PRECAST CONCRETE · CONCRETE AND MASONRY · FIXED BY STEP 01

A yard full of panels the contract won't let you bill

Four hundred thousand dollars of panels are laying on dunnage, cast, cured, and piece marked, and none of it is billable this month.

WHY IT'S A PRECAST CONCRETE PROBLEM

For most subs, material waiting in a warehouse is a purchase waiting to be installed, and the supplier's terms fund it. For a precaster it's finished goods with your own labor and burden already cured into it, stamped with that project's piece marks so it can't be returned or moved to another job. The working capital hole is your own production cost laying on dunnage, and it grows every day the bed produces on schedule.

WHAT IT COSTS

The size of it

You fund $200k to $500k of finished goods on your own money for six to twelve weeks. It gets funded by stretching AP with the strand and cement suppliers who are the same people gating your next job.

OVERHEAD AT $1M to $5M

15%

CFOS target 14% for precast concrete.

GROSS MARGIN AT $1M to $5M

22%

CFOS target 24.5% for precast concrete.

NET PROFIT AT $1M to $5M

CFOS target 10.5% for precast concrete.

Erection sequence sets casting order, which is why the yard fills up long before the site can take a single piece. A bed cycles roughly daily, so a 60 piece package gets cast over eight to twelve weeks and then ships just in time against crane availability. That inventory stays at the plant by definition, which makes it offsite stored material, and stored material clauses commonly refuse offsite storage outright. Where the contract does allow it, it wants advance written approval, a bill of sale transferring title, piece mark or serial documentation, a storage location spelled out by address, and property of others insurance with the owner as loss payee. Shops that didn't get that paperwork into the subcontract at buyout simply don't bill it, and the cement, strand, labor, and burden are all already spent.

WHAT TO DO

Three moves, in order

STEP 01

Before you sign at buyout, read the stored material clause out loud: offsite allowed or refused, what approval it needs, and what documentation triggers payment.

STEP 02

Build the packet once and reuse it on every job: bill of sale, piece mark schedule, storage location, and an insurance certificate that lists the owner as loss payee.

STEP 03

Report cast but not shipped as its own line in job cost every month so you can see how much of your cash is parked in the yard.

THE FIX

Step 01: Job cost structure

Seven cost categories and three levels of granularity, built so the estimate and the ledger use the same words.

CFOS-01 · CHAPTER 1

Job cost codes that match how you bid the work

What this step changes, what it depends on, and how to tell it's installed.

BENCHMARKS

Precast concrete 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

Cost codes the field ignores

You have 200 cost codes. The crews use four of them, and one is called Miscellaneous.

SAME TRADE

What else costs precast concrete contractors money

PRECAST CONCRETE · CFOS-02

Your mold is a one-job asset you pay for up front

Sixty grand of steel forms is parked in the yard for a job that hasn't billed a dollar, and the piece count just got value engineered down after award.

PRECAST CONCRETE · CFOS-06

The casting bed is empty while the architect reviews

Drawings have been on somebody else's desk for five weeks. Your bed is reserved for that job, and it's casting nothing all week.

PRECAST CONCRETE · CFOS-06

Three more trips to that job after the crane goes home

You go back for welding and drypack, then caulk a season later, then patch at punch, and the GC picks the week for every one of them.

SAME MECHANISM, OTHER TRADES

The same mechanism in other trades

CONCRETE

Ten Jobs Used Those Forms, One Job Paid for Them

Your yard is full of panels and shoring, every job report says you made money, and the bank account disagrees. The form buy was charged to job one and jobs two through ten absorbed none of it.

DEMOLITION

The Scale Wants Cash Today, The GC Pays In Sixty Days

Almost everything a demolition job costs goes out in the first two weeks, and the first pay application hasn't even been submitted yet.

FLOORING

You bankroll the mill six months before you get paid

The mill wants a check before it ships, the GC won't pay for stored material, and your cash is stuck in a warehouse for four months waiting on a space that isn't ready.

QUESTIONS

What precast concrete owners ask

Can I bill for precast panels stored at my plant before delivery?

Four hundred thousand dollars of panels are laying on dunnage, cast, cured, and piece marked, and none of it is billable this month.

What does it cost?

You fund $200k to $500k of finished goods on your own money for six to twelve weeks. It gets funded by stretching AP with the strand and cement suppliers who are the same people gating your next job.

What do I do first?

Before you sign at buyout, read the stored material clause out loud: offsite allowed or refused, what approval it needs, and what documentation triggers payment.

What are precast concrete contractors supposed to be making?

Precast concrete has 22% gross margin, 15% overhead and 7% net profit after taxes at $1M to $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 01, job cost structure. Seven cost categories and three levels of granularity, built so the estimate and the ledger use the same words. It comes from chapter 1 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 precast concrete contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, led by the same author.

What a fractional CFO does for precast concrete contractors

AUTHOR

JOSH LUEBKER

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

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