Construction Financial Glossary

Preliminary Costs Definition

Preliminary costs, also known as pre-construction costs, are expenses incurred before actual construction work begins. These include feasibility studies, design fees, permits, and site investigations.

Why Preliminary Costs Matter

Properly estimating and managing preliminary costs ensures that a project is financially viable before major investments are made. These costs are often included in project budgets and contracts to prevent financial surprises.

Typical Preliminary Costs in Construction

    1. Architectural and engineering design fees
    2. Environmental assessments and soil testing
    3. Legal fees for zoning approvals and permits


Related Terms: Mobilization Costs, General Conditions, Preconstruction Phase, Feasibility Study

FAQs

Are preliminary costs refundable if a project is canceled?

A: In most cases, they are non-refundable, but some contracts may allow for partial recovery.

How do preliminary costs impact the total project budget?

A: They typically account for 5-10% of the total budget and must be factored into initial funding plans.

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