FENCING · SPECIALTY · FIXED BY STEP 04

A 30-Day Steel Quote Won't Survive a Six-Month Buyout

Steel moved, your bid didn't, and the job was gone before a single post went in the ground.

WHY IT'S A FENCING PROBLEM

Plenty of trades buy steel. Very few buy it as roughly half the cost of the unit they sell, and fewer still hold a hard bid open for months against a quote the supplier will only honour for thirty days. Fencing lives in both spots at once, and because a foot of fence looks identical in any market, everyone downstream assumes the price is stable.

WHAT IT COSTS

The size of it

You come up short on a near-50 percent cost line across every foot of a contract you already signed. You find out at buyout, when the only moves left are to absorb it or to argue language you agreed to months earlier.

OVERHEAD AT $1M–$5M

15%

Derived from Sitework, the nearest comparable trade. CFOS target 14%.

GROSS MARGIN AT $1M–$5M

18%

Derived from Sitework, the nearest comparable trade. CFOS target 24%.

NET PROFIT AT $1M–$5M

Derived from Sitework, the nearest comparable trade. CFOS target 10%.

Galvanized chain link fabric, line and terminal posts, top rail, and fittings all price off the steel and zinc commodity markets. That's why your supplier stamps a 30-day validity window on the quote, since they won't absorb the move either and push it back to you. On chain link, material and labor run roughly even per foot, which puts material at close to half of what every foot costs you. When a hard-bid commercial award buys out well past that 30-day window, the whole commodity move falls on your side of the contract, and escalation language gets struck from lump-sum subcontracts as a matter of routine.

WHAT TO DO

Three moves, in order

STEP 01

Put the supplier's quote expiry date on the face of your proposal and tie your price to the award date, not the bid date.

STEP 02

On hard-bid commercial work, ask the supplier to hold or reserve fabric, posts, and rail at award, and price that hold into the number.

STEP 03

Code material separately from labor on every job and compare bought quantity and dollars against your bid quantity monthly, so the difference turns up while the job is running.

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

Fencing 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 fencing contractors money

FENCING · CFOS-06

Your Gate Ships in 20 Weeks. The Schedule Says Two.

It's a two-week install that you order four months ahead, and the only calendar anybody upstream watches is your install window.

FENCING · CFOS-06

The Locate Ticket Belongs To No One, So You Eat the Stand-Down

Crew's loaded, trailer's hooked, and you're waiting in the yard on a locate that hasn't come back.

FENCING · CFOS-02

You Make Four Trips and the Bid Prices One

You make four trips to a job you priced like one trip, and the auger rides along on every one of them.

FENCING · CFOS-08

Your Five-Year Guarantee Is an Unfunded Cost Code

The gate is dragging again and your truck is out there for the third time, and no invoice goes to anyone.

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 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.

QUESTIONS

What fencing owners ask

Steel price increase after fence bid was accepted?

Steel moved, your bid didn't, and the job was gone before a single post went in the ground.

What does it cost?

What do I do first?

Put the supplier's quote expiry date on the face of your proposal and tie your price to the award date, not the bid date.

What are fencing contractors supposed to be making?

No survey separates fencing, so there is no figure of its own. The nearest comparable trade in the reference is Sitework, which runs 18% gross margin, 15% overhead and 3% net profit before taxes at $1M–$5M, with a CFOS target of 10% net. Those are derived figures, not fencing's own. Read them as the neighbourhood, and read your own job costing as the answer.

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 fencing contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, run by the same author.

What SPM The Construction CFO does, and what it costs

AUTHOR

JOSH LUEBKER

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

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