Profit and overheads on construction projects - Revision history

Designing Buildings at 08:00, 6 January 2023

2023-01-06T08:00:41Z

← Older revision		Revision as of 08:00, 6 January 2023
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		+	[[File:Profit-g283819ada 1280.jpg]]
		+
		+	= What are profit and overheads? =
		+
	On construction projects, profit and overheads are normally referred to in relation to contractors.		On construction projects, profit and overheads are normally referred to in relation to contractors.

−	In terms of individual projects, profit can be defined as the money the ~~project~~ makes after accounting for all costs and expenses. The percentage profit a contractor might apply to their tender price will vary according to risk, workload and economic climate. It can also relate to the turnover of capital employed for each project; the more times a contractor can turnover its capital on a project the more it can afford to cut margins.	+	In terms of individual projects, profit can be defined as the money the contractor makes after accounting for all costs and expenses. The percentage profit a contractor might apply to their tender price will vary according to risk, workload and economic climate. It can also relate to the turnover of capital employed for each project; the more times a contractor can turnover its capital on a project the more it can afford to cut margins.
		+
		+	For more information see: Profit.

	Overheads are often priced proportionately against a project and are the calculated costs of running the company contracted to carry out a project. Often these costs are described as head office administrative costs (in some cases there may be factory or manufacturing overheads).		Overheads are often priced proportionately against a project and are the calculated costs of running the company contracted to carry out a project. Often these costs are described as head office administrative costs (in some cases there may be factory or manufacturing overheads).
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	Head office or administrative costs might include; property costs, finance charges on loans, insurances, staff, taxes, external advisors, marketing and tendering activities. Most contracting organisations will calculate a percentage against project costs to be set against each project somewhere between 2.5% and 10% to cover head office services.		Head office or administrative costs might include; property costs, finance charges on loans, insurances, staff, taxes, external advisors, marketing and tendering activities. Most contracting organisations will calculate a percentage against project costs to be set against each project somewhere between 2.5% and 10% to cover head office services.

−	~~NB:~~ 'Site overheads' such as site accommodation, insurance, and so on, do not fall within this definition of profit and overheads, but are included in the preliminaries element of the contract.	+	'Site overheads' such as site accommodation, insurance, and so on, do not fall within this definition of profit and overheads, but are included in the preliminaries element of the contract. For more information see: Preliminaries.
		+
		+	For more information see: Overheads
		+
		+	According to NRM1: Order of cost estimating and cost planning for capital building work, Main contractor’s overheads and profit, '...means the main contractor’s costs associated with head office administration proportioned to each building contract plus the main contractor’s return on capital investment. Main contractor’s preliminaries exclude costs associated with subcontractor’s overheads and profit, which are to be included in the unit rates applied to building works.'
		+
		+	= Loss and expense =

	Construction contracts will generally provide for the contractor to claim direct loss and expense as a result of the progress of the works being materially affected by relevant matters for which the client is responsible (such as instructing variations to the works).		Construction contracts will generally provide for the contractor to claim direct loss and expense as a result of the progress of the works being materially affected by relevant matters for which the client is responsible (such as instructing variations to the works).
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	For example, there is a grey area in relation to part-time project staff who are stationed at head office and may cover a number of projects. This can lead to double accounting. As a consequence it is best to agree the allocation of such staff costs before placing orders, and if there are specific losses which the parties to the contract wish to exclude, it may be wise to ensure that this is stated explicitly within the contract.		For example, there is a grey area in relation to part-time project staff who are stationed at head office and may cover a number of projects. This can lead to double accounting. As a consequence it is best to agree the allocation of such staff costs before placing orders, and if there are specific losses which the parties to the contract wish to exclude, it may be wise to ensure that this is stated explicitly within the contract.

