Nobody has updated your overhead rate in years
The rate in your bid sheet was right once. Revenue doubled, you hired two PMs and a fleet, and nobody went back to it.
Overhead as a percentage of revenue drops as you grow, but only if the revenue catches up to the cost base you built. Add the people first and the ratio goes the wrong way for a year. If the template never moves, you either leave money on the table or you buy work you can't deliver.
Three moves, in order
Step 03: Overhead calculation
What indirect cost really comes to at your size, and the rate your estimating template should be carrying.
Other problems step 03 solves
Other things that go wrong
What owners ask
When to update construction overhead rate?
The rate in your bid sheet was right once. Revenue doubled, you hired two PMs and a fleet, and nobody went back to it. Overhead as a percentage of revenue drops as you grow, but only if the revenue catches up to the cost base you built. Add the people first and the ratio goes the wrong way for a year. If the template never moves, you either leave money on the table or you buy work you can't deliver.
Which part of the system fixes this?
The step is number 03, overhead calculation. What indirect cost really comes to at your size, and the rate your estimating template should be carrying. It's drawn from chapter 3 of CONTROL: The Construction Financial Operating System.
Is this normal for my trade?
Across the 48 trades in the benchmark reference, net profit at $1M–$5M averages 7% before taxes. If you're well under that and this page describes your month, the two are usually the same story. The published average tells you where the pack sits, and your own job costing tells you where you sit, which is the number that pays payroll.
Where do I start?
Recalculate at every revenue band, not every year.
Can I fix this without touching anything else?
You can try, and it doesn't hold. Step 03 depends on step 01, job cost structure and step 02, equipment cost basis. Install it ahead of those and it produces numbers nobody trusts, which is worse than the problem you started with.
Josh Luebker ran commercial construction projects before he ran the numbers behind them, on data centres, military bases, hospitals, and high-rises. He wrote CONTROL: The Construction Financial Operating System, which is an eight-step framework for commercial subcontractors, and it publishes on October 1, 2026. He is a master electrician who moved into the office and kept the field vocabulary.
Sulphur Prairie Operations LLC maintains the benchmark reference behind these figures. Every edition is reconciled against the newest CFMA survey release before it publishes here. Where a figure changes between editions, the older edition keeps its year in the title so a citation to it stays correct.