Storage facility costs can sometimes be part of the overhead of a project.
The different types of project overheads fall into many of the same categories as normal project expenses. They can be fixed or variable, operating or capital, and can include items such as employee salaries, rent, materials and equipment, and any other type of project management expense. What makes these expenses part of this category is how they are applied to specific aspects of the underlying contract.
Projects are managed as separate business units with their own budgets, assigned staff, and assigned resources. To determine the profitability of a project, project managers are tasked with identifying the expenses incurred specifically to complete the project. These expenses are linked to the project deliverables, which refer to the specific list of tasks to be completed in order for the project to be completed and the contract to be fulfilled.
In an ideal world, all expenses generated by a project would be tied to a specific deliverable. However, reality often interferes and certain project expenses tend to span different deliverables or apply to all of them at the same time, without the ability to attribute the majority of expenses to one deliverable at the expense of others. These types of overheads are known as project overheads.
Any type of project expense can end up in this category, including salaries for project general managers, for example. These managers spend time organizing the project as a whole and it can be impossible to allocate time between the various deliverables. Another common type of cost is general administration, which may include staff hired to do project accounting, office supplies, general secretarial support, or the cost of running a main project office. Indirect costs can include a wide range of common expenses, such as a storage facility used throughout the project or travel expenses for project managers to attend meetings.
It is important to distinguish between the general costs of the project and the general and administrative costs of the entire business. Project overhead costs are generally project specific. The company has its own overheads that are allocated to clients and projects as a percentage of overheads. Although some costs are considered overhead for the project, they are therefore still direct project expenses. A project contract would receive an additional percentage of the overhead that comes from running the entire business.