Construction Budget 101
A clear breakdown of hard vs soft costs, contingency, GMP, and the real-world reasons budgets blow up.
What interviewers are testing
Do you understand where risk hides?
They want to see you understand contingency, scope gaps, and change-order dynamics—not perfect cost codes.
Hard vs soft costs (simple)
Hard costs
- Site work, shell, interiors
- MEP, elevators
- GC general conditions
Soft costs
- Architecture/engineering
- Permits/fees, legal
- Financing, insurance, leasing
Contingency
- Covers unknowns and scope gaps
- Typically higher early, lower when de-risked
GMP, change orders, and draws
Key lines to use
- “GMP reduces pricing uncertainty, but scope clarity is everything.”
- “Change orders usually come from drawings, site surprises, or schedule pressure.”
- “Draws require tight documentation and lender controls.”