ENVIRONMENTAL REMEDIATION · CIVIL AND EARTHWORK · FIXED BY STEP 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.

WHY IT'S AN ENVIRONMENTAL REMEDIATION PROBLEM

A steel or copper escalation is in an index the owner can pull up, so that conversation is short. This one is a chemistry result on material that was never fully characterized before bid, and the change order routes through the owner's own consultant, who wrote the boring plan that missed it. No other trade has its largest cost line reclassified by a laboratory after the contract is signed.

WHAT IT COSTS

The size of it

On a 3,000 ton job that swing is roughly $150,000 to over $1M of exposure tied to a line you priced from someone else's borings.

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.

A single lab result decides whether the biggest number in the bid is fifty dollars a ton or four hundred and fifty, and it comes back after the price is fixed. Soil bid as non-hazardous goes to a Subtitle D landfill somewhere in the $25 to $75 per ton range. A TCLP failure, usually benzene or lead out of old leaded gasoline, reclassifies that same dirt as Subtitle C hazardous at roughly $140 to $450 per ton, plus manifested transport and possibly stabilization before anyone will take it. Disposal and haul is frequently the single largest cost line in the whole bid, and it gets priced off a limited boring grid you didn't drill.

WHAT TO DO

Three moves, in order

STEP 01

Bid the tonnage at the non-hazardous unit price and price a separate published unit rate for Subtitle C tons, manifested transport, and stabilization, so a reclassification becomes arithmetic and not a negotiation.

STEP 02

State the boring grid and the sample count you priced from as the written basis of bid, with a clause that a lab reclassification triggers the alternate unit rate through the owner's consultant.

STEP 03

Use the same tonnage cost codes in the estimate and in job cost, so the day the TCLP result comes back you can show the delta on one page.

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

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

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 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-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.

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

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 Set 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 environmental remediation owners ask

Soil failed TCLP after bid who pays for hazardous disposal?

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

What does it cost?

On a 3,000 ton job that swing is roughly $150,000 to over $1M of exposure tied to a line you priced from someone else's borings.

What do I do first?

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 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: 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.