Construction Overhead and Profit

Question 1

Overhead costs

Answer 1

Include all general costs of operating and maintaining a contract business and all project expenses that are not included in the material.
-General overhead and project overhead costs

Question 2

Define General overhead costs

Answer 2

Category of costs that cannot be charged to a specific project. Range from 8 to 15 percent of the total value of the business for a large firm
-Payroll taxes included in labor costs

Question 3

Typical General overhead costs

Answer 3

-Advertising
-Automobile
-Consulting fees
- Entertainment
-Furniture
-Heat
-Interest
-Legal Expenses
-Rent
- Salaries
- Stationary
- Supplies
-Taxes -
Telephone
- Travel
- Utilities
-Wages (staff)

Question 4

Define Project Overhead Cost

Answer 4

Costs that can be charged to a specific project but not to labor, materials, or equipments

• 10 to 20 percent of labor costs of labor
• Note that payroll taxes are usually part of labor costs not project overhead
• Total overhead vary 5 to 20 percent of tital construction cost

Question 5

Typical Projects overhead Costs

Answer 5

• Bonds
• Equipment storage
• Heat/air conditioning
  -Insurance - Interest
• Light, power, water
• Office maintenance
• Permits - Project telephone
  -Sanitary facilities - Security - Stationery supplies
  -Taxes - Temporary enclosures - Temporary walks and stairs - Transportation - Trash removal
  Note: the contractor makes interest payments to finance the costs of labor
  -If contractor is required to pay property taxes and not owner then those cost are overhead costs

Question 6

Other types of permits

Answer 6

Permit to:

• Cross a sidewalk,
• erect shelters over a sidewalk
• store gasoline or other hazardous materials
• Construct temporary buildings
• Maintain sanitary facilities
• Repairing pavements
• Use dumps and transport heave or wide loads in cities

Question 7

General insurance

Answer 7

Securing or guaranteeing bonds, proposal or bid bonds, performance bonds, and labor materials

Type of Insurance:

• Fire
• Owner’s contingencies
• Miscell. Property Damage
• Public liability
• Windstorm
• Workers compensation

Question 8

Miscellaneous Insurance

Answer 8

• Automobile
• Boiler
• Earthquake
• Flood
• Forgery
• Payroll
• Plate glass
• Rain
• Theft
• Vehicle
• Wind

Question 9

Public Enterprise Revenue Bond

Answer 9

Funds a public project that will produce revenue.
The bond is paid with the money generated by the facility.

Issued to finance a project like an airport, hospital or stadium

Question 10

General Obligation bond

Answer 10

Used to fund public projects that will not produce revenue. these are often used to finance schools, public libraries, or municipal buildings

Question 11

Development Impact Fee

Answer 11

charged to developers to pay for public improvements that are necessary because of the development.

Question 12

Ad Valorem tax

Answer 12

Also known as property taxes

Question 13

Land Value

Answer 13

Most influenced by location, local market conditions.