Oregon Construction Contractors (CCB) Practice Test

Which of the following is considered an indirect cost in project equipment?

1. Large machinery expenses

2. Small tools and pickup trucks

3. Labor costs for equipment operation

4. Material costs necessary for the project

The correct answer is: Small tools and pickup trucks

Indirect costs in project equipment refer to those expenses not directly tied to a specific project task but necessary for overall project completion. Among the options, the expenses associated with small tools and pickup trucks fall under indirect costs because they are typically utilized across numerous construction activities and their costs cannot be easily allocated to a specific line item in a project budget. Small tools and pickups are essential for supporting the work done on-site but do not directly contribute to the production of the final project deliverable. Their usage spans across multiple tasks, making it difficult to directly assign their costs to a specific activity. In contrast, large machinery expenses, labor costs for equipment operation, and material costs are typically classified as direct costs because they can be directly linked to a particular project or task. Understanding the distinction between direct and indirect costs is vital for accurate project budgeting and financial planning within construction projects.