Overhead Percentage

Most people add an overhead line item to their estimates created in Goldenseal estimating software, to cover general business overhead expenses. Here's how to calculate the percentage to use there.

Calculating Hard Costs

Before you try to calculate an overhead percentage, pick a time period for which you have decent job cost data. Use the current year to date, or the previous year, or any other period that makes sense for you.

If you have already entered past job cost data into Goldenseal, follow these steps:

  1. Choose Expenses from the Reports menu, and choose All Expenses from the submenu.
  2. Enter the desired date range into the Date Range popup field.
  3. Turn on the More Details checkbox.
  4. Enter Job Class into the Match Field popup field.
  5. Enter Project into the clairvoyant field next to the Match Field popup.
  6. Click the Update button.
  7. Goldenseal will fill in a report of all project expenses during the period, with a total at the bottom.

If you have not entered past job cost data into Goldenseal, follow these steps:

  1. Add up all labor costs during the time period. Only include labor that was spent on project work.
  2. Add up all material costs during the period. Only include materials used on project work.
  3. Add up all equipment costs during the period. Only include equipment time used on project work.
  4. Add up all subcontractor costs during the period. Only include work done on projects.
  5. Add up all other costs during the period. Only include expenses that apply to projects.
  6. The total of the previous five items is your total project hard costs for the period.

Calculating Overhead

Next, calculate your overhead expenses for the same period.

If you have already entered past job cost data into Goldenseal, follow these steps:

  1. Choose Expenses from the Reports menu, and choose All Expenses from the submenu.
  2. Enter the desired date range into the Date Range popup field.
  3. Turn on the More Details checkbox.
  4. Enter Job Class into the Match Field popup field.
  5. Enter Overhead into the clairvoyant field next to the Match Field popup.
  6. Click the Update button.
  7. Goldenseal will fill in a report of all overhead expenses during the period, with a total at the bottom.

NOTE-- If you entered expenses that were job costed towards equipment accounts, repeat the steps above, but enter Equipment into the match field at step 5. Add the total of equipment costs to the overhead cost.

If you have not entered past job cost data into Goldenseal, follow these steps:

  1. Add up all labor costs during the time period. Only include labor that did not apply to any specific project.
  2. Add up all material costs during the period. Only include materials that did not apply to any specific project.
  3. Add up all equipment costs during the period. Only include equipment time that did not apply to any specific project.
  4. Add up all subcontractor costs during the period. Only include work that did not apply to any specific project.
  5. Add up all other costs during the period. Only include expenses that did not apply to a specific project.
  6. The total of the previous five items is your total overhead for the period.

Calculating Overhead Percentage

To calculate your overhead percentage, divide the overhead total by the project hard cost total.

For example, if you had $15,000 worth of overhead in the period and did $100,000 of project work, then the overhead percentage would be $15,000/$100,000, or 15%.

Use this percentage as a line item in your Estimates, and you'll cover your overhead expenses (on average).

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