What do indirect costs refer to in construction estimating?

Indirect costs in construction estimating refer to expenses that are not directly tied to the physical production of the project, such as labor and materials. Instead, these costs are necessary for supporting the construction process but cannot be traced back to a specific task or activity. Examples of indirect costs include administrative expenses, insurance, utilities, and general project overhead.

Understanding this distinction is crucial for accurately estimating project expenses and ensuring that all potential costs are considered in the budgeting process. In construction, recognizing indirect costs helps ensure that a project is financially viable and that all associated overheads are accounted for in the final proposal or bid.