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Construction Pricing: Overhead, Profit & Contingency
How do I turn a direct cost into a bid price with overhead, profit and contingency and send it safely?
Add overhead, profit and contingency as separate markup lines on the direct cost, each with its own switch (in the example 12%, 8% and 5%). Run Validate and review what it flags, such as missing MasterFormat codes or unit warnings. Save a version before the price is sent, use Create Revision and Compare when scope changes, and export the PDF for the client.
The estimate says what the job costs. The price says what you charge. Turn a direct cost into a bid price with overhead, profit and contingency, then check it, save a version and export it.
In this video
- Add overhead (12%), profit (8%) and contingency (5%) as separate markup lines, each with its own switch.
- Validate the estimate and read what the checks find, such as missing MasterFormat codes and unit warnings.
- Use the cost breakdown to see where your pricing risk sits.
- Save a version before a price leaves the office, start a revision when the scope changes, and compare the two line by line.
- Export to Excel, PDF or CSV, and read the PDF the way your client will.
You will produce
A bid price with overhead, profit and contingency, validated, saved as a version and exported to PDF
Sources
Transcript
0:00 Markups
The estimate says what the job costs. The price says what you charge. In this lesson you turn the Maple Street direct cost into a price you can send. You add overhead, profit and contingency, check the result, save a version, and export it. Here is the plan. You add the markups, validate the estimate and read what it finds, and look at the cost breakdown. You save a version before you send anything, and start a revision when the scope changes. Then you export, and see exactly what the client receives. A price is a team decision. The estimator prepares it. The owner of the company sets overhead and profit, the project manager checks it against the job, and the client receives the final PDF. Markups sit on top of the direct cost. Overhead covers running your company: the office, the trucks and the insurance. Profit is what you keep. Contingency is money for the things you cannot see yet. Each one is a percentage of the direct cost, and each one stays a separate line in the estimate. Markups live below the table, under Markups and Overheads. Apply Regional Template loads a starting set for your country, and the United States is on the list. Here we type our own. Click Add Markup and name it Overhead, at 12%. Then Profit, at 8%. And Contingency, at 5%, in its own category. Each line shows its amount and has its own switch, and the grand total is the direct cost plus all three.
1:28 Checks
Before a price leaves the building, validate it. The Validate page runs over a hundred checks against your standard and lists what it finds. Here, every position is missing its MasterFormat code. That is why the score is low, and it is the first thing to fix. The warnings are questions: a rate five times above the typical one, a metric unit in an imperial job, a division with nothing in it. Read each one before you send the price. Cost Breakdown shows the same money as a picture: material, labor and equipment, with the top resources underneath. If one resource carries a large part of the job, that is where your pricing risk is. Here it is the metal roofing, so check that rate twice.
2:10 Versions
Before you send it, save a version. Open Version History, type a label, Sent to client, and click Save. That snapshot keeps the estimate exactly as you sent it. Save one every time a number leaves your office, and there is never an argument later about which price was sent. When the client changes the scope, do not overwrite the price you sent. Create Revision makes a copy and opens it, and the one you sent stays as it was. Make the change in the copy, here more drywall. Then click Compare and pick the estimate you sent, and you see exactly what moved, line by line.
2:46 Export
Now export. Choose Excel if your client or your team wants to work with the numbers, PDF for a clean document to send, or CSV for any other software. For the client, it is the PDF. Open the PDF. This is what lands in your client's inbox. Read it once the way the client will: the project name, the sections, the markups and the final price. If a line would confuse you, it will confuse them too, so fix it in the estimate and export again. Every number in this price traces back. Each markup goes back to a percentage you chose, and each position to a database item or a quote you typed in. Each rate goes back to its resources, and the labor to your own crews. So when a client asks why, you can show them. That is the whole path: a cost database you have checked, an estimate built from it, and a price in your client's inbox. Take a real bid you are working on, build it next to your spreadsheet, and compare the two. OpenConstructionERP is free and open source. Download it, start with your next bid, and I will see you in the next episode.
