In construction, what is generally considered an indirect cost?

Indirect costs are expenses that are not directly attributable to a specific project or job but are necessary for the overall operation of a business. General administrative expenses, such as office rent, utilities, and salaries for management staff, fall into this category because they support multiple projects without being tied to the execution of a single job. These costs are essential for the functioning of a construction company but do not contribute to the physical completion of a construction project directly.

In contrast, costs attributed to materials, specific labor for project execution, and direct wages for on-site workers are considered direct costs. They can be specifically linked to the production of a project, directly impacting its delivery and completion. Understanding the distinction between direct and indirect costs is crucial for effective budgeting and financial management in construction.