TELECOM · ELECTRICAL AND TECHNOLOGY · FIXED BY STEP 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.

WHY IT'S A TELECOM PROBLEM

No other trade pays a third party in advance to move somebody else's plant before work can start. The pole owner controls the clock: 45 days to survey on a routine order, 60 to 90 on mid-size and large ones, then 30 days of make-ready in communications space or 90 days above it, and you've no crew on site to influence any of it. Your money is tied up inside another company's operation, buying work you can't schedule, expedite, or invoice against.

WHAT IT COSTS

The size of it

Five- and six-figure make-ready payments go out as cash with zero revenue behind them for three to six months, and one mis-coded check turns a break-even aerial build into a job that looks profitable right up until payroll week.

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.

Under 47 CFR 1.1411 the new attacher accepts the utility's estimate and pays it in full before the pole owner touches a single pole, and then the utility takes its survey window and its construction window before you can build. Cash leaves on your schedule and comes back on theirs. Code make-ready as job cost the day the check clears, tagged to the aerial route it buys. When that payment goes to overhead, the books flatter every open aerial job while the operating account drains and nothing on the P&L explains why.

WHAT TO DO

Three moves, in order

STEP 01

Open a make-ready cost code on every aerial job and post the utility check to it the day it clears, tied to the pole count and route it paid for.

STEP 02

Record the estimate acceptance date and the dates the utility's survey and construction windows expire on the job record, so you can see which jobs are parked on someone else's clock.

STEP 03

Forecast cash off make-ready outflow dates, not contract value, so you know how many aerial jobs you can fund at one time.

THE FIX

Step 01: Job cost structure

Seven cost categories and three levels of granularity, built so the estimate and the ledger use the same words.

CFOS-01 · CHAPTER 1

Job cost codes that match how you bid the work

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

Cost codes the field ignores

You have 200 cost codes. The crews use four of them, and one is called Miscellaneous.

SAME TRADE

What else costs telecom contractors money

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.

TELECOM · CFOS-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.

SAME MECHANISM, OTHER TRADES

The same mechanism in other trades

CIVIL

The grading permit clock isn't on your schedule

Third resubmittal on the grading permit, the power pole relocation is six months out, and your crew and iron cost money while no party in your contract chain is at fault.

CONCRETE

The 28-Day Break Decides a Pour You Already Billed

You poured in March on an approved mix, the cylinders came back low in April, and two floors have already gone up on the slab in question.

DEMOLITION

Four Clocks Own Your Start Date And You Own None

The machine is on the pad, the crew is standing around, and everyone is waiting on a letter from the gas company. None of the clocks that release your start belong to you.

QUESTIONS

What telecom owners ask

Do I have to pay pole make ready costs up front before construction?

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.

What does it cost?

What do I do first?

Open a make-ready cost code on every aerial job and post the utility check to it the day it clears, tied to the pole count and route it paid for.

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 01, job cost structure. Seven cost categories and three levels of granularity, built so the estimate and the ledger use the same words. It comes from chapter 1 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.