GRADING · CIVIL AND EARTHWORK · FIXED BY STEP 04

You Bid Bank Yards And Get Paid Compacted Yards

You take off bank yards, haul loose yards, and get paid compacted yards, on conversion factors assumed off a few borings.

WHY IT IS A GRADING PROBLEM

This trade's largest cost line is bid in a unit the contract never pays in. A shrink factor guessed from four borings decides whether a balanced site balances at all, and you don't get the answer until the machines are working. A miss here never becomes a change order, because the plan quantity didn't change. You eat the difference and the owner never sees a number.

WHAT IT COSTS

The size of it

A ten point miss on shrink across a 50,000 CY balanced site is 5,000 CY of import you carried at zero. At $12 to $18 a yard delivered, that's $60K to $90K off the job.

OVERHEAD AT $1M–$5M

16%

CFOS target 15% for grading.

GROSS MARGIN AT $1M–$5M

18%

CFOS target 25% for grading.

NET PROFIT AT $1M–$5M

CFOS target 10% for grading.

Dirt gets measured in three different units on the same job, and the factors between them are assumptions made before a machine ever broke dirt. Takeoff comes off the civil plan as bank cubic yards in place. Trucks then load and bill in loose cubic yards, roughly 15% to 30% larger for common soils. What you get paid for is compacted cubic yards, which shrink roughly 10% to 25% off bank depending on the material. On a unit price contract you're paid on the plan quantity or the engineer's cross section measurement, so your truck tickets prove what you spent and nothing more.

WHAT TO DO

Three moves, in order

STEP 01

Record the bank, loose, and compacted quantities on every job you finish and build your own shrink and swell table by soil type.

STEP 02

Write the assumed shrink factor on the proposal and qualify import above it as a unit price add.

STEP 03

Track import yards against the bid factor every week during mass grade so a bad assumption gets caught in week two, not at closeout.

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

Grading by revenue band

Every one of the 7 bands carries the CFOS target beside the published figure.

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 grading contractors money

GRADING · CFOS-02

You Ordered The Dozer Before You Won The Job

You signed a five year note on a machine sitting in a factory build slot, betting on backlog nobody had awarded yet. The job slid nine months and you rented the whole time.

GRADING · CFOS-06

A Density Tech's Calendar Runs Your Fill Schedule

Nobody places the next lift until the lab comes out and shoots it, and that lab answers to the owner's geotech, not to you.

GRADING · CFOS-07

Earned In Month Two, Retention Paid In Month Twenty-Two

Mass grading is finished before the foundation is poured, and the retention on it sits until somebody else's building reaches substantial completion.

GRADING · CFOS-01

Five Trips To Site, One Mobilization Line Item

Clearing, mass grade, trench backfill, subgrade, and final grade are five separate visits spread across the GC's whole schedule, and you bid them as one number.

GRADING · CFOS-08

When The Vertical Trades Slip, Your Silt Fence Pays

You installed the BMPs in week one and got paid for them once. The seven day inspection clock keeps running until the site stops being a construction site.

SAME MECHANISM, OTHER TRADES

The same mechanism in other trades

DRYWALL

Level 5 gets discovered after the primer goes on

The spec said Level 4, the owner walked it at night with the wall washers on, and now there's a skim coat standing between you and your retention.

DRYWALL

Piece rate and square-foot bids agree on flat walls only

Your hangers make the same on a clean corridor as on a bathroom full of soffits, so guess which walls are done Friday and which ones aren't.

ELECTRICAL

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.

QUESTIONS

What grading owners ask

How do i figure shrink and swell for a dirt bid?

You take off bank yards, haul loose yards, and get paid compacted yards, on conversion factors assumed off a few borings.

What does it cost?

A ten point miss on shrink across a 50,000 CY balanced site is 5,000 CY of import you carried at zero. At $12 to $18 a yard delivered, that's $60K to $90K off the job.

What do I do first?

Record the bank, loose, and compacted quantities on every job you finish and build your own shrink and swell table by soil type.

What are grading contractors supposed to be making?

Grading runs 18% gross margin, 16% overhead and 2% net profit before taxes at $1M–$5M. The all-trade average is 7%, so this trade sits 5 points below 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.

AUTHOR

JOSH LUEBKER

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

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.