The Truth About “Double Dipping” in Construction
Why Berkley Construction Separates Supervision Costs from Production Costs
By Keith Berkley, Berkley Construction Inc.
At Berkley Construction Inc., one of the most common questions we occasionally hear from clients revolves around a single line item in our proposals:
#26 Supervision
Sometimes the question is genuine curiosity. Other times, it feels more like an accusation:
“Keith and Robert, you’re already marking up subcontractor work in the production line items… and then you’re charging us for supervision too. Isn’t that double dipping?”
It’s a fair question — and one worth explaining clearly. So this month’s Berkley Blog is dedicated to unpacking what supervision actually means in a professional construction environment, why it matters, and why transparency can sometimes look more expensive even when it’s not.
Construction Pricing Is More Complicated Than It Looks
Talking about money in construction can be uncomfortable. Every project involves trust, expectations, risk, and communication. At Berkley Construction, we try to approach those conversations honestly from the beginning.
Our goal is typically to maintain approximately a 20% margin on projects. That margin is not pure profit, and it is not a “cost-plus jackpot” scenario. Once direct production costs are paid — labor, subcontractors, materials, permits, rentals, etc. — that remaining percentage helps support the infrastructure required to operate a professional construction company.
That includes things like:
Administration
Vehicles and fuel
Software and technology
Insurance and compliance
Tools and equipment
Office overhead
Project coordination
Executive leadership and operational support
Frankly, sometimes even we wonder how companies survive on margins this tight.
But we try.
And because we are transparent about this from the beginning of the client relationship, the “double dipping” question can catch us off guard a little. Still, asking questions about contracts is smart. We encourage it.
After reviewing tens of thousands of construction proposals over the years, I can confidently say this:
If something in a contract is unclear, sloppy, or confusing — ask about it.
You should.
The Real Source of the Confusion
The confusion comes down to one thing:
What exactly does “supervision” mean?
Some clients assume that because subcontractor line items include markup, that markup should automatically include all supervision and management activities related to the project.
And to some degree, that’s true.
A subcontractor markup does include management of that trade work. But projects involve far more than simply coordinating workers swinging hammers or installing plumbing.
There are countless activities that contribute to a successful project that are not directly tied to “production.”
That’s the distinction.
Production vs. Organizational Support
Most people naturally want to pay for visible production only. We understand that completely.
In fact, we could simply bury supervision costs inside production line items and increase the cost of each trade package accordingly. The total project cost would likely remain almost identical.
But we believe separating these costs creates more transparency — not less.
And the best analogy I can think of is football.
The Football Team Analogy
Imagine a football team.
The fans buy tickets to watch the players on the field and the coaches on the sidelines. That’s the visible product — the game itself.
In construction terms, the players are the:
Framers
Plumbers
Electricians
Tile installers
Painters
All skilled and non skilled trades
The client sees the “game” happening as the project progresses.
But what makes the team successful goes far beyond what happens during the four quarters on the field.
Behind the scenes are:
Trainers
Analysts
Technology systems
Recruiting staff
Operations teams
Scheduling coordinators
Facility management
Ownership and leadership
Now imagine if the stadium experience itself was terrible:
Parking six miles away
Endless entry lines
Dirty bathrooms
Poor communication
Disorganized operations
Even if the team wins, the overall experience feels broken.
That behind-the-scenes organizational structure is the equivalent of what our supervision and operational support line item represents.
Yes, the project manager supervises production, he's the coach. But there are many additional activities required to ensure the entire project experience succeeds for the client.
What Supervision Actually Includes
Professional project supervision includes activities such as:
Client Coordination
Meetings with clients, architects, designers, and engineers
Scope clarification
Budget discussions
Scheduling coordination
Problem Solving
Handling unforeseen conditions
Conflict resolution
Vendor coordination
Utilizing resources from many sources to find good outcomes
Technology & Systems
Project management software
Compliance systems
Documentation tracking
Communication platforms
Training
Executive Oversight
Senior leadership involvement and support of the PM or Coach
Quality assurance
Operational decision-making
Resource allocation
Organizational Infrastructure
Safety systems
Insurance administration
Logistics coordination
Vendor management
Many of these activities are not directly tied to a single “production” line item, but they absolutely contribute to project success.
And yes — they cost money.
The Alternative: Hourly Billing
The easiest way to account for every hour of effort would be to bill clients hourly, the same way consultants or law firms often do.
Every meeting.
Every phone call.
Every scheduling issue.
Every site visit.
But most construction clients don’t want open-ended hourly billing. They want predictable pricing upfront — and understandably so.
That means contractors must estimate operational support costs and account for them somewhere in the proposal.
At Berkley Construction, we choose to show those costs transparently instead of hiding them.
Transparency Can Sometimes Feel More Expensive
Here’s another football example.
Imagine two teams selling tickets.
Team A breaks down the ticket:
$70 Game Ticket
$10 Parking
$10 Facility Fee
$10 Administrative and game experience support Fee
Team B simply says:
$100 Ticket
The customer pays the same amount either way.
But Team A’s transparency can sometimes create the impression that they are charging “extra” — even though the final cost is identical.
That’s often what happens with supervision line items in construction proposals.
At Berkley Construction, we prefer to explain where costs come from rather than hide them inside higher production pricing.
Maybe “Supervision” Is the Wrong Word
Honestly, this entire discussion has made us reconsider the title itself.
The word supervision can imply we are only supervising subcontractors, when in reality the role is much broader:
Customer experience
Communication
Coordination
Operational support
Quality management
Organizational leadership
So moving forward, we may rename Line Item #26 entirely.
Some ideas we’ve discussed internally:
Organizational Management
Organizational Support
Value & Budget Management
Project Operations
Client Success Coordination
Operational Excellence
Operational Awesomeness
We would genuinely love client feedback on this.
Final Thoughts
At the end of the day, most construction failures don’t happen because a building physically falls apart.
They happen because communication falls apart.
Poor coordination, lack of organization, weak leadership, unclear expectations, and inadequate support systems are what destroy projects.
That’s why we invest heavily in operational structure and client communication — even when those efforts are not directly tied to “nails in wood.”
So the next time you see Line Item #26, we hope you view it in a different light.
Not as “double dipping.”
But as an investment in the systems, people, and organizational support required to deliver a better overall construction experience.
Keith Berkley
Lead Estimator & Founder
Berkley Construction Inc.
“When Industry Standard is not good enough.”
