You sell yards and you buy gallons and truck hours
The contract quantity never changed, the haul route did, and somehow the earthwork margin is gone.
Most trades buy their material in the same unit they sell it in, so a price change is visible on the invoice. Earthwork buys time and fuel and sells volume, which means the cost can double while the quantity on the pay application never moves. Hard-bid private sitework almost never carries fuel or material escalation language, and a GC won't sign one on a scope he thinks of as commodity labour.
The size of it
A 10% shrink-swell miss on 50,000 CY is 5,000 unbilled yards of machine hours, trucking, and disposal. A haul-distance change on its own can eat the whole earthwork margin without one line of the contract quantity changing.
Your revenue is fixed in cubic yards the day you sign, but your cost comes in as diesel, hired haul, and imported fill or aggregate, and none of those convert cleanly to a yard. Gallons burned per yard is a function of haul distance, cycle time, weather, and how many times you move the same material. Shrink and swell widen the distance between the two: bank, loose, and compacted are three different numbers, with roughly 1 bank yard yielding about 0.85 compacted, so a 10,000 CY compacted fill is really about 11,800 CY of bank material moved. Then the spoil site closes or starts charging a tipping fee, your 6-mile round trip becomes 22, and that doesn't add trucks in a straight line, because it multiplies them by cycle time.
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 excavation contractors money
The same mechanism in other trades
What excavation owners ask
Why does my earthwork job lose money when the haul distance changes?
The contract quantity never changed, the haul route did, and somehow the earthwork margin is gone.
What does it cost?
A 10% shrink-swell miss on 50,000 CY is 5,000 unbilled yards of machine hours, trucking, and disposal. A haul-distance change on its own can eat the whole earthwork margin without one line of the contract quantity changing.
What do I do first?
Bid bank, loose, and compacted yards as separate quantities, and show the shrink or swell factor you used right on the estimate so it can be checked against what the crew moves.
What are excavation contractors supposed to be making?
Excavation runs 21% gross margin, 14% overhead and 7% net profit before taxes at $1M–$5M. The all-trade average is 7%, so this trade sits right on it. The CFOS target is 10%.
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.