TELECOM · ELECTRICAL AND TECHNOLOGY · FIXED BY STEP 02

Standby Days Cost What Bore Days Cost

You get paid per foot. The bore rig, vac truck, and four-man crew cost the same whether you shoot 1,200 feet or wait all morning on a locate that never got marked.

WHY IT'S A TELECOM PROBLEM

Trades that bid by the square foot buy labor by the hour and can send people home. You buy a rig, a vac truck, and a four-man crew as one indivisible daily unit that produces zero feet on a standby day at full cost. That makes your equipment cost basis the number that decides whether the job worked, and the unit price only tells you what you were allowed to charge.

WHAT IT COSTS

The size of it

One standby week on a single spread can wipe out the estimated margin on a footage package, and with no daily cost against daily feet you'll write it off as a bad bid and price the next job the same way.

OVERHEAD AT $1M–$5M

15%

CFOS target 14% for telecom.

GROSS MARGIN AT $1M–$5M

22%

CFOS target 24.5% for telecom.

NET PROFIT AT $1M–$5M

CFOS target 10.5% for telecom.

The unit you bid in and the unit your cost lives in are two different things, and the distance between them is where OSP margin disappears. A bore spread runs $3,000 to $5,000 a day once it's mobilized, and that figure doesn't move when rock, wet clay, an unlocatable service, or a homeowner who won't open a gate cuts production in half. In Texas the utility gets 48 hours to answer an 811 ticket, and you stay responsible for knowing whether the marks are still valid, so a mismarked or wiped-out locate parks a mobilized crew with nothing billable to show for the day. Estimated margin was built on a footage-per-day the field rarely hits, and since your biggest cost line isn't priced in the unit you bid, you can't separate a bad bid from a bad week until the job is closed.

WHAT TO DO

Three moves, in order

STEP 01

Charge the bore spread to jobs at a daily rate covering ownership, fuel, and the crew that runs it, and post it every day the spread is assigned, standby included.

STEP 02

Log feet per day by spread and by soil condition until you've got a production rate the estimate can rely on.

STEP 03

Give standby, locate delays, and denied access their own cost codes so you can put a real dollar figure in front of the utility or the customer.

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

Telecom 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 telecom contractors money

TELECOM · CFOS-01

You Pay the Pole Owner Months Before You Hang Strand

You cut a check to the power company in March for work your crews don't perform, and the first foot of strand goes up in August. In between there is nothing to bill.

TELECOM · CFOS-06

The Inspector's Signature Starts Your Pay Clock

Twelve thousand feet went in the ground in June and the invoice didn't move until September. The crews got paid in June.

TELECOM · CFOS-06

A Pre-Term Trunk Cut Wrong Is Scrap You Own

Pre-term trunks run eight to twelve weeks and get cut to a number you took off the ceiling grid. Miss the number and you own an assembly no one can use.

TELECOM · CFOS-07

Month-Three Retainage Comes Back in Month Twenty-Four

You pulled cable in month three and saw the retainage on it in month twenty-four. In between, you mobilized four more times against the same lump sum.

TELECOM · CFOS-08

Links Fail in November, Cable Was Crushed in April

Forty links fail at certification in November. The HVAC crew crushed them above the ceiling in April and demobilized in June.

SAME MECHANISM, OTHER TRADES

The same mechanism in other trades

CIVIL

Four mobilizations, one mob line item

You clear and grub in month one, come back for wet utilities, come back again for paving subgrade at closeout, and the contract still has one mobilization line.

CONCRETE

Six Trips Back for Pads and Sidewalks, One Unit Price

You were first on the site and you're still coming back for stairs, pads, curbs, and exterior flatwork, all priced inside a per-yard number that assumed you never left.

DRYWALL

You Go Back Six Times And No Ticket Gets Signed

You hung the corridor in March and you're still sending a guy back in June, one hole at a time, on somebody else's dime.

QUESTIONS

What telecom owners ask

How do I account for bore crew standby time on unit price footage work?

You get paid per foot. The bore rig, vac truck, and four-man crew cost the same whether you shoot 1,200 feet or wait all morning on a locate that never got marked.

What does it cost?

What do I do first?

Charge the bore spread to jobs at a daily rate covering ownership, fuel, and the crew that runs it, and post it every day the spread is assigned, standby included.

What are telecom contractors supposed to be making?

Telecom runs 22% gross margin, 15% 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 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 telecom contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, run by the same author.

What a fractional CFO does for telecom contractors

AUTHOR

JOSH LUEBKER

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

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