WHY UNDERGROUND UTILITY CONTRACTORS LOSE MARGIN WITHOUT KNOWING IT.
Underground Utility margin is lost to three specific things: the two bores, the linear gauntlet, and the council's calendar. Underground Utility subcontractors at $1M to $5M run 18 percent gross and 5.5 percent net, against CFOS targets at $1M to $5M of 24 percent gross and 10 percent net. All three are measurable, and all three are invisible without job costing that reads against the estimate.
Underground utility contractors at $1M to $5M net 5.5 percent, rising to 8.5 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. HDD and open cut are separate production economies sold under one bid book; blended histories misprice both, and an 18 percent gross margin can't fund systematic mispricing in either direction.
THE MATH BEHIND THE MISSING CASH.
The Two Bores
HDD and open cut are separate production economies sold under one bid book; blended histories misprice both, and an 18 percent gross margin can't fund systematic mispricing in either direction.
The Linear Gauntlet
Every week of pipe crosses more foreign utilities than most trades meet in a year, under strict-liability locate law with GL sublimits underneath. Potholing and vacuum excavation are financial controls priced into the work, not optional caution.
The Council's Calendar
Municipal owners pay on approval cycles, hold retainage to restoration acceptance, and replace lien rights with bond claims. The public-owner cash carry gets priced in the bid or funded by the contractor. (cfos-cash-control-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 | 24% | 23% | 23% |
| Net profit, industry average | 3% | 6% | 9% |
| Net profit, CFOS target | 10% | 10% | 11% |
| Overhead, industry average | 15% | 14% | 13% |
| Overhead, CFOS target | 14% | 13% | 12% |
Industry figures are Underground Utility 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.
