You should base calculations of a project and company overhead on what?

Basing calculations of a project and company overhead on historical data is crucial for accurate budgeting and financial planning. Historical data provides insight into past project costs, trends, and operational efficiency, allowing contractors to make well-informed projections for future projects. By analyzing previous overhead costs and their impact on the overall profitability of past projects, contractors can determine a more reliable overhead rate that reflects their specific business model and operational structure.

Using historical data helps to account for variables that may not be captured through experience alone or subjective assessments by professionals such as CPAs. This data-driven approach ensures consistency and accuracy in budgeting, which is essential for maintaining competitiveness and achieving financial stability in the construction industry. It allows for adjustments based on real past performance rather than estimates or averages that may not reflect the unique circumstances of a particular company or project.