Overhead Principles

Overhead expenses must be taken into account when keeping the books for a business.


What is Overhead?

Overhead are cost items that cannot readily be charged to any one project, but represent the cost of operating a construction company. They are incurred regardless of any specific project. There are two types of overhead items, Overhead Expense Items and Job Overhead Items.

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Overhead Expense Items

Overhead Expense Items include, but are not limited to, costs in the following categories:

Office Expenses

  • Rent (If the building is owned then the cost of the building plus a return upon your investment)
  • Electricity
  • Heat
  • Water
  • Office Supplies
  • Postage
  • Insurance
  • Taxes
  • Telephones
  • Office Machines
  • Furnishings


Exempt Employees (Employees you are exempt from paying overtime)

  • Salaried Employees
  • President
  • Vice President
  • Controller
  • Chief Estimator
  • Human Resource Director

Non-Exempt Employees (Dept of Labor requires paying overtime when overtime is worked)

  • Hourly employees
  • Secretaries
  • Payroll clerk
  • Accounts payable clerk

Other Expenses

  • Advertising
  • Trade journals
  • Donations
  • Legal Services
  • Accounting Services
  • Club and Assoc.. dues
  • Travel and Entertainment
  • Cars and Insurance

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Job Overhead Items

Job Overhead includes items that can be charged to a specific project, but cannot readily be charge to a specific item of work on the project. They may include, but are not limited to, the following catagories.


  • Superintendent
  • Assistant Superintendent
  • Timekeeper
  • Materials Clerk
  • Foreman

Temporary Office

  • Heat
  • Lights
  • Equipment

Temporary Buildings

  • Barricades
  • Enclosures
  • Signals

Temporary Utilities

  • Power
  • Water
  • Fuel

Other Items

  • Sanitary Facilities
  • Drinking Water
  • Photographs
  • Surveys
  • Cleanup
  • Insurance
  • Winter Construction

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This content is provided to you freely by BYU-I Books.

Access it online or download it at https://books.byui.edu/construction_estimat/overhead_principles.