In Construction Contracts, What type of costs are included in overhead costs????

In construction, overhead costs results from the organization structure, size and form of the enterprise, some apply more directly to site operations and some may lie somewhere in between. Overhead costs largely represent the enterprise’s operational capacity, including aspects of both physical capacity such as plant and equipment and intellectual capacity such as data, records, expertise, experience and knowledge.

labours cost, meterial and instumentation cost, other cost like health etc...

If this contractor has a construction project with an estimated value of $350,000 then the general overhead chargeable to that specific project would be $350,000 divided by $1,000,000 multiplied by $50,000. The general overhead costs included in the estimate for that project would then be $17,500.

In construction projects, overhead costs result from the company structure, its size and type of company or organization, and type of site operations & some are random with respect to the kind of job to be done. OHC is largely depends on company’s operational capacity. We can use the previous data of projects to filter out the overhead costs and even manage them wisely if give proper studies in the previous projects and also can be considered by lesson learned within company or within industry around.

Classification of overhead cost elements depends on internal accounting and costing system of the company too.

 

Broadly overhead costs covers: Management & administration, Communications, Travelling, HR (training, skill development, EHS etc), Financial costs, store and workshops, procurement process and marketing.

fixe costs that can not be removed for the project execution such as office rent

1- Office Expenses

2- Staff Salaries

3- Depreciation

4- Other Miscellaneous Indirect Overhead costs.