Margin
The Code of Estimating Practice, seventh edition, published by the Chartered Institute of Building (CIOB) in 2009 suggests the term ‘margin’ refers to:
‘The sum that is required by an organisation, from a project, as a contribution towards its head office overheads and profit.’
Where profit is the money the project makes after accounting for all costs and expenses, and overheads refer to the costs of running the company, often described as head office administrative costs (although in some cases there may also be factory or manufacturing overheads).
Confusingly, profit may also be referred to as a ‘profit margin’. Profit margin is the percentage of the gross revenue that represents profit.
A report published in July 2018 by Construction Manager and Commercial Risk Management found a worrying gap between the margins construction professionals think they should be earning and what they actually earn. For example, nearly two-thirds of respondents said they would expect the appropriate profit margin for a main contractor under a design-and-build contract should be above 5%. In fact this is well above the average achieved in the industry.
Jason Farnell, managing director of Commercial Risk Management, said; "The survey responses are communicating clearly that the ratio of risk to reward in contracting is seriously imbalanced – put simply, the margins that contractors may expect to earn from projects is insufficient compensation for the uncertainty and risk exposure they face in delivering them.”
NB: The term ‘mark up’ refers to the sum added to a cost estimate to arrive at a tender sum, including margin, allowances for exceptional risks, and adjustments for commercial matters such as financial charges, cash-flow, opportunities (scope) and competition.
Short Guide, Maintaining Your Home, published, on 1 November 2014 by Historic Scotland, defines margins as: ‘protruding masonry framing an opening or emphasising the angle of a building. Most are raised (usually adopted when the building was to be harled but sometimes used decoratively).’
[edit] Related articles on Designing Buildings
Featured articles and news
Investors in People: CIOB achieves gold
Reflecting a commitment to employees and members.
Scratching beneath the surface; a guide to selection.
ECA 2024 Apprentice of the Year Award
Entries open for submission until May 31.
UK gov apprenticeship funding from April 2024
Brief summary the policy paper updated in March.
For the World Autism Awareness Month of April.
70+ experts appointed to public sector fire safety framework
The Fire Safety (FS2) Framework from LHC Procurement.
Project and programme management codes of practice
CIOB publications for built environment professionals.
The ECA Industry Awards 2024 now open !
Recognising the best in the electrotechnical industry.
Sustainable development concepts decade by decade.
The regenerative structural engineer
A call for design that will repair the natural world.
Buildings that mimic the restorative aspects found in nature.
CIAT publishes Principal Designer Competency Framework
For those considering applying for registration as a PD.
BSRIA Building Reg's guidance: The second staircase
An overview focusing on aspects which most affect the building services industry.
Design codes and pattern books
Harmonious proportions and golden sections.
Introducing or next Guest Editor Arun Baybars
Practising architect and design panel review member.
Quick summary by size, shape, test, material, use or bonding..