Overhead allocation in construction is a way to share costs across multiple jobs.
Overhead allocation in construction is a way to share costs across multiple jobs. Why on earth would you do that? Simple: these are the costs your projects share responsibility for anyway — they’re the costs you’re already paying but can’t easily charge directly to a single project. Instead, they’re “indirect costs.” And if indirect costs aren’t tracked properly, it can give you a false sense of job performance.
How do you assign those costs fairly? That’s the goal of overhead allocation.
The more accurately you can measure how overhead impacts each job’s bottom line, the more accurate your picture of job performance can be. This can also mean better data for estimating, which in turn can protect your bottom line on future jobs.
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