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TL;DR: SPM provides fractional CFO services for excavation contractors doing $1M-$12M in commercial new construction. Job costing by cubic yards by soil type and depth in ControlQore, overhead rate including all real costs, WIP reporting monthly, and AR collection system that clears the backlog in 30 days. Most excavation clients find their first month's AR collection exceeds the annual SPM fee.
Excavation
The CFO for
Excavation Contractors.
You bid by the cubic. Your margin lives or dies in the field every week. If you find out a job is losing money at closeout it is too late. We make it visible in week two.
Published: May 2026 · Updated: May 2026
The Problem
What Kills Excavation Margins
Most excavation do not know a job is losing money until it is done. The estimate looked right. The crew was working. But the actual cost per cubic yards by soil type and depth was running over estimate for three weeks and nobody knew it until closeout.
01
Changed Conditions Not Billed
The geotech showed uniform sandy loam to 12 feet. You hit fractured rock at 7 feet across 40% of the excavation area. Equipment productivity dropped 60%. You documented the condition in daily reports and waited for the GC to bring up the change order. They never did. You absorbed $52,000 in additional machine time.
02
Equipment Idle Rate Not in Overhead
An excavator sitting on a job waiting for utility conflicts to clear is still depreciating. At $4,200/month in ownership cost running at 55% utilization you have $1,890/month in idle cost that belongs in the overhead rate. Most excavation contractors do not have it there.
03
CY Production Variance Invisible
You estimated 280 CY per day at 8-10 foot depth in sandy loam. You are running 190 CY per day due to groundwater seepage requiring additional dewatering. That production gap compounds across the job. Without cost codes by soil type and depth it is invisible until closeout.
Prevailing wage note: Excavation contractors doing DOT and municipal work have additional fringe benefit requirements of $12-$20/hour above base wages. SPM calculates separate overhead rates for prevailing wage and private work. Prevailing wage CFO services →
FAQ
Frequently Asked Questions
What does a CFO for excavation contractors do?
A fractional CFO for excavation contractors builds the job costing structure aligned to the estimate - cost codes by cubic yards by soil type and depth - so actual cost per unit is visible weekly against estimated cost per unit. They manage WIP reporting, overhead rate calculation, billing calendar, and monthly cash flow. The result: you know which jobs are winning and which are losing before you cannot do anything about it. All SPM clients run on ControlQore - purpose-built for construction job costing at $1M-$12M.
What overhead rate should excavation contractors use?
Excavation Contractors at $1M-$3M typically run 12-14% overhead. The most common errors are missing owner compensation at market rate and not including equipment depreciation or vehicle fleet in the SG&A calculation. Each of those understates the real overhead rate and underprices every bid.
What are the most common cash flow problems for excavation contractors?
Three consistent problems: schedule of values that underbills early phases which are the most cash-intensive work, overhead rate below actual because ownership costs are not fully included, and AR sitting uncollected at 45+ days with no follow-up system. Most excavation contractors have all three simultaneously. SPM fixes all three in the first 60 days.
What gross margin should excavation contractors target?
Excavation Contractors at $1M-$12M in commercial new construction typically target 21-26% gross margin. Margin below the lower end of that range usually indicates a markup problem, an overhead rate understatement, or job costing that is not capturing all direct costs accurately.
Do you handle payroll?
No. SPM does not handle payroll. We have vetted partners including prevailing wage and Davis-Bacon integrations that connect directly with ControlQore at additional cost.
How long does onboarding take?
60 days. We migrate your books to the start of your last taxable year, build your ControlQore job costing structure, and get you fully operational in two months.
What software do you use?
All SPM clients run on ControlQore - purpose-built for construction job costing and WIP reporting at $1M-$12M. More capable than QuickBooks for job costing, more affordable than Sage. We set it up and manage it.
Do I need clean books to start?
No. Most clients come with messy books and no job costing. That is exactly what onboarding is for.
