Overhead Costs in Estimates for Construction, Installation, and Electrical Works

Abstract

Overhead costs in construction projects can represent up to 35-40% of total costs. Various methodologies exist to calculate these costs, most commonly as a percentage of direct costs or labor expenses. However, some issues related to calculating intrinsic overhead costs remain unresolved, for example: 1) when using price data from comparable projects, and 2) when managing outsourcing work. These and other relevant issues are discussed in this article. Construction, installation, electrical, and commissioning work in Georgia are used as the primary basis for analysis and calculations. Sources of information include relevant literature, the author's own experience, and research in the field of hydrotechnical and energy structure construction. Recommendations for estimating overhead costs are proposed. Some proposals require constructive opposition but must be considered when planning and implementing construction projects. The findings contribute to improving cost management practices in the Georgian construction sector.