OVERHEAD RATE FOR DEMOLITION CONTRACTORS — WHAT IT SHOULD BE.
The target overhead rate for demolition contractors doing $2M–$8M is 11–15%. Hazardous materials compliance programs, equipment fleet carrying costs between projects, disposal administration, and the regulatory burden of demolition work push overhead above most production trades. If the overhead rate has never been formally calculated — or if owner salary is not included at market rate — the real rate is almost certainly higher than what is being bid.
Demolition is a regulated trade. The compliance infrastructure — asbestos and lead surveys, AHERA coordination, disposal manifests, regulatory agency notification — creates administrative overhead that production trades do not carry. That cost belongs in the overhead rate.
OVERHEAD BENCHMARKS FOR DEMOLITION CONTRACTORS.
Demolition contractors typically sit at the higher end of the overhead range due to compliance requirements and equipment fleet complexity. A well-managed demolition company at $3M–$6M should be in the 11–13% range.
THE LINE ITEMS THAT PUSH DEMOLITION OVERHEAD ABOVE TARGET.
Hazardous Materials Compliance Program
Asbestos and lead-based paint coordination — survey coordination, AHERA compliance, abatement contractor management, regulatory notification — is overhead for a demolition contractor even when abatement is subcontracted. The project management time spent coordinating hazmat compliance, reviewing abatement reports, and managing regulatory timelines belongs in overhead.
Equipment Fleet Between Projects
Demolition equipment — excavators with specialized attachments, concrete crushers, bobcats, roll-off trucks — is expensive to sit idle between projects. The carrying cost of the fleet during project gaps belongs in overhead proportional to downtime. A demolition contractor with a $1.5M equipment fleet running 70% utilization carries 30% of annual ownership cost as overhead.
Disposal Administration and Manifesting
Disposal manifest management, landfill coordination, recycling documentation, and material tracking for regulatory compliance is administrative overhead that most demolition contractors absorb informally. At $3M–$6M revenue with significant disposal volume, disposal administration can run $20,000–40,000 annually in office staff time that belongs in overhead.
ONE SITTING. REAL NUMBER.
Free calculator: The CFOS overhead rate calculator walks through every line item and produces your real rate in about 10 minutes at constructioncfo.net/construction-overhead-rate-calculator-interactive
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