The three layers and their orders of magnitude
| Layer | What it covers | Usual order of magnitude |
|---|---|---|
| Site indirect costs | Site facilities, crane, cabins, foreman and staff not attributable to items, consumption, site health and safety | 6 – 13 % on direct costs, embedded in the PEM's unit prices |
| Overheads (GG) | The company's structure: offices, administration, estimating, general financing | Usual convention of 13 % on PEM |
| Industrial profit (BI) | Remuneration of risk and the company's profit | Usual convention of 6 % on PEM |
The architecture differs by layer: site indirect costs are a real cost of the specific project and live inside the unit prices; GG and BI are applied on the PEM to form the contract budget (the 13+6 convention comes from public procurement and the private market uses it as a reference, with freedom of agreement). Adding both layers to the same base is the error that doubles the margin in the budget.
What this mechanism lets you read
Tender discounts. An aggressive discount does not reduce the direct costs of executing the works: it compresses indirects, GG and BI. Compressing indirects means less supervision, fewer site resources, less safety; compressing the BI leaves the company without a cushion for contingencies. That is why disproportionate discounts resurface later as claims, disputed change orders and strained quality: the company tries to rebuild through the contract what it gave away in the offer.
Incomparable budgets. Two offers with the same final amount can distribute very differently across items and layers. Serious comparison is done on a homogeneous structure: same chapters, indirects made explicit, GG and BI declared. A comparison table that ignores the layers compares totals, not offers.
Change orders. New unit prices during the works are built with the same structure (direct costs plus indirects plus GG and BI), and knowing it prevents both paying the indirects twice and accepting new prices without the breakdown that justifies them.
The essentials
From direct cost to contract price stand the site indirect costs (6-13 % inside the prices), overheads and industrial profit (13+6 convention on the PEM). This structure is the reading key for any offer: where a healthy discount can live, where the discount destroys site resources, and how new prices must be built. The complete chain up to development cost is developed in from PEM to total cost.
Note: indicative percentages and usual conventions in Spain in 2026; the specific agreement of each contract prevails.