What does the term project overhead exclude?

Project overhead generally refers to indirect costs associated with a construction project that cannot be directly attributed to a specific task or project element. This includes costs necessary for project administration but not directly tied to the labor or materials used.

The correct choice indicates that direct labor costs are excluded from project overhead because they are directly associated with the labor performed on the project. Direct labor costs contribute specifically to the execution of the project rather than to overhead functions, which support the project but do not provide a direct contribution to its completion.

In contrast, fixed asset purchases, sales and marketing expenses, and interest on loans are often categorized under project overhead. Fixed assets are long-term investments to support the project, while sales and marketing expenses pertain to acquiring new business, both indirectly related to specific project work. Interest on loans can also fall under project overhead as it supports project financing rather than contributing directly to labor or material costs. Each of these can impact the overall budget and operation of a project, distinct from the labor that goes directly into completing project tasks.