Overhead & Profits

General Overhead & Profit

General Overhead & Profit may be added to a Cotality estimate to provide additional allowances for a General Contractor to support business operations. These amounts are determined by individual estimators and can be determined based on multiple factors, including, but not limited to, job complexity, coordination, number of trades required, or other conditions or requirements that may impact the planning and execution of an individual job.

If these additional factors exist, estimators may consider including General Overhead & Profit.

The inclusion, omission or amount of General Overhead & Profit is defined by the estimator based on the specific circumstances of the job under estimation and are not defined by Cotality.

Jobsite Overhead & Profit

Overhead and profit within individual line items take into consideration applicable reasonable and customary subcontractor and general contractor margins consistent with current market conditions. Labor billing rates for the Cotality Claims Construction Cost Database line items include costs associated with subcontractor overhead and profit.

Subcontractor overhead and profit is incorporated into Cotality estimating tools on an individual component level. The overhead percentage factor applied varies based on numerous business costs, depending on the trade and geography.

Subcontractor profit is included at a flat percentage, and varies by trade and geography based on market conditions such as supply and demand economics.

Cotality has established a dynamic formula that includes a review of subcontractor records, while taking into account the various logistics and dynamics of operating a business in both primary and secondary markets.

Each part of the Cotality formula may fluctuate based on changing local economic and market conditions.

To help provide insight into how these costs are built, the formula below illustrates the calculation for these line items within the Cotality Claims Construction Cost Database.

Formula Definitions

Wage Rate:

The hourly wage paid to the employee performing the work, inclusive of any typical overtime allocation.

Fringe Benefits:

Company-paid benefits provided to the employee above their base wage, including paid vacations, health insurance, pensions and any paid training or professional association dues.

Statutory Burden:

Government controlled fees/taxes, Social Security, Medicare, state and federal disability insurance, unemployment, or other social health and welfare programs. Some examples of state burdens accounted for include (but are not limited to) Massachusetts PFML tax or Oregon Corporate Activity Tax.

Business Overhead:

The surveyed cost of doing business within a market. These costs may include building expenses, rent, mortgage, utilities, taxes, and services performed by general employees that are not billable to a specific job such as those of accountants, legal counsel, sales, marketing, and office personnel. Work trucks, trailers, office furniture, technology and software costs, and general supplies are also considered part of business overhead.

Jobsite Overhead:

Any cost(s) that can be billed directly to a job. Examples of such costs would include expedited labor, engineering review expenses, work performed by jobsite managers, perishable tools, temporary electricity, lost productivity, transportation to/from a job site, snow removal, basic jobsite safety and security, and specific jobsite bonding.

Profit:

Profit associated with any subcontractors, but not including General Overhead & Profit (Referenced further below).

Claims Construction Pricing Database Methodology