Public Contract Profit Calculator

• Costs are entered as separate lines for staff, materials or consumables, and other direct costs such as travel, plant or subcontractors.
• Overhead is applied as a percentage of contract value, which is the simplest way for a small firm to allocate fixed costs.
• Gross profit is value minus the direct cost lines. Net profit takes off the overhead allocation.
• Net margin is net profit as a percentage of the contract value.

A 120,000 contract with 70,000 of staff cost, 12,000 of materials, 8,000 of other direct costs and 8% overhead.

• Direct costs: 70,000 + 12,000 + 8,000 = 90,000.
• Gross profit: 120,000 - 90,000 = 30,000.
• Overhead at 8%: 9,600.
• Net profit: 20,400.

A net margin of 17%, healthy for a service contract if the staffing assumption holds.

Staff cost is where public service contracts are usually won or lost. Check that your hourly figure includes holiday cover, employer national insurance, pension and any uplift for unsocial hours. A model that assumes perfect attendance and no agency cover will look profitable and deliver a loss.

Should I model the whole term or one year?

Model the whole term, then divide. Mobilisation costs land in year one and distort a single year view.

What about inflation over a long contract?

Check whether the contract allows indexation. If it does not, build a cost uplift into later years.

Does this handle VAT?

Use figures excluding VAT throughout.