ENVIRONMENTAL REMEDIATION · CIVIL AND EARTHWORK · FIXED BY STEP 01

Closure letters come quarters after your crew leaves

The soil left in the spring, the crew has been on three other jobs since, and your final draw is stuck behind a state agency's review.

WHY IT'S AN ENVIRONMENTAL REMEDIATION PROBLEM

The party holding your money is a regulator with no contract with you and no duty to your cash flow, so leaning on the GC moves nothing. This is the only trade where the closing signature comes from a state agency reading groundwater data. That's why the job has to be structured with the excavation and the monitoring tail separated, or a finished job looks open on your books for two years.

WHAT IT COSTS

The size of it

Retention and final payment on work you earned in the first month stay unbilled for four to eight quarters, against overhead that has turned over several times since the last truck left.

OVERHEAD AT $1M to $5M

16%

CFOS target 15% for environmental remediation.

GROSS MARGIN AT $1M to $5M

23%

CFOS target 25.5% for environmental remediation.

NET PROFIT AT $1M to $5M

CFOS target 10.5% for environmental remediation.

Field work takes weeks and final payment can take years. Most trades get retention released against substantial completion or a certificate of occupancy, and a general contractor controls those dates. On remediation the milestone is often a No Further Action letter, a site closure, or a risk based closure determination issued by the state environmental agency, and where a site enters post remediation monitoring that decision waits on multiple quarters of well data. A crew that walked off in week four can still be waiting in month eighteen for the determination that releases its money.

WHAT TO DO

Three moves, in order

STEP 01

Split the contract so retention releases against substantial completion of the excavation, with monitoring, reporting, and closure support billed as separate scheduled line items.

STEP 02

Give quarterly well sampling, reporting, and closure paperwork their own cost codes and their own billing calendar, so the long tail stops distorting the dig's margin.

STEP 03

Age retention on a separate schedule by expected closure quarter and stop counting it as current cash in your forecast.

THE FIX

Step 01: Job cost structure

Seven cost categories and three levels of granularity, built so the estimate and the ledger use the same words.

CFOS-01 · CHAPTER 1

Job cost codes that match how you bid the work

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

BENCHMARKS

Environmental remediation 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

Cost codes the field ignores

You have 200 cost codes. The crews use four of them, and one is called Miscellaneous.

SAME TRADE

What else costs environmental remediation contractors money

ENVIRONMENTAL REMEDIATION · CFOS-06

Your disposal outlet is booked before the dig starts

You mobilized, the excavation is open, and the only permitted facility that will take the material is 400 miles away and booked three weeks out.

ENVIRONMENTAL REMEDIATION · CFOS-02

An open hole is rented equipment with no production

The cut is finished, the sidewalls are trimmed, and your crew and your machines wait there while a lab decides whether you're allowed to backfill.

ENVIRONMENTAL REMEDIATION · CFOS-04

One TCLP result can multiply your biggest cost line

You priced the dirt as non-hazardous off borings somebody else drilled, and the TCLP came back failing for lead.

ENVIRONMENTAL REMEDIATION · CFOS-07

The landfill gets paid in 15 days, you get paid in 90

You wrote checks to the landfill, the hauler, and the lab inside three weeks, and the pay app covering all of it is still with the consultant.

ENVIRONMENTAL REMEDIATION · CFOS-01

Task caps on fund work turn good hours into bad debt

The fund approved a set number of hours and tons, the site turned out to have more, and you kept going because the excavation was already open.

SAME MECHANISM, OTHER TRADES

The same mechanism in other trades

CIVIL

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 held behind a seed bed that has to reach 70 percent cover.

CONCRETE

Done in June, Retention Releases When the Building Opens

Footings, foundations, and slab-on-grade are the first real dollar volume on the site, so you bill most of your contract early and then wait on a building you left a year and a half ago.

DEMOLITION

Demo Goes First And Gets Its Retention Back Last

You work five weeks and wait twenty months for the money. Your retention depends on the prime's substantial completion on a building you left before the foundation went in.

QUESTIONS

What environmental remediation owners ask

Retention held until no further action letter from the state?

The soil left in the spring, the crew has been on three other jobs since, and your final draw is stuck behind a state agency's review.

What does it cost?

Retention and final payment on work you earned in the first month stay unbilled for four to eight quarters, against overhead that has turned over several times since the last truck left.

What do I do first?

Split the contract so retention releases against substantial completion of the excavation, with monitoring, reporting, and closure support billed as separate scheduled line items.

What are environmental remediation contractors supposed to be making?

Environmental remediation has 23% gross margin, 16% overhead and 7% net profit after taxes at $1M to $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 01, job cost structure. Seven cost categories and three levels of granularity, built so the estimate and the ledger use the same words. It comes from chapter 1 of CONTROL: C.F.O.S. Construction Financial Operating System.

OR HAVE IT HANDLED

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

What a fractional CFO does for environmental remediation contractors

AUTHOR

JOSH LUEBKER

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

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