You hit the hours and still lost money on the rate
You bid labor in unit hours and the field hit the unit hours. The loss lives in the dollars per hour you converted them at, and it runs the same direction on every job you take.
Labor runs 40 to 45 percent of revenue in an electrical shop, and the estimate treats it as a quantity question while the damage happens on the price side. The electrical bid passes through two conversions, unit hours to crew hours and crew hours to dollars, and both assumptions live in a settings screen nobody opens. License law and crew availability set the apprentice mix you run, while the template still assumes the mix somebody typed in years ago.
The size of it
A 20 percent spread between the crew rate you assumed and the loaded rate you pay, in a shop where labor is 40 to 45 percent of revenue, costs 8 to 9 points of gross margin on every job. The year closes at breakeven with a full backlog, and no single job looks like the one that did it.
The hours were right. The conversion to dollars was wrong, and it has been wrong in the same direction on every job in your backlog. Estimating software prices labor in NECA style unit hours and converts at an assumed crew rate and an assumed journeyman to apprentice mix, and the field then runs whoever is available that week. State ratio and license rules cap how many apprentices one journeyman can supervise, so when the ratio tightens the mix richens and the identical hours cost 18 to 30 percent more. The burden multiplier is usually years stale on top of that: workers comp class 5190 is a high rate code that moves with your EMR, and the truck, fuel, phone, and small tools that follow every electrician sit in overhead where the estimate never sees them.
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 electrical contractors money
The same mechanism in other trades
What electrical owners ask
We hit our estimated labor hours but still lost money on the job?
You bid labor in unit hours and the field hit the unit hours. The loss lives in the dollars per hour you converted them at, and it runs the same direction on every job you take.
What does it cost?
A 20 percent spread between the crew rate you assumed and the loaded rate you pay, in a shop where labor is 40 to 45 percent of revenue, costs 8 to 9 points of gross margin on every job. The year closes at breakeven with a full backlog, and no single job looks like the one that did it.
What do I do first?
Take last quarter's payroll register, add real burden, comp at your current EMR, truck, fuel, phone, and small tools, then divide by field hours worked to get one true loaded rate per classification.
What are electrical contractors supposed to be making?
Electrical runs 25% gross margin, 16% overhead and 9% net profit before taxes at $1M–$5M. The all-trade average is 7%, so this trade sits 2 points above it. The CFOS target is 11%.
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.
Josh Luebker ran commercial construction projects before he ran the numbers behind them, on data centres, military bases, hospitals, and high-rises. He wrote CONTROL: The Construction Financial Operating System, which is an eight-step framework for commercial subcontractors, and it publishes on October 1, 2026. He is a master electrician who moved into the office and kept the field vocabulary.
Sulphur Prairie Operations LLC maintains the benchmark reference behind these figures. Every edition is reconciled against the newest CFMA survey release before it publishes here. Where a figure changes between editions, the older edition keeps its year in the title so a citation to it stays correct.