ONE OVERHEAD RATE FOR ALL WORK IS COSTING YOU ON EVERY PW BID.
Civil contractors running both DOT or municipal prevailing wage work and private work need two overhead rates. Prevailing wage work requires fringe benefit payments, $12 to $20/hour on federal work for operators and laborers, that private work doesn't carry. A blended overhead rate underprices prevailing wage work by the fringe benefit difference on every public bid. SPM calculates separate overhead rates for prevailing wage and private work at engagement start.
The math is easy to miss because the base wage is the number everybody quotes. An operator at $38 an hour is an operator at $38 an hour, right up until the wage determination adds health and welfare, pension, and training fund contributions on top. Now the same operator costs $52 to $56 an hour, and the overhead rate you built on the $38 base is spreading SG&A across a labor cost base that no longer exists. So the public bid goes out light by the fringe difference, every single time, and the private work ends up carrying the shortfall.
WHAT IT MEANS.
A prevailing wage overhead rate is an overhead rate calculated on the prevailing wage labor cost base with fringe benefits included, so public work carries its own share of SG&A instead of borrowing the private work rate.
Prevailing wage civil work carries a higher labor burden than private work, because fringe benefits sit on top of base wages. Bidding both at the same overhead rate underprices one of them every time. The one that gets underpriced is almost always the public work, because the blended rate was built mostly on the lower private labor cost base.
WHERE THE PUBLIC BID GOES LIGHT.
Fringe benefits inflate labor cost on PW work
A heavy equipment operator at $38/hour base wage on federal prevailing wage work requires $14 to $18/hour in fringe benefits on top, covering health insurance, pension, and training fund contributions mandated by the wage determination. Your private work overhead rate was calculated using $38/hour as the labor cost base. On prevailing wage work the real cost is $52 to $56/hour.
Classification errors create back wage liability
Civil prevailing wage work uses operator, laborer, and carpenter classifications at different rates. Using a laborer rate for an operator, or failing to pay the correct fringe for each classification, creates back wage liability equal to the underpayment. Civil contractors with large DOT projects have received six figure back wage assessments from classification errors that went undetected for months.
One overhead rate applied to both work types
A contractor bidding a $2M private site development job and a $2M DOT highway project at the same overhead rate is pricing one of them incorrectly. Prevailing wage work carries the higher labor burden, so the rate that correctly covers overhead on private work understates what's needed to cover the same overhead on prevailing wage work at the higher labor cost base. The public bid is the one that comes in short.
WHAT IT LOOKS LIKE IN DOLLARS.
A $38/hour base wage plus $14 to $18/hour of mandated fringe puts a heavy equipment operator at $52 to $56/hour on federal prevailing wage work. The overhead rate built on the $38 base spreads SG&A across a labor cost base well below the one the job runs on.
A verified civil client at $6.7M revenue took roughly 40% of revenue from DOT and municipal prevailing wage work while using a single blended overhead rate across all bids. Separating the overhead calculation by work type showed the prevailing wage rate running 4 points higher than the private work rate, which means every DOT bid had been underpriced. Within 60 days of the correction the line of credit went from $348,000 to $0, and $65,000 of employee bonuses were paid.
TWO RATES, NOT ONE.
The private work overhead rate is SG&A divided by private work revenue. The prevailing wage overhead rate is SG&A divided by prevailing wage revenue, calculated on the prevailing wage labor cost base with fringe included. The difference between the two rates is the additional overhead burden carried per dollar of prevailing wage labor.
Prevailing wage rates change. Federal Davis-Bacon rates get updated periodically, and state DOT prevailing wages update on their own schedules. Bidding with a rate that was current 18 months ago and has since increased puts the wrong labor cost in the bid, so pull the current determination from SAM.gov for federal work, or from the applicable state agency for state work, before every prevailing wage bid.
Certified payroll for civil work is submitted weekly, and each submission certifies that every worker was paid the correct prevailing rate for their classification. SPM builds the classification structure in ControlQore so certified payroll comes out of time entry data instead of being assembled manually. The weekly submission then takes 15 to 20 minutes to review and file rather than 2 to 3 hours of manual assembly.
Prevailing wage projects get tagged in ControlQore with the applicable wage determination, and cost reports separate PW and private work margins. After six months you can see whether PW work is as profitable as private work at current pricing, or whether the difference between the two overhead rates has been compressing margin on public projects the whole time.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
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