WHY GRADING CONTRACTORS LOSE MARGIN WITHOUT KNOWING IT.
Grading margin is lost to three specific things: the two economies, the acceptance gate, and the idle spread. Grading subcontractors at $1M to $5M run 18 percent gross and 5.5 percent net, against CFOS targets at $1M to $5M of 25 percent gross and 10 percent net. All three are measurable, and all three are invisible without job costing that reads against the estimate.
Grading contractors at $1M to $5M net 5.5 percent, rising to 8 percent by $25M to $50M; the CFOS target at $1M to $5M is 10 percent. The distance between the trade average and the CFOS target isn't a pricing problem in this trade. It sits in the three mechanisms below, each of which moves margin without appearing as a failure on any single job. Mass grading sells yards; fine grading sells tolerance. One blended cost history misprices both, and the trade's 18 percent gross margin has no room for systematically wrong bids in either direction.
THE MATH BEHIND THE MISSING CASH.
The Two Economies
Mass grading sells yards; fine grading sells tolerance. One blended cost history misprices both, and the trade's 18 percent gross margin has no room for systematically wrong bids in either direction.
The Acceptance Gate
Density tests and subgrade acceptance are payment gates: a failed proctor is unpaid production plus retest fees plus schedule burn. Moisture and soils documentation is what separates a claim from a donation.
The Idle Spread
Sixteen percent overhead at the small end, heaviest in the dirt family, running twelve months against seasonal production. Winter reserves and utilization tracking are the difference between a spring restart and a spring refinance. (cfos-working-capital-system) ---
WHAT CHANGES IN THE FIRST 60 DAYS.
| Metric | $1M to $5M | $5M to $10M | $10M to $25M |
|---|---|---|---|
| Gross margin, industry average | 18% | 20% | 22% |
| Gross margin, CFOS target | 25% | 24% | 23.5% |
| Net profit, industry average | 2% | 5% | 8% |
| Net profit, CFOS target | 10% | 10% | 10.5% |
| Overhead, industry average | 16% | 15% | 14% |
| Overhead, CFOS target | 15% | 14% | 13% |
Industry figures are Grading contractors' AVERAGE for each revenue band, not a floor. The CFOS net profit target is set at 10 percent before taxes or 3.5 points better than your trade's average at your revenue, whichever is higher, and the gross margin target is set at whatever gross margin produces that net profit once your overhead is paid, and never below your trade's own average. Gross minus overhead equals net on every column, so the rows tie out.
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
FREQUENTLY ASKED.
