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When generating Summary Reports, a block of information is presented at the bottom of the page. These numbers range from multiplication factors to the calculated profitability of a job. In the middle of work, it can be difficult to determine how these values are calculated. Below is a brief explanation of the formulae used and how each value affects the job overall
Total Markup Amount
This number is determined by adding together all of your other markups into one sum. You can view the total markup amount as well as its contributing factors from the Summary window.
The overall markup number is used to show how above cost on a job you are. However, this number can't be applied to the cost of each bid item in order to arrive at the overall bid price, due to the fact that markups are being spread back to different items at different ratios in the process of calculating the formula.
Total Markup Percent
The markup percent is calculated by dividing the Total Markup Amount by the Total Estimate w/Overall Markup (the field immediately above the Multiplication Factors).
Cash Generated: Income from markups and equipment ownership (Total Markup Amount + Owned Equipment Base Cost + Owned Equipment Base Cost within Indirects).
Relates to any piece of equipment or similar item that is already owned and is being charged for its use. The markup is money received that isn't directly being paid out for the cost of the job.
Summary Cut/Add Total
The amount shown in this field comes from the items you entered in the Cuts/Adds tab in the Summary window.
% of Operating Expense: Ratio of Cash to labor and equipment operating expenses (Cash Generated / ((Total Labor + Total Equipment) – Owned Equipment Base Cost).
% Profitability: Ratio of markups to job costs. (Total Markup Amount / ((Total Detail Costs + Indirect Costs + Cut/Add + Bonding + Sub Bonding + Insurance) - Owned Equipment Base Cost).
% Cash on Cost: Ratio of Cash to job costs (Cash Generated / ((Total Detail Costs + Indirect Costs + Cut/Add + Bonding + Sub Bonding + Insurance) - Owned Equipment Base Cost).
Markup percentages entered in this window are used to calculate the Overall Multiplication Factor -- which is the percentage difference between your total cost and your total bid. The overall markup number is used to show how above cost on a job you are. However, this number can't be applied to the cost of each bid item in order to arrive at the overall bid price, due to the fact that markups are being spread back to different items at different ratios in the process of calculating the formula.
If we for instance input a 5% markup on General/Admin, but also 10% markup overall, the 10% is applied on top of the General/Admin markup. The 10% will be spread back consistently, but the 5% will only go back to certain items that are directly related to General/Admin.
The more markups you add--such as bonding rates--the more accurate you will be when determining above cost figures.
The formula for calculating this multiplication factor is:
•Total Estimate w/Overall Markup:
•Minus Total of Subcontractor
•Minus Total of Joint Venture
•Divided by the Total Cost Types
•Equals a Total Value that when converted to a percentage (-1 X 100)
•Equals the Multiplication Factor Percentage
Subcon. Multiplication Factor/JV Multiplication Factor
These are far less complicated than the Overall Multiplication Factor. Entering a 3% markup to either of these, for example, will simply result in an outputted figure of 3%.
A Closer Look
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