INTERIORS · INTERIORS AND FINISHES · FIXED BY STEP 04

The January Board Increase Applies to a Job You Bid in October

Wallboard moves on an announced list increase with a hard effective date, your distributor quote holds about 30 days, and buyout is three months after you signed the contract.

WHY IT'S AN INTERIORS PROBLEM

Buying early means stocking material into a building that isn't ready, and it means financing that material and finding somewhere dry to keep it. That works for a trade with a small material buy. Board and framing are typically 25 to 40 percent of an interiors contract, so pre-buying a full job turns into a warehouse problem and a cash problem at the same time, while every competitor bidding after the effective date prices the new number.

WHAT IT COSTS

The size of it

On a hard bid with no escalation clause, the entire move is yours. A high single digit increase on 25 to 40 percent of contract value is one to three points of gross margin on every job that crosses the date.

OVERHEAD AT $1M to $5M

13%

CFOS target 12% for interiors.

GROSS MARGIN AT $1M to $5M

19%

CFOS target 22% for interiors.

NET PROFIT AT $1M to $5M

CFOS target 10% for interiors.

Wallboard manufacturers publish list increases with a hard effective date, historically at the start of the calendar year, and distributor quotes to subs hold roughly 30 days. Steel stud and track price off galvanized coil, so they move continuously and take tariff exposure on top of that. A job bid in the fourth quarter and bought out in the first quarter therefore crosses a price step you could see coming and couldn't lock. Escalation language gets refused because GCs treat board and studs as shelf commodities, and the answer you get back is buy it early.

WHAT TO DO

Three moves, in order

STEP 01

Date-stamp every board and stud quote in the estimate file with the day it expires, and put that expiration onto the bid summary you sign.

STEP 02

Flag any bid whose likely buyout falls after the first of the year and price the drywall and framing material line at the announced increase, not at today's quote.

STEP 03

Ask the distributor for a written price hold to a specific date tied to a release schedule, and if they won't give it, put that refusal in your proposal as a qualification.

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

Interiors 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 interiors contractors money

INTERIORS · CFOS-01

Your Door Hardware Stays in a Crate for Nine Months

You cut the deposit on doors, frames, and hardware in the spring so hollow metal frames can go in before the walls close, and the leaves and closers stay crated until finishes.

INTERIORS · CFOS-06

Waiting on the Inspector Is Priced Into Nothing

Your crew is mobilized and can't legally cover the wall until MEP rough, blocking, sound batt, and head-of-wall firestopping pass, and the special inspector books elsewhere.

INTERIORS · CFOS-07

Peak Payroll and Peak Retention Occur in the Same Quarter

You start in month 10 to 14 of an 18 to 24 month build and install most of your contract in the last stretch, which is when the withheld retention balance is at its highest.

INTERIORS · CFOS-05

Mud and Screws Are Using Up Your Overhead

Joint compound, tape, screws, corner bead, blades, caulk, and plastic come off a revolving supply house account on one monthly statement with no job written on any line.

INTERIORS · CFOS-08

The Callback Comes One Winter After You Left the Job

Nail pops and cracks at door heads appear after the first heating season, the adhered flooring lets go from slab moisture, and the one-year warranty letter is yours.

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 interiors owners ask

Drywall board price went up after I already bid the job?

Wallboard moves on an announced list increase with a hard effective date, your distributor quote holds about 30 days, and buyout is three months after you signed the contract.

What does it cost?

What do I do first?

Date-stamp every board and stud quote in the estimate file with the day it expires, and put that expiration onto the bid summary you sign.

What are interiors contractors supposed to be making?

Interiors has 19% gross margin, 13% overhead and 6% net profit after taxes at $1M to $5M. The all-trade average is 7%, so this trade is 1 point 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: 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 interiors contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, led by the same author.

What a fractional CFO does for interiors contractors

AUTHOR

JOSH LUEBKER

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

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