TY - JOUR
T1 - The management of construction company overhead costs
AU - Assaf, Sadi A.
AU - Bubshait, Abdulaziz A.
AU - Atiyah, Sulaiman
AU - Al-Shahri, Mohammed
N1 - Funding Information:
The authors appreciate the support of the King Fahd University of Petroleum and Minerals during the course of the study. Thanks are also extended to the construction companies who participated in the study. Dr. Sadi Assaf is a professor of construction engineering and management at King Fahd University of Petroleum & Minerals (KFUPM) in Dhahran, Saudi Arabia. He holds a B.Sc. and Ph.D in Civil engineering from the University of Illinois and an MBA from Northern Illinois University. His main areas of research are quantitative methods in construction management, risk management in construction and life cycle costing Dr. Assaf has received distinguished and research awards from KFUPM Dr. Abdulaziz A. Bubshait is an associate professor of construction engineering and management at King Fahd University of Petroleum & Minerals (KFUPM) IN Dhahran, Saudi Arabia. He holds a B.Sc. form UPM and M.sc. and Ph.D in Civil Construction contract and administration, quality management, construction methods and pavement management. Dr. Solaiman Atiyah is an associate professor of accountancy at King Fahd University of Petroleum & Minerals (KFUPM) in Dhahran, Saudi Arabia. Mohammed Al-Shahri is a captain engineer in the Ministry of Defense, General Directorate of Military Works, Khamis Mushayt, Saudi Arabia.
PY - 2001/7
Y1 - 2001/7
N2 - This paper investigates the overhead cost practices of construction companies in Saudi Arabia. Although overhead costs are extremely important in construction estimation, they can be easily overlooked. Neglecting overhead has forced some contractors out of business, because these costs constitute a significant portion of the total construction cost. The practices of 61 large building construction contractors were investigated via questionnaire. The questionnaire has three parts covering the construction firms, overhead costs in general, and company overhead costs. Results show that average overhead cost is slightly higher than the ratio reported in the literature. The average percentage of company overhead costs to project direct cost is greater than 10%. Causes of increased company overhead costs include delayed payments, shortage of new projects, cost of inflation and governmental regulations. Factors affecting company overhead costs include the following: automobile and equipment costs, head office expenses, labor related costs and financing costs. The unstable construction market makes it difficult for contractors to decide on the optimum level of overhead costs that enables contractors to win and efficiently administer large projects.
AB - This paper investigates the overhead cost practices of construction companies in Saudi Arabia. Although overhead costs are extremely important in construction estimation, they can be easily overlooked. Neglecting overhead has forced some contractors out of business, because these costs constitute a significant portion of the total construction cost. The practices of 61 large building construction contractors were investigated via questionnaire. The questionnaire has three parts covering the construction firms, overhead costs in general, and company overhead costs. Results show that average overhead cost is slightly higher than the ratio reported in the literature. The average percentage of company overhead costs to project direct cost is greater than 10%. Causes of increased company overhead costs include delayed payments, shortage of new projects, cost of inflation and governmental regulations. Factors affecting company overhead costs include the following: automobile and equipment costs, head office expenses, labor related costs and financing costs. The unstable construction market makes it difficult for contractors to decide on the optimum level of overhead costs that enables contractors to win and efficiently administer large projects.
KW - Administrative costs
KW - Construction costs
KW - Overhead cost
KW - Saudi Arabia
UR - http://www.scopus.com/inward/record.url?scp=0035400031&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=0035400031&partnerID=8YFLogxK
U2 - 10.1016/S0263-7863(00)00011-9
DO - 10.1016/S0263-7863(00)00011-9
M3 - Article
AN - SCOPUS:0035400031
SN - 0263-7863
VL - 19
SP - 295
EP - 303
JO - International Journal of Project Management
JF - International Journal of Project Management
IS - 5
ER -