Contractor License Practice Exam

Which of the following is not typically included in direct project costs?

1. Labor

2. Materials

3. Overhead

4. Subcontractor fees

The correct answer is: Overhead

Direct project costs are expenses that can be directly attributed to a specific project. These costs typically include expenses such as labor, materials, and subcontractor fees, as they are directly involved in the completion of the project. Overhead, on the other hand, generally refers to indirect costs that are not tied to a specific project or task but are necessary for the overall operation of a business. This includes costs like utilities, administrative salaries, and rent, which support multiple projects or the business as a whole but cannot be directly allocated to any single project. Thus, overhead costs are not included in the direct costs associated with a project. This distinction helps managers track the financial health of a project more accurately by separating direct project expenses from general business operating costs.