−	~~NB: On prime~~ cost contracts the contractor is paid for carrying out the works based on the prime cost (the actual cost of labour, plant and materials) and a fee for overheads and profit. This fee can be agreed by negotiation or by competition, and may be a lump sum (which it may be possible to adjust if the actual cost is different from the estimate), or a percentage of the prime cost (which it may be possible to revise if the client changes the nature of the works).	+	= Prime cost contracts =

−	~~According to NRM1: Order of~~ cost ~~estimating and cost planning~~ for ~~capital building work~~, ~~Main contractor’s~~ overheads and profit~~, '~~.~~..means the main contractor’s costs associated with head office administration proportioned~~ to ~~each building contract plus~~ the ~~main contractor’s return on capital investment. Main contractor’s preliminaries exclude costs associated with subcontractor’s overheads and profit~~, which ~~are to~~ be ~~included in the unit rates applied~~ to ~~building~~ works.'	+	On prime cost contracts the contractor is paid for carrying out the works based on the prime cost (the actual cost of labour, plant and materials) and a fee for overheads and profit. This fee can be agreed by negotiation or by competition, and may be a lump sum (which it may be possible to adjust if the actual cost is different from the estimate), or a percentage of the prime cost (which it may be possible to revise if the client changes the nature of the works).

−	= Related articles =	+	= Related articles on Designing Buildings =

	* Head office overheads.		* Head office overheads.

Designing Buildings at 10:34, 20 September 2021

2021-09-20T10:34:27Z

← Older revision		Revision as of 10:34, 20 September 2021
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	According to NRM1: Order of cost estimating and cost planning for capital building work, Main contractor’s overheads and profit, '...means the main contractor’s costs associated with head office administration proportioned to each building contract plus the main contractor’s return on capital investment. Main contractor’s preliminaries exclude costs associated with subcontractor’s overheads and profit, which are to be included in the unit rates applied to building works.'		According to NRM1: Order of cost estimating and cost planning for capital building work, Main contractor’s overheads and profit, '...means the main contractor’s costs associated with head office administration proportioned to each building contract plus the main contractor’s return on capital investment. Main contractor’s preliminaries exclude costs associated with subcontractor’s overheads and profit, which are to be included in the unit rates applied to building works.'

−	~~{{:Deltek_CTA_setup}}~~	+	= Related articles =
−		+
−	= Related articles ~~on Designing Buildings Wiki~~ =	+

	* Head office overheads.		* Head office overheads.

Designing Buildings at 10:11, 20 July 2021

2021-07-20T10:11:10Z

← Older revision		Revision as of 10:11, 20 July 2021
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	According to NRM1: Order of cost estimating and cost planning for capital building work, Main contractor’s overheads and profit, '...means the main contractor’s costs associated with head office administration proportioned to each building contract plus the main contractor’s return on capital investment. Main contractor’s preliminaries exclude costs associated with subcontractor’s overheads and profit, which are to be included in the unit rates applied to building works.'		According to NRM1: Order of cost estimating and cost planning for capital building work, Main contractor’s overheads and profit, '...means the main contractor’s costs associated with head office administration proportioned to each building contract plus the main contractor’s return on capital investment. Main contractor’s preliminaries exclude costs associated with subcontractor’s overheads and profit, which are to be included in the unit rates applied to building works.'
		+
		+	{{:Deltek_CTA_setup}}

	= Related articles on Designing Buildings Wiki =		= Related articles on Designing Buildings Wiki =

Designing Buildings at 13:42, 28 August 2020

2020-08-28T13:42:58Z

← Older revision		Revision as of 13:42, 28 August 2020
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	* Project overheads.		* Project overheads.

−	[[Category:Contracts_/_payment]] [[Category:Procurement]]	+	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Contracts_/_payment]] [[Category:Procurement]]

Editor: Reverted edits by 31.48.193.73 (talk) to last revision by Designing Buildings

2020-05-01T13:51:29Z

Reverted edits by 31.48.193.73 (talk) to last revision by Designing Buildings

← Older revision		Revision as of 13:51, 1 May 2020
Line 1:		Line 1:
−	On construction projects, profit and ~~[https://payrollheaven.com/define/overhead/~~ overheads] are normally referred to in relation to contractors.	+	On construction projects, profit and overheads are normally referred to in relation to contractors.

