It’s important that all construction companies develop an annual budget for their business expenses. What to include in an annual construction budget Related: Free budget templates for use on almost any construction project. It includes costs for labor, materials, equipment rental, temporary services, project management, supervision, and other project-related expenses.Ī construction project budget is often developed when putting together a project bid, as you have to know what it will cost you before you price the project. An annual budget also helps you know how much profit your company will need to make on projects to cover your expenses.Ī project budget is an estimate of costs that will be incurred when working on a particular job. This budget includes proposed amounts for anticipated income, project costs, payroll, and business expenses.Ĭompanies can use their past history and trends in their financial statements as a guide to determine these amounts. Types of construction budgetsĬonstruction budgets come in two main types: annual budgets and project budgets.Įvery construction company should have an annual budget for the business. Anything that helps support the construction activities is considered a soft cost. However, they are needed in order to complete the project.Īlso known as indirect costs, soft costs include design fees, insurance, bonds, legal fees, and accounting costs. Soft costs are not directly related to the construction of a project or building. The easy test to determine if a cost is a hard cost is to ask “Does this up in the physical building, or does it help install something in the physical building?” If the answer is yes, that means it’s a hard cost. Any cost for something that gets installed during the project or helps with installation is considered a hard cost.Įxamples of hard costs include drywall, nails, equipment rental fees, subcontractor labor costs, and site work equipment. They include materials, labor, supervision, and equipment costs. Hard costs are directly related to the physical construction of the project or building. When calculating a construction budget, there are two types of costs to factor in: hard costs and soft costs. What to include in a construction project budget.What to include in an annual construction budget.Types of costs in a construction budget.
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