Indirect Costs - which include General Conditions or Overhead, and Markup (Fee or Profit), which are the costs associated with the jobsite management of the project, including items such as project management staff, jobsite trailers, telephones, administrative as well as temporary roads, temporary utilities, permits, fees, general hoisting, safety and cleaning, not specifically associated with individual elements being erected.Direct Costs - which are the costs necessary to furnish and install the permanent elements of the project, such as structure, exterior envelope, interior finishes, vertical transportation, mechanical electrical and plumbing systems, etc., and.But before we get to the discussion of the insurance custom and practice O&P myth, we must first understand what O&P is, and how it gets applied in the real world.įrom a general contractor or construction manager’s perspective, there are only two major cost categories associated with the “Cost of the Work” on any project: This however is untrue and indeed defies both logic and economic reality. In the insurance restoration and casualty reconstruction business, overhead and profit is often characterized as a standard by which deviation is not possible. It can often be the subject of misapplication and dispute, and in connection with the alleged custom and practice in the insurance claims world, has become the subject of class action lawsuits against insurers in numerous states. ![]() Overhead and profit (or O&P as it is most often referred to) is frequently a misunderstood term.
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