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Engineering and Administrative Overhead (EAO)

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Engineering and Administrative Overhead (EAO)

Post by pjdelosreyes on Wed Sep 28, 2016 3:09 pm

Is usage of EAO limited only to project-related expenses? Below is the president's veto message for GAA 2016 which includes the conditional implementation for EAO expenses. Please clarify! Thanks! Smile

DPWH-OSEC, SP No. 15 (Engineering and Administrative Overhead Expenses)

Engineering and Administrative Overhead Expenses. The DPWH is authorized to deduct not more than the following
percentages of the project cost for infrastructure projects of the Department to be used for engineering and administrative
overhead expenses (EAO): (i) three and one-half percent (3.5%) for those directly released to its Central Office; (ii) two
and one-half percent (2.5%) for those directly released to its Regional Offices; and (iii) two percent (2%) for those directly
released to its District Engineering Offices. The use thereof shall be limited: (i) administrative overhead including the
hiring of individuals engaged through job-orders or contracts of service or such other engagement of personnel without
any employer-employee relationship; (ii) pre-construction activities; (iii) construction project management; (iv) testing
and quality control; (v) acquisition, rehabilitation and repair of heavy equipment and other related equipment and parts
used in the implementation of infrastructure projects; and (vi) contingencies in relation to pre-construction activities:
PROVIDED, That the EAO expenses shall be treated or booked-up as capitalized expenditures and shall form part of the
project cost.

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