It stands to reason that smaller contractors will have less general overhead costs and larger contractors will have more. The general overhead costs included in the estimate for that project would then be $7,500. If this contractor has a construction project with an estimated value of $150,000 then the general overhead chargeable to that specific project would be $150,000 divided by $1,000,000 multiplied by $50,000. As percentage of his annual business his general overhead expense would be 5%. He calculates his annual expenses for operating that business to be $50,000.
#PROJECT WINTER PRICE PROFESSIONAL#
Miscellaneous Indirect Overhead Costs – These would include travel expenses, legal fees, marketing and advertising, any contracted professional services like auditors, club or association dues or any charitable donations.ĭepreciation Expense – Any expenditures for office equipment or any other company owned construction equipment would have a percentage written off each year as part of a general overhead expense and the cost of doing business.Īs an example, let’s say a contractor does $1,000,000 in business per year. Staff Salaries – Part of the indirect overhead costs includes the salaries of employees such as executives, purchasing staff, bookkeepers, estimators, administrative staff or anyone else working in their offices and not directly employed on a specific project. This also includes office supplies, utilities, insurance, phones, office equipment, furniture and taxes.
#PROJECT WINTER PRICE PLUS#
Office Expense – This category would include any office rents or lease expense or if their building is owned, the cost plus a return on their investment. The contractor will base this on their average annual expenses and will then convert that to a percentage of the total annual business. Items included in a contractor’s estimation of indirect overhead costs are as follows: These types of expenses are shared proportionally across all projects depending on their size. They constitute the contractor’s cost of doing business and any fixed expenses that are paid by the contractor. General Overhead Costs (Indirect Expense)Ĭosts included in general overhead are those not readily chargeable to one particular project. Both of which are covered in more detail below. Overhead costs are split into two categories, general overhead or indirect costs and job overhead or direct costs. Overhead costs amount to a sizeable portion of the cost of any project and failure by the contractor to adequately project these costs can make the difference between a profitable project and a failure. Included in every estimate for any construction or renovation project are overhead costs which are generally added as a percentage to sum of labor, material and equipment.
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