TWELVE NEW SITES IN SIX WEEKS. $81,600 OUT BEFORE ONE INVOICE.
A SWPPP book is dozens of small recurring contracts, and every one of them starts with materials and a crew day you pay for before you bill anything. Add twelve sites in a good spring and the bank account reads like a bad one.
A new SWPPP site starts with a BMP install: silt fence, inlet protection, wattles and a construction entrance, roughly $6,800 in materials and crew time on day one. The site then bills about $850 a month for inspections and maintenance, so the install alone takes eight months of that site's billing to come back. Twelve new sites in a six week spring push is $81,600 out against $10,200 a month coming in, and at a 45 day collection cycle the first of that money reaches the bank about 75 days after the first site went in. Every one of those sites is profitable at 24 percent gross the whole time.
This is the cash problem a portfolio business creates by winning work, which is why it catches good operators and never the ones who are shrinking.
This post covers what a new site costs before it bills. That page covers the whole cash cycle for SWPPP and erosion control, including the rain event surge and the collection ladder. Read SWPPP Cash Flow for the complete treatment, worked figures included.
WHAT DOES A NEW SWPPP SITE COST ON DAY ONE?
Silt fence around the disturbed perimeter. Inlet protection on every drain in and downstream of the site. Wattles or blankets on the slopes. A rock construction entrance so the tracking violation doesn't write itself. A crew, a truck and a day, sometimes two on a large pad.
Call it $6,800 in materials and crew time for a mid-size commercial pad. Some sites run half that and some run triple, and the number is less important than which side of the invoice it sits on. All of it is spent before the site has produced a dollar.
Then the site goes on your route. Weekly or biweekly inspections, corrective actions when the inspector finds a failed BMP, a 24 hour turnaround after any quarter inch rain event, materials to repair what the dozer took out. And a contract that pays you about $850 a month for all of it.
EIGHT MONTHS TO GET THE INSTALL COST BACK.
Divide $6,800 by $850 and you get eight. Eight months of that site's entire billing, before a single dollar of it covers the inspections, the drive time, the replacement wattles or your overhead. On a nine month project the install cost comes back in month eight and the profit lives in month nine.
None of that is a bad deal. SWPPP subs at $1M to $5M run 24 percent gross, which is the highest of any trade in the erosion family and better than most site trades. Every site in this example makes money over its life.
The margin is correct and the margin is silent on the question that keeps a SWPPP owner up, which is what the account looks like in week six of a spring push.
TWELVE SITES AT ONCE, AND WHAT THE BANK SEES.
Spring is when developers break dirt, so a SWPPP contractor's new sites cluster. Twelve installs across six weeks is a good spring for a sub in this range, and it's $81,600 of materials and crew time out the door in six weeks.
What comes back in that window is nothing. The first monthly application on the earliest site goes out at the end of month one, and at the 45 day collection cycle that's the target for this trade, it pays around day 75. Twelve sites billing $850 is $10,200 a month, and at eight months per site to cover its own install, the last site in the push is square about ten months after the first one went in.
Put those two together and here's what a successful year looks like: a six week hole of $81,600, then a slow climb funded by $10,200 a month, and a business more profitable in December than it was in March while its bank balance spent the summer going the wrong way.
MOST SUBS MISS THIS: GROWTH AND TROUBLE LOOK IDENTICAL.
A SWPPP owner watching his balance drop through May and June has two possible explanations and they produce the same bank statement. Either he won twelve sites and funded twelve installs, or he's losing money on the book he already had. From the account alone there's no telling which.
That's why per-site costing is worth more in this trade than in almost any other. One number separates the two explanations: cost per site against revenue per site, on the sites you already run. If the existing book is at or above 24 percent gross, the balance is a funding question and the answer is a line of credit sized to your spring. If the existing book is under 20 percent, no amount of borrowing will fix it and the installs are hiding a pricing problem.
Screenshot for the office: a falling bank balance during a growth month is a working capital question, and a falling bank balance during a flat month is a pricing question. They need opposite responses and getting them backwards is how contractors borrow their way into a bigger loss.
HOW TO FUND A SPRING WITHOUT AN ADVANCE.
Bill the install as its own line, separate from the monthly. A $6,800 install invoiced at signing, or split into a mobilisation and a completion draw, moves your recovery from eight months to about six weeks. Most developers will sign it, because the BMP install is a permit condition they need done before they can move dirt and they're used to paying for site work up front.
Buy BMP materials against a supplier account with terms that outlast your collection cycle. Thirty day supplier terms against 45 day collections means you fund the difference. Sixty day terms means the supplier does.
Then size a line of credit off your own numbers and never off a banker's guess. Twelve installs at $6,800 is $81,600, and the peak draw is that figure plus one month of route payroll. Walk into the bank with the install cost per site, the monthly contract value, and last year's collection days, and you're asking for a specific number for a specific reason.
THE ONE THING TO DO THIS WEEK.
Count the sites you added in your last spring and multiply by your own install cost per site. That figure is the working capital your growth consumed, and most SWPPP owners have never put a number on it.
Then check one invoice: does your contract bill the initial BMP install separately from the monthly inspection fee. If it doesn't, that single change to your agreement template is worth more to your cash position than anything else on this page.
THE SHORT LIST.
FREQUENTLY ASKED.
