OHP (overheads and profit): definition and example
The amount added to the cost of work to cover running your business and a profit, usually as a percentage.
By Jack Butler-Kettle · Updated
Guidance for England and Wales. Check the contract, amendments and facts that apply to your job.
What it means in practice
Read this alongside NRM 2: Detailed measurement for building works.
Overheads and profit describe allowances within a price, rather than a universal percentage payable on every claim. Rates may already contain these allowances. The contract's valuation rules determine whether a separate addition is appropriate and what it applies to.
Identify what is already included before adding a mark-up. Variation recovery can help present a calculation without overlapping allowances.
Worked example
The facts
A variation has £2,000 of eligible direct costs and an assumed agreed 10% overhead-and-profit addition.
What happens
The subcontractor confirms that the direct costs do not already include that addition.
It calculates £200 separately and records the source of the 10% rate.
What this shows
The illustrative total is £2,200, but the same percentage is not automatically appropriate for another contract or claim.