	In terms of individual projects, profit can be defined as the money the project makes after accounting for all costs and expenses. The percentage profit a contractor might apply to their tender price will vary according to risk, workload and economic climate. It can also relate to the turnover of capital employed for each project; the more times a contractor can turnover its capital on a project the more it can afford to cut margins.		In terms of individual projects, profit can be defined as the money the project makes after accounting for all costs and expenses. The percentage profit a contractor might apply to their tender price will vary according to risk, workload and economic climate. It can also relate to the turnover of capital employed for each project; the more times a contractor can turnover its capital on a project the more it can afford to cut margins.
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	Head office or administrative costs might include; property costs, finance charges on loans, insurances, staff, taxes, external advisors, marketing and tendering activities. Most contracting organisations will calculate a percentage against project costs to be set against each project somewhere between 2.5% and 10% to cover head office services.		Head office or administrative costs might include; property costs, finance charges on loans, insurances, staff, taxes, external advisors, marketing and tendering activities. Most contracting organisations will calculate a percentage against project costs to be set against each project somewhere between 2.5% and 10% to cover head office services.

−	NB: 'Site overheads' such as site accommodation, ~~[https://payrollheaven.com/define/~~insurance~~/ insurance]~~, and so on, do not fall within this definition of profit and overheads, but are included in the preliminaries element of the contract.	+	NB: 'Site overheads' such as site accommodation, insurance, and so on, do not fall within this definition of profit and overheads, but are included in the preliminaries element of the contract.

−	Construction contracts will generally provide for the ~~[https://payrollheaven.com/define/~~contractor~~/ contractor]~~ to claim direct loss and expense as a result of the progress of the works being materially affected by relevant matters for which the client is responsible (such as instructing variations to the works).	+	Construction contracts will generally provide for the contractor to claim direct loss and expense as a result of the progress of the works being materially affected by relevant matters for which the client is responsible (such as instructing variations to the works).

	Very broadly, contracts generally allow direct losses to be recovered (such as the cost of labour and materials), but may exclude indirect or consequential losses (such as loss of profit). There is disparity between different contract types about whether head office overheads can be included in claims for loss and expense, as it is difficult to attribute them to a specific project.		Very broadly, contracts generally allow direct losses to be recovered (such as the cost of labour and materials), but may exclude indirect or consequential losses (such as loss of profit). There is disparity between different contract types about whether head office overheads can be included in claims for loss and expense, as it is difficult to attribute them to a specific project.
Line 15:		Line 15:
	For example, there is a grey area in relation to part-time project staff who are stationed at head office and may cover a number of projects. This can lead to double accounting. As a consequence it is best to agree the allocation of such staff costs before placing orders, and if there are specific losses which the parties to the contract wish to exclude, it may be wise to ensure that this is stated explicitly within the contract.		For example, there is a grey area in relation to part-time project staff who are stationed at head office and may cover a number of projects. This can lead to double accounting. As a consequence it is best to agree the allocation of such staff costs before placing orders, and if there are specific losses which the parties to the contract wish to exclude, it may be wise to ensure that this is stated explicitly within the contract.

−	NB: On prime cost contracts the contractor is paid for carrying out the works based on the prime cost (the actual cost of labour, plant and materials) and a fee for overheads and profit. This fee can be agreed by ~~[https://payrollheaven.com/define/~~negotiation~~/ negotiation]~~ or by competition, and may be a lump sum (which it may be possible to adjust if the actual cost is different from the estimate), or a percentage of the prime cost (which it may be possible to revise if the client changes the nature of the works).	+	NB: On prime cost contracts the contractor is paid for carrying out the works based on the prime cost (the actual cost of labour, plant and materials) and a fee for overheads and profit. This fee can be agreed by negotiation or by competition, and may be a lump sum (which it may be possible to adjust if the actual cost is different from the estimate), or a percentage of the prime cost (which it may be possible to revise if the client changes the nature of the works).

