BRIDGE · CIVIL AND EARTHWORK · FIXED BY STEP 04

Steel Adjustment Is a Box You Check at Letting

On a lot of DOT bridge lettings, steel price protection is elected item by item at bid time. Skip the election and you own the entire move yourself.

WHY IT'S A BRIDGE PROBLEM

The fabricated and coated portion is where your markup lives, and that's the one portion the index refuses to cover. A trade buying stock material off a shelf reprices at purchase; a bridge sub buys a fabricated assembly quoted a year before it ships, against an election made at letting that never gets revisited. The exposure is set by a checkbox and paid for by the crew twelve months later.

WHAT IT COSTS

The size of it

On a structure where steel is 25 to 35% of cost, a 10% miss on the fabricated side eats real gross margin, and it turns up in WIP as fade no report traces back to a bid decision made a year earlier.

OVERHEAD AT $1M–$5M

15%

CFOS target 14% for bridge.

GROSS MARGIN AT $1M–$5M

22%

CFOS target 24.5% for bridge.

NET PROFIT AT $1M–$5M

CFOS target 10.5% for bridge.

Bridge is the most steel dense civil work there is: deck mats, substructure cages, epoxy coated bar, strand, piling, and plate. IDOT's Steel Cost Adjustment shows how these clauses usually run, and the terms are consistent: the bidder elects it per pay item at bid, it pays only past a 5% index move, it measures at the month steel ships from the mill, and it lists temporary sheet piling as excluded. It also excludes fabrication, coating, shipping, storage, and labor cost changes, and it shuts off during any period subject to liquidated damages. On private or GC-let bridge work there's usually no clause at all.

WHAT TO DO

Three moves, in order

STEP 01

Before the next letting, read the escalation provision line by line, mark which pay items allow election, and price the election as a decision with a number behind it.

STEP 02

Split the steel estimate into mill cost and fabricated cost so you can see what the index would and wouldn't cover.

STEP 03

Price escalation contingency on the fabricated and coated portion as its own bid line, coded separately, so closeout tells you whether you needed it.

THE FIX

Step 04: Estimating system

The estimate maps one to one onto the job cost codes, so variance means something the day it appears.

CFOS-04 · CHAPTER 4

Make the estimate and the job cost report match

What this step changes, what it depends on, and how to tell it's installed.

BENCHMARKS

Bridge by revenue band

All 7 bands are published. The CFOS target is beside the figure up to $10M to $25M, and the 4 bands above that are labelled modeled.

ACROSS EVERY TRADE

The estimate and the actual never match

You can compare the estimate to the job cost report, but the two use different words, so the comparison means nothing.

SAME TRADE

What else costs bridge contractors money

BRIDGE · CFOS-06

Your Girder Date Comes From the Casting Bed Calendar

You didn't buy beams, you bought a spot in a casting bed. The plant releases that spot when your shop drawings come back approved, and the calendar behind it belongs to somebody else.

BRIDGE · CFOS-01

One Bridge Takes Five Move-Ins and Pays One Mobilization

A single structure takes four to six separate trips in and out. The contract pays mobilization once, usually capped, usually paid down against early progress.

BRIDGE · CFOS-02

You Bid Erection by the Beam and Pay by the Day

Girder erection gets bid per beam or per structure. The crane, mats, rigging, and crew accrue by the day, and the day keeps running while the pick waits on someone else.

BRIDGE · CFOS-05

Girders in the Yard Can Be Billed Before They Ship

State specs let you get paid for girders stored at the fabrication plant. Most small bridge subs never file the forms and float the whole package for months.

SAME MECHANISM, OTHER TRADES

The same mechanism in other trades

CIVIL

You bid cubic yards and pay by the ton

You bid 40,000 yards of import and every scale ticket comes back in tons. The biggest cost line on the job is measured in a unit your contract never defined.

CONCRETE

Your Ready-Mix Quote Expired Eleven Months Before the Pour

Concrete has about a 90-minute working life from batch to placement, so your supply market is a haul radius with two or three plants. They quoted a market that's gone.

DEMOLITION

Your Bid Locked A Scrap Price The Market Never Honored

You priced the steel credit in February and crossed the scale in October. The market moved and the subcontract had no escalation language for it.

QUESTIONS

What bridge owners ask

Does DOT steel cost adjustment cover fabrication and coating or just mill price?

On a lot of DOT bridge lettings, steel price protection is elected item by item at bid time. Skip the election and you own the entire move yourself.

What does it cost?

On a structure where steel is 25 to 35% of cost, a 10% miss on the fabricated side eats real gross margin, and it turns up in WIP as fade no report traces back to a bid decision made a year earlier.

What do I do first?

Before the next letting, read the escalation provision line by line, mark which pay items allow election, and price the election as a decision with a number behind it.

What are bridge contractors supposed to be making?

Bridge runs 22% gross margin, 15% overhead and 7% net profit before taxes at $1M–$5M. The all-trade average is 7%, so this trade is right on it. The CFOS target is 10.5%.

Which part of the system fixes it?

The step is number 04, estimating system. The estimate maps one to one onto the job cost codes, so variance means something the day it appears. It comes from chapter 4 of CONTROL: The Construction Financial Operating System.

OR HAVE IT HANDLED

Everything on this page is something you can install yourself, andCONTROL is the order to do it in. If you would rather buy the finished result, SPM The Construction CFO does this work for bridge contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, run by the same author.

What a fractional CFO does for bridge contractors

AUTHOR

JOSH LUEBKER

MASTER ELECTRICIAN · 150+ PROJECTS · $2.1B+ MANAGED

Wrote CONTROL, the 8 step system behind these figures. More about the author.