A survey of indirect cost estimating in practice

This paper presents the findings of an investigation into the current practices of estimating the indirect costs involved in tendering for construction work. It shows the results of a survey of current practices and attitudes in seven firms towards the quantification and allocation of general overheads, risk contingencies and profit in a tender. The survey indicates that the methods used are highly subjective and are based on past experience. Quantitative methods involving statistics and probability, even though advocated, are rarely used. This suggests that future methods adopted in a computerized estimating environment should reflect the subjective nature of the process and should be simple enough to be applied.