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Profit Guidelines for Construction Calculator

by Christy Watts, Professor of Contracting, Defense Acquisition University

Factor Rate Weight Value
Degree of Risk 20
Relative Difficulty of Work 15
Size of Job 15
Period of Performance 15
Contractor's Investment 5
Assistance by Government 5
Subcontracting 25
Profit Percentage =


This tool calculates a fair and reasonable profit percentage for construction contracts (basic or modification). For each factor, select a weight (0.03 to 0.12) based on the circumstances of the procurement action then press the calculate button.

The tool calculates the value column by multiplying the rates by the weights entered. The sum of all the values is then combined below to provide a fair and reasonable profit percentage. Click on any of the factors to view additional information for determining weights.


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