Change Order Price with Overhead and Profit
Change-order price = direct cost x (1 + OH%) x (1 + profit%).
Example
You enter
- Added direct cost (USD) 10000
- Overhead markup (%) 10
- Profit markup (%) 10
- Current contract total (USD, optional) 500000
You get
- Change-order price 12100
- Markup dollars (and margin % of price) 2100
- New contract total 512100
Checked against published worked examples from: Caltrans Division of Local Assistance.
Details, formula, and sources
ScopeThe compounded markup. $10,000 direct at 10% and 10% -> $12,100 (markup $2,100, 17.4% gross margin); the additive method gives $12,000. Applied to a $500K contract -> $512,100 new total. The contract's general conditions govern the allowed markup.
Formula or tableprice = direct x (1 + OH%) x (1 + profit%); markup = price - direct; margin% = markup/price x 100.
Source and editionThe change-order overhead-and-profit markup (compounded) from construction estimating practice, by name (AIA G701 is the change-order form and prescribes no markup method; many public contracts set one markup per cost category, e.g. Caltrans labor 35% / equipment 15%, or cap a single markup, e.g. 10%).
Free accessOverhead-and-profit markup on a change order is standard construction estimating; the allowed rate and method are in the contract.
What governsEstimate. AHJ and licensed professional govern.
API field namesdirect_cost_usd, overhead_pct, profit_pct, current_contract_usd, price, markup, new_contract
- Compounded markup price = direct x (1 + OH%) x (1 + profit%)estimating practice; the contract governs (Caltrans CCO training 2020: per-category markups)
- Additive alternative direct x (1 + OH% + profit%) is slightly less; the contract decidesconstruction accounting
- Contract governs the general conditions set the allowed markup and methodscope of this tile