Civil Engineering Reference
In-Depth Information
DIRECT AND INDIRECT COSTS
A contractor's main expenses are as follows:
I.
Direct costs
A.
Labor
, particularly hourly workers, for whom a labor expense can be
directly linked to a particular work item
B.
Materials
, such as concrete, rebar, bricks, lumber, nails, paint, drywall,
carpet,
structural
steel, and
installed equipment
,
such as elevators,
air-conditioning units, and kitchen equipment
C.
Equipment
, mainly construction equipment
(bulldozers, excavators,
cranes, concrete pumps, etc.)
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D.
Subcontractors
(even though subcontractors' charges comprise labor,
materials, equipment, overhead, and possibly sub-subcontractors, the
general contractor treats these charges as a direct cost)
E.
Other costs
, such as government permits and fees, and fees for lawyers and
consultants hired for a specific task in a project
II.
Indirect costs
A.
Project overhead (or
job overhead
), such as the following:
1.
Project staff (project manager, project superintendent, project engi-
neer, receptionist or secretary, clerk, etc.)
2.
Office trailer and other temporary structures
3.
Cars and trucks assigned to the project team
4.
Office equipment (copying machine, fax machine, computers, etc.)
5.
Temporary utilities (electricity, water, drinking water and ice,
telephones, cell phones, gas, portable toilets, etc.)
6.
Other indirect project-related expenses, such as power generators and
projectors used to provide light during night working hours.
B.
General overhead
, such as the following:
1.
Main office expenses (rent, lease, maintenance, utilities, etc.)
2.
Main office personnel
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If a power generator was installed as a permanent part of the building, it counts as materials. If a power
generator was used to provide power for construction work only, such as night lighting, it counts as
equipment. Construction professionals in the United Kingdom call all equipment used in the construction
plant
to make a clear distinction from installed equipment.
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