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Estimating & Bidding

Indirect Costs

In Plain English

Business costs that support the project but cannot be tied to a specific piece of work.

Definition

Indirect costs are project expenses that cannot be attributed to a specific work item but are necessary to support project execution, such as home office overhead, insurance, bonding, and general administrative expenses. They are allocated across projects as a percentage of direct costs. Managing indirect costs is critical to contractor profitability.

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