How to Make Changes & Still Make Money
It’s nearly impossible to make any money when contracts allow just 10% and your subcontract only allows for 15% total overhead and profit markup on change orders, or time and material costs plus work. The typical commercial contractor’s annual overhead and profit markup look much like those in Figure 1.
As shown, the maximum change order markup generally doesn’t allow contractors to break even. Also note that when general contractors and subcontractors grow and increase their annual volume, their total overhead and profit markup generally decreases. When it gets low enough, they can make a little money on change order work, but not enough to compensate for the hassle and disruption.
