Last quarter, a Phoenix GC completed a $1.8M renovation with 8.5% gross margin all direct costs controlled, client paid in full. Three months later: $68,000 loss. The culprit? Overhead spiked 340% during mobilization and closeout while everyone focused on "visible" costs. The PM burned 140 hours post-revenue managing punch lists. Retention sat uncollected for 73 days while overhead kept running. Overhead costs are construction's silent profit killers. Most contractors track

“Last year was our best on record yet I’m not sleeping any better.” You’re bidding more, winning more, and keeping crews fully utilized. Revenue is up year over year, but when you review the numbers, profit margin has slipped again. The explanation is familiar: overhead increased . What that doesn’t tell you is what to address or how to correct it . In reality, you’re focused on managing projects, coordinating subs, and serving clients. Meanwhile, cash is leaking in places

In the highly competitive construction industry, bidding accurately is crucial for maintaining profitability. Many contractors win projects only to realize later that labor costs have wiped out their expected profits. The cause is simple but devastating: bidding based on gross wages instead of the True Cost of Labor . If your estimates rely solely on wages, you’re underpricing each project by 20%–35% , a silent profit leak that worsens with every payroll run. That hidden cos

In the construction industry, managing insurance costs is a critical yet often complex task for contractors. Insurance expenses can...

O verhead costs represent the indirect expenses required to run a business but are not directly tied to the physical construction process. These costs include office rent, administrative salaries, utilities, insurance, equipment maintenance, and more. Efficient management of these costs is crucial for maintaining profitability, but it is equally important to ensure that cost-cutting does not compromise the quality of construction projects. This article will explore how optim

Contractor insurance is a critical component in the construction industry, influencing not only risk management but also the financial...

Managing payroll in the construction industry is far from straightforward. Unlike other sectors, construction projects often involve a...

In the fast-paced construction industry, managing complex AIA (American Institute of Architects) contracts is essential for project...

In the construction sector, good cost management can mean the difference between operating a lucrative business and merely keeping...

In the construction industry, accurately managing expenses is crucial to maintaining profitability. One key metric that contractors must master is the overhead recovery rate, which helps allocate indirect expenses across projects to ensure proper cost recovery and pricing decisions. In this article, we will explain what the overhead recovery rate is, how to calculate it, and why getting it right is critical for business success. We'll also look at typical contractor question

Mastering Construction Cost Accounting is essential for any construction business aiming to remain competitive and profitable. Effective...

Overhead expenditures are a major component of any construction project. Whether you’re an experienced contractor or a small business owner, understanding the difference between fixed and variable overhead is critical for efficiently managing your project’s budget and controlling business expenses. Proper knowledge of fixed vs variable overhead in construction improves financial planning, budgeting accuracy, and profit control. In this post, we’ll explain fixed vs variable ov