apply to your project, but here’s a good start of items to consider:

  • Site acquisition
  • Demolition
  • Utility relocation/connections/new systems such as a well or septic drain field if you are in a rural setting
  • Professional fees – legal, architectural including three-dimensional renderings, interior design, civil and structural engineering, etc.
  • Fixtures, furnishings, and equipment/FF&E including computers, phone and security systems, kitchen appliances, tables/chairs/linens, household interior and exterior furniture including a fire pit, bedding/towels, window coverings, televisions, Wi-Fi, garage storage systems, etc.
  • Site survey
  • Soils testing if the site is steeply sloped or in an area of previous contamination
  • Solar systems and/or preparation for a future system
  • Special inspections and testing during construction, as required by the International Building Code
  • Taxes such as sales taxes
  • Project management if the project or site is unusually complex
  • Art work (interior and exterior)
  • Escalation of construction costs: this is a percentage factor that can be applied to the hard construction cost to anticipate increases in materials/labor over a lengthy project timeline
  • Additional costs associated with complex or phased construction projects

A third idea is related to the hard and soft costs noted above: it’s worth noting the value of your own time and that of family members devoted to planning and participating in a house project. When your time is also considered a resource, it can help you feel positive about allowing enough of it to make decisions at a comfortable pace. Then you will enjoy the excitement of the whole process!

As you work through options and define your budget be sure to talk with your designer and contractor. More communication early and often about what you need, not just from the building but also from the budget, the better equipped we are to meet and exceed your expectations.

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