Direct vs. Indirect Cost Ratio Calculator

What's a normal indirect cost percentage for commercial construction?

Most commercial general contractors run indirect costs (GCs plus home office overhead allocation) at 5-15% of total project cost, with the exact figure depending heavily on project size, duration, and complexity — larger, longer-duration, or more complex jobs often run toward the higher end due to more supervision and coordination burden per dollar of work.

Why would this ratio be a better diagnostic than tracking GC cost alone?

Tracking indirect dollars alone doesn't tell you if overhead is proportionate to workload — a company might have the same GC dollar spend on a $5M job as a $3M job, and the raw dollar figure looks stable while the ratio reveals the overhead burden per dollar of installed work actually increased. The ratio normalizes for project size, making it comparable across a portfolio of different-sized jobs.

What causes indirect cost ratio to creep up over time?

Common causes are supervision headcount growing faster than revenue (adding project engineers or assistant supers before volume justifies it), extended project durations from delays that stretch fixed monthly GC costs over more calendar time without more work getting done, and creeping home office overhead allocation. Track the ratio quarterly across your active job portfolio to catch the trend early rather than discovering it at year-end.

Does this ratio apply the same way to a small remodeling company as a large GC?

The absolute ratio benchmark shifts for smaller companies and smaller jobs — fixed overhead costs (a truck, insurance, a part-time admin) don't scale down proportionally with smaller project size, so small residential and light commercial contractors often legitimately run indirect ratios of 15-25% without it signaling a problem, versus the 5-15% range typical for larger commercial work.