EXCAVATION JOBS LOOK PROFITABLE. THE COST CODES SAY OTHERWISE.
Excavation subcontractors run out of cash for reasons specific to how the work is built and billed, on jobs that are making money. The three that cost the most in this trade are below, taken from excavation contractor research. Most sit at 75 to 90 days from finishing work to holding the money, and 45 days is achievable.
Cash and profit are measured on different clocks. Your profit and loss records revenue when you invoice and costs when you incur them, while the bank account only knows what cleared. Labour goes out weekly and collects 45 to 90 days later, minus retention. That distance is what a growing, profitable excavation company funds out of pocket, and it widens as you grow. The specific things that widen it in this trade are what the rest of this page is about.
WHERE IT LEAKS OUT.
Same ownership math as civil: roughly $200 per day for a CAT 330 parked, $150 to $200 per hour loaded, industry idle rates near 30 percent. An operator's cubic yards per hour is the revenue engine, and unmeasured production turns good iron into expensive lawn art.
"Excavation is more weather-dependent than almost any other trade." A half inch of rain stops a spread; frozen ground rewrites production rates; fixed cost runs all winter.
WHAT MOVES MARGIN IN THIS TRADE.
Production Blindness
Excavation sells cubic yards per hour. When production rates aren't tracked per operator, per machine, per soil class, the estimate and the field never reconcile, and losing jobs look identical to winning ones until the money is gone.
The Ground Lies
Soil class changes, rock shows, groundwater rises, and quantities move; the cost is spent before the change order is signed. A $630K excavation subcontract at the Fifth Circuit proves the fight is real. Documentation and unit-price discipline are the difference between a claim and a donation.
One Bucket, One Margin
A single utility strike can erase a job's profit through repair bills, fines up to $10,000 for repeats, and GL sublimits that cap below the damage. The locate, the tolerance zone, and the hand-dig are financial controls, not just safety rules. (cfos-cash-control-system) ---
DAYS SALES OUTSTANDING.
Ninety days is weak, 45 is the target, 30 is strong. Nothing else moves cash faster.
| Position | Days | What it means |
|---|---|---|
| Weak | 90 days | Roughly three months of work funded out of your own pocket. |
| Target | 45 days | Achievable on the days you control: submission timing, complete documentation, follow up in week two. |
| Strong | 30 days | Requires discipline every month, and it's the cheapest capital available to you. |
Moving from 90 days to 45 frees roughly annual revenue divided by 365, times 45 days. At $4M that's about $493,000. At $8M it's about $986,000. That money doesn't come from a bank and it costs no interest, which is why we work the cycle before discussing financing anything.
EXCAVATION BENCHMARKS.
Excavation subcontractors at $1M to $5M net 7 percent, against a CFOS target of 10 percent, set at 10 percent before taxes or 3.5 points better than your trade's average at your revenue, whichever is higher. Working capital should sit at 13 percent of annual revenue, and the monthly close should finish by day 10 so the numbers can still change a decision.
FREQUENTLY ASKED.
