SCAFFOLDING · SPECIALTY · FIXED BY STEP 02

Owned steel parked on a job costs that job nothing

A tower that ties up forty percent of your yard for fourteen months prices out identically to a three-month job using the same frames. Utilization lives nowhere in the accounting.

WHY IT'S A SCAFFOLDING PROBLEM

Most subcontractors own tools; a scaffold sub owns the product. Frames, planks, ledgers, and clamps are your capital, and that same steel is both what earns the revenue and what limits the next award, which is a combination no drywall or mechanical contractor has to model. When the accounting treats owned components as a fixed asset on a depreciation schedule and not as a consumable capacity you're renting to yourself, deployment looks completely costless to the job that consumed it.

WHAT IT COSTS

The size of it

You bid the next three jobs at owned-equipment rates, then serve them by buying new or cross-renting at two to three times that basis. The margin is gone before the first truck rolls out of the yard.

OVERHEAD AT $1M–$5M

18%

CFOS target 17% for scaffolding.

GROSS MARGIN AT $1M–$5M

26%

CFOS target 28.5% for scaffolding.

NET PROFIT AT $1M–$5M

CFOS target 11.5% for scaffolding.

Your largest asset is your own inventory, and when it deploys, the job picks up rental revenue while job cost records erect labor, freight, and consumables. Nothing charges the job for holding the steel. So the fourteen-month tower shows a beautiful margin on the job report while the yard behind your office is bare, and the estimator pricing next month's award has no way to know the components are spoken for. The monthly rate on that tower was bid against an assumed duration that expired eleven months ago, and no one recalculated anything when it did. Utilization is the number that governs a scaffold business, and it's the one number the books don't produce.

WHAT TO DO

Three moves, in order

STEP 01

Publish an internal monthly rate per component type and post it as a job cost the day the steel leaves the yard, so the job that holds the inventory pays for holding it.

STEP 02

Build a one-page deployment sheet: what is out, which job it's on, and the month it's scheduled back. Update it every Friday from the load tickets.

STEP 03

Require the estimator to check committed inventory and expected return dates before pricing any job with a duration over six months, and to price the shortfall at cross-rental rates.

THE FIX

Step 02: Equipment cost basis

A correct internal rate per machine covering ownership, maintenance, fuel, and transport, charged to the projects that used it.

CFOS-02 · CHAPTER 2

What your equipment really costs per hour

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

BENCHMARKS

Scaffolding 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

Your equipment is eating the margin

The machine is paid for, so the jobs use it at no charge. Then the transmission goes and the year is gone.

SAME TRADE

What else costs scaffolding contractors money

SCAFFOLDING · CFOS-01

Your rental line is funding the GC's cash for two years

The GC holds ten percent of your monthly rental invoice the way they hold it on installed work, and keeps holding it until the building is done. Nothing on rent waits to be completed.

SCAFFOLDING · CFOS-06

Forty verbal adds a job never become change orders

Masons want a lift raised and painters want a deck moved. Two men go out for three hours, no ticket gets signed, and the same call comes forty more times.

SCAFFOLDING · CFOS-06

Your erect date belongs to people who don't work for you

Crew is booked for the fifteenth and the drawings are still on the owner's engineer's desk. You don't control any of the three clocks that release the erect.

SCAFFOLDING · CFOS-04

You sell deck square feet and spend erector hours per lift

Ten thousand square feet at eight feet in an open garage and ten thousand square feet at ninety feet inside an occupied atrium bid identically. One of them costs double.

SCAFFOLDING · CFOS-01

The clamps that never came back are hiding in your overhead

Eleven hundred clamps shipped and nine hundred came home. By the time you know that, the final pay app is cut and the GC's job budget is closed.

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 hit 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 scaffolding owners ask

How do I charge a job for scaffold equipment I already own?

A tower that ties up forty percent of your yard for fourteen months prices out identically to a three-month job using the same frames. Utilization lives nowhere in the accounting.

What does it cost?

You bid the next three jobs at owned-equipment rates, then serve them by buying new or cross-renting at two to three times that basis. The margin is gone before the first truck rolls out of the yard.

What do I do first?

Publish an internal monthly rate per component type and post it as a job cost the day the steel leaves the yard, so the job that holds the inventory pays for holding it.

What are scaffolding contractors supposed to be making?

Scaffolding runs 26% gross margin, 18% overhead and 8% net profit before taxes at $1M–$5M. The all-trade average is 7%, so this trade is 1 point above it. The CFOS target is 11.5%.

Which part of the system fixes it?

The step is number 02, equipment cost basis. A correct internal rate per machine covering ownership, maintenance, fuel, and transport, charged to the projects that used it. It comes from chapter 2 of CONTROL: The Construction Financial Operating System.

OR HAVE IT HANDLED

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 scaffolding contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, run by the same author.

What a fractional CFO does for scaffolding contractors

AUTHOR

JOSH LUEBKER

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

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