SIDING · ENVELOPE AND STRUCTURE · FIXED BY STEP 04

Prefinished siding gets bought by the lot, weeks early

You ordered the wall, the wall came up two boards short, and the reorder is a different lot. Now the whole elevation is in play and the money went out weeks before the first pay app.

WHY IT'S A SIDING PROBLEM

Primed lap and stock colors stay at the yard, and most trades can send a truck back for one more bundle at noon. A prefinished siding order is a manufacturing run reserved for you, so the insurance stock is a financing decision that gets recorded as a waste factor. It repeats on every prefinished job, which makes the money structural and puts it in the estimate, not in a bad-buy story you tell yourself once a year.

WHAT IT COSTS

The size of it

You commit 10-15% more material dollars than the takeoff on every prefinished job, on supplier terms 30-60 days ahead of the pay app that covers it. One lot mismatch in the middle of an elevation is a $6,000-15,000 re-side with no change order behind it.

OVERHEAD AT $1M–$5M

14%

CFOS target 13% for siding.

GROSS MARGIN AT $1M–$5M

21%

CFOS target 23.5% for siding.

NET PROFIT AT $1M–$5M

CFOS target 10.5% for siding.

Factory finish is made to order. ColorPlus fiber cement, prefinished engineered wood, and prefinished cedar run in a batch for one color, and that batch ships as a lot with its own sheen and shade. Two boards ordered later come off a different run, they read different in flat afternoon light, and the break has to die into a corner board or a trim line, never mid-elevation. So the buyout is the whole elevation plus 10-15% insurance stock in week one, on a lead time counted in weeks, before a single square is installed or billable.

WHAT TO DO

Three moves, in order

STEP 01

Pull the last three prefinished jobs and set actual lot quantity beside takeoff quantity, so you can see the real insurance percentage you buy, split out by color and manufacturer.

STEP 02

Move that percentage into the estimate as its own prefinished material line with its own unit cost, so the buyout stops eating the labor budget where no report shows it.

STEP 03

Require the lot number and run date on every prefinished PO, log it to the job, and get written GC sign-off before any partial reorder ships.

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

Siding 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 siding contractors money

SIDING · CFOS-06

Two clocks gate your start and you own neither

The mockup wall went up in a day, and then the crew waited three weeks on an architect who was never on your payroll.

SIDING · CFOS-07

Building A's retainage waits on the landscaper

Building A was wrapped and occupied last summer, and the retention on it is still parked in the GC's account waiting on paving and punch.

SAME MECHANISM, OTHER TRADES

The same mechanism in other trades

CONCRETE

Eight Tons of Rebar Tagged to a Drawing That Changed

The EOR approved the placing drawings, the fab shop cut and bent to the bar list, and then somebody moved a footing. Now you own bundles tagged to grid lines that no longer exist.

DEMOLITION

Your Breaker Burns Tool Steel That Overhead Pays For

A hammer chews $9,000 of tool steel on one teardown and the job that ate it never sees a dollar of the cost. The margin looks fine and the bank account disagrees.

DRYWALL

Lead-lined board is eight weeks and non-returnable

The imaging room's board is eight weeks out, cut to the shielding drawings, and the deposit is gone the day you release the order.

QUESTIONS

What siding owners ask

Why does prefinished siding cost more than my takeoff?

You ordered the wall, the wall came up two boards short, and the reorder is a different lot. Now the whole elevation is in play and the money went out weeks before the first pay app.

What does it cost?

What do I do first?

Pull the last three prefinished jobs and set actual lot quantity beside takeoff quantity, so you can see the real insurance percentage you buy, split out by color and manufacturer.

What are siding contractors supposed to be making?

Siding runs 21% gross margin, 14% 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.

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

What a fractional CFO does for siding contractors

AUTHOR

JOSH LUEBKER

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

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