| Title |
A Model for Reflecting Subcontractor’s Indirect Costs in the Estimated Price of Public Construction Project |
| Authors |
한상준(Han, Sang-Jun) ; 이시욱(Lee, Siwook) ; 우성권(Woo, Sungkwon) |
| DOI |
https://doi.org/10.5659/JAIK.2025.41.10.349 |
| Keywords |
Standard Production Rates; Subcontractor’s Indirect Costs; Owner’s Estimate |
| Abstract |
This study aims to improve the fairness and rationality of the estimated price calculation for public construction projects by proposing a
methodology to reflect the indirect costs of subcontractors, which are currently excluded from official cost estimations in Korea. Although
subcontractors account for a substantial portion of construction execution, their indirect costs such as indirect labor costs, miscellaneous
expenses, general administrative expenses, and profit are not systematically reflected in the standard estimated price structure led by general
contractors. This exclusion has led to cost distortions, weakened transparency, and unfair burden-sharing in the subcontracting market. In
response, this study develops a systematic methodology to incorporate subcontractors’ indirect costs in the Estimated Price. Based on
empirical simulation using 30 project cases, it was found that incorporating subcontractor indirect costs increases the total construction cost by
an average of 17.3%, with building works showing higher increases than civil works due to the higher share of direct labor costs. The
results of this study are expected to provide an empirical basis for improving public procurement policies. |