The Use of Historical Overhead Costs for Estimation and Control Purposes in Future Construction Projects

Download or read book The Use of Historical Overhead Costs for Estimation and Control Purposes in Future Construction Projects written by Sami Mohamad Kamal Azhari and published by . This book was released on 2006 with total page 124 pages. Available in PDF, EPUB and Kindle. Book excerpt: The competitive environment in the construction industry has forced contractors to bid with a very small margin of profit. At the same time, more coordination, supervision, and temporary site facilities are required due to the growing trend of subcontracting, in addition to the fact that construction projects are becom ing more complicated and many work trades are involved. As a result, overhead co sts of main contractors are tremendously increasing relative to project direct c ost. The main intended purpose of this research is to study and analyze project overh ead costs (also called project indirect costs), which are costs needed to manage and administer a construction project at a job site. For this reason, this rese arch has focused on the components of project overhead costs and studied project characteristics that affect these components. This research also discusses and examines the estimation process of project overhead costs during the bidding pha se and the control process during the construction phase. Finally, a case study was conducted on actual overhead costs for six similar bui lding projects of a main contractor in Lebanon. A database of actual cost infor mation was developed and the use of this database for estimating and controlling overhead cost was discussed. It is concluded from this study that about 47% of project overhead costs, for this type of building, is attributable to the cost o f contractor?s supervision team, 41% to the cost of site facilities and general expenses, and the remaining to the cost of soft overhead. It also concluded that there is a high degree of similarity in the proportional breakdown within each group and within the groups of project overhead costs. One of the most important results of the case study is that the percentages of total overhead amount to t he direct cost amount for the studied projects are almost equal.