Greetings all,
When reviewing bids from a contractor, is it typical they include their time and material costs as well as the overhead and profit markup? what is a typical markup cost on a change order?
Thank you
@coachgarricbaker Hi Garric, do you have any thoughts on this question?
Thank you
Hi @wildlandguy! Thank you for your question, and I apologize that you’ve been waiting so long on an answer.
Yes, these items are typically included in a contractor’s bid. There are four price categories common to all typical bidding approaches: construction costs (“cost of the work”), contingencies (to cover risk), overhead, and profit. See “Price Categories” on page 705 in The Architect’s Handbook of Professional Practice (15th edition).
The markup percentage for change orders typically ranges between 10-15%, though it really depends on the project and contractor. The specific percentage for a given project would be predefined in the A101-2017 Standard Form of Agreement Between Owner and Contractor.
I found this article that clearly breaks down how a contractor might calculate an appropriate overhead/profit markup. I wouldn’t worry about the details presented here as you wouldn’t be expected to perform these types of contractor-specific calculations on the ARE, but it provides some additional context.
Hope this helps. Happy studying!
Kiara Galicinao, AIA, NCARB
Black Spectacles
Hi Kiara,
Thank you for the thorough response, very useful for CE. The article was helpful and detailed. Have a good weekend.
1 Like