WHY PAVING CONTRACTORS LOSE MARGIN WITHOUT KNOWING IT.
Paving margin is lost to three specific things: the unhedged tuesday, the ticket-to-yield gap, and the ninety-day season. Paving subcontractors at $1M to $5M run 20 percent gross and 5.5 percent net, against CFOS targets at $1M to $5M of 23 percent gross and 10 percent net. All three are measurable, and all three are invisible without job costing that reads against the estimate.
Paving 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. DOT work adjusts pay to the liquid asphalt index automatically; private work leaves the same contractor fully exposed on the same commodity. Carrying index-tied escalation language into private bids is the trade's single highest-value contract habit.
THE MATH BEHIND THE MISSING CASH.
The Unhedged Tuesday
DOT work adjusts pay to the liquid asphalt index automatically; private work leaves the same contractor fully exposed on the same commodity. Carrying index-tied escalation language into private bids is the trade's single highest-value contract habit.
The Ticket-to-Yield Gap
Bought by the ton, sold by the square yard: waste, over-depth, and handwork live in the spread between plant tickets and placed quantity, and nobody sees the donation until the reconciliation runs per job.
The Ninety-Day Season
Plant schedules, temperature floors, and a compressed calendar concentrate the year's revenue into a window, while the fleet and the overhead run twelve months. The winter reserve isn't a luxury; it's the business model. (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 | 20% | 22% | 23% |
| Gross margin, CFOS target | 23% | 22% | 23% |
| Net profit, industry average | 6% | 9% | 11% |
| Net profit, CFOS target | 10% | 10% | 12% |
| Overhead, industry average | 14% | 13% | 12% |
| Overhead, CFOS target | 13% | 12% | 11% |
Industry figures are Paving 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.
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