XL EagleOverhead
Overhead. Overhead is the indirect cost of supporting the people and equipment that do the work. Examples include field supervisors, shop rent, vehicles, tools and safety training.
It is spread across jobs using a rate, usually as a percent of direct labor. Overhead differs from G&A, which covers running the company as a whole.
Why it matters to a small contractor
Trucks, tools and shop space are real costs. If they are not in your rates, every job quietly loses money even when it looks profitable.
Example
A shop has $120,000 a year in overhead and $400,000 in direct labor. Its overhead rate is 30 percent, so each $100 of labor carries $30 of overhead.
Overhead: common questions
What is the difference between overhead and G&A?
Overhead supports the work itself. G&A supports the business overall, like the owner's office, accounting and insurance.
Can I recover overhead on fixed-price work?
Yes, but only by building it into your price. Nobody reimburses it separately.
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