1 - What is the best way to calculate overhead in our small construction company?

First, based on the 4 items listed above, we can make a complete list of our general expenses. Then we add up each expense or its proportional part during a certain period. The resulting total is our company's overhead for that period.

2 - What is the percentage of overhead of a construction company over a period?

To get the overhead percentage, we divide the above total by the total sales for that period and multiply by 100. The equation is: [Total overhead in a period / Total sales in the same period]*100 = Percentage overhead rate This percentage is what the estimator uses to allocate the overhead charges to the new budgets. Just for reference: My company’s overhead always ranged from 15% to 10% of sales.

3 - What is the best way to keep overhead costs low?

Overhead costs are kept reasonably low when common sense is applied. Uncontrolled overhead can drive a company out of business. It is necessary to reduce overhead costs to what is strictly necessary. For example, it is not advisable for a company to risk investing in a large office in the most expensive sector of the city from the beginning of its activities without a sales contract in sight. It is advisable at the beginning of any business to be prudent with overheads until revenues justify a larger investment. Some companies take the risk of reducing the amount allocated to overhead in a budget in order to present a more competitive offer.

How to Calculate Overhead Costs in Construction Projects

Posted on February 6, 2021October 11, 2021 by Gustavo Cinca

How to Calculate Overhead Costs in Construction Projects.
A comprehensive guide to determining overhead costs for construction and industrial assembly companies.
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