−	According to NRM1: Order of cost estimating and cost planning for capital building work, Main contractor’s overheads and ~~[https://payrollheaven.com/define/~~profit~~/ profit]~~, '...means the main contractor’s costs associated with head office administration proportioned to each building contract plus the main contractor’s return on capital investment. Main contractor’s preliminaries exclude costs associated with subcontractor’s overheads and profit, which are to be included in the unit rates applied to building works.'	+	According to NRM1: Order of cost estimating and cost planning for capital building work, Main contractor’s overheads and profit, '...means the main contractor’s costs associated with head office administration proportioned to each building contract plus the main contractor’s return on capital investment. Main contractor’s preliminaries exclude costs associated with subcontractor’s overheads and profit, which are to be included in the unit rates applied to building works.'

	= Related articles on Designing Buildings Wiki =		= Related articles on Designing Buildings Wiki =

31.48.193.73 at 12:31, 1 May 2020

2020-05-01T12:31:47Z

← Older revision		Revision as of 12:31, 1 May 2020
Line 1:		Line 1:
−	On construction projects, profit and overheads are normally referred to in relation to contractors.	+	On construction projects, profit and [https://payrollheaven.com/define/overhead/ overheads] are normally referred to in relation to contractors.

	In terms of individual projects, profit can be defined as the money the project makes after accounting for all costs and expenses. The percentage profit a contractor might apply to their tender price will vary according to risk, workload and economic climate. It can also relate to the turnover of capital employed for each project; the more times a contractor can turnover its capital on a project the more it can afford to cut margins.		In terms of individual projects, profit can be defined as the money the project makes after accounting for all costs and expenses. The percentage profit a contractor might apply to their tender price will vary according to risk, workload and economic climate. It can also relate to the turnover of capital employed for each project; the more times a contractor can turnover its capital on a project the more it can afford to cut margins.
Line 7:		Line 7:
	Head office or administrative costs might include; property costs, finance charges on loans, insurances, staff, taxes, external advisors, marketing and tendering activities. Most contracting organisations will calculate a percentage against project costs to be set against each project somewhere between 2.5% and 10% to cover head office services.		Head office or administrative costs might include; property costs, finance charges on loans, insurances, staff, taxes, external advisors, marketing and tendering activities. Most contracting organisations will calculate a percentage against project costs to be set against each project somewhere between 2.5% and 10% to cover head office services.

−	NB: 'Site overheads' such as site accommodation, insurance, and so on, do not fall within this definition of profit and overheads, but are included in the preliminaries element of the contract.	+	NB: 'Site overheads' such as site accommodation, [https://payrollheaven.com/define/insurance/ insurance], and so on, do not fall within this definition of profit and overheads, but are included in the preliminaries element of the contract.

−	Construction contracts will generally provide for the contractor to claim direct loss and expense as a result of the progress of the works being materially affected by relevant matters for which the client is responsible (such as instructing variations to the works).	+	Construction contracts will generally provide for the [https://payrollheaven.com/define/contractor/ contractor] to claim direct loss and expense as a result of the progress of the works being materially affected by relevant matters for which the client is responsible (such as instructing variations to the works).

	Very broadly, contracts generally allow direct losses to be recovered (such as the cost of labour and materials), but may exclude indirect or consequential losses (such as loss of profit). There is disparity between different contract types about whether head office overheads can be included in claims for loss and expense, as it is difficult to attribute them to a specific project.		Very broadly, contracts generally allow direct losses to be recovered (such as the cost of labour and materials), but may exclude indirect or consequential losses (such as loss of profit). There is disparity between different contract types about whether head office overheads can be included in claims for loss and expense, as it is difficult to attribute them to a specific project.
Line 15:		Line 15:
	For example, there is a grey area in relation to part-time project staff who are stationed at head office and may cover a number of projects. This can lead to double accounting. As a consequence it is best to agree the allocation of such staff costs before placing orders, and if there are specific losses which the parties to the contract wish to exclude, it may be wise to ensure that this is stated explicitly within the contract.		For example, there is a grey area in relation to part-time project staff who are stationed at head office and may cover a number of projects. This can lead to double accounting. As a consequence it is best to agree the allocation of such staff costs before placing orders, and if there are specific losses which the parties to the contract wish to exclude, it may be wise to ensure that this is stated explicitly within the contract.

