COPE-ing with Overhead and Cost Codes
Discover the COPE method for smarter estimating and job costing. Learn how to track overhead, categorize costs, and increase profitability in your construction business.
Contents
The latest episode of Builders, Budgets, and Beers brought a deep dive into a game-changing approach to estimating and job costing with guest Michael Anschel, owner of Otogawa-Anschel Design+Build in Minneapolis. With his diverse experience in the industry, Michael has pioneered the COPE method—Cost of Project Execution—to provide builders with more accurate, transparent, and scalable financial tracking.
What is the COPE Method?
The COPE system challenges the traditional approach of applying a single markup percentage across all projects. Instead, it:
- Recognizes overhead as a function of time rather than a fixed percentage.
- Breaks down costs into 12 COPE codes that track key project execution expenses.
- Moves costs like client meetings, material orders, and inspections into direct project costs rather than treating them as overhead.
- Provides a more realistic margin based on market conditions and project complexity.
Why COPE Matters
Traditional markup models often force builders into a justification game with clients. When a customer sees a single markup figure, they may question why it seems high—leading to difficult conversations about overhead, salaries, and other business expenses. COPE removes that ambiguity, making the numbers clear and defensible.
Michael explained that using COPE allowed his company to adjust markups based on project size and complexity. For example, small projects required an 84% markup to remain profitable, while large-scale projects could operate with significantly lower markups. This flexibility ensures builders aren’t losing money on small jobs or overcharging unnecessarily on large ones.
From Estimating to Job Costing: Why It All Connects
One of the biggest takeaways from this episode was the importance of tracking costs accurately from estimate to execution. Builders who don’t categorize costs properly end up guessing on their profitability—often leading to margin erosion and financial instability.
Michael emphasized that setting up a strong cost code structure and job costing system enables builders to:
- Compare estimated vs. actual costs to refine future pricing.
- Eliminate inefficiencies in material and labor tracking.
- Gain visibility into overhead allocation to avoid financial surprises.
Making the Shift: Practical Steps to Implement COPE
For builders looking to implement a more structured financial approach, Michael recommends:
- Commit to cost codes – Set up a standardized list (e.g., framing, electrical, plumbing) and use them consistently.
- Apply overhead based on project duration – Allocate overhead costs by time rather than a fixed percentage.
- Track project execution costs separately – Move job-related meetings, materials handling, and inspections out of general overhead.
- Use financial tools effectively – Ensure job costing data integrates seamlessly with accounting software like QuickBooks.
Final Thoughts
The COPE method isn't just about tracking numbers—it’s about creating confidence, transparency, and profitability in a construction business. Builders who embrace structured estimating and job costing will be better positioned to grow, increase margins, and avoid the common pitfalls of financial mismanagement.
For those looking to dive deeper into COPE, Michael offers online training and workshops. Learn more by visiting Remodelers on the Rise or reaching out for upcoming sessions.
