do general contractors get to charge overhead &profit on contracts if they don't use subcontractors?

Question

this is specifically in the state of florida regarding construction contracts. i've been looking for written guidelines on who gets to charge overhead and profit as separate line items for billing. some say you can charge it only if you use subcontractors and i'm not sure if this is accurate.

Answer 1

The simple answer is yes they do.

Think of a construction project as having three parts. These are Project Costs, Overhead Costs, and Profit.

The Project Costs includes the labor, material, equipment, and subcontracts costs that the Contractor should have to spend to build a project. This is also referred to as the construction budget. The overhead and profit are not included in this number. Your employees do not need to know how much you are, or are not, making on a project!

Your Overhead Costs would be items that cannot be allocated to just one project. These items are things such as home office salaries and expenses, legal expenses, and warehouse expenses. These costs are shared among all of the company's projects. Since these costs are not a part of the project's budget, they must be added. Most companies will calculate this expense as a percentage of the cost on every project.

Your Profit is the reason you are in business. That reason is to make money! Your Markup should be calculated on both the Gross Cost and the Overhead. You are risking your money on both so you should get profit on both.

Answer 2

I have been a Licensed plumbing contractor for 25yrs and live in Calif,When I turn in a bid or work contract I always charge enough to make Money!!! That's called Business. And I do Sub out work sometimes I always charge more than what I pay the subs, that's how it works,Truth is you can charge what you want, or what people will pay!!! Lawyers are the same way, You can get one here from $150.00 to $450.00 per hr.It depends on what you want to pay!!!! My lawyer charges $300.00 per hour BUT I think he is worth it.If you don't charge enough $$$ you want be in business very long. Eddie

Answer 3

They would have to charge it or go out of business. It wouldn't matter what they wrote on the bill it is a cost of doing business so it will be charged separately or built into a bid price.

Answer 4

They get to charge what the customer is willing to pay for...

Whatever the contract says.

If they contractor wasn't in the business to make a profit he wouldn't be in the business at all.