How should indirect costs be determined for an estimate?

Indirect costs are expenses that are not directly attributed to a specific project activity but are essential for overall project execution. These can include overhead, administrative costs, and general operational expenses. Determining these costs accurately is crucial for creating comprehensive estimates.

Using the estimator's judgment involves leveraging knowledge of past projects, industry experience, and the unique characteristics of the current project. This approach allows the estimator to assess the indirect costs considering the specific context and nuances that can affect the total expenses involved, such as location, project complexity, and organizational factors.

While personal experience, detailed project specifications, and industry standards all contribute to estimating indirect costs, relying solely on them can lead to oversights. Personal experience may not account for specific aspects of the new project, whereas detailed project specifications might omit broader operational costs. Industry standards provide a baseline but may not reflect the actual conditions of a particular project. Therefore, making a judgment based on a blend of these factors combined with personal expertise results in a more accurate estimation of indirect costs.