What is typically included in project overhead costs?

Project overhead costs generally encompass expenses that are necessary for the operation of a project but do not directly contribute to the physical construction or production work itself. Temporary storage is a typical example of an overhead cost because it pertains to the logistics and management of materials and supplies needed for the project, rather than costs associated with the direct production or implementation activities.

In contrast, raw materials, which are essential components used in construction or manufacturing, are charged directly to the project as project costs rather than overhead. Similarly, salaries of permanent staff are usually considered part of general administration costs and are not classified as overhead directly related to a specific project. Product development costs also fall outside of overhead; these are typically associated with research and development efforts, distinct from the ongoing operational expenses tied to managing a project's execution. Therefore, temporary storage represents the indirect costs associated with facilitating a project, solidifying its status as a typical inclusion in project overhead costs.