Why Your Jobs Look More Profitable Than They Are: Indirect Allocations and Overhead in Construction

If your indirect costs aren't tracked—they're hiding. And what they're hiding is your true profit margin.

In this episode of Construction Genius, Eric sits down with Kathe Barrington, CPA and fractional Controller/CFO with 20 years of construction experience, to break down one of the most misunderstood areas of construction accounting: indirect cost allocations, equipment costing, and overhead structure.

Kathe explains the difference between indirect costs and G&A, how to think about owned equipment usage rates, what a clean chart of accounts should look like, and why your bank and bonding company will notice if you're burying job costs in overhead. She also shares her favorite phrase that every construction leader should internalize: every dollar needs a home and a purpose.

In this episode, you'll learn:

• The difference between indirect costs, overhead, and G&A—and why it matters

• How to cost and track owned equipment using market usage rates

• Why inaccurate chart of accounts structure distorts job profitability

• How misallocated costs affect banking, bonding, and strategic decisions

• Why your estimators and accounting team need to speak the same language

• The two biggest areas of indirect cost leakage to look for first

• Why you should review indirect allocations monthly, not annually

This is Part 4 of the Construction Accounting Series with Kathe Barrington.

Previous Episodes in This Series

Ep. 357 - WIP Reports Made Simple: The Key to Stopping Hidden Job Losses

Ep. 359 - How to Use Your WIP to Protect Cash and Grow Profitability

Ep. 364 - Why the Field and Accounting Are Both Right