You bought January lumber and you hold the June move
You priced the frame off January lumber and bought it in June, and the subcontract had no escalation language in it. The whole price move comes out of your job.
Most trades take commodity risk on a supporting line, where a bad quarter on copper or fasteners stings and moves on. For a framer the commodity is the job. When your dominant material line is the one commodity most likely to swing between January and June, a hard bid with no escalation language is a position and not a price.
The size of it
A price move between bid and buyout comes straight off the job with no mechanism to recover it. The same crew is running three or four jobs bought at three or four different price points, so you can't tell which one is losing money until the year is closed.
Lumber, sheathing, and engineered wood are the biggest thing a framing sub buys, and lumber is one of the most volatile commodities in the building supply chain. Months routinely pass between bid day and buyout day on a commercial job, because the approval sequence in front of you doesn't move on your schedule. Escalation clauses exist and are well documented, but on hard bid subcontract forms they get struck or never offered, which leaves the move entirely on you. The finish side has the same exposure in a different form: cabinet pulls, hinges, slides, and closers are the most common scope omission in the trade and are frequently marked NIC, so you either eat the hardware or go fight for a change order after signing.
Three moves, in order
Step 04: Estimating system
The estimate maps one to one onto the job cost codes, so variance means something the day it appears.
What else costs carpentry contractors money
The same mechanism in other trades
What carpentry owners ask
Lumber went up between my bid and buyout who eats the difference?
You priced the frame off January lumber and bought it in June, and the subcontract had no escalation language in it. The whole price move comes out of your job.
What does it cost?
A price move between bid and buyout comes straight off the job with no mechanism to recover it. The same crew is running three or four jobs bought at three or four different price points, so you can't tell which one is losing money until the year is closed.
What do I do first?
Date stamp every material price in the estimate and put the quote expiration beside it, so on buyout day you can see how old each number is.
What are carpentry contractors supposed to be making?
No survey separates carpentry, so there is no figure of its own. The nearest comparable trade in the reference is Framing, which runs 18% gross margin, 13% overhead and 5% net profit before taxes at $1M–$5M, with a CFOS target of 10% net. Those are derived figures, not carpentry's own. Read them as the neighbourhood, and read your own job costing as the answer.
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.
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 carpentry contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, run by the same author.
Wrote CONTROL, the 8 step system behind these figures. More about the author.