You Buy Pile by the Ton and Bill It by the Foot
Every cutoff on the barge is footage you already paid for and will never invoice. The same mismatch runs backwards on dredging.
Most trades buy and sell in the same unit, so waste reads as an obvious overage against the takeoff. Marine buys in tons and in scow yards and sells in linear feet and surveyed in place yards, so the loss hides inside the conversion. No purchase order ever looks wrong, and the whole thing turns up months later as a job that just came in light.
The size of it
Five feet of cutoff on a 200 pile job is 1,000 linear feet of purchased pile that never appears on a pay application. On dredging, bulking of 15 to 25 percent means disposal costs run about a quarter above pay yardage with no line to charge it to.
Pile is bid and paid as linear feet furnished and driven, and it's purchased by the ton from a mill or by the whole stick from a treater. You order to an estimated tip elevation, so when a pile hits refusal high, the footage above the cutoff line is yours: bought, hauled, cut off, and absent from every pay application. Dredging runs the same mismatch in reverse, where you bill in place cubic yards measured by pre and post dredge hydrographic survey to the design template plus allowable overdepth. The material bulks in the scow, so you move and dispose of substantially more volume than you bill, and anything below allowable overdepth goes out for nothing.
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 marine contractors money
The same mechanism in other trades
What marine owners ask
Pile cutoff isn't a pay item how do I cover it?
Every cutoff on the barge is footage you already paid for and will never invoice. The same mismatch runs backwards on dredging.
What does it cost?
Five feet of cutoff on a 200 pile job is 1,000 linear feet of purchased pile that never appears on a pay application. On dredging, bulking of 15 to 25 percent means disposal costs run about a quarter above pay yardage with no line to charge it to.
What do I do first?
Estimate every pile and dredge line twice, once in the unit you buy and once in the unit you bill, side by side on the same sheet.
What are marine contractors supposed to be making?
Marine runs 22% gross margin, 15% overhead and 7% net profit before taxes at $1M–$5M. The all-trade average is 7%, so this trade is right on it. The CFOS target is 10.5%.
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.
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 marine contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, run by the same author.
Wrote CONTROL, the 8 step system behind these figures. More about the author.