Soft Costs in Construction: Heavy Civil Contractor Guide

When you’re bidding a heavy civil project, you’re probably focused on the big‑ticket, visible items—pipe, concrete, equipment, aggregate, asphalt, and labor. These hard costs are easy to see and quantify.

But there’s another layer of the budget that can make or break profitability: soft costs. These indirect expenses—like engineering, permits, environmental studies, insurance, and project management—don’t show up on the job site, but they can represent 20–30% of your total project cost.

In this guide, we’ll explain what soft costs are, how they differ from hard costs, common examples specific to heavy civil construction, and how to budget for them. We’ll also show you how estimating software can make tracking both hard and soft costs far more accurate—helping you submit competitive bids without leaving money on the table.

What Are Soft Costs in Construction?

Soft costs are the indirect expenses of a construction project. They’re the behind‑the‑scenes costs that support the physical work, like planning, design, permits, and project management.

Think of it this way: hard costs are what you see on‑site (materials, labor, equipment), while soft costs are everything that makes the project possible before and during construction.

Why Soft Costs Matter in Your Budget

Because they’re not physical materials, soft costs are easy to underestimate—or overlook entirely. But ignoring them can throw your budget off by thousands (or millions) of dollars.  

Industry best practices—such as those outlined in the FHWA Cost Estimation Guidelines—emphasize the importance of including soft costs early in project planning to avoid costly overruns.

Here’s why they matter:

• They can account for 20–30% of the project budget (sometimes up to 50% for smaller or complex builds).
• Many are front‑loaded before work even begins (design, permits, financing).
• Skipping them in your estimate can create costly surprises later. 
  

Examples of Soft Costs in Heavy Civil Construction

Soft costs in heavy civil projects typically include a wide range of indirect expenses—many of which occur before work begins on site. These costs can be just as significant as hard costs and are well-documented in industry research, such as studies by the Construction Industry Institute.

Here’s a breakdown of common categories:

Soft Costs vs Hard Costs in Heavy Civil Projects

 It’s common to confuse these terms. 

Hard Costs: 

• Materials: pipe, rebar, concrete, asphalt, aggregate, geotextiles
• Labor: crews for excavation, grading, paving, utility installation
• Equipment: excavators, loaders, dozers, rollers, haul trucks

Soft Costs:

• Engineering and design services
• Permitting, environmental compliance fees, and inspections
• Utility coordination and traffic control planning
• Project management, scheduling, and administration
• Insurance and bonding costs
• Financing and interest expenses

How to Budget for Soft Costs in Heavy Civil Construction

1. Plan a Percentage: A safe rule is to plan for 20–30% of the total budget. Complex or small projects may require more.
2. List Categories Early: Include major soft cost categories in your initial budget (design, permits, legal, financing, insurance).
3. Use Contingency Funds: Set aside 5–10% extra for changes in professional fees, permitting delays, or unexpected approvals.

4. Track as You Go: Keep soft costs in your project management or accounting system to avoid surprises. 

FAQ: Soft Costs in Heavy Civil Construction

Q: What are examples of soft costs in construction?
A: Examples include engineering fees, permitting, environmental compliance, loan interest, insurance, and project management expenses.

Q: What percentage of a construction budget are soft costs?
A: Soft costs typically range from 20–30% of the budget, but complex projects can run higher.

Q: Are soft costs tax deductible?
A: Many soft costs can be capitalized and amortized over the life of the project. Consult a tax professional for specifics.

Q: How do soft costs differ from hard costs?
A: Soft costs are indirect expenses (planning, design, admin) while hard costs are direct physical expenses (labor, materials, equipment).

Final Thoughts

Soft costs may not be as visible as the trucks and pipe on site, but they’re a critical part of every heavy civil project budget. Planning for them—right alongside hard costs—helps avoid budget surprises and keeps projects on schedule and profitable.

For heavy civil contractors, managing both hard and soft costs accurately is essential for competitive bids. The right estimating software makes it easier to track, calculate, and manage every dollar—from labor and equipment to engineering and permitting.

 
👉 Book a free demo today and see how Estimating Link® estimating software helps heavy civil contractors build more competitive, profitable bids.