The secrets of dry disbursement for controlling the costs and profitability of a worksite
There are a number of essential methods for correctly estimating the cost of a construction or public works project. One of them is the calculation of dry disbursements.
Adjusted according to your overheads and the margin rate you wish to apply, it gives you a precise idea of the price you need to charge to break even and generate profits on a site. We tell you more. 👇
Dry disbursement: definition
What is dry disbursement?
A key concept in the building industry, dry disbursements represent the sum of the costs inherent in carrying out a project. It includes several components
- supplies (paint, cement, plaster, etc.) 🚧 ;
- labour (number of workers required) 👷;
- equipment hire (crane, backhoe, etc.) 🚛.
What's the point of calculating dry disbursements?
Calculating the dry disbursement allows you to put an exact figure on the price of the work to be carried out. To do this, however, you need to be very specific about the cost of the work:
- How much cement will the workers need? 🛒 ;
- how much will it cost to hire a crane for X number of days? 💵 ;
- how many hours will the plumber have to work and what is his daily rate? 🔧 etc.
It should be noted that the concept of dry disbursement does not take into account two decisive factors in drawing up an estimate for a job. These are the company's overheads (rent, office staff wages, electricity, IT equipment, etc.) and the margin rate applied, necessary to make a profit.
As a picture is worth a thousand words, here's how dry disbursements figure in the calculation of your site's overall profitability:
💡 Good to know: it's important to factor into your calculations the additional costs associated with the hazards of a worksite, such as longer works due to bad weather, equipment breakdown, etc.
How do you calculate dry disbursements?
Formula for calculating dry disbursements
To calculate the dry disbursement, you first need to add up all the costs involved in carrying out the project. This calculation is based on the following formula:
🧮 Dry disbursement = supplies + labour + materials
As we have just seen, estimating all these costs is no mean feat. The help of an accountant or an appropriate building and civil engineering solution is strongly recommended to establish a forecast that is as close as possible to reality. Graneet software, for example, helps construction companies monitor the financial and administrative aspects of their activities. It saves a lot of time when it comes to costing estimates, in terms of disbursements or selling prices, thanks in particular to a price library.
Similarly, knowing the amount of dry disbursements is only the first step in estimating the total cost of a service.
Calculating the company's general expenses
In order to break even, a company must necessarily include the cost of its overheads, both fixed and variable, in the amounts of its services.
| Examples of fixed costs | Examples of variable costs |
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The calculation of these general expenses takes the form of a coefficient to be applied to the dry disbursement. It generally takes the following form:
🧮 Coefficient of general expenses = 1 + [(annual cost of overheads + cost of unproductive personnel*) / (annual cost of materials + cost of personnel present on site)]
*employees not working on the site
Calculating the margin rate
In order to make a profit, a company must apply a margin rate to its cost price. It is the company that determines the amount of the mark-up, ensuring that it remains both profitable and competitive.
For information purposes, it is estimated that the mark-up applied to the construction of a building is around 20%, i.e. a coefficient of 1.20.
Dry disbursement: example
To help you see things more clearly, let's take a simple example of a building site. Let's imagine the installation of a dual-flow CMV for a private home.
First of all, we need to calculate the dry cost:
| Cost of supplies (VMC, ducts, etc.) | 2 500 € |
| Cost of labour (4-hour job) | 500 € |
| Cost of equipment hire | / |
| Total dry costs | 3 000 € |
Now we need to determine the cost of the work. To do this, simply apply the company's general expenses coefficient to the dry disbursement. In this case, the company's accountant tells us that this is estimated at 1.2.
This gives us 3 000 € x 1,2 = 3 600 €
All that remains is to apply the mark-up to obtain the final cost of the project. In this case, the mark-up is 30%, giving a coefficient of 1.3.
So we have: €3,600 x 1.3 = €4,680
👍 Good to know: at the end of the last stage, VAT should be added to determine the final price of the estimate to be given to the customer.
A few tips to keep your project profitable
To ensure that your site - and by extension your business - remains profitable, here are a few tips to follow.
Use a building price library
To help you make the best estimate of your dry-cost outlay, a building price library can be a valuable aid. For each type of work, this tool lists :
- the quantities of materials required 🧱;
- the average price to be paid 💰 ;
- the number of hours of work required ⏲️.
These libraries of works are regularly updated by professionals in the building and economic sectors. It's a simple but highly effective way of getting a clear idea of the cost of your future projects.
Planning and monitoring your projects
To save precious time and minimise errors, you need to be able to monitor the progress of your work in real time.
Thanks to appropriate tools, it is now possible to effectively manage several worksites at the same time.
✅ The result?
- Better communication between your teams,
- optimised monitoring at every stage of the works,
- and, by extension, increased productivity and profitability.
Opting for specialist construction software
The construction industry has not escaped the digital transformation that has been taking place for many years. As a result, a large number of specialist software applications have emerged. Their aim? To make it easier for you to manage your business with the right tools. Some of the essential functions include :
- site monitoring (planning, preparation, delivery, etc.) 📋 ;
- assistance in calculating dry disbursements ➕ ;
- stock management (need to place a new order, etc.) 🛒;
- personnel management (monitoring employee schedules, number of hours worked on site, etc.) 👷 ;
- cash management (working capital requirements, balance sheet, etc.) 💵; etc.
Dry disbursements in a nutshell
As you will have realised, dry disbursements are an essential element to take into account in order to estimate the real cost of a project as accurately as possible. In particular, it serves as a basis for calculating the cost of the work.
In addition, we strongly recommend that you use specialist construction software to help you determine the dry disbursements for a project.
Article translated from French