−	NB: On prime cost contracts the contractor is paid for carrying out the works based on the prime cost (the actual cost of labour, plant and materials) and a fee for overheads and profit. This fee can be agreed by negotiation or by competition, and may be a lump sum (which it may be possible to adjust if the actual cost is different from the estimate), or a percentage of the prime cost (which it may be possible to revise if the client changes the nature of the works).	+	NB: On prime cost contracts the contractor is paid for carrying out the works based on the prime cost (the actual cost of labour, plant and materials) and a fee for overheads and profit. This fee can be agreed by [https://payrollheaven.com/define/negotiation/ negotiation] or by competition, and may be a lump sum (which it may be possible to adjust if the actual cost is different from the estimate), or a percentage of the prime cost (which it may be possible to revise if the client changes the nature of the works).

−	According to NRM1: Order of cost estimating and cost planning for capital building work, Main contractor’s overheads and profit, '...means the main contractor’s costs associated with head office administration proportioned to each building contract plus the main contractor’s return on capital investment. Main contractor’s preliminaries exclude costs associated with subcontractor’s overheads and profit, which are to be included in the unit rates applied to building works.'	+	According to NRM1: Order of cost estimating and cost planning for capital building work, Main contractor’s overheads and [https://payrollheaven.com/define/profit/ profit], '...means the main contractor’s costs associated with head office administration proportioned to each building contract plus the main contractor’s return on capital investment. Main contractor’s preliminaries exclude costs associated with subcontractor’s overheads and profit, which are to be included in the unit rates applied to building works.'

	= Related articles on Designing Buildings Wiki =		= Related articles on Designing Buildings Wiki =

Designing Buildings at 07:35, 18 March 2019

2019-03-18T07:35:43Z

← Older revision		Revision as of 07:35, 18 March 2019
Line 19:		Line 19:
	According to NRM1: Order of cost estimating and cost planning for capital building work, Main contractor’s overheads and profit, '...means the main contractor’s costs associated with head office administration proportioned to each building contract plus the main contractor’s return on capital investment. Main contractor’s preliminaries exclude costs associated with subcontractor’s overheads and profit, which are to be included in the unit rates applied to building works.'		According to NRM1: Order of cost estimating and cost planning for capital building work, Main contractor’s overheads and profit, '...means the main contractor’s costs associated with head office administration proportioned to each building contract plus the main contractor’s return on capital investment. Main contractor’s preliminaries exclude costs associated with subcontractor’s overheads and profit, which are to be included in the unit rates applied to building works.'

−	~~= Find out more =~~	+	= Related articles on Designing Buildings Wiki =
−		+
−	=== Related articles on Designing Buildings Wiki ===	+

	* Head office overheads.		* Head office overheads.
		+	* How to calculate head office overheads and profit.
	* Loss and expense.		* Loss and expense.
	* Margin.		* Margin.

Designing Buildings: Reverted edits by 85.92.167.81 (talk) to last revision by 108.171.128.175

