ONE CHART OF ACCOUNTS, EVERY REPORT IT HAS TO PRODUCE.
Most subcontractors bid ten percent overhead when the real number is eighteen to twenty eight. The rate isn't wrong through carelessness: it's wrong because the chart of accounts never separated direct cost from overhead cleanly, so nobody has ever been able to calculate it. Fix the structure and the rate becomes a monthly number instead of a guess inherited from whoever set up the books.
The uncomfortable part is what an eight to eighteen point error does to a bid file over a few years. Underprice overhead and you win more work than you should, which feels like momentum right up until the busiest year is the one that runs out of cash. Every page in this hub is one piece of the split: owner salary against owner draw, fleet burden, supervision, indirect labor, insurance, shop cost, and public jobs that use a different rate than private ones. Get the chart right once and the rate becomes a monthly number you can bid against, instead of a figure inherited from whoever set up the books.
WHAT IT MEANS.
A construction chart of accounts is the structure that decides which costs belong to a job and which belong to the business, and because the overhead rate is calculated from that split, the chart of accounts determines whether every bid you write is priced correctly.
WHY IT BREAKS.
The Chart of Accounts Was Never Built for Construction
A generic chart of accounts has no clean line between cost of goods sold and operating expense as construction means them, so supervision, shop time, small tools and equipment sit wherever they first got posted. Any overhead rate calculated on top of that structure is math performed on categories that don't mean what they say.
Owner Compensation Is Not In It
An owner taking draws rather than a market salary removes the single largest overhead item from the rate. The business then looks leaner than it is, bids lower than it should, and wins work that can't cover the true cost of running the company. The correction is uncomfortable and it's the one that moves the rate most.
The Rate Is Set Once and Never Recalculated
Overhead as a percentage of revenue moves every month, because the numerator is fixed and the denominator isn't. A rate calculated in a busy year is too low for a slow one, and a rate set once and kept for three years is wrong in both directions at different times. It belongs on a rolling twelve month average, recalculated monthly and loaded straight into the estimate.
EVERYTHING ON THIS SUBJECT.
Every guide below is a full page on one part of this subject. Start at the top if the whole thing is new; jump to the one that describes your week if it's not.
- How to Calculate Overhead RateThree steps from your own last 12 months of costs, why leaving owner pay out understates the rate by 4 to 7 points, and the check that confirms it.
- Is Your Overhead Rate Wrong?Five tests, fastest first.
- Fixing a Wrong Overhead RateRecode the eight overhead categories, take direct job expense back out, settle the borderline roles, and then price the backlog sold at the old rate.
- Chart of Accounts SetupTwo cost code levels, eight overhead categories, and the direct job expense group most structures leave out.
- Construction Chart of AccountsA construction chart separates true job cost from overhead and includes the two WIP accounts percentage of completion needs.
- Owner Salary and OverheadOwner pay is an overhead cost, not profit.
- Contractor Insurance CostsComp is priced per $100 of payroll by class code, and a $5M sub at a 1.5 percent effective GL load who never bids it donates $75K a year to the GCs.
- Fleet Burden and OverheadInsurance, fuel, maintenance and depreciation leave a fleet of 8 vehicles $101,600 a year short in overhead.
- Overhead in BidsSix points of overhead absorbed out of gross margin on $5M of revenue.
- Overhead Rate Is Wrong by DesignA stale revenue base, missing cost categories and field cost blended into overhead.
- Overhead Recovery RateThe three step calculation, the 70 percent line where shortfall turns critical, and the $140,000 example that shows where the money went.
- Owner Draw vs SalaryOnly salary belongs in overhead, at a market rate of $120,000 to $180,000 for a $3M to $8M owner.
- Supervision Cost and OverheadA superintendent at $180K spending 80% on one job belongs on that job.
- Indirect Labor and OverheadShop time, travel, and yard work belong in overhead, not in job costs.
- Prevailing Wage Overhead RatePublic work needs its own rate.
- Shop and Yard OverheadLease, yard manager, fueling, forklift maintenance, security.
- Why Overhead Rate Keeps ChangingFour causes: revenue moving against flat fixed costs, $85,000 of cost creep by December, owner pay at $120K to $180K, and a method that changes every year.
- Winning Too Many BidsA 3 point shortfall at $5M is $150,000 a year and $750,000 over five.
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 and no payroll.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Up to $1M | $1,900 to $2,900 | $1,000 |
| $1M to $3.5M | $2,600 to $3,900 | $1,500 |
| $3.5M to $6.5M | $3,800 to $5,700 | $3,000 |
| $6.5M to $9.5M | $5,100 to $7,100 | $4,500 |
| $9.5M to $12.5M | $6,100 to $8,500 | $6,000 |
| $12.5M to $15.5M | $7,400 to $11,000 | $7,500 |
| $15.5M to $18.5M | $9,400 to $13,500 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
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. The onboarding fee is right here in the table.
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 and never in a report.
Your bookkeeper still does the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Your office stops answering coding questions and stops chasing a reconciliation on the last day of the month.
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 books, the job costing, and the software. No payroll.
FREQUENTLY ASKED.
