Foreman

A

Alwayslearningelec

Senior Member
Location
NJ
Occupation
Estimator
Would you consider a non working foreman an indirect or direct job cost? How about a dedicated project manager?

What exactly is the difference between the two?

I do think permits, lifts, trailers, tools, consumables etc. are direct.
 
Site super is a direct job cost.


Indirect costs are shop rental, estimators salary, vehicle license, insurance, registration, GL insurance, tool purchases and repairs, etc.

Generally items considered overhead.
 
AC\DC said:
May I ask a question. I don’t have that great of organization on that part I have it just lumped together what’s the difference and why do that
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It’s important to figure what it costs you to be in business.

I go do a panel change out, cost me $500 in materials, and I want to make $160/hour, charged a full day because there wasn't enough time to hit another job after, so $1,280 + $500, I charge $1,780, and conclude “I made a good profit”.

We’ll, at the end of the year I count what I spent, and it cost me $5k for GL, $12k for fuel, $6k for truck repairs, $2k in new tools and repairing tools, $250 for the license, on and on, and now I see that it costs me $25k-year, whether I book no jobs, or 100 jobs.

Then there is fixed vs variable overhead. For example, my gl policy remains the same, whether I do no jobs, or $500k in jobs. But if I do $500k in gross sales, my fuel is going to be much higher than if I sat at home going broke.

But both categories are overhead. And in construction, miscalculating overhead is probably the main reason good tradesmen end up going out of business.
 
Seven-Delta-FortyOne said:
It’s important to figure what it costs you to be in business.

I go do a panel change out, cost me $500 in materials, and I want to make $160/hour, charged a full day because there wasn't enough time to hit another job after, so $1,280 + $500, I charge $1,780, and conclude “I made a good profit”.

We’ll, at the end of the year I count what I spent, and it cost me $5k for GL, $12k for fuel, $6k for truck repairs, $2k in new tools and repairing tools, $250 for the license, on and on, and now I see that it costs me $25k-year, whether I book no jobs, or 100 jobs.

Then there is fixed vs variable overhead. For example, my gl policy remains the same, whether I do no jobs, or $500k in jobs. But if I do $500k in gross sales, my fuel is going to be much higher than if I sat at home going broke.

But both categories are overhead. And in construction, miscalculating overhead is probably the main reason good tradesmen end up going out of business.
Click to expand...
One thing to keep in mind is that you have to be judicious in applying overhead. The common way is to spread it over the dollar value of the quotes based on expected revenue for the year. If you have overhead of $25,000 and revenue of $500,000 then each dollar of revenue needs to absorb $0.05 of overhead. That means a $10,000 quote has to have $500 of overhead tacked on, assuming your quote is generated on direct costs only.
 
I have never used percentage based overhead figures. I think it would work well for someone who does pretty much the same type of work, but I’ve found, for me, a time-based approach works better for me, because of the wide variety of work I take on.

It still requires projections, (projected days worked in a year vs project gross sales), but I figure a 200-working-day year, take my yearly OH and divide it by 200.

So far it has worked well for me, but like anything else in business, it’s constantly moving target and requires regular adjustments and corrections.
 
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