Which item is commonly classified as a Soft Cost?

• A. Due diligence, project design fees, commissioning, jurisdictional fees, relocation, terminating leases and rental agreements.
• B. Site utilities and structural materials.
• C. On-site safety equipment.
• D. Direct construction materials.

Answer: (A)

Soft costs are the indirect expenses that support a construction project but aren’t part of the actual building work. They cover services, approvals, and arrangements needed to make the project happen, rather than the physical construction itself. Items like due diligence, project design fees, commissioning, jurisdictional fees, relocation, and terminating leases or rental agreements fall into this category because they are related to planning, approvals, and legal/administrative steps rather than buying or installing materials or performing construction on-site.

In contrast, site utilities and structural materials are tangible construction components used directly in building and must be paid for as part of the actual construction scope—these are hard costs. On-site safety equipment, while essential to the project, is typically considered part of hard costs or general site overhead rather than soft costs, since it’s a direct expense tied to the construction activities. Direct construction materials are the quintessential hard costs, representing the physical items that become part of the structure.

Therefore, the item described—listing due diligence, design and commissioning fees, permit and jurisdictional fees, relocation, and lease terminations—best represents soft costs.