Construction companies have several overhead costs and business expenses to account for. These costs can vary depending on the company, but there are some standard expenses that all construction companies face.
This article will analyze the most common overhead costs and business expenses construction companies face.
Many construction companies have office space for administrative staff to work out of and to store equipment and materials. Rent is a significant overhead expense for construction companies.
Though it typically varies based on location, building size, and other factors, construction companies can expect to pay several thousand dollars in rent each month.
Another overhead cost construction companies need to account for are utilities. These can include electricity, water, gas, and trash service. Depending on the size of the construction company, these costs can range from a few hundred to several thousand dollars per month.
Materials and Supplies
Construction companies also need to purchase materials and supplies for their projects. This can include lumber, drywall, nails, and other construction supplies. The cost of materials and supplies can vary depending on the project, but it is typically a significant expense for construction companies.
- Lumber: $300-$400
- Drywall: $600-$800
- Nails: $100-$200
- Concrete: $300-$400
- Asphalt: $100-$200
- Basic tools (hammer, drill, etc.): $200-$300
Labor and Benefits
Construction companies also need to account for the cost of labor. This includes the wages of construction workers and the cost of benefits, such as health insurance and retirement plans. The cost of labor is typically the largest expense for construction companies, accounting for an average of 30% of total costs.
The typical hourly wage for common workers in the construction industry is as follows.
- Construction workers: $25-$35
- Electricians: $30-$40
- Plumbers: $40-$50
- Administrative staff: $15-$25
- Human resources: $20-$30
Construction companies also need to purchase or rent construction equipment, such as excavators, bulldozers, and cranes. This equipment can be expensive, with some machines costing hundreds of thousands of dollars. Construction companies typically either purchase their equipment outright or rent it from an equipment rental company.
Some standard equipment rental prices are:
- Excavator: $200-$300 per day
- Bulldozer: $100-$200 per day
- Crane: $250-$350 per day
Space and Rentals
Another typical overhead cost for construction companies is renting space for storage or construction projects. This can include storage units for construction materials or construction sites themselves.
The cost of renting space varies depending on the location and size of the space. Still, construction companies can expect to pay several hundred dollars monthly for storage units or construction sites.
Construction companies are also required to carry insurance, another significant overhead expense. Insurance can protect construction companies from liability in the event of an accident or injury. construction companies typically have several types of insurance, including liability, workers’ compensation, and property insurance.
The cost of insurance varies depending on the coverage, but construction companies can expect to pay several thousand dollars per year in premiums.
Construction companies also need to spend money on marketing their business. This can include advertising, public relations, and website development. Marketing is a necessary expense for construction companies, but the cost can vary depending on the size and scope of the marketing campaign.
Consider the following standard marketing activities:
- Advertising: $500-$5,000 per month
- Public relations: $2,500-$10,000 per month
- Website development: $1,000-$5,000 once
- Social media: $500-$2,500 per month
Construction companies also need to purchase software to manage their business. This includes project management, accounting, and construction estimating software. The cost of software varies depending on the features and functionality, but construction companies can expect to pay several hundred dollars per month for construction software.
Understand Construction Costs
Construction overhead costs can be significant, but they are necessary expenses for construction companies. By understanding the typical overhead costs associated with construction companies, you can better manage your finances and make informed decisions about your construction business.