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Then what's the problem?ContractOne said:we usually give a detailed estimate to the owner for this size of a job that shows our O&P % and what it applies to.
This is really rather an exercise in putting certain beans in some jars and other beans in other jars. PWG is right - the price should be the price.ContractOne said:Is this typical or???
If they are trying to control you now, its only going to get worse when the job begins.
You're reasoning is sound. Sometimes what comes into play are factors on the Owner's side that you may not be able to know or otherwise influence. The Owner may think that General condition costs are "overhead" so charging an OH fee is a circuitous application of the fee. As ridiculous as it sounds, it's often a matter of shifting costs out of "overhead" into job cost columns to which a fee may be applied.ContractOne said:I believe that O&P should be charged on top of the bottom line because...
There's nothing circular about it. That's how MARKUP works. A 12% markup is equal to ( cost divided by .88) ). This technique results in profit being expressed as a constant percentage of the agreed upon PRICE. In the example you show, 12% of the PRICE is profit. In an instance where you might agree to a 15% MARKUP, profit will equal 15% of the PRICE (cost divided by .85).ContractOne said:He had an estimate from a GC that used a circular calc to figure O&P. So you would figure the O&P on the bottom line after O&P was applied. Has anyone ever seen this or used this before?