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Running a Successful Construction Company by David Gerstel is considered by many to be a seminal classic book on running a building and/or remodeling contracting business in addition to giving us a great explanation and the definitive phrase “Capacity Based Markup”.
Is in Chapter 5; Estimating and Bidding, and more specifically on pgs 167 through 168 that Gerstel talks about using what he calls a “Capacity Based Markup” which is the same thing as what is otherwise known as a PROOF or Indexed or Labor Allocated Markup which Irv Chasen, Ellen Rohr, and I all talk and write about and why it’s a safer better bet for a new contractor with a varied mixed of projects to use.