Utah General Contractors - Business and Law Practice Exam

Temporary storage facilities, dumpsters, and utilities are classified as what type of overhead?

1. Administrative overhead

2. General overhead

3. Project overhead

4. Fixed overhead

The correct answer is: Project overhead

Temporary storage facilities, dumpsters, and utilities are classified as project overhead because they are directly related to the specific needs of a construction site and project requirements. Project overhead encompasses all costs that are necessary for the execution of a particular project but are not directly associated with labor and materials. This may include temporary structures needed for the project duration, dumping services for construction waste, and utilities required to operate equipment on-site. In contrast, administrative overhead typically covers costs associated with administrative functions such as office supplies, salaries of management staff not directly involved in the project, and other general business expenses. General overhead refers to costs that support overall business operations rather than specific projects, such as rent for office space that is not project-specific. Fixed overhead includes expenses that remain constant regardless of the level of production or number of projects being worked on, such as long-term leases and certain salaries. Understanding the classification of these overhead costs is crucial for accurate project budgeting and financial planning in construction management, ensuring that all costs are accounted for effectively within the project's financial framework.