HVAC · MECHANICAL AND LIFE SAFETY · FIXED BY STEP 04

Bid pounds and bought pounds are two different numbers

You bid 42,000 pounds of duct and the mill invoices add up to 51,000, and nobody in the building can tell you where the other 9,000 pounds went.

WHY IT IS A HVAC PROBLEM

Most trades bid and buy in the same unit, so a material overrun points at itself. You bid a finished installed weight and buy a raw coil weight, and the difference between them is a shop behavior, nesting and fitting mix, that never touches the estimate. The overrun then appears as a lump with no cause attached, on the single largest commodity you handle.

WHAT IT COSTS

The size of it

You run a 5 to 9 percent material overrun on a quarter of the job cost, it repeats on every job, and you've nothing in place to catch it before the job closes.

OVERHEAD AT $1M–$5M

16%

CFOS target 15% for hvac.

GROSS MARGIN AT $1M–$5M

24%

CFOS target 26% for hvac.

NET PROFIT AT $1M–$5M

CFOS target 11% for hvac.

Sheet metal is 25 to 40 percent of a duct-heavy job, and it's the one line item where the unit you bid and the unit you buy aren't the same thing. The estimate carries installed pounds by SMACNA gauge and pressure class. Your purchase is galvanized coil by hundredweight at whatever the mill is charging that week, plus drop and scrap that runs 10 to 20 percent depending on fitting mix and how well the shop nests. If your waste factor is a number somebody typed in 2019 and this job ran 22 percent drop, nothing catches it, because pounds installed and pounds bought never appear in the same report. Add galvanized price movement between bid and buyout, and the biggest commodity on the job is unmanaged from both ends.

WHAT TO DO

Three moves, in order

STEP 01

Build one report per job that puts estimated installed pounds by gauge next to coil hundredweight purchased, with the drop percentage calculated at the bottom.

STEP 02

Set waste factors by fitting mix, one for straight duct runs and a higher one for fitting-heavy work, and update them from the last four closed jobs.

STEP 03

Lock galvanized pricing at buyout where the supplier will do it, and where they won't, carry the exposure as a stated allowance the PM can see.

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

HVAC 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 hvac contractors money

HVAC · CFOS-01

Your biggest PO gets paid months before it can be billed

You wired the deposit in April, paid the balance in July, and in September the unit is still in a leased warehouse with nothing on the pay app to show for it.

HVAC · CFOS-04

You bid a price the factory never agreed to hold

You bid it in March, released it in June, and it ships in February at whatever the factory is charging in February.

HVAC · CFOS-03

A model nobody signs turns into shop burden nobody bid

The coil line isn't running, the plasma table is idle, the shop foreman is on payroll, and you're chasing the plumber and the sprinkler contractor for a signature.

HVAC · CFOS-06

Temp heat on your units is a change order

They dried the building in, fired your rooftops in November, pulled drywall dust through the coils until March, and now they want a clean warranty at turnover.

HVAC · CFOS-07

Retention rides on a report you didn't write

Field work wrapped in April, and your last five percent is still waiting on a heating verification somebody has to schedule for cold weather.

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 nobody in your contract ever agreed on.

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 nobody wrote escalation language for it.

QUESTIONS

What hvac owners ask

Why did i buy more sheet metal than i bid on the job?

You bid 42,000 pounds of duct and the mill invoices add up to 51,000, and nobody in the building can tell you where the other 9,000 pounds went.

What does it cost?

You run a 5 to 9 percent material overrun on a quarter of the job cost, it repeats on every job, and you've nothing in place to catch it before the job closes.

What do I do first?

Build one report per job that puts estimated installed pounds by gauge next to coil hundredweight purchased, with the drop percentage calculated at the bottom.

What are hvac contractors supposed to be making?

HVAC runs 24% gross margin, 16% overhead and 8% net profit before taxes at $1M–$5M. The all-trade average is 7%, so this trade sits 1 points above it. The CFOS target is 11%.

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.