2019-02-07T13:00:58Z

Reverted edits by 85.92.167.81 (talk) to last revision by 108.171.128.175

← Older revision		Revision as of 13:00, 7 February 2019
Line 1:		Line 1:
−	~~erklvgjuer giclkfjklfjwelfjlwerjfjwerklferferkllr~~	+	On construction projects, profit and overheads are normally referred to in relation to contractors.
		+
		+	In terms of individual projects, profit can be defined as the money the project makes after accounting for all costs and expenses. The percentage profit a contractor might apply to their tender price will vary according to risk, workload and economic climate. It can also relate to the turnover of capital employed for each project; the more times a contractor can turnover its capital on a project the more it can afford to cut margins.
		+
		+	Overheads are often priced proportionately against a project and are the calculated costs of running the company contracted to carry out a project. Often these costs are described as head office administrative costs (in some cases there may be factory or manufacturing overheads).
		+
		+	Head office or administrative costs might include; property costs, finance charges on loans, insurances, staff, taxes, external advisors, marketing and tendering activities. Most contracting organisations will calculate a percentage against project costs to be set against each project somewhere between 2.5% and 10% to cover head office services.
		+
		+	NB: 'Site overheads' such as site accommodation, insurance, and so on, do not fall within this definition of profit and overheads, but are included in the preliminaries element of the contract.
		+
		+	Construction contracts will generally provide for the contractor to claim direct loss and expense as a result of the progress of the works being materially affected by relevant matters for which the client is responsible (such as instructing variations to the works).
		+
		+	Very broadly, contracts generally allow direct losses to be recovered (such as the cost of labour and materials), but may exclude indirect or consequential losses (such as loss of profit). There is disparity between different contract types about whether head office overheads can be included in claims for loss and expense, as it is difficult to attribute them to a specific project.
		+
		+	For example, there is a grey area in relation to part-time project staff who are stationed at head office and may cover a number of projects. This can lead to double accounting. As a consequence it is best to agree the allocation of such staff costs before placing orders, and if there are specific losses which the parties to the contract wish to exclude, it may be wise to ensure that this is stated explicitly within the contract.
		+
		+	NB: On prime cost contracts the contractor is paid for carrying out the works based on the prime cost (the actual cost of labour, plant and materials) and a fee for overheads and profit. This fee can be agreed by negotiation or by competition, and may be a lump sum (which it may be possible to adjust if the actual cost is different from the estimate), or a percentage of the prime cost (which it may be possible to revise if the client changes the nature of the works).
		+
		+	According to NRM1: Order of cost estimating and cost planning for capital building work, Main contractor’s overheads and profit, '...means the main contractor’s costs associated with head office administration proportioned to each building contract plus the main contractor’s return on capital investment. Main contractor’s preliminaries exclude costs associated with subcontractor’s overheads and profit, which are to be included in the unit rates applied to building works.'
		+
		+	= Find out more =
		+
		+	=== Related articles on Designing Buildings Wiki ===
		+
		+	* Head office overheads.
		+	* Loss and expense.
		+	* Margin.
		+	* Maintenance contractor’s overheads and profit.
		+	* Mark-up.
		+	* Overheads.
		+	* Preliminaries.
		+	* Prime cost contract.
		+	* Prime cost sum.
		+	* Profit.
		+	* Project overheads.

	[[Category:Contracts_/_payment]] [[Category:Procurement]]		[[Category:Contracts_/_payment]] [[Category:Procurement]]

85.92.167.81: Replaced content with "erklvgjuer giclkfjklfjwelfjlwerjfjwerklferferkllr Category:Contracts_/_payment Category:Procurement "

2019-02-07T09:27:55Z

Replaced content with "erklvgjuer giclkfjklfjwelfjlwerjfjwerklferferkllr Category:Contracts_/_payment Category:Procurement "

