CIVIL: CHANGED CONDITIONS AND THE EXCESS DIRT DISPUTE
The ground never matches the geotech report. Quantities move, hauling distances grow, and the change order dispute starts after the cost is already spent.
This page covers one problem. The full picture for this trade, including the other places margin leaks, is on the civil operating system page.
WHERE THE MONEY GOES.
Covered in full in the quick answer above. The sourced numbers and what controls it are below.
The ground never matches the report. D2 Excavating v. Thompson Thrift started as a $630K excavation subcontract, produced far more spoil than planned, and ended at the Fifth Circuit with a judgment for the sub above half a million dollars. The cost is spent before the dispute starts.
THE COST, SOURCED.
D2 Excavating v. Thompson Thrift. A $630K excavation subcontract produced far more spoil than planned. The dispute over the excess dirt ended in a judgment for the subcontractor above half a million dollars, decided at the Fifth Circuit.
IN THEIR OWN WORDS.
No change order, not paying.
Mike Holt forums, GC dirty tricks thread, quoting a GC after directed extra work
Always get it in writing.
Mike Holt forums, GC dirty tricks thread, quoting a GC after directed extra work (same thread, the lesson the poster drew after settling for half)
THE NUMBER TO MEASURE IT AGAