What do “hard costs” in construction refer to?

"Hard costs" in construction refer specifically to direct costs that are associated with the physical construction of a project. These typically include expenses related to labor, materials, equipment, and any other tangible resources that are necessary to build the structure. Understanding hard costs is essential for budgeting and estimating expenses for construction projects, as they represent the funds that will be directly spent to complete the work.

In contrast, the other options focus on costs that do not directly contribute to physical construction. For example, permits and fees are necessary but are categorized as soft costs rather than hard costs. Overhead expenses for management, while integral to running a construction project, do not pertain to the actual building process. Indirect costs related to project design, which might include architectural services or engineering fees, also fall outside the scope of hard costs. Thus, the distinction between hard costs and these other categories is crucial for understanding construction financials.