Financial Management, Construction Economics, and Budget Control:
General Overhead Allocation for Projects
Lesson Plan #4
LESSON GOALS AND OBJECTIVES:
The goal of this lesson is to teach the students how to convert a contractor’s detailed estimate to an owner’s schedule of values. Two methods are presented to distribute overhead: even distribution and front-loaded distribution. The use of spreadsheets is highlighted.
If a construction contractor wins a project, they must be able to create a schedule of values based on the owner’s desired line items and the contractor’s costs. Once approved by the owner and architect, this schedule of values becomes the basis for progress payment billings. Emphasis is placed on creating reasonable schedule of values that will be both accepted by the owner and assist the contractor’s cash flow on the project.