Overhead Recovery Rate
Annual overhead spread over billable hours ($/hr) or over annual direct cost (% markup). $200K over 8,000 hours ->...
Example
You enter
- Annual overhead ($) 200000
- Recovery basis per-hour
- Annual billable hours 8000
You get
- Rate (hr) $25/billable hour
Checked against published worked examples from: Construction Executive (S. Groo).
Details, formula, and sources
ScopeAnnual overhead spread over billable hours ($/hr) or over annual direct cost (% markup). $200K over 8,000 hours -> $25/hr; over $500K direct -> a 40% markup. Cutting overhead lowers the rate directly, widening the margin. The contractor books and billable volume govern.
Formula or tableper-hour: rate = annual_overhead / billable_hours; markup: overhead% = annual_overhead / annual_direct x 100; job_overhead = job_direct x overhead%/100.
Source and editionThe standard contractor overhead-recovery (indirect cost allocation) method, by name.
Free accessOverhead recovery is standard contractor cost accounting; the allocation base is the contractor's own books. The contractor's actual books and billable volume govern.
What governsEstimate. AHJ and licensed professional govern.
API field namesannual_overhead, basis, billable_hours, rate_hr
- Two bases rate = overhead/billable hours ($/hr), or overhead/annual direct (% markup)contractor cost accounting
- Full recovery each billed hour or direct dollar must carry its overhead sharecost accounting
- Excludes profit overhead recovery only; the profit markup is separatescope of this tile