Where excavation contractors lose money
5 things cost excavation contractors money without ever becoming a line item, and each one traces to a step you can install. Excavation contractors average 21% gross margin, 14% overhead and 7% net profit at $1M–$5M of revenue. The CFOS target at that size is 23.5% gross margin, 13% overhead and 10.5% net, and the 3.5 points left on the table is where those mechanisms live. Figures for all 7 revenue bands are in the table below.
Excavation ranks 2nd of 11 in civil and earthwork on net profit, and it has leaner overhead than the 48-trade average. Here is every figure, across all 7 revenue bands.
Excavation by revenue band
| Metric | $1M–$5M | $5M–$10M | $10M–$25M | $25M–$50MModeled | $50M–$100MModeled | $100M–$500MModeled | $500M+Modeled | CFOS target at $1M–$5M |
|---|---|---|---|---|---|---|---|---|
| Overhead | 14% | 13% | 12% | 11% | 10% | 9% | 8% | 13% |
| Gross margin | 21% | 23% | 24% | 26% | 27% | 28% | 30% | 23.5% |
| Net profit | 7% | 10% | 12% | 15% | 17% | 19% | 22% | 10.5% |
| Metric | $1M–$5M | $5M–$10M | $10M–$25M |
|---|---|---|---|
| Overhead | 13% | 12% | 11% |
| Gross margin | 23.5% | 25.5% | 26.5% |
| Net profit | 10.5% | 13.5% | 15.5% |
Modeled extension of the survey curve, not reconciled against the licensed CFMA Benchmarker. That applies to the 4 bands above $10M to $25M, and no CFOS target is published for them.
Gross margin and overhead come from CFMA, Jones Maresca and SPM's own trade data, because those are the figures those sources report by trade and size. Net profit is calculated from them as gross margin minus overhead, so the three rows tie. That makes it an operating profit figure: what is left before interest, other income and expense, and the tax planning choices owners make, such as bonuses, depreciation methods and retirement contributions.
Surveys report net income before taxes after those items, so a reported net can run below the figure here. At the typical contractor the difference is small: CFMA's 2025 medians are 7.1 percent before interest and taxes and 6.7 percent net income before taxes. It grows with size. Against the separate measured net profit dataset, the calculated net runs 0.8 points higher at $1M to $5M, 2.2 points at $5M to $10M and 3.5 points at $10M to $25M, because the gross margin and overhead rows change faster with size than reported net profit does.
Above the $10M to $25M band the gross margin and overhead rows are a modeled extension of the same curves. They have not been reconciled against the licensed CFMA Benchmarker, and the calculated net there runs well above survey medians, so read those bands as a model and not as a survey result.
Run On CFOS. Run On CFOS Trade Benchmark Reference: Excavation. 2026. Sulphur Prairie Operations, LLC. https://runoncfos.com/trades/excavation. CC BY 4.0.
Figures on this page were last revised 2026-08-21. Published under CC BY 4.0, which permits reuse of any figure here, including commercially, as long as the credit above travels with it. The same figures in machine-readable form: /benchmarks.json.
Trade level gross margin and overhead come from figures CFMA, Jones Maresca and other sources publish, and Run On CFOS derives net profit as gross margin minus overhead. The CFOS targets beside them are from the book CONTROL: C.F.O.S. Construction Financial Operating System, published with the full reference at runoncfos.com.
- 2024 Construction Financial Benchmarker, Executive Summary, Construction Financial Management Association, 2024.
- 2025 Construction Financial Benchmarker, Executive Summary, Construction Financial Management Association, 2025.
- 2025 Performance Benchmarks, Construction Companies, Jones Maresca and Company, 2025.
- Run On CFOS Trade Benchmark Reference, Sulphur Prairie Operations, LLC, 2026.
Sourcing and method: the methodology page.
Which bands are measured. The 4 bands above $10M–$25M extend the survey curve further out and have not been reconciled against the licensed CFMA Benchmarker. How every figure was built is explained on the methodology page.
5 problems specific to excavation
The pipe is laid, the hole is dug, and the whole run stops because a manhole barrel and a frame and grate are still weeks out at the plant. You installed erosion control in month one for a thin lump sum, and you're still driving out to fix it two springs later on a job that quit paying you a long time ago. The geotech red-tagged the proof roll, the fix is two feet of undercut and select fill, and no one on the GC's side is writing a ticket for it. The contract quantity never changed, the haul route did, and somehow the earthwork margin is gone.
