Winning the bid and making money on the job are two different problems. An estimate that only covers materials and labor can win you jobs that lose money the moment something unexpected comes up — which on a construction site, something always does. Here's the structure that actually protects a bid.
The three real costs
- Materials. What you're buying to build it — lumber, fixtures, wiring, concrete, whatever the job calls for.
- Labor. What it costs to build it — your crew's time, or subcontractor costs.
- Equipment. Rentals, or the allocated cost of equipment you own.
Add those three together and you have a subtotal — the raw cost of the job. That's not your bid price.
Overhead: the cost of running the business, not the job
Rent, insurance, office staff, your own time spent bidding jobs that don't close — none of that shows up in materials, labor, or equipment for a specific job, but it's real cost your business carries every day. Overhead is usually expressed as a percentage of the subtotal, and it's the number contractors most often underprice, because it doesn't feel like "real" cost the way a lumber invoice does.
Contingency: the buffer for what you can't see yet
Every job has some chance of hitting something the original scope didn't account for — a structural issue behind a wall, a permit delay, a material price change. Contingency is a percentage buffer for that risk, sized to the job — a straightforward job might carry 5-10%, a renovation with unknowns behind the walls might carry more.
Total bid price
Subtotal, plus overhead, plus contingency — that's the number that goes to the client. Skip either one and you're not padding your margin, you're betting the job goes exactly as planned.
Use the template instead of building this from scratch
The Construction Estimate Template already has this structure — materials, labor, and equipment rolling into a subtotal, with adjustable overhead and contingency percentages calculating the total bid price automatically. Open it in FLYNT Sheets and enter the real numbers for your next bid. Once the job is won, the Job Cost Tracker picks up where this leaves off, tracking budget against what actually gets spent.