Soft Costs and How to Plan for Them
In planning any project, understanding soft costs is essential to avoid budget surprises. Unlike hard costs, which cover tangible expenses like materials and labor, soft costs include intangible, yet crucial, expenses like permits, design fees, and project management. Proper planning for soft costs can save you from financial headaches later on.
What Are Soft Costs?
Soft costs are the indirect costs needed to complete a project. Some of the common ones include:
- Legal Fees: Preparing and negotiating contracts
- Permits & Inspections: Ensuring compliance
- Design & Consulting: Architectural or engineering expertise
- Insurance: Liability and/or property damage during the project
You cannot see them, yet they contribute significantly to your bottom line in any project.
How to Plan for Soft Costs
- Know Your Project Scope: Identify all areas that may involve soft-cost expenditures, such as legal advice or third-party consultants.
- Research Costs: Gather estimates from professionals such as designers, lawyers, or insurers.
- Assign a Budget Percentage: Soft costs usually make up 15-30% of the total project budget. Make sure your financial plan reflects this.
- Use Project Management Tools: Tools like Vabro will help you track, plan, and adjust your budget efficiently.
How Vabro Helps with Soft Costs
Intuitively, with Vabro, you have the ability to map out all the details of your budget and track costs in real time. Vabro ensures both soft and hard costs are updated and managed, helping your project stay on track with its schedule and financial goals.
Conclusion
Soft costs are often underestimated but form an integral part of a project's success. By understanding and planning for them using tools like Vabro, you can confidently manage your budget, ensure timely delivery, and stay within scope.
