Contract costs should comprise:
- Costs that relate directly to the specific contract;
- Site labour costs, including site supervision;
- Costs of materials used in construction;
- Depreciation of plant and equipment used on the contract;
- Costs of moving plant, equipment and materials to and from the contract site;
- Costs of hiring plant and equipment;
- Costs of design and technical assistance that are directly related to the contract;
- The estimated costs of rectification and guarantee work, including expected warranty costs; and
- Claims from third parties.
Costs that are attributable to contract activity in general and can be allocated to the contract;
- Insurance;
- Costs of design and technical assistance that are not directly related to a specific contract; and Construction overheads.
- Borrowing costs capitalized under AS 16 Borrowing cost
Such other costs as are specifically chargeable to the customer under the terms of the contract. Costs that cannot be attributed to contract activity or cannot be allocated to a contract are excluded from the costs of a construction contract. Such costs include:
- General administration costs for which reimbursement is not specified in the contract;
- Selling costs;
- Research and development costs for which reimbursement is not specified in the contract;
- Depreciation of idle plant and equipment that is not used on a particular contract.
