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

M 9.3 Differentiate 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 project overheads, 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.

Kristina Abdilla - NDC 2C

27th April 2010

1 of 3

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

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 as contractor 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.

Kristina Abdilla - NDC 2C

27th April 2010

2 of 3

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

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.

Kristina Abdilla - NDC 2C

27th April 2010

3 of 3