TRANSCRIPTION
--- CLIP 4: Overhead Recovery & Materials & Subcontractors ---
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[00:18:52]
this is going to work directly when we scroll back up by going directly to the overhead recovery tab all right when you get to this tab you're going to have three different options weighted equal and field labor so I'm going to recommend if you have any field labor to switch it over to field labor first to see where it's coming out to you all right if you don't have any field labor employees and this is zero then definitely stay on weighted but if you do have field labor employees switch it over to this one just to check this out so I can explain how it will how this works okay so what it does is it takes the total overhead cost for your company from this overhead tab and it divides it
[00:19:42]
by the total labor hours from field labor and what that gets you is an overhead cost per man-hour of how much it's costing your company every single hour that your employees are working each employee to operate and recover your overhead this is in addition to what you pay your employees so we're paying employees in this example 23 an hour on average our overhead is 35 so the total break-even is 58 an hour in this example now with that being said this rate right here will heavily depend on how much your overhead is compared to how much your field labor is right so if I go and add an additional employee here and I put one more crew member in right so I go and put we have one more crew
[00:20:32]
member they make 22 an hour whatever the settings are here for like unbillable and overtime and that type of stuff save that now when we come back here to overhead recovery this rates going to automatically adjust because now we have more billable hours to spread out the same amount of overhead costs so keep that in mind of how this is being calculated it's a ratio between the total overhead and the amount of total hours and that depends on the field labor and the overhead you can see now it's at 26 an hour instead of 35 and the break-even has been reduced to just under 50 an hour this is how much it's
[00:21:19]
costing your company to operate to pay the employees and recover the overhead expenses now with this being said you only want to use field labor only recovery if you don't use any subcontractors if you use any subcontractors then you're going to all want to use the weighted overhead recovery and what that allows you to do is enter a markup percent to recover the overhead for your materials and your subcontractors for example I can come here to the materials and I can enter in an expected amount of material cost for example you could say roughly 15,000 a month 10,000 a month whatever it is
[00:22:05]
for your company so to multiply that by 12 months in this case now you can adjust these maybe in January it's going to be lower and February you can go and adjust these however needed and same thing at the end of the year however it works for your company you can adjust these however you need and once you do that you can see where it's calculating the rest out so it's going to spread out the rest into the rest of the months here if these are too high then you can decrease this total maybe this is only 160 or whatever and it'll recalculate these for you alright so put this in for how much you're expecting to spend in materials I'm going to say in this case 220,000 and you can of course look at last year's PL to see how much you spent and base it off of that and then you can
[00:22:54]
kind of break it out by month to get a rough idea this doesn't have to be perfect this can be super rough based on your different numbers and expenses