SITEWORK · CIVIL AND EARTHWORK · FIXED BY STEP 02

You Bid in Cubic Yards and Pay in Machine Hours

You hit the yardage, held the schedule, and still lost money, because yards are what you sold and machine hours are what you spent.

WHY IT'S A SITEWORK PROBLEM

A trade that bids labor and material can read a job's whole story from labor cost per unit. Your largest cost line is iron, and iron doesn't appear in a labor hour or a material invoice. Until every machine has an hourly rate charged to the job, a rain month and a job blown on production rate look identical in the P&L.

WHAT IT COSTS

The size of it

You can't tell whether the loss came out of a machine, a crew, or a job, so you re-bid next year off the same corrupted history. The same loss comes back under a different job number.

OVERHEAD AT $1M–$5M

15%

CFOS target 14% for sitework.

GROSS MARGIN AT $1M–$5M

18%

CFOS target 24% for sitework.

NET PROFIT AT $1M–$5M

CFOS target 10% for sitework.

The bid is cubic yards, linear feet, and square yards. The spend is machine hours: payments, insurance, undercarriage, tires, off-road diesel, the GPS base station and machine control subscriptions, model building, and lowboy moves, all running at the same rate whether the excavator cut dirt or sank in mud all week. In most sitework books those equipment payments go into overhead and never get charged to a job at an hourly ownership and operating rate, so gross margin reads clean and net profit is unexplainable. Mobilization, BMP install, the survey, and the machine control model are also spent in full before the first pay application can go out.

WHAT TO DO

Three moves, in order

STEP 01

Set an hourly ownership and operating rate for every machine covering the payment, insurance, fuel, wear parts, and the lowboy, and charge machine hours to jobs the way you charge labor hours.

STEP 02

Log machine hours on the daily by unit number and phase, so an excavator stuck in mud reads as idle time rather than disappearing into the grading phase.

STEP 03

Put mobilization, survey, the machine control model, and BMP install on their own codes and get them billed on the first pay application instead of amortizing them into unit prices.

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

Sitework 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 sitework contractors money

SITEWORK · CFOS-06

Your Fastest Billable Work Comes Before the Pipe Gets There

You bill five weeks of mass grading, then watch six weeks of operators and iron wait on a wet well that couldn't be ordered until the shop drawing came back approved.

SITEWORK · CFOS-04

Permit Review Rewrites the Job You Already Signed For

The city holds the grading permit, the engineer is redlining the civil set, and your silt fence has to pass inspection before a blade touches dirt. You signed against the bid set.

SITEWORK · CFOS-02

Haul Miles Are Your Commodity Price, and They Moved

The rock price held all year. The trucking on it didn't, and then the spoil site quit taking dirt halfway through the export.

SITEWORK · CFOS-07

Retention Releases When the Grass Hits Seventy Percent

Your last retention check is stuck behind seed germinating in October, and germination depends on mother nature no matter when the work finished.

SITEWORK · CFOS-06

The Job Needs Five Mobilizations and You Priced Two

You graded that pad once and got paid for it once. The steel hauler rutted it, somebody buried spoil in it, and you graded it a second time on your own dime.

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 sitework owners ask

Should equipment payments be in overhead or charged to jobs dirt work?

You hit the yardage, held the schedule, and still lost money, because yards are what you sold and machine hours are what you spent.

What does it cost?

You can't tell whether the loss came out of a machine, a crew, or a job, so you re-bid next year off the same corrupted history. The same loss comes back under a different job number.

What do I do first?

Set an hourly ownership and operating rate for every machine covering the payment, insurance, fuel, wear parts, and the lowboy, and charge machine hours to jobs the way you charge labor hours.

What are sitework contractors supposed to be making?

Sitework runs 18% gross margin, 15% overhead and 3% net profit before taxes at $1M–$5M. The all-trade average is 7%, so this trade is 4 points below it. The CFOS target is 10%.

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

What a fractional CFO does for sitework contractors

AUTHOR

JOSH LUEBKER

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

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