What does project overhead refer to?

Project overhead encompasses the costs necessary to complete a construction project that cannot be directly attributed to labor or materials. These costs include a variety of indirect expenses such as administrative costs, utilities, insurance, equipment rental, and the salaries of project management personnel. It's important to distinguish these expenses from direct costs, which are clearly associated with a specific part of the project, like labor for workers and the materials used in construction.

Understanding project overhead is crucial for accurately estimating the total costs of a construction project and for effective budgeting. By including these overhead costs in project planning, contractors can ensure they are covering all necessary expenditures and maintaining profitability. This concept plays an essential role in project management and financial forecasting within the construction industry.