American Institute Of Constructors (AIC) Level 2 Practice Test

Overhead and general conditions are indirect costs. They support the project as a whole rather than a single line item of work. Things like site facilities, supervision, utilities, and temporary infrastructure are part of this category because they benefit the entire project and can’t be charged to one specific construction activity. Because of that, these costs are not added directly to one task; they’re allocated across the project, typically as a percentage of the direct costs or by another fair basis. For example, if the project has substantial direct costs and an overhead/general conditions rate of 10%, that 10% is distributed across all work items, increasing the overall estimate to cover these ongoing project-support costs. They are not profits earned by the contractor, nor are they insurance premiums paid only for the owner's risk.