Chapter 5: Local Road Quantity Calculation and Cost Estimation 145 priced for auditing purposes, although the costs are zero if project is implemented. However, if the quarry source is privately-owned, the material costs should follow prevailing market rates; b. Material Costs. If the material source (quarry source) is owned by the LGU, materials cost should be accounted or priced for auditing purposes, although the costs are zero if project is implemented. However, if the quarry source is privately-owned, the material costs should follow prevailing market rates; c. Equipment Costs. LGUs should have a pool of heavy equipment, which would mean savings from the rental of such equipment from the private sector. Occasionally, these LGUs will lease out its heavy equipment to the private sector or to other government offices as a means of additional local revenue source. The lease rates of LGU-owned heavy equipment are normally prescribed through its Local Revenue Ordinance (or Local Revenue Code, as the case maybe). In this context, the local engineering office may adopt the lease rates of its heavy equipment as mandated by its Local Revenue Ordinance. If the equipment will be leased from the private sector, then the market rates should be adopted, inclusive of fuel, oil, lubricants and operator. This will allow the local engineering office to ascertain the true cost of delivering local road works. 4.2.2 Indirect Costs The second component of the total project cost is the Indirect Costs, and these are also applicable to the estimation of project costs if implemented By-Administration. The local engineering office can compute for applicable indirect costs, for which the actual amount should be based on previous actual expenditures or previous approved budget for similar items. As with comparable contracted works, the applicable indirect costs that the local engineering office should consider are: a. Overhead Expenses. The local engineering office should take into account the cost for engineering and administrative supervision, transport allowance, and office expenses. This is especially true if the indirect costs of By-Administration