You Lock The Price At Bid And Buy Paint Two Years On
You priced the thermoplastic two summers before anybody let you on the road. The unit price never moved and the material did.
Every trade grumbles about material prices, and most of them buy within weeks of bidding. Striping falls at the tail of the prime, so the stretch between the number you signed and the day you buy can run two full seasons of commodity movement. On thermoplastic and durable systems the material is a far larger share of the line than on waterborne paint, which means one bad buyout can take the entire marking package with it.
The size of it
Twelve to twenty-four months of unhedged exposure rides on a line item with no escalation clause, and every month of that window is yours alone. The contract offers no mechanism to recover any of it.
Marking is the last work on a multi-year roadway contract, so the unit price gets locked twelve to twenty-four months before you buy the paint, thermoplastic, glass beads, epoxy, or MMA. Traffic paint is built on petroleum resin and titanium dioxide, and beads are an energy-intensive glass product, so both drift with input costs across that entire window. Agency payment is per station, per linear foot, or per each, all-in, and the unit price is written to cover surface preparation, application, maintenance, removal, and disposal. Escalation language on a marking line item is the exception, so you absorb the whole commodity move for the life of the prime contract with nothing in the contract that gives any of it back.
Three moves, in order
Step 04: Estimating system
The estimate maps one to one onto the job cost codes, so variance means something the day it appears.
What else costs striping contractors money
The same mechanism in other trades
What striping owners ask
Thermoplastic and bead price increases after the unit price was locked?
You priced the thermoplastic two summers before anybody let you on the road. The unit price never moved and the material did.
What does it cost?
Twelve to twenty-four months of unhedged exposure rides on a line item with no escalation clause, and every month of that window is yours alone. The contract offers no mechanism to recover any of it.
What do I do first?
Tag every open bid with its expected buyout date, not its bid date, and re-price the material portion whenever that date falls more than a year out.
What are striping contractors supposed to be making?
No survey separates striping, so there is no figure of its own. The nearest comparable trade in the reference is Paving, which runs 20% gross margin, 14% overhead and 6% net profit before taxes at $1M–$5M, with a CFOS target of 10% net. Those are derived figures, not striping's own. Read them as the neighbourhood, and read your own job costing as the answer.
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.
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 striping contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, run by the same author.
Wrote CONTROL, the 8 step system behind these figures. More about the author.