Indirect Costs

Indirect costs are those costs incurred to get more than one project done i.e. directly benefit the project and are not office related.   Indirect costs include project managers, transportation, equipment, supplies and general insurance.

Estimating in Construction – Part IV (Concepts, Tenets, and Principles)

Well developed, accurate and timely estimates are the best tool ensuring profitability in the construction industry. No other internal control mechanism is as valuable to the contractor as the estimate. Good estimating systems in construction provide the management team with the necessary confidence to make long-term decisions benefiting all parties involved with the company. Customers receive a higher quality structure with less warranty requirements, employees get a sense of security with their tenure, and vendors/subcontractors acquire desirable relationships with their contractor assuring delivery of best practices for their respective trades. Simple put, good estimates deliver profits to the contractor.

Roofer – Business Dynamics

Roofer

Roofers depend heavily on labor to accomplish their task. They are also highly susceptible to weather conditions and dangerous conditions. There are a multitude of issues they face. If properly managed, an owner of a roofing company can make a good living and profit. Experience is absolutely the best ally for the roofer.

Markup Percentage for Remodelers

Markup Percentage

In the construction industry, remodelers face a different set of criteria than your traditional new home builder. Because of these issues the markup percentage on costs is generally much higher than other forms of construction. If you are a remodeler, you need to understand the impact of these issues and how to properly markup your job to cover all your indirect and overhead costs.

How to Calculate the Best Markup for a Construction Project

Markup for a Construction Project

Every construction project has costs beyond the direct costs and the contractor wants to earn a profit. To cover these costs he must have an appropriate markup. The contractor must give consideration to many variables and circumstances to calculate the best markup for a construction project. To determine the best markup percentage on costs, the contractor should consider his indirect costs, overhead, taxes, and final profit desired. 

What is a Reasonable Profit in Construction?

Reasonable Profit in Construction

For any company, profit is based on the risk reward concept. With construction, what should be the profit (reward) given the risk? What is a reasonable expectation given the industry and the particular business? There is no single correct answer. The construction industry is divided into several significant branches. This article is focused on the residential contractor. 

From the new home builder to the re-modeler, a reasonable profit given the risk should be no less than 9%  AND this is net after a reasonable salary to the owner for his management role.  This is the take home or actual bottom line profit; the amount after taxes.  How do you derive such a figure?  How do you determine the markup on the construction project to end up with this profit? 

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