By the MassBid Estimation team · Published · Updated
In short
A construction estimate is read from the top down: the cost of each trade by CSI division, added up to a trade cost, then the markups for overhead and profit, insurance, contingency and tax, ending in a suggested bid. On a real 8,020 square foot interior renovation, trade cost was $819,430 and the suggested bid was $996,458, so markups added about 22%.
- Trade cost
- Material, labor and equipment for the work itself
- General requirements
- Site costs not tied to one trade
- Overhead and profit
- The contractor's office costs and margin
- Contingency
- An allowance for what the drawings do not show
- Example project
- 8,020 sq ft salon and spa renovation, Illinois
- Example result
- $819,430 trade cost, $996,458 suggested bid
Start with the summary page
Most estimates open with a one-page summary, the breakdown of the whole job. It lists each CSI MasterFormat division that has work in it, with its cost and its cost per square foot. Behind it sit the detail sheets, one for each trade, with every line item.
This is the summary of an estimate we prepared for a general contractor: the interior renovation of an 8,020 square foot salon and spa in Illinois. The client and address are withheld; the figures are as delivered.
| Division | Cost | Per sq ft |
|---|---|---|
| 01 General requirements | $62,500 | $7.79 |
| 02 Existing conditions (demolition) | $29,280 | $3.65 |
| 06 Wood, plastics and composites | $13,515 | $1.69 |
| 08 Openings | $49,549 | $6.18 |
| 09 Finishes | $289,800 | $36.13 |
| 10 Specialties | $26,122 | $3.26 |
| 11 Equipment | $4,312 | $0.54 |
| 12 Furnishings | $4,946 | $0.62 |
| 22 Plumbing | $164,155 | $20.47 |
| 23 HVAC | $59,389 | $7.41 |
| 26 Electrical | $115,237 | $14.37 |
| 27 Communications | $626 | $0.08 |
| Total trade cost | $819,430 | $102.17 |
Read down the per-square-foot column first. Finishes and plumbing together are more than half the job, which is what you would expect of a salon.
Trade cost
Trade cost, sometimes called direct cost, is what it costs to put the work in place: material, labor and equipment for every line, added up by division. Here it is $819,430, or $102.17 per square foot.
It is the figure to use when comparing one project with another, because it leaves out markups that differ from contractor to contractor.
General requirements
Division 01, general requirements, covers costs that belong to the job but not to any one trade: supervision, temporary power and toilets, permits, dumpsters, protection of finished work and final cleaning. Here it is $62,500, about 7.6% of trade cost.
In this estimate it is counted inside trade cost. Some estimates list it below the line with the markups, so check which before comparing two estimates.
The markups, from trade cost to bid
Below the trade cost come the markups. On this job the contractor asked for these rates:
| Line | Rate | Amount |
|---|---|---|
| Total trade cost | $819,430 | |
| Overhead and profit | 10% | $81,943 |
| Insurance | 3% | $24,583 |
| Contingency | 5% | $40,971 |
| Tax | 8%, on materials | $29,531 |
| Suggested bid | $996,458 |
- Overhead and profit pays for the contractor's office, estimating, insurance and vehicles, and leaves a margin. Rates on our estimates run from 10% to 40%, because every contractor sets their own.
- Insurance is carried as its own line by some contractors and inside overhead by others.
- Contingency is an allowance for what the drawings do not show. Five percent is common on a complete set; early design stages carry more.
- Tax is sales tax on materials at the local rate. It is not charged on labor in most states.
Five things to check on any estimate
- Is general requirements inside trade cost, or below it? Two estimates can differ by that alone.
- Is the floor area the same one you are using? Cost per square foot depends on it.
- Do the markup rates match what your company actually uses?
- Is tax applied to materials only, and at the right local rate?
- Does every division you expected appear? A missing division is a missing trade.
On our estimates the markups are formulas in an Excel workbook. Change overhead and profit from 10% to 15% and the suggested bid recalculates, so you can test your number right up to bid time. See more examples on the samples page.
Common questions
Trade cost, or direct cost, is the material, labor and equipment needed to put the work in place, added up by division. It leaves out overhead, profit, contingency and tax.
The suggested bid is trade cost plus markups. On a real 8,020 square foot renovation we estimated, trade cost was $819,430 and the suggested bid was $996,458 after overhead and profit, insurance, contingency and tax.
It varies by contractor, trade and market. On estimates we have delivered, clients have asked for combined overhead and profit from 10% to 40%. Use the rate your own costs support.
Five percent is common on a complete set of construction drawings. Estimates made from early design drawings carry more, because more is still unknown.
Division 01 of CSI MasterFormat: job costs that are not part of any one trade, such as supervision, temporary facilities, permits, dumpsters and final cleaning.
Because the scope, the floor area used and the markups differ. Compare trade cost per square foot for the same scope before comparing bid totals.