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Construction glossary

What are Direct Costs?

Direct costs in the construction industry refer to the expenses directly related to the actual building process. These essential expenditures are easily traceable to a specific project and vary based on the size or scope of work. Examples include raw materials (like concrete, steel, wood), labor costs that involve wages for the construction crew, equipment hire, and subcontractor fees. If a cost can be directly allocated to a particular construction job and affects the final total bid price for the project, it is considered a direct cost. Management of direct costs is crucial for financial efficiency and profitability.

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Other construction terms

Overbillings

What is Overbilling?

Overbilling refers to the unscrupulous practice of charging more than what is warranted for materials or services in the construction industry. This can occur when a contractor bills for more material...
Long-Term Liabilities (or Noncurrent Liabilities)

What are Long-term Liabilities (Noncurrent Liabilities)?

Long-term liabilities, also known as noncurrent liabilities, in the construction industry are obligations that are due more than a year from the current date. They are an important part of a company's...
Enterprise Resource Planning (ERP)

What is Enterprise Resource Planning (ERP)?

Enterprise Resource Planning (ERP) in the construction industry refers to a suite of integrated software applications designed to automate and control the core processes of a construction company. It ...

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