Indirect Labor Or General Expense

[Alwayslearningelec]

GM. I use Accubid for out estimating program. There's an indirect labor and general expense tab.

On large jobs I always put non working foreman(supervision), PM, engineer etc. and other office staff in the indirect labor tab.

Starting to think maybe office staff should fall under general expenses. Thoughts?

 

[petersonra]

Personally, this is just me, I think if someone is directly working on a project regardless of what they are doing, the time should be charged to the project and not to overhead. Otherwise you start to fool yourself about how much money you're actually making on a project.

 

[Alwayslearningelec]

Personally, this is just me, I think if someone is directly working on a project regardless of what they are doing, the time should be charged to the project and not to overhead. Otherwise you start to fool yourself about how much money you're actually making on a project.

Ok. Thinking that office staff should be under job expense and my field labor( non working) should be under indirect labor. Again these are tabs within my program.

 

[nunoslg]

petersonra is right. Think of it like this. Overhead is the cost to operate if you do not have any projects. It can be complicated at first. When you know your true overhead cost then you know how much work you must win to meet this cost. Issue, you can not cover your overhead on a few projects because you still must have a low number to win the project. There is a leap of faith at first that you will win the dollar amount of work needed to cover your overhead. Once you meet that goal overhead becomes profit. The standard OH and Profit is generally 10% and 10% when work is good and maybe 10% and 15% when work is great. You can also divide your profit and Overhead dollar amount by your man-hours and see how much per hour you project to make per man. This will tell you if the project is worth going after.​