In terms of project management, what does the term 'soft costs' refer to?

The term 'soft costs' in project management refers to non-physical expenses that are essential for a project but do not involve direct construction activities. This encompasses various expenses such as fees for permits, financing charges, legal fees, design fees, project management expenses, and other indirect costs associated with getting a project from concept to completion. These costs can significantly affect the overall financial feasibility of a project and are crucial for budget planning and management.

While costs directly associated with construction labor involve physical work and materials, and marketing expenses relate specifically to the promotion of the project rather than its actual development, soft costs focus on the necessary overheads that facilitate a project's progress. Costs related to project delays are typically seen as consequences of inefficiencies or issues during execution rather than planned expenditures. Thus, the correct understanding of soft costs is foundational for comprehensive project cost estimation and management in construction.