INTERIOR CONTRACTOR OVERHEAD RATE.
Interior contractors doing $1M–$5M should target 12–14% overhead. Most run 16–21% because MEP conflict rework is absorbed without change orders, multi-scope contracts hide which work type is losing margin, and PM/superintendent project time lands in overhead instead of Direct Job Expense. All three are traceable and fixable.
Interior work has a cost structure problem. MEP conflicts downstream are predictable but rarely change-ordered. Multi-scope contracts obscure which work type is performing. PM and superintendent time for specific projects ends up in overhead by default. Each of these is a named, traceable problem. When they are corrected through cost code structure and contract language, the overhead rate drops to where it should be — and every bid gets priced correctly.
WHAT OVERHEAD ACTUALLY IS FOR INTERIOR SUBS.
Overhead for a interior contractor includes your estimating team, project coordinators, office rent, vehicles not assigned to a job, software subscriptions, insurance, and every other dollar that leaves the business regardless of whether you have active work. The overhead rate is what you must recover from every bid before you make a dollar of profit.
Most interior contractors understate their overhead because direct job expenses get absorbed into overhead and certain ownership costs never make it into the calculation at all. When the rate is wrong in your estimate, every bid is mispriced from the start.
INTERIOR OVERHEAD BENCHMARKS — WHERE YOU SHOULD BE.
| METRIC | INDUSTRY LOW | SPM TARGET | STRONG | NOTES |
|---|---|---|---|---|
| Overhead Rate | 16% | 12–14% | 21%+ | MEP conflict rework absorbed without change orders and multi-scope coordination overhead are the primary inflators |
| Gross Margin | 19% | 23–25% | 27–28% | Interior work often spans multiple trades in one contract — blended billing rates hide where margin is being lost |
| Net Profit Margin | 5.5% | 8–10% | 11.5% | Punch list and warranty callbacks on finish work create overhead costs after the job is billed and closed |
| Days Sales Outstanding | 60 days | 40–50 days | 35 days | Interior punch list disputes and GC final billing holds delay payment on final 10–15% of contract value routinely |
3 REASONS INTERIOR OVERHEAD STAYS TOO HIGH.
MEP CONFLICT REWORK ABSORBED WITHOUT CHANGE ORDERS
Interior contractors work downstream of mechanical, electrical, and plumbing rough-in. When MEP work is out of coordination — sprinkler heads in the wrong location for a suspended ceiling grid, ductwork that conflicts with soffits, conduit runs blocking furring — the interior contractor adjusts. Ceiling grid gets reconfigured. Soffit dimensions change. Furring moves. Each adjustment has real labor and material cost. Most interior contractors absorb it because the MEP sub is not going to pay and the GC will fight a change order. A ceiling grid reconfiguration on a 3,000 square foot floor plate costs $800–$3,000 in absorbed rework. Across 20 floors on a multi-story project that is $16,000–$60,000 in unrecovered cost billed to overhead.
MULTI-SCOPE BILLING HIDES WHICH WORK TYPE IS LOSING MARGIN
Interior contracts often bundle drywall, ceiling, millwork, doors and frames, and finish hardware into a single lump sum. The SOV has five or six line items. The estimate was built with a single markup on all work types combined. Millwork installation runs at a different margin than drywall. Door and frame rough-in is different from finish hardware. When all work types share a billing structure, you cannot see which scope is performing and which is losing money. The overhead rate picks up the variance from the underperforming scopes. By the time the job closes, the loss is visible in overhead — but impossible to trace back to the specific work type or billing event where it started.
SUPERINTENDENT AND PM TIME CLASSIFIED AS OVERHEAD INSTEAD OF JOB COST
Interior projects have a project manager and a superintendent. Both spend meaningful time on a specific job — coordination meetings, shop drawing reviews, subcontractor scheduling, GC interface. That time has a real cost. On a $600,000 interior scope with 18 weeks of field execution, PM and superintendent time is 80–140 hours of combined effort. At $65–$95/hour fully burdened, that is $5,200–$13,300 of labor that belongs to this job. In most interior contractors it lands in overhead because the payroll system puts PM and superintendent under G&A and there are no Direct Job Expense cost codes to capture their project time. The overhead rate absorbs it and the job reports a higher margin than it actually produced.
WHAT CHANGES WHEN THE RATE IS CORRECT.
REAL OVERHEAD CALCULATION
SPM builds your overhead rate from actual financials — separating MEP rework absorption, multi-scope variance, and PM/superintendent project time from true overhead. The rate you bid reflects what the business actually costs.
MEP CONFLICT CHANGE ORDER DOCUMENTATION
SPM builds MEP coordination conflict language into every interior contract. When field adjustments are driven by MEP out-of-coordination, a written change order is issued within 24 hours with photographic documentation of the conflict.
SCOPE-LEVEL COST CODE STRUCTURE
SPM builds separate ControlQore cost codes for each work type in the interior contract — drywall, ceiling, millwork, doors, hardware — so margin by scope type is visible weekly. You know which work makes money before you price the next contract.
DIRECT JOB EXPENSE FOR PM/SUPER TIME
SPM builds Direct Job Expense cost codes for PM and superintendent time allocated by project. That cost lands on the job, not in overhead — and the overhead rate drops by the amount that was always there but never named.
FLAT MONTHLY FEE. NO SURPRISES.
Two tiers based on trailing 12-month revenue. No hourly billing. No payroll. No add-ons.
| Revenue | Core Financial | Executive Financial |
|---|---|---|
| Under $1M | $1,900/mo | $2,900/mo |
| $1M–$3M | $2,600/mo | $3,600/mo |
| $4M–$6M | $3,800/mo | $5,500/mo |
| $7M–$9M | $5,100/mo | $6,900/mo |
| $10M–$12M | $6,100/mo | $8,500/mo |
| $13M+ | Quoted | Quoted |
ControlQore billed separately at ~$100/month per $1M in revenue. SPM does not handle payroll.
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