Preconstruction Costs Launch Good Building Budgets
March 28, 2025
Preconstruction costs are typically a small investment on the front end of any building plan to formulate an accurate budget for the overall project. Nor-Son Construction emphasizes the importance of detailing preconstruction expenses as the foundation of a building project budget because the process will help owners make important decisions. Where can they add or remove costs while still meeting core functions within their building project? What are material costs? What about architectural and engineering design fees? Preconstruction activities lay the groundwork for a successful project that is well-planned.
At Nor-Son, we are skilled at making sure clients know exactly what they are paying for, utilizing Modelogix, a cost estimating software. This process involves utilizing Engineering News-Record (ENR) data, a respected publication in the construction industry, to estimate costs for similar projects, resulting in a more accurate initial budget, typically at the programmatic stage. For design development and construction document budgets, we incorporate subcontractor input and conduct manual takeoffs to refine our estimates.
In a commercial preconstruction budget, there are soft costs (intangible and indirect) and hard costs (tangible and direct).
Soft Costs Outlined in a Preconstruction Budget
Expenses involved in a commercial construction project are fees that do not deal with the physical construction of a building project. Soft costs differ from project to project. A renovation will not incur the same expenses as new construction. Nor-Son will guide you through each budgetary item that is considered a soft cost.
- Architectural and Engineering Design Fees: costs for architectural plans and designing the building.
- Project Management Fees: cost of managing a project, including budgeting and scope definition (providing an understanding of the project’s objectives and deliverables).
- Feasibility Studies: costs for site assessment and other jobs related to determining project viability.
- Environmental Reports: documentation and evaluation of environmental impacts of a project.
- Regulatory Requirements: building permits and legal fees, zoning approvals, and inspection fees.
- Insurance and Financing Costs: covering risks and liabilities and costs associated with securing pre-construction loans.
- Contingency Reserves: funds set aside to cover unforeseen costs or risks.
- Real Estate and Property Tax Assessments: determine the value and taxation of a property.
Hard Costs Outlined in a Preconstruction Budget
Hard costs are considered the brick and mortar of a building project. Anything considered direct construction or expenses needed for the construction of a project are hard costs. These expenses typically occur during construction, as opposed to soft costs, which are present from preconstruction through owner occupancy.
- Materials: includes all materials needed for the building project.
- Labor Rates: wages of construction workers, including general contractors and subcontractors (electricians, plumbers, HVAC specialists, etc.)
- Equipment: cost of machinery and tools used on the construction site.
- Site Preparation: costs associated with preparing the land for construction, including excavation, grading, and landscaping.
Typically, a preconstruction budget is connected to the owner’s funding, and any discrepancies during preconstruction can lead to funding problems before construction begins. Clearly defined pre-construction budgets are typically finished on time and within budget. At Nor-Son Construction, we believe your project should be no different and guarantee our preconstruction process will get your project off to a successful start.
Partner with Nor-Son Construction for your next building project. With our team on the job, your budget will be a tool that will bring your dream into a reality. Contact Nor-Son Construction today to get started on your construction project in Minnesota, Wisconsin, North Dakota, South Dakota, or Iowa.
