Understanding and Managing Indirect Costs in Construction Projects
Joel Phillips • January 1, 2000
What Are Indirect Costs?
Overhead Costs
- _x000D_
- Rent for office space _x000D_
- Utilities _x000D_
- Office Supplies _x000D_
- Storage for equipment _x000D_
General and Administrative (G&A) Costs
- _x000D_
- Salaries of non-project staff (e.g., operations and marketing personnel) _x000D_
- Accounting services _x000D_
- Other administrative expenses _x000D_
Tools and Equipment
- _x000D_
- Hammers, drills, and other small tools _x000D_
- Vehicles (including fuel and maintenance) _x000D_
Site-Specific Costs
- _x000D_
- Site Security _x000D_
- Specialized utility setups _x000D_
Regulatory Compliance
- _x000D_
- Permit fees _x000D_
- Inspection costs _x000D_
- Environmental, health, or safety standards compliance _x000D_
Indirect Costs vs. Soft Costs
Soft Costs
- _x000D_
- Architectural and engineering fees _x000D_
- Legal fees _x000D_
- Financing costs _x000D_
Indirect Costs
Managing Indirect Costs
- _x000D_
- Identify All Indirect Costs _x000D_
- _x000D_
- Estimate the Indirect Cost Budget _x000D_
- _x000D_
- Determine an Allocation Method _x000D_
- _x000D_
- Absorption costing _x000D_
- Allocation base _x000D_
- Activity-based costing _x000D_
- _x000D_
- Include Contingency _x000D_
- _x000D_
- Review Periodically _x000D_
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