Where tunnel contractors lose money
6 things cost tunnel contractors money without ever becoming a line item, and each one traces to a step you can install. Tunnel contractors average 23% gross margin, 16% overhead and 7% net profit at $1M–$5M of revenue. The CFOS target at that size is 25.5% gross margin, 15% 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.
Tunnel ranks 2nd of 11 in civil and earthwork on net profit, and it has heavier overhead than the 48-trade average. Here is every figure, across all 7 revenue bands.
Tunnel by revenue band
| Metric | $1M–$5M | $5M–$10M | $10M–$25M | $25M–$50MModeled | $50M–$100MModeled | $100M–$500MModeled | $500M+Modeled | CFOS target at $1M–$5M |
|---|---|---|---|---|---|---|---|---|
| Overhead | 16% | 15% | 14% | 13% | 12% | 11% | 10% | 15% |
| Gross margin | 23% | 24% | 25% | 26% | 28% | 29% | 31% | 25.5% |
| Net profit | 7% | 9% | 11% | 13% | 16% | 18% | 21% | 10.5% |
| Metric | $1M–$5M | $5M–$10M | $10M–$25M |
|---|---|---|---|
| Overhead | 15% | 14% | 13% |
| Gross margin | 25.5% | 26.5% | 27.5% |
| Net profit | 10.5% | 12.5% | 14.5% |
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.
SPM The Construction CFO. SPM Trade Benchmark Reference: Tunnel. 2026. Sulphur Prairie Management, LLC. https://runoncfos.com/trades/tunnel. 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 compiled by SPM The Construction CFO, validated against published CFMA and JMCO benchmarks. The CFOS targets beside them are from the book CONTROL: The 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.
- SPM Trade Benchmark Reference, Sulphur Prairie Management, 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.
6 problems specific to tunnel
You wired a deposit for casing cut to one crossing, and the first pay app on that drive is still two months out. 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. 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. Six crossings means six setups and six teardowns, and the contract has a single capped mobilization item to cover all of it.
Each one below points at the item, the unit, the clock, or the party that makes it a tunnel problem, and it says which step fixes it.
| Mechanism | Why it's specific to this trade | Step |
|---|---|---|
| Your jacking pipe is bought before the shaft is dug | 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. | Job cost structure |
| The railroad's eight weeks run on your money | Most subs buy one annual policy and pull one permit from a city that answers the phone. A tunnel sub buys a separate five figure permit and insurance package for every set of rails it goes under, and the approval clock belongs to a railroad that has no contract with you and no stake in your schedule. No party on the job can accelerate it, and the GC will still hold you to the crossing date. | Estimating system |
| You bid a foot and the mill sells you a ton | A framer buys lumber by the board foot and bids by the board foot, so the two units move together. Here the revenue unit and the purchase unit measure different things, and the conversion between them is controlled by a design engineer who can change wall thickness after your number is already in. The longest crossings take the most tons, so your best looking bid item is also your largest unpriced position. | Estimating system |
| Six setups bill against one mobilization line | A drywall crew stays in one building until it's done and mobilizes once. You set up, produce for a few days, tear down, and then do it five more times on the same contract against one mobilization line. Every idle stretch between crossings is somebody else's sequencing decision spending your rental money. | Project management |
| The void turns up after somebody else paves | Other trades' defects appear during the work or on a warranty walk, on something a person can look at. Soil settlement is a slow physical process over a void only you created, and it turns up months after your final pay app on a surface a different contractor installed and priced. That combination is why tunnel subs absorb restoration costs at a scale no other trade on the site sees. | Standards and accountability |
| Slow digging costs the same and bills half the feet | On a surface job a bad day costs labor hours and you send people home early. Underground, the machine, the shaft, the shoring, and the mandated safety manning bill the same whether the crew makes sixty feet or twenty, and you can't send the rescue team home to save a day. A per foot estimate has nowhere to put a fixed daily cost, which is where the money leaves. | Equipment cost basis |
Tunnel against the other 47 trades
| Metric | Tunnel | Civil and earthwork average | All 48 average | Rank |
|---|---|---|---|---|
| Overhead | 16% | 15% | 15.1% | 32nd of 48 |
| Gross margin | 23% | 20.7% | 22.1% | 13th of 48 |
| Net profit | 7% | 5.7% | 7% | 21st of 48 |
Tunnel 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. Tunnel is neither, which is the usual position and the one with the most room in it.
Other civil and earthwork trades
What owners ask
What overhead should a tunnel contractor run?
Tunnel shares its overhead figure with 12 other trades at this revenue, which is what the published data resolves to. It averages 16% at $1M–$5M and 10% at $500M+, as a percentage of revenue. That is 1 point above the civil and earthwork average of 15%. The CFOS target at $1M–$5M is 15%. The CFOS target is one point leaner than your trade's industry average at your revenue.
What gross margin should a tunnel contractor run?
Tunnel shares its gross margin figure with 6 other trades at this revenue, which is what the published data resolves to. It averages 23% at $1M–$5M and 31% at $500M+, as a percentage of revenue. That is 2.3 points above the civil and earthwork average of 20.7%. The CFOS target at $1M–$5M is 25.5%. 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 a tunnel contractor run?
Tunnel 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 21% 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 tunnel business run?
Owners usually mean net profit when they say profit margin, and for tunnel at $1M–$5M that's 7%. Gross margin is a different number, 23%, and it's what's left after job costs but before overhead. Overhead is the 16% between the two. A small tunnel business holding 7% net is at the published figure for its size, and the CFOS target at that revenue is 10.5%.
Does tunnel get more profitable as it grows?
Overhead is the number that moves. Tunnel 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 tunnel rank against the other trades?
Tunnel ties 4 trades in civil and earthwork on net profit, all at 7%. SWPPP and erosion control is the most profitable at 10%. Civil, Excavation, Paving, 1 more run the leanest overhead at 14%. Gross margin ranks 13th of 48 and overhead ranks 32nd.
That's the industry average and the CFOS target for tunnel 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, 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.
Wrote CONTROL, the 8 step system behind these figures. More about the author.