Which of the following insurance costs are classified under Home Office Overheads rather than project indirect costs?

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BlackTom AI · Accepted Answer

To begin, we consider what is meant by Home Office Overheads versus project indirect costs. Home Office Overheads are costs that support the overall operation from the home office and are not directly tied to a specific project.
Option 1: 'Builder’s Risk Insurance' is typically a project-specific cost, tied to the particular construction site and its ongoing risk exposure, so it would be allocated to the project rather than to home office overheads.
Option 2: 'Workers’ Compensation Insurance' relates to worker coverage for on-the-job injuries and illnesses. Although it covers employees, it is commonly allocated as an overhead that supports all projects through the payroll and human resources functions, and in many cost systems it is treated as a home office overhead rather than a project indirect cost because it is not uniquely assigned to a single project site.
Option 3: 'Pollution Liability Insurance' generally protects against environmental claims arising from a project’s activities and is commonly categorized as a project-level or site-specific cost rather than a home office overhead.
Option 4: 'Jobsite Security Insurance' covers protections specific to the construction site and is plainly a project or site-specific cost, not a general home office overhead.

In summary, options 1, 3, and 4 are typically allocated to project-related or site-specific costs, whereas option 2 corresponds to a broader, home office-type overhead allocation, explaining why it is classified under Home Office Overheads rather than project indirect costs.

Note: Different organizations may structure cost allocations differently, but the reasoning here aligns with common practice distinguishing project-specific risks and site protections from general, non-project-specific overheads.

2258-1_20CM3034001 Indirect Costs - Bonds & Insurance

Which of the following insurance costs are classified under Home Office Overheads rather than project indirect costs?

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