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#21969 - 02/13/03 10:18 PM Overhead  
spyder  Offline
Joined: Oct 2002
Posts: 210
Does anyone have any rule of thumb for the percentage that should be figured into a bid for overhead?

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#21970 - 02/13/03 10:57 PM Re: Overhead  
Jim M  Offline
Joined: Aug 2001
Posts: 457
Chestertown, MD, USA

You will first need to define your costs for office staff, insurances, licenses etc. These cost need to be recouped over the available working hours.

#21971 - 02/13/03 11:47 PM Re: Overhead  
HotLine1  Offline

Joined: Apr 2002
Posts: 6,853
Brick, NJ USA
You have to take all your expenses that are not directly related to jobs, come up with a total dollar amount first. (Office/Insurance/Vehicle Costs/etc)

Then, take the above total & divide it to get a "per day cost"

Take the projected days for the bid job & multiply by the daily cost and thats overhead recovery.

Don't overlook Health Insurance , Tax expenses related to payroll & Workers Comp, unless you figured these costs into your "Labor" figures.



#21972 - 02/14/03 09:35 AM Re: Overhead  
rowdyrudy  Offline
Joined: Nov 2002
Posts: 169
Mascoutah, IL USA
Years ago I attended a seminar about ways of reducing overhead. One attendee made a statement that broke up everyone. He said that the way he reduced overhead was to fire all of his relatives. Probably excellent advice today.

#21973 - 02/14/03 09:40 AM Re: Overhead  
Redsy  Offline
Joined: Mar 2001
Posts: 2,056
Bucks County PA
Try 20-30% for Overhead & Profit

#21974 - 02/15/03 08:32 AM Re: Overhead  
rowdyrudy  Offline
Joined: Nov 2002
Posts: 169
Mascoutah, IL USA
Seriuosly, overhead costs will vary wildly between contractors. A couple of examples:
Dale P. operates out of his home. His wife handles the telco and the books. He has one, and sometimes two, helpers. He does 99% local work and his longest commute is about 20 minutes. His truck is also his personal transportation. In November 2002 his OH was calculated at 9.8-9.9%.
T.E.C., in a nearby town, on the other hand runs 8 trucks, an office staff of three and a roving super. T.E.C. has a large tool inventory as well as stock. Last Juns their OH was calced to be 19.7-21.1%.
Some EC's budget a number of man-hours to establish OH. Fall under the budget and OH is not met, over budget and it's profit. There are so many variables in OH that each EC must arrive at his own indirect costs. Tools, rent (or taxes), vehicles, insurance of all types, office equipment and supplies, bank loan interest, depreciation, etc. There is no catch-all percent.

#21975 - 02/15/03 12:13 PM Re: Overhead  
Electric Eagle  Offline
Joined: Apr 2002
Posts: 914
Alpharetta, GA
I don't figure an overhead percent into the bids because as a percent it varies. Instead I know what my daily overhead as a dollar figure is. Take all of your fixed expsense and divide by 250. Then you know what you have to bring in every day before you make a dime. Do the same for labor. With a little buffer, I know a $15 an hour guy costs me $170 a day after I pay WC, match taxes and other related employee expenses. Don't forget to plan for the future. My overhead just went up $92 a day because we added another truck and moved the shop out of my house and garage.

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