1. In general all construction work shall be done by contract, but in the event that the estimated cost of such work or of a specified portion thereof shall not exceed the sum of twenty-five thousand dollars, the department may, on the recommendation of the Commissioner of Transportation, authorize the Commissioner of Transportation to do such work or part of such work by days' work under his direction.

2. All costs of supervision and inspection of construction work, costs of making surveys, plans and estimates in connection therewith and the costs of taking title to property and any other costs which may be incurred in connection with or incidental to such work shall be considered a part of the cost of such improvement.