What is the difference between direct costs and indirect costs?

Direct costs are expenses directly attributable to a specific project, such as team salaries assigned to the project, materials purchased for the project, equipment rented for the project, and travel for project activities. Indirect costs are shared expenses that benefit multiple projects or the organization as a whole and cannot be traced to a single project, such as rent, utilities, administrative staff, corporate IT infrastructure, and executive salaries. Indirect costs are typically allocated to projects using overhead rates.