This glossary defines key financial, estimating, and GovCon cost structure terms used in labor-intensive businesses. Explore concepts such as breakeven rates, indirect costs, G&A, and forecasting frameworks used within SERVVIAN® and FALIB®.
Use the search below to quickly find definitions and understand how these terms connect to real-world estimating, pricing, and financial decision-making.
FALIB® is SERVVIAN’s financial intelligence system for analyzing labor-intensive businesses through forecast-driven cost structure, revenue alignment, and breakeven discipline.
FALIB-Mr means Master Report. It is designed for companies operating with a SOLD labor revenue stream only.
This makes it especially relevant for businesses that primarily generate revenue from their own sold labor and may be partially paying Davis-Bacon wages or other prevailing wage obligations.
FALIB-Mr can help identify the ripple impact of fringe shortfalls across the labor cost structure.
FALIB-Sr means Senior Report. It is built for businesses that operate with both SOLD labor and Pass-Thru support revenue streams, or for firms that need visibility into a hybrid model.
This makes FALIB-Sr a strong fit for businesses such as general contractors that may carry a blend of direct sold labor and pass-thru support activity.
Hybrid companies may require separate breakeven hourly rates for SOLD labor and Pass-Thru support labor.
FALIB-Jr means Job Report. It can only be produced after completing either FALIB-Mr or FALIB-Sr first and then carrying that forecast analysis into a specific estimate.
Once a company completes its master or senior report structure and then finishes an estimate for a job to be bid, FALIB-Jr translates that higher-level forecast intelligence into a job-facing report.
The Net Rate, sometimes referred to as the raw rate, is the true labor-related multiplier that must be understood in order to budget payroll cost correctly within the forecast structure.
Companies that do not clearly understand their net rate can misread actual labor exposure and create pricing distortion that later shows up as margin leakage or undercovered labor assumptions.
The Raw Rate is another way of referring to the Net Rate. In SERVVIAN® language, this should be treated as the same core concept unless you are intentionally distinguishing terminology for audience clarity.
Because this rate influences labor budgeting and breakeven support, it plays a major role in how forecast analysis should be interpreted before pricing and profit are layered into the final estimate.
The Breakeven Rate is the rate that covers everything up to the point of breakeven. It is not profit.
For some hybrid companies with two revenue streams, there may need to be one breakeven hourly rate for SOLD labor and another for Pass-Thru support labor.
Profit is then layered above those rates only after the breakeven structure is fully supported.
In GovCon environments, one of the most important disciplines is ensuring that cost components are fully covered without being counted twice.
FALIB-Mr and FALIB-Sr help structure the underlying breakeven rates, while FALIB-Jr carries that logic into the job-level estimate.
Together, these reports support a cleaner breakdown that helps ensure all required elements are covered while avoiding duplication inside the rate structure.
SOLD Labor Revenue refers to revenue earned directly from labor sold by the company. Pass-Thru support revenue refers to support-related activity that may require its own treatment within the pricing model.
Understanding which revenue stream is present matters because it affects whether a company is better aligned to FALIB-Mr, FALIB-Sr, or a hybrid framework that requires multiple breakeven paths before profit is applied.
Total Cost Input (TCI) is a cost allocation base used in government contracting to apply indirect rates across the full cost structure of a project or organization.
Under TCI, indirect costs such as overhead and G&A are applied to the total cost base, including direct labor, materials, and other allowable costs.
This method provides a comprehensive view of how indirect expenses are distributed across all cost elements, making it a common approach in GovCon pricing and compliance environments.
The G&A Rate represents the allocation of General and Administrative (G&A) costs across a company’s cost base.
These costs include executive management, accounting, legal, HR, and other business-wide expenses that support overall operations but are not tied to a specific project.
In GovCon, the G&A rate is applied using allocation bases such as Total Cost Input (TCI), Value-Added Base (VAB), or Single-Element structures.
The Hourly Sell Rate is the rate charged to the customer for labor and is built on top of the breakeven rate.
It includes all labor-related costs, indirect expenses, and adds profit margin on top of the fully supported breakeven structure.
If the sell rate is set too low, it can result in undercovered costs. If set correctly, it ensures that all obligations are met before profit is realized.
The Value-Added Base (VAB) is a cost allocation method that applies indirect rates to a reduced cost base by excluding certain pass-through costs.
Typically, subcontractor costs and materials are removed from the base, so indirect rates are applied only to value-added activities such as labor and internal operations.
This method is often used in GovCon to prevent distortion of indirect rates when large pass-through costs are present.
Direct Labor refers to wages and salaries paid to employees performing revenue-generating work tied directly to a job or project.
This includes base pay, overtime, and differential rates, forming the core labor cost used in estimating and pricing.
Adjusted Wages reflect increases required to meet prevailing wage obligations such as Davis-Bacon.
A Fringe Shortfall occurs when required fringe benefits are not fully covered, creating additional cost exposure that impacts total labor burden.
Burden & Fringe includes all employer-paid labor costs beyond wages, such as FICA, Medicare, workers’ compensation, PTO, health benefits, and retirement contributions.
These costs must be applied correctly to labor to ensure accurate breakeven and pricing models.
Indirect Labor includes wages and salaries not directly tied to a specific job, such as administrative, clerical, and office personnel.
These costs are typically allocated through overhead or indirect rate structures.
Operations Costs include ongoing business expenses such as rent, software, fuel, insurance, and utilities required to run the company.
These costs drive overhead and must be properly included in forecasting and rate development.
Indirect Rates are calculated percentages used to allocate indirect costs across labor or total cost bases.
Common examples include Overhead (OH), G&A, IR&D, and B&P, which support pricing, forecasting, and compliance.
Pass-Through Costs include expenses such as subcontractors, materials, equipment, and travel that are billed through to the client.
These costs may carry markup but require careful treatment to avoid distortion in rate calculations.
Ripple Impact refers to secondary increases in labor costs that occur when base wages are adjusted, such as under prevailing wage requirements.
These increases affect burden, fringe, and total cost structure, and are often missed in traditional estimating models.
Allowable Costs are expenses permitted under contract or regulatory guidelines, while Unallowable Costs cannot be included in certain cost structures.
Proper classification ensures compliance, accurate rate development, and defensible pricing.