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Malta College of Arts & Science & Technology

BTEC National Diploma Level 3 2009/2010

Unit 9 Measuring, Estimating and Tendering Process in Construction and the Built Environment

Kristina Abdilla - NDC 2C 27th

April 2010 1 of 3

M 9.3Differentiate between company overheads and project overheads. Give at least

six examples of each explaining in detail how to calculate their percentage effect on any

given organization or project.

As company and project overheads, these are mostly known as the general overheads

which lead to dividing these overheads into two. The company overheads are normally used all

the time such as the office utilities, the stationery and the office equipment. For the project

overheads, these are normally used for that particular site such as the plant, tools and vehicle

which these can be hired or else bought for that on-site project. All of these overheads are

calculated on their percentage effect depending on the organization or the project. In addition,

this specific business function is important because it includes the utilities, rents mentioned and

especially the insurance.

Six factors chosen for this question are the transport of workmen to site, temporary

works or services, drawings, mechanical plant, works and materials, and last of all the

telephone charges. These six factors can be described for both company and project overheads

because they are used at all times.

To start off, the transport of workmen to site is to travel their workmen on-site for their

own accommodation which the company hires to take these labours to all of his on-sites. In

addition, for this to be included as the company overhead, the labours of different sites are

transported all together at the same time, site after site. Then, if only the labours are

transported for one site, it becomes the project overhead for that particular project. This is

because the transport is going only for that site, therefore it is transporting only the labours of

that particular site.

Then, for the temporary works or services, there are the needed requirements for the

employees accommodations. These are normally provided by the contractor which finally they

have to be removed from site and these includes all necessary temporary site accommodation

such as the contractors own site management staff, storage, fully equipped site office/s for the

employer and also temporary fencing. All of these mentioned were an example of the projectoverheads, on the other hand there are the company overheads which refer to the equipment

used for on-site. For example, when a land surveyor of that particular company needs to

survey a site, he needs his equipment to measure, therefore these equipments used by the

surveyor are used at all times for varies sites.

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April 2010 2 of 3

Drawings are the most important thing for a project and these have to be kept at the

building company and also on-site. In other words, varies drawings have to be printed for many

times such as for the company itself, for the employees on-site and especially for the client.

There is also project and company overheads for these drawings, such as an example for the

company overheads are when the employees print the drawings and are kept in the building

such as in cupboards and folders. These are kept there for records of the company itself and a

copy for themselves. On the other hand, the project overheads are the drawings printed for

that particular project on-site. These drawings are printed to pass it on to the project manager,

contractor or any other employee involved in that particular project to have guidelines for their

job on-site and also to have an idea of what to do. Therefore, if these are only used for that

particular project on-site, they become as a project overhead.

As a company, the mechanical plant is mostly used especially on-site. However, these

mechanical plants are listed for both company and project overheads because these plants can

be bought for all company use. If the mechanical plant is bought, it would be used for all

projects of the company, on the other hand, the plant can be also hired or rented to be used for

that particular project depending on the schedule planned. Therefore, if the mechanical plant

is bought, it would be as the company overhead and if it is hired or rented, it would be as the

project overhead.

The works and materials are done by the labour which depends on that particular

project which consist different types of works and materials. An example for the project

overhead is the type and material done on-site such as every project consists of different

methods of how to build and in addition, every client want to build with what they desire. For

the company overhead, one can see that if any mistakes are made on-site, the company has to

arrange everything and to the work again as it suppose to from the company own expenses.

Last but not least, there are the telephone charges which are important for the

company to connect off-site and on-site by means of telephones (mobiles phones nowadays).

These telephone charges are divided as project and company overheads by the employees and

the clients. In other words, the project overheads are when the employees on-site such ascontractor or project manager call off-site for any problems or vice-versa, which normally these

telephones are bought by the company expenses. Then the project overheads would be when

the company calls the client or else calls others for the accommodation of the client and this

affects the expenses of the company. This is why, the expenses are for the project overheads

because it depends on the client and his/her project.

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April 2010 3 of 3

Then we have the formula for the unit rate as shown below, which affects the percentage of

the overheads mentioned:

Material + Labour + Overheads + Profit

Normally this formula shown above is divided as the material, labour and overheads for

the net price for contractor. Then, when the net price for the client has to be calculated, the

contractors net pricing (material + labour + overheads) has to be added with the contractors

profit. However, as these calculations are made, the additions charges of taxes, VAT and rates

have to be carefully done. For these unit rates, if any discount is involved, every part of the

project such as the net price material and others has to be included.

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