Common Overhead Expenses for Construction Companies

Overhead expenses refer to the ongoing costs of running a business. Before operating a company, it’s critical to assess the expenses. Review these common overhead expenses for construction companies to get a better understanding of costs.

Temporary Office Structures

Generally, construction projects require an on-site office space. Contractors and workers use the space for meetings and storing project-specific information. Although this is a necessary cost, businesses can get the most out of their budget with a temporary structure.

The best choices come down to modular and mobile offices. However, the mobile space is better. In fact, the difference between a modular and mobile office is a mobile option is easier for relocation because it has wheels. Companies can transport the unit to different job sites!

Long-Term Office Space

Every company needs a permanent office space. Business owners can purchase or rent buildings for the company’s headquarters. Renting and owning a building comes with typical expenses, and here are some examples:

  • Rent
  • Utilities (electric, gas, and water)
  • Property taxes
  • Maintenance costs
  • Miscellaneous expenses (ex., building cleaning crew)

Employee Salaries

Employee salaries are another overhead expense for construction companies. Workers are the most essential asset to the construction industry. To retain workers, it’s important to offer a reasonable salary. Of course, every company is different, and budgets depend on business size and clients. On average, construction workers earn between $30,000 to $50,000 per year. Please note that this salary is subject to change for each state’s adjusted cost of living.

Transportation Costs

Traveling to job sites costs money, too. Gas and vehicles transport workers and equipment to the construction area. Sometimes, workers travel to sites in personal vehicles and take care of fuel costs. However, companies take on the bill for equipment transportation.

Insurance Coverage

General liability, builder’s risk, and professional liability insurance are the types of coverage construction companies need. Construction is a high-risk industry, and insurance coverage protects workers, clients, and the company. Insurance is expensive, but it’s a necessary addition.

Managing Overhead Expenses

It’s no secret that overhead expenses pile up and max out budgets. However, careful planning can help companies manage costs. Finding ways to cut back is a smart plan. For example, renting equipment instead of purchasing it saves a lot of money. Furthermore, customizing insurance plans prevents overpaying for unnecessary policies. Ultimately, it’s all about crunching the numbers to find money-saving opportunities!

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Written by Logan Voss

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