Each one below points at the item, the unit, the clock, or the party that makes it an excavation problem, and it says which step fixes it.
| Mechanism | Why it's specific to this trade | Step |
|---|---|---|
| The manhole is late and the trench is still open | A vertical trade stages its material dry in a conex and waits for the call. Excavation has no such pause: the run is already open, so shoring boxes, trench plates, dewatering pumps, traffic control, and a backfill crew on standby keep accruing every single day, and none of it is a pay item on the schedule of values. Base doesn't go down until the underground is in and tested, so one late casting becomes the paving date, and the paving date comes back at you as a delay claim. | Project management |
| Silt fence outlives the invoice that paid for it | Every other trade starts work after the permit is already in force and inherits none of it. The excavator is the one disturbing earth, so the inspection and repair duty attaches to your scope and stays attached through the entire vertical build you're no longer on. Billing and obligation run in opposite directions here: the money comes in during the first quarter, and the work runs across the next two years. | Overhead calculation |
| Failed density stops the job and starts an argument | Excavation is the one scope where a third party you didn't hire holds the gate on covering your work, and once it's covered the evidence is buried. The quantity in dispute runs to thousands of yards moving at machine speed while the argument is still open. Every hour you wait for a written direction is idle iron, and every hour you keep digging without one is money you may never get back. | Job cost structure |
| You sell yards and you buy gallons and truck hours | Most trades buy their material in the same unit they sell it in, so a price change is visible on the invoice. Earthwork buys time and fuel and sells volume, which means the cost can double while the quantity on the pay application never moves. Hard-bid private sitework almost never includes fuel or material escalation language, and a GC won't sign one on a scope he thinks of as commodity labor. | Estimating system |
| First trade in, last one paid, and held twice | Every other subcontractor's retention clock starts near the end of the job, when substantial completion is already in sight. Yours starts at the beginning and runs the entire length of a building you never touched, gated by weather and seed germination that no amount of pushing can speed up. Your direct costs, the fuel, the trucking, the imported fill and the payroll, all cleared your bank account before the steel went up. | Monthly cadence |
Excavation against the other 47 trades
| Metric | Excavation | Civil and earthwork average | All 48 average | Rank |
|---|---|---|---|---|
| Overhead | 14% | 15% | 15.1% | 6th of 48 |
| Gross margin | 21% | 20.7% | 22.1% | 33rd of 48 |
| Net profit | 7% | 5.7% | 7% | 21st of 48 |
Excavation sheds 6 points of overhead between $1M–$5M and $500M+, against 6.2 for civil and earthwork as a group. Inside that group, SWPPP and erosion control is the most profitable at 10%, and Civil, Excavation, Paving, 1 more all run 14% overhead, the leanest. The leanest one is this trade.
Other civil and earthwork trades
What owners ask
What overhead should an excavation contractor run?
Excavation shares its overhead figure with 10 other trades at this revenue, which is what the published data resolves to. It averages 14% at $1M–$5M and 8% at $500M+, as a percentage of revenue. That is 1 point below the civil and earthwork average of 15%. The CFOS target at $1M–$5M is 13%. The CFOS target is one point leaner than your trade's industry average at your revenue.
What gross margin should an excavation contractor run?
Excavation shares its gross margin figure with 5 other trades at this revenue, which is what the published data resolves to. It averages 21% at $1M–$5M and 30% at $500M+, as a percentage of revenue. That is 0.3 points above the civil and earthwork average of 20.7%. The CFOS target at $1M–$5M is 23.5%. The CFOS target recalculates at your revenue: whatever gross margin produces the net profit target once overhead is paid, never below your trade's own industry average.
What net profit should an excavation contractor run?
Excavation shares its net profit figure with 16 other trades at this revenue, which is what the published data resolves to. It averages 7% at $1M–$5M and 22% at $500M+, before taxes, as a percentage of revenue. That is 1.3 points above the civil and earthwork average of 5.7%. The CFOS target at $1M–$5M is 10.5%. The CFOS target recalculates at your revenue: 10 percent before taxes, or 3.5 points better than your trade's industry average, whichever is higher.
What profit margin should a small excavation business run?
Owners usually mean net profit when they say profit margin, and for excavation at $1M–$5M that's 7%. Gross margin is a different number, 21%, and it's what's left after job costs but before overhead. Overhead is the 14% between the two. A small excavation business holding 7% net is at the published figure for its size, and the CFOS target at that revenue is 10.5%.
Does excavation get more profitable as it grows?
Overhead is the number that moves. Excavation sheds 6 points between $1M–$5M and $500M+, which is in line with the 6.2 points civil and earthwork sheds as a group. Net profit starts 0 points under the 48-trade average, so the room is in the overhead line before it's anywhere else.
Where does excavation rank against the other trades?
Excavation ties 4 trades in civil and earthwork on net profit, all at 7%. SWPPP and erosion control is the most profitable at 10%. Its overhead is the leanest too, level with Civil, Paving, SWPPP and erosion control. Gross margin ranks 33rd of 48 and overhead ranks 6th.
That's the industry average and the CFOS target for excavation at every size. Want your own books set beside them? The Financial Health Snapshot builds a CEO Report from your last twelve months, sets every figure against your trade, and walks you through it on a 60 minute call. SPM The Construction CFO (Sulphur Prairie Management, LLC) is a separate firm, and the same author runs it.
Everything on this page is something you can install yourself, and CONTROL is the order to do it in. If you would rather buy the finished result, SPM The Construction CFO does this work for excavation 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.