Costs that relate to construction activity but are NOT easily identifiable for a specific project are considered?

Costs that relate to construction activity but are not easily identifiable for a specific project are classified as project overhead. This category encompasses expenses that cannot be directly attributed to a single project but are necessary for the overall functioning of the construction operation. Examples of project overhead costs include general administrative expenses, job site management salaries, utility costs for the job site, and insurance costs.

Project overhead differs from direct costs, which are tied specifically to a particular project and include expenses like materials and labor directly associated with construction. Variable costs fluctuate with the level of production or activity, whereas fixed costs remain constant regardless of the level of construction activity. Therefore, project overhead captures those ancillary costs associated with running the construction aspect of a business that support various projects but do not get charged directly to any single one.