What type of costs are incurred during construction, such as materials and labor?

Direct costs are the expenses that can be directly attributed to the construction of a specific project. This includes the cost of materials, labor, and any other related expenses that are directly involved in the construction process. For instance, the purchase of concrete, steel, or labor wages for carpenters and electricians are classified as direct costs because they are essential and directly tied to the construction of the property.

In contrast, indirect costs are not easily tied to any one specific project. These can include general administration expenses, costs related to the overall management of construction projects, and other overhead that supports the construction process but does not specifically contribute to it.

Operational costs refer to the ongoing expenses associated with running and maintaining a property after construction has been completed, such as utilities and maintenance.

Overhead costs are the general costs necessary to conduct business that do not directly relate to the project at hand, similar to indirect costs, and can include salaries of management or facility costs that are not specific to one project.

The distinguishing factor for direct costs is their clear connection to the construction work itself, making this choice the most appropriate in this context.