Construction Glossary
Overheads and Profit
Also known as OH&P
Definition
Overheads and profit, often shown as OH&P, is the percentage added to the cost of work to cover running the business and to make a return. Overheads are the costs of being in business that are not charged to a single job, such as office, vehicles, insurance and admin. Profit is the return you make for taking on the risk. It is usually added as a percentage on top of net costs.
Overheads cover everything it takes to run a building firm beyond the work itself, for example the office, accounts, advertising, fuel and the time spent estimating jobs you do not win. These have to be recovered across the jobs you do win.
Profit is added on top so the business grows and is rewarded for carrying risk. Together they are commonly applied as a single percentage to the measured cost of the work.
Why it matters
Plenty of builders price the labour and materials well and then forget to add enough for overheads and profit, so they are busy but broke. Getting OH&P right is what turns a covered cost into a real margin and keeps the business alive between jobs.
We build your estimates so net costs are clear and your overheads and profit can be applied openly, leaving you a genuine margin.
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