← Older revision		Revision as of 09:27, 7 February 2019
Line 1:		Line 1:
−	~~On construction projects, profit and overheads are normally referred to in relation to contractors.~~	+	erklvgjuer giclkfjklfjwelfjlwerjfjwerklferferkllr
−		+
−	In terms of individual projects, profit can be defined as the money the project makes after accounting for all costs and expenses. The percentage profit a contractor might apply to their tender price will vary according to risk, workload and economic climate. It can also relate to the turnover of capital employed for each project; the more times a contractor can turnover its capital on a project the more it can afford to cut margins.	+
−		+
−	Overheads are often priced proportionately against a project and are the calculated costs of running the company contracted to carry out a project. Often these costs are described as head office administrative costs (in some cases there may be factory or manufacturing overheads).	+
−		+
−	Head office or administrative costs might include; property costs, finance charges on loans, insurances, staff, taxes, external advisors, marketing and tendering activities. Most contracting organisations will calculate a percentage against project costs to be set against each project somewhere between 2.5% and 10% to cover head office services.	+
−		+
−	~~NB: 'Site overheads' such as site accommodation, insurance, and so on, do not fall within this definition of profit and overheads, but are included in the preliminaries element of the contract.~~	+
−		+
−	Construction contracts will generally provide for the contractor to claim direct loss and expense as a result of the progress of the works being materially affected by relevant matters for which the client is responsible (such as instructing variations to the works).	+
−		+
−	Very broadly, contracts generally allow direct losses to be recovered (such as the cost of labour and materials), but may exclude indirect or consequential losses (such as loss of profit). There is disparity between different contract types about whether head office overheads can be included in claims for loss and expense, as it is difficult to attribute them to a specific project.	+
−		+
−	For example, there is a grey area in relation to part-time project staff who are stationed at head office and may cover a number of projects. This can lead to double accounting. As a consequence it is best to agree the allocation of such staff costs before placing orders, and if there are specific losses which the parties to the contract wish to exclude, it may be wise to ensure that this is stated explicitly within the contract.	+
−		+
−	NB: On prime cost contracts the contractor is paid for carrying out the works based on the prime cost (the actual cost of labour, plant and materials) and a fee for overheads and profit. This fee can be agreed by negotiation or by competition, and may be a lump sum (which it may be possible to adjust if the actual cost is different from the estimate), or a percentage of the prime cost (which it may be possible to revise if the client changes the nature of the works).	+
−		+
−	According to NRM1: Order of cost estimating and cost planning for capital building work, Main contractor’s overheads and profit, '...means the main contractor’s costs associated with head office administration proportioned to each building contract plus the main contractor’s return on capital investment. Main contractor’s preliminaries exclude costs associated with subcontractor’s overheads and profit, which are to be included in the unit rates applied to building works.'	+
−		+
−	~~= Find out more =~~	+
−		+
−	~~=== Related articles on Designing Buildings Wiki ===~~	+
−		+
−	* Head office overheads.	+
−	* Loss and expense.	+
−	* Margin.	+
−	* Maintenance contractor’s overheads and profit.	+
−	* Mark-up.	+
−	* Overheads.	+
−	* Preliminaries.	+
−	* Prime cost contract.	+
−	* Prime cost sum.	+
−	* Profit.	+
−	* Project overheads.	+

	[[Category:Contracts_/_payment]] [[Category:Procurement]]		[[Category:Contracts_/_payment]] [[Category:Procurement]]

108.171.128.175: Undo revision 113392 by 108.171.128.175 (talk)

2018-08-06T10:42:52Z

Undo revision 113392 by 108.171.128.175 (talk)

← Older revision		Revision as of 10:42, 6 August 2018
Line 1:		Line 1:
	On construction projects, profit and overheads are normally referred to in relation to contractors.		On construction projects, profit and overheads are normally referred to in relation to contractors.

−	I site accommodation, insurance, and so on, do not fall within this definition of profit and overheads, but are included in the preliminaries element of the contract.	+	In terms of individual projects, profit can be defined as the money the project makes after accounting for all costs and expenses. The percentage profit a contractor might apply to their tender price will vary according to risk, workload and economic climate. It can also relate to the turnover of capital employed for each project; the more times a contractor can turnover its capital on a project the more it can afford to cut margins.
		+
		+	Overheads are often priced proportionately against a project and are the calculated costs of running the company contracted to carry out a project. Often these costs are described as head office administrative costs (in some cases there may be factory or manufacturing overheads).
		+
		+	Head office or administrative costs might include; property costs, finance charges on loans, insurances, staff, taxes, external advisors, marketing and tendering activities. Most contracting organisations will calculate a percentage against project costs to be set against each project somewhere between 2.5% and 10% to cover head office services.
		+
		+	NB: 'Site overheads' such as site accommodation, insurance, and so on, do not fall within this definition of profit and overheads, but are included in the preliminaries element of the contract.

	Construction contracts will generally provide for the contractor to claim direct loss and expense as a result of the progress of the works being materially affected by relevant matters for which the client is responsible (such as instructing variations to the works).		Construction contracts will generally provide for the contractor to claim direct loss and expense as a result of the progress of the works being materially affected by relevant matters for which the client is responsible (such as instructing variations to the works).