Overhead – Lecture 9

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Overhead Lecture 9

• CEE 474 Engineering Project Management

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Definition

• Overhead (or indirect costs) Those costs that
  cannot be attributed to a single item or unit of
  construction work.
• In construction, indirects are divided between
  home office overhead (also called GA and field
  office overhead, or HOOH and FOOH

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Field Office Overhead

• Clerical wages and salaries
• Office Equipment
• Field Office Building
• Erecting and Removing Field Office Building
• Field Staff
• Superintendent
• Quality Control
• Safety

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Field Office Overhead

• Usually calculated on an item-by-item basis
• For contractor modifications, paid for on a time
  basis (/day) if there is a time extension

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Real Field Office Overhead

• Field Office Overhead.xls

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Home Office Overhead

• General overhead expenses incurred by the
  contractor in the overall management of his
  business. They are not usually charged to a
  specific project.
• Calculated by dividing the home office expenses
  for a year by all the direct project expenses
  (field office, labor, material, subcontracts,
  etc.). This percentage is applied to all job
  costs. Usually 4 to 20, depending on contractor.

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Unallowable Overheads

• On Federal projects, the Government only pays
  for allowable overhead costs. The unallowables
  are advertising, bad debt, donations,
  entertainment, interest, labor relations, and
  organization fees (incorporation).

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Real Home Office Overhead

• HOOH.pdf