TUNNEL · CIVIL AND EARTHWORK · FIXED BY STEP 01

Your jacking pipe is bought before the shaft is dug

You wired a deposit for casing cut to one crossing, and the first pay app on that drive is still two months out.

WHY IT'S A TUNNEL PROBLEM

Conduit, rebar, and fittings are stock items. An electrician who loses a job puts the material on the next one, and the supply house takes back what's left. Casing cut to one crossing's diameter, wall, and length can't be used anywhere else, which is why a tunnel sub has more non-recoverable cash per contract dollar than almost any other trade on that site.

WHAT IT COSTS

The size of it

On a $400K crossing the pipe often runs 30 to 40 percent of the contract value, paid at order, parked on your books with nothing billable behind it. If the crossing gets deleted or redesigned, you own steel no mill will take back.

OVERHEAD AT $1M–$5M

16%

CFOS target 15% for tunnel.

GROSS MARGIN AT $1M–$5M

23%

CFOS target 25.5% for tunnel.

NET PROFIT AT $1M–$5M

CFOS target 10.5% for tunnel.

Jacking pipe gets fabricated to one drive: a specified diameter, wall thickness, and joint detail, cut to the length of that crossing. RCP with steel collars, Permalok, rolled steel casing, and liner plate all have mill and precast lead times measured in months, so the order goes in against a design that's still in review. You excavate the shaft to hit the GC's window, and then the shaft is open waiting on steel. The deposit or the full buy leaves at order, with no pay application to hang it on until the drive starts.

WHAT TO DO

Three moves, in order

STEP 01

List every open crossing with its pipe PO date, deposit amount, and the earliest date the drive can start; the weeks in between are your real cash exposure.

STEP 02

Set a stored materials cost code per crossing so the pipe hits the job when it goes in the ground, and confirm the contract gives you a stored materials billing right before you place the order.

STEP 03

Release pipe to fabrication only against the GC's stamped approved-for-construction plan in writing, with cancellation and restocking terms spelled out in the sub agreement.

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

Tunnel 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 tunnel contractors money

TUNNEL · CFOS-04

The railroad's eight weeks run on your money

You pay two grand just to apply and buy a five million dollar railroad policy for every crossing, and then you pay the railroad's flagger to watch you work.

TUNNEL · CFOS-04

You bid a foot and the mill sells you a ton

You priced a hundred dollars a foot of casing, then the mill quoted by the ton at a wall thickness the engineer moved during review.

TUNNEL · CFOS-06

Six setups bill against one mobilization line

Six crossings means six setups and six teardowns, and the contract has a single capped mobilization item to cover all of it.

TUNNEL · CFOS-08

The void turns up after somebody else paves

A dip appeared in new asphalt six months after you demobilized, and the repair bill came back to you as a backcharge.

TUNNEL · CFOS-02

Slow digging costs the same and bills half the feet

The machine, the crew, and the daily burn don't change when production halves, and the estimate only knows dollars per linear foot.

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 tunnel owners ask

Paying for jacking pipe months before I can bill the bore?

You wired a deposit for casing cut to one crossing, and the first pay app on that drive is still two months out.

What does it cost?

What do I do first?

List every open crossing with its pipe PO date, deposit amount, and the earliest date the drive can start; the weeks in between are your real cash exposure.

What are tunnel contractors supposed to be making?

Tunnel runs 23% gross margin, 16% 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 tunnel contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, run by the same author.

What a fractional CFO does for tunnel contractors

AUTHOR

JOSH LUEBKER

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

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