- 1). Add up the total expenses of the project that are directly billable.
- 2). Estimate the expenses for the overhead costs, such as administrative help or other employee costs, insurance, travel, taxes, legal fees, telephone and fax charges, rentals, repair, accounting, supplies, utilities and advertising. You may find many of these expenses difficult to calculate, but make a rough estimate.
- 3). Figure 20 percent of the total direct billable costs. Compare that sum with the estimate for the overhead or implicit costs. Include the greater number in your budget for overhead. For example, if your calculation for the implicit costs is less than 20 percent of the total of the directly billable costs, use the 20 percent figure instead. You can always return any unused funds, but you'll find this amount much more difficult to make up for a cost overrun.
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