Contractor Overhead Rate

Contractor Overhead Rate (COR) is a critical financial metric representing the indirect costs a contractor incurs while running their business, expressed as a percentage of direct labor costs. It's calculated by dividing total indirect costs (e.g., rent, utilities, administrative salaries) by total direct labor costs. In project costing and engineering, COR is applied to direct labor costs to determine the total labor cost, a key component in bidding and pricing strategies. A higher COR reflects higher indirect expenses, impacting profitability and competitiveness. Accurate COR calculation ensures projects are adequately funded and contractors remain financially viable.