What is represented by the term "profit margin" in construction estimating?

Profit margin in construction estimating refers to the difference between project cost and client charge. This term captures the essence of how much profit a company makes on a particular project after accounting for the total costs incurred. In a construction context, project costs include labor, materials, overhead, and any other expenses directly related to completing the job.

When a client is charged a certain amount for the project, the profitability of that project can be assessed by subtracting the total costs from this charge. The remaining amount represents the profit margin, which is crucial for assessing the financial health of a construction business. This figure not only informs management about the success of individual projects but also plays a critical role in strategic planning and pricing for future work.

Other options do not accurately describe profit margin. The total contract value solely refers to the client's payment and does not reflect cost components. Total expenses of running a construction company encompass much more than just a single project's financials, and focusing only on the amount spent on materials neglects many other critical costs involved in the project. Therefore, understanding profit margin as the difference between project cost and client charge is essential in construction estimating.