Hard costs are the cost of the physical building: site work, structure, envelope, systems, finishes, and the contractor's general conditions, overhead and fee. They are what a general contractor prices, and they are the largest single line in almost every development budget.
- A hard cost number without a drawing set behind it is a guess with a decimal point. Precision comes from documents, not from experience alone.
- Contingency is part of the budget, not a cushion someone else keeps. Where it sits, and who releases it, is a term worth reading.
- Escalation is a real line on a project that permits this year and builds next.
- The contractor's fee and general conditions are negotiable and they are large. They belong in the comparison, not below it.
Related terms
All termsSoft Costs
Soft costs are everything a project spends that is not the physical building: design and engineering, permits and impact fees, survey and testing, legal and accounting, insurance, financing costs and interest during construction, marketing, and the developer's own overhead.
DevelopmentLand Residual Value
Land residual value is what a developer can rationally pay for a site: the value of the finished project, minus every cost to build it, minus the profit the risk demands.
DevelopmentImpact Fees
Impact fees are one-time charges a local government imposes on new development to fund the share of public infrastructure the new units will consume: roads, parks, schools, fire and police.
Terms arrive with the writing.
The glossary grows as the Journal does, one email when something worth reading goes up. No noise.
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