General Conditions, Overhead, Markup & Profit
Welcome
Hello, and welcome. This is Super Structures General Contractors — a national general contractor headquartered in Powhatan, Virginia — here to help you and your clients build something that lasts. We're glad you're with us, and we look forward to connecting with you.
Alright, General Conditions, Overhead, Markup & Profit. Don't let the plain title fool you. Here's the heart of it: A bid is direct cost + general conditions (job overhead, schedule-driven) + G&A recovery + profit — estimate general conditions as a real line, get markup-vs-margin right, know your breakeven, and never buy work below cost + overhead. Nail it, and it pays you back on every job you ever run.
A complete bid covers far more than the direct work. It must include the cost of running the project, the cost of running the company, and profit.
The layers of a bid
- Direct costs — labor, material, equipment, subs (the work itself).
- General conditions (job overhead) — the cost of running this project: site superintendent, trailer, temp utilities, dumpsters, safety, cleanup, PM — often 5–15% of cost, and time-dependent (driven by schedule).
- General overhead (G&A) — the company's cost (office, owner's salary, insurance) — recovered via markup.
- Profit — your margin for risk and reward.
Going Deeper (Intermediate)
General conditions are schedule-driven — a longer job means more months of super, trailer, and equipment — so a schedule slip eats your GCs. Estimate them as a real, detailed line, not a percentage guess. And get the markup vs. margin math right: a 20% markup is only a ~16.7% margin, so compute the markup needed to recover G&A and leave profit.
Advanced / Pro-Level
Separate time-dependent general conditions (the monthly super) from fixed ones (mobilization). Choose an overhead-recovery method (% of cost, % of direct labor, or fixed) and watch the under-recovery risk when volume drops (overhead is largely fixed). Carry bonding and insurance as line items, and price escalation and contingency separately from profit. Above all, never "buy work" below cost + overhead — know your breakeven (overhead ÷ gross-margin %).
Practice Challenge
A contractor bids direct cost + 10% and wins lots of work but isn't getting richer. What did the 10% likely fail to cover? (Answer: the 10% markup probably didn't fully recover general overhead (G&A) and still leave profit. If G&A alone is ~10–15% of cost, a flat 10% markup runs jobs at or below breakeven. The price must cover direct cost + general conditions + G&A recovery + profit — and confusing markup with margin makes the shortfall worse.)
Takeaway: A bid is direct cost + general conditions (job overhead, schedule-driven) + G&A recovery + profit — estimate general conditions as a real line, get markup-vs-margin right, know your breakeven, and never buy work below cost + overhead.
Educational overview — estimating methods and cost data vary by market, project, and firm; build and verify with your own historical data and judgment.