CFOS-03OVERHEAD CALCULATION
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STEP 03 OF 08 · CHAPTER 3

Overhead calculation

What indirect cost really comes to at your size, and the rate your estimating template should be using.

SYSTEM POSITION

Where this step fits

DEPENDS ON
CFOS-01Job cost structureCFOS-02Equipment cost basis
FEEDS
CFOS-04Estimating systemCFOS-07Monthly cadenceCFOS-08Standards and accountability
GO DEEPER ON THIS STEP

The rules and targets underneath it

CFOS-03
12% net profit
The company level outcome this step produces, against what the benchmarked trades average.
PUBLISHED FIGURES

What your trade runs

Overhead rates for all 48 trades across 7 revenue bands, with the CFOS target beside them up to $10M to $25M.

CFOS-03
Overhead benchmarks
Pick your trade and revenue, and see the shortfall in dollars.
PROOF

Contractors where this step did the work

SWPPP AND EROSION CONTROL
$24,000 of net profit became $1,105,000
An erosion control contractor was running seven figures of revenue and keeping almost none of it, because no site had a number of its own.
CIVIL
A maxed $348,000 line of credit, paid off in 60 days
A civil contractor had a maxed line of credit and 30% overhead, and couldn't point at where either came from.
TENANT IMPROVEMENT GENERAL CONTRACTOR
6.7% to 11.2% net profit in 120 days
A tenant improvement GC was using each new job to finish the last one, and could see two weeks ahead at best.
CIVIL
Four merchant cash advances gone, gross profit 5% to 33%
A civil subcontractor did everything right to grow and nearly finished the business doing it.
CONCRETE
$1.3M less revenue, and more profit than the year before
A concrete subcontractor had overhead on the books at 5% when the real number was closer to 12%, so every bid was wrong by the difference.
MARINE
$2.3M to $5.5M in business value on identical revenue
A marine general contractor wanted to sell, and found out what a buyer pays for is provable profit, which he couldn't prove.
ELECTRICAL ยท IN PROGRESS
33 points of overhead found in the first 30 days
An electrical service contractor had been running on fear since a partner situation pulled six figures out of the company.
LANDSCAPING
Breakeven to $12,000 a month in cash, in 75 days
A father and son operation was losing its entire margin to a dozen small leaks, none of which looked big enough to chase.
QUESTIONS

What owners ask

What is the overhead calculation step?

What indirect cost really comes to at your size, and the rate your estimating template should be using. It's step 03 of 8 in CONTROL, drawn from chapter 3.

Does the order make a difference?

Yes. This step depends on job cost structure and equipment cost basis, so installing it first produces numbers the field won't trust.

What does it change downstream?

It feeds estimating system, monthly cadence, standards and accountability. A change here moves every one of those.

What fails if I skip step 03?

3 later steps read from it: 04, estimating system, 07, monthly cadence, 08, standards and accountability. Skip it and those run on numbers that were never established, so the output looks finished and isn't.

Where does step 03 fit in the sequence?

Position 3 of 8 once the dependencies are resolved. It waits on 01 and 02. 3 steps wait on it. Most owners install all 8 inside 60 days.

AUTHOR
Josh Luebker
JOSH LUEBKER
MASTER ELECTRICIAN · 150+ PROJECTS · $2.1B+ MANAGED

Wrote CONTROL, the 8 step system behind these figures. More about the author.

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