Category: Quantities & pricing
Prepared by Eng. Ahmed Fathy, Projects Manager ·
Definition
Direct cost is the spend on executing the item itself: materials, labour, plant and the subcontractors tied to it.
Why it matters on a project
It is calculated per item, and indirect costs and profit are built on top of it, so any error is multiplied in the final price.
Worked example
One m³ of concrete: materials 230 + labour 45 + plant 25 = 300 SAR direct cost (illustrative figures).
Common mistake
Loading site and management salaries into the direct cost of one item, distorting its rate against the others.
Frequently asked questions
Are subcontractors a direct cost?
Yes, when they carry out the item itself; their price goes into that item's cost.
How do I work out labour cost per item?
Divide the crew's daily cost by its daily output in the item's unit.
Related terms
- Indirect costs (overheads)Site and head-office costs not attributable to a single item, added as a percentage.
- Unit rateThe item price per unit of measure, built from material, labour and equipment then indirect costs and profit.
- Waste allowanceA percentage added to material quantities to cover cutting, damage and site loss.
- Bill of quantities (BOQ)A list of work items with description, unit and quantity, priced item by item.
Read next
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