CIVIL · CIVIL AND EARTHWORK · FIXED BY STEP 04

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.

WHY IT'S A CIVIL PROBLEM

Most trades buy and install the same unit, so a box of material is a box of material all the way through. Civil buys tons at the pit, hauls by the hour or the load, and gets paid by the cubic yard at plan measure, which means three different units describe one pile of dirt. The conversion lives in the estimator's head and never on the ticket, so the error widens unwatched.

WHAT IT COSTS

The size of it

On a $1.2M grading package, a 10% conversion error on import runs roughly $60k to $120k of material and haul with no change order behind it. Spread across hundreds of tickets, it never trips a single red flag.

OVERHEAD AT $1M–$5M

14%

CFOS target 13% for civil.

GROSS MARGIN AT $1M–$5M

21%

CFOS target 23.5% for civil.

NET PROFIT AT $1M–$5M

CFOS target 10.5% for civil.

Pick one unit and make the whole job live in it. Excavation and embankment get bid by the cubic yard at plan or bank measure, while select fill, flex base, and stone get bought by the ton FOB the pit and hauled by the hour or the load. Your bid and your cost report stop using the same unit from day one. Between them is a shrink and swell factor plus a unit weight your estimator assumed once, and unless somebody checks both against scale tickets in the first week of import, the error compounds across every load for the rest of the job. Set the import cost codes to record both sides: tons received and cubic yards placed, converted at the factor you bid. Then you can read a Tuesday's tickets and know whether you're ahead of the yardage or buying somebody else's dirt without seeing it.

WHAT TO DO

Three moves, in order

STEP 01

Pull last week's scale tickets, total the tons, and divide by the cubic yards your grade checker says went in the ground. That ratio is your real unit weight and swell, not the one in the bid.

STEP 02

Rebuild the import cost codes so each one tracks tons received and cubic yards placed side by side, with the bid conversion factor stored on the code itself.

STEP 03

Set a recurring Friday check on the first 20% of the import. If tons per placed yard run off the bid factor by more than 5%, reprice the balance and go get the change order while the dirt is still moving.

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

Civil 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 civil contractors money

CIVIL · CFOS-01

Four mobilizations, one mob line item

You clear and grub in month one, come back for wet utilities, come back again for paving subgrade at closeout, and the contract still has one mobilization line.

CIVIL · CFOS-06

Your retainage is waiting on 70 percent grass

You finished grading in month three and utilities in month six, and the last 5 to 10 percent of your contract is locked behind a seed bed that has to hit 70 percent cover.

CIVIL · CFOS-06

The grading permit clock isn't on your schedule

Third resubmittal on the grading permit, the power pole relocation is six months out, and your crew and iron cost money while no party in your contract chain is at fault.

CIVIL · CFOS-08

Trench dips appear inside the bond window

The parking lot settled over your sewer line eighteen months after acceptance, and who pays comes down to whether the density test for that station and that lift is in a file.

SAME MECHANISM, OTHER TRADES

The same mechanism in other trades

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.

DRYWALL

Your contract holds two commodities and hedges neither

You bid it in October off a quote good for thirty days, and you're buying board and studs in March on two markets that move separately.

QUESTIONS

What civil owners ask

I bid cubic yards but my fill is billed in tons and I can't tell if I'm making money?

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.

What does it cost?

What do I do first?

Pull last week's scale tickets, total the tons, and divide by the cubic yards your grade checker says went in the ground. That ratio is your real unit weight and swell, not the one in the bid.

What are civil contractors supposed to be making?

Civil runs 21% gross margin, 14% 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 civil contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, run by the same author.

What a fractional CFO does for civil contractors

AUTHOR

JOSH LUEBKER

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

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