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 to $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.
Run On CFOS publishes the full benchmark reference: 48 trades across all 7 revenue bands, $1M to $500M and above. The 4 bands above $25M are modeled and labeled that way in every table, and no CFOS target is published for them. Run On CFOS computes net profit as gross margin minus overhead, before taxes.
Excavation by revenue band
| Metric | $1M to $5M | $5M to $10M | $10M to $25M | $25M to $50MModeled | $50M to $100MModeled | $100M to $500MModeled | $500M+Modeled | CFOS target at $1M to $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 to $5M | $5M to $10M | $10M to $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 figures CFMA, Jones Maresca and other sources publish by trade and size. Net profit is computed, not surveyed: net profit = gross margin minus overhead. Nothing comes out for taxes, interest or other income and expense, so it is a before tax figure, on the same basis as CFMA's net income before taxes.
CFMA's 2025 medians are 7.1 percent before interest and taxes and 6.7 percent net income before taxes. Gross margin minus overhead leaves out interest and other income and expense, so a figure here can come in a little above or below a reported net income on the same business.
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, 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 computes net profit from them: net profit = gross margin minus overhead, before taxes. 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 to $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.
Use these numbers on your own jobs
CFOS for QuickBooks grades your own books against the excavation figures above, every month. At $1M to $5M, the published average net profit is 7% before taxes and the CFOS target is 10.5%.
Under $10M. You see which jobs made money while they are still open, so you can fix a excavation job before it closes. From $10M to $50M. The controller gets a WIP that ties to QuickBooks Online, with each project manager's cost to complete approved every month.
5 problems specific to excavation
The pipe is laid, the hole is dug, and the whole job 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 going 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 trench 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 go in opposite directions here: the money comes in during the first quarter, and the work is spread 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 out of sight. The quantity in dispute comes 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 lasts 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 to $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 have 14% overhead, the leanest. The leanest one is this trade.
Other civil and earthwork trades
What owners ask
What overhead should an excavation contractor have?
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 to $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 to $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 have?
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 to $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 to $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 have?
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 to $5M and 22% at $500M+, before taxes, gross margin minus overhead, as a percentage of revenue. That is 1.3 points above the civil and earthwork average of 5.7%. The CFOS target at $1M to $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 have?
Owners usually mean net profit when they say profit margin, and for excavation at $1M to $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 to $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 leads 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, led by the same author.
Wrote CONTROL, the 8 step system behind these figures. More about the author.