Most contractors don’t lose money because they’re bad at their trade. They lose money because G&A is misunderstood, misapplied, or ignored.
Let’s clear up the biggest misconception. If you don’t recover G&A, you are subsidizing your customers.
Total Cost Input base makes the % look lower because the base is larger.
Value-Added Base excludes pass-through, so the same dollars yield a higher %.
Direct labor bases concentrate recovery into fewer dollars—often spiking the rate.
Changing the base changes the percentage — not the dollars. Servvian calculates G&A dollars first, then applies those dollars to the appropriate base structure.
Break-even does not mean payroll is covered.
Break-even means every allowable cost required to operate the business has been recovered.
Under-recovered G&A is the usual culprit.
Forward planning starts with a single-element base.
Direct base labor wages only.
Burden, overhead, and G&A are layered after the base — never blended into it.
If you choose a G&A rate first, the model is already broken.
The correct order:
This sequencing guarantees the math always reconciles.
General and Administrative (G&A) and Overhead are often conflated, but they serve different purposes and must be treated separately. Overhead captures costs that directly support production or delivery—such as supervision, indirect labor, and operational support—and is allocated to the work being performed. G&A, by contrast, represents the cost of running the business itself, including leadership, finance, legal, HR, IT, and corporate infrastructure, and it applies across the entire enterprise. Overhead varies with operational volume; G&A exists regardless of project mix. When these are blended, costs become obscured, margins appear inflated, and break-even becomes unreliable. Servvian separates Overhead from G&A to preserve cost visibility, ensure proper recovery, and maintain defensible pricing, turning indirect costs from a rough estimate into a controlled, auditable structure.
Disclaimer:
The information provided is for educational and planning purposes only. G&A methodologies and base selection (TCI or VAB) must be evaluated based on each company’s specific cost structure, contract type, and regulatory environment. Servvian does not provide legal, tax, or government compliance certification advice. Contractors are responsible for ensuring alignment with applicable accounting standards and contractual requirements.