What type of costs includes insurance and bonding in construction estimating?

In construction estimating, the type of costs that includes insurance and bonding is classified as indirect costs. Indirect costs, often referred to as overhead costs, are expenses that are not directly tied to a specific project activity or the immediate labor and materials used on-site. Instead, they contribute to the overall operational capability of a business or project.

Insurance is necessary to protect against various risks, such as accidents, property damage, and liability issues, while bonding provides financial assurance to project stakeholders that the contractor will fulfill their contractual obligations. Both of these costs are essential for ensuring the smooth functioning and legal compliance of a construction project.

In contrast, direct costs are directly attributable to the construction work itself, such as labor, materials, and equipment costs. Contingency costs are reserved for unexpected expenses or risks that might arise during the project. Operational costs generally relate to the day-to-day expenses of running a business, which can include both direct and indirect costs. Therefore, within this context, indirect costs properly encompass insurance and bonding as essential elements of a construction project's total expenditure.