What qualifies as “hard costs” in a construction project?

Like contractors around the country, contractors here in California need to make sure they do not undercut themselves when bidding on a contract, which could cause problems later. Every construction project will have its own needs and some of them are classified as “hard costs,” which are the tangible assets the company will need in order to complete the project.

Knowing what qualifies as a hard cost will help in making sure any bid submitted will not result in unnecessary cost overruns later on in the project. Below are common hard costs:

• The site, which includes all the utilities
• The structure, including material and labor costs
• The landscaping, such as plants, grass and other materials included in the architectural drawings
• The anticipation of change orders
• The overhead associated with the project, such as administrative and other costs associated with doing business
• The contingency fund to cover unforeseen conditions

At the beginning of the process, the contingency fund will most likely comprise the majority of the hard cost estimate since all the information needed for a more accurate assessment is probably not yet available. It will most likely be as high as 50% at this point. By the time all the information is available, the estimate can be much more accurate. Without the contingency, any bid most likely be woefully inadequate.

Construction contractors here in California and elsewhere should be able to focus on their work and not the legalities involved in it. Putting together a bid for a construction project will require a great deal of a contractor’s knowledge and experience, but putting it together in a way that will protect the company may require some assistance. A construction law attorney could prove invaluable in helping make sure the rights and interests of a contractor remain intact throughout the bidding and contract negotiation processes.