Scope you didn't price and had to do anyway
Compare crew work to the estimate, then fix the template.
Most scope misses are small and ordinary. Traffic control, haul off, mobilization, a second trip for inspections, cleanup, or a spec section somebody didn't read all the way down. Each one looks too small to argue about with the GC, so the crew does it and the cost goes on the job with no revenue behind it. Add up a year of those and it takes a real bite out of the profit you thought you bid. The bigger problem is that the estimator never hears about it, so the next bid leaves out the same items.
Three moves, in order
What CFOS does about it
CFOS imports your estimate as the job budget by cost code, so the budget is the estimate and not a second guess. Job cost updates every hour against that budget, which means a code going over is visible while the crew is still on the job, not after close. Dailies and T&M tickets from the field go on the job, and a signed T&M ticket becomes a change order draft for the next pay app, so extra work gets billed when the GC has asked for it. Contracts and spec books are read and the terms pulled out, so the estimator has the scope language in front of them.
Who owns this: Estimator.
At $5M, a few missed items on every job separate a good year from a flat one. The owner is usually the only person who sees it. The estimator needs to see it too.
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Step 04: Estimating system
The estimate maps one to one onto the job cost codes, so variance means something the day it appears.
Other problems step 04 solves
Other things that go wrong
What owners ask
Scope gaps subcontractor bid?
Compare crew work to the estimate, then fix the template. Most scope misses are small and ordinary. Traffic control, haul off, mobilization, a second trip for inspections, cleanup, or a spec section somebody didn't read all the way down. Each one looks too small to argue about with the GC, so the crew does it and the cost goes on the job with no revenue behind it. Add up a year of those and it takes a real bite out of the profit you thought you bid. The bigger problem is that the estimator never hears about it, so the next bid leaves out the same items.
Which part of the system fixes this?
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's drawn from chapter 4 of CONTROL: C.F.O.S. Construction Financial Operating System.
Is this normal for my trade?
Across the 48 trades that publish a figure, net profit at $1M to $5M averages 7% before taxes. If you're well under that and this page describes your month, the two are usually the same story. The published average tells you where the pack is, and your own job costing tells you where you are, which is the number that pays payroll.
Where do I start?
Pull your last five closed jobs and list every cost code that went over budget, then ask the foreman and the PM what work was done that the estimate never listed.
How do I know a cost overrun is a scope miss and not just slow production?
Look at the cost code and ask what the crew was doing. If the work is on the estimate and took longer, that's production. If the work isn't on the estimate at all, that's scope. The foreman can usually tell you in a couple of minutes, and the dailies back it up.
Should I bill the GC for scope I missed in my own bid?
No, if the work was in the plans and specs, it was yours to price. You can bill for work the GC directed that was outside the contract. The checklist sorts those two cases early, so the first becomes a better estimate and the second becomes a change order.
Can I fix this without touching anything else?
You can try, and it doesn't hold. Step 04 depends on step 01, job cost structure and step 03, overhead calculation. Install it ahead of those and it produces numbers the field won't trust, which is worse than the problem you started with.
Wrote CONTROL, the 8 step system behind these figures. More about the author.