Hard costs and soft costs are two crucial components of your office build-out budget. Understanding the distinction between them is essential. Hard costs refer to expenses associated with tangible construction elements such as materials, labor, and equipment. Soft costs, on the other hand, encompass non-construction expenses like permits, design fees, and consultant fees. Allocating a suitable budget for each type is dependent on the specifics of your project.

Read Now: Cost to Build Out Office Space: How to Plan and Budget

AQUILA’s project managers have developed budgets for numerous office build-outs and tenant improvement projects. We are here to guide you through the process, starting with the fundamentals. In this article, we will delve into the definitions of hard costs and soft costs, as well as provide insights on budgeting for both.

In this article, we will cover:

  • What a hard cost is
  • What a soft cost is
  • What you can expect to budget for both


What Are Hard Costs

Hard costs encompass the expenses associated with the actual physical construction of a space, including materials, labor, and installations such as walls, electrical systems, and plumbing. Typically, hard costs constitute a significant portion of the overall project expenses, ranging from 75% to 85%. Estimating hard costs accurately requires a detailed examination of the project scope and specifications.

What Is Included in Hard Costs?

  • Paint and Carpet
  • Electrical
  • Mechanical
  • Plumbing
  • Drywall, Framing, and Acoustical Ceilings
  • Doors, Frames, and Hardware
  • Glazing
  • Millwork
  • Fire Alarms and Sprinklers
Hard Cost vs. Soft Cost | Construction Materials and Labor

Hard costs not only include the physical construction of a space, but also the labor that goes into it.

The range of hard costs can significantly fluctuate based on the selected finishes’ quality and the extent of planned space renovations.

Read Next: 3 Tips to Keep Your Commercial Build-Out Costs on Budget


What Are Soft Costs

Soft costs encompass expenses and fees associated with project services, excluding direct construction costs. These costs, which typically range from 8% to 12% of the total project budget, pertain to design and implementation services rather than physical building materials and labor.

What Is Included in Soft Costs?

  • Architectural Designs
  • Engineering
  • Permit Expeditor
  • TAS/ADA Inspections if required
  • Reimbursables (such as the cost to produce drawings, courier fees, travel, etc.)
Soft Cost vs. Hard Cost | Design Plans

Soft costs include things like architectural designs and engineering as well as any fees from permitting, inspection, and reimbursement.

Soft costs in project management exhibit variability, contingent upon project type and complexity. However, it is generally observed that estimating soft costs is comparatively more straightforward than estimating hard costs.


Explore our informative blog post to uncover essential considerations for your office build-out budget, beyond the distinction between hard and soft costs. Read our blog post Cost to Build Out Office Space: How to Plan and Budget.

To learn more about building out your office space read our Ultimate Guide to Building Out Office Space.

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To start budgeting for your office build-out, download our handy, interactive Office Build-Out Budget Template.

Get your free Office Build-Out Budget Template here.

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Dustin Hogzett | Commercial Project Management in Austin, Texas | AQUILA Commercial

Dustin Hogzett

As a project manager with AQUILA, Dustin leads and manages fast-track and task-critical design and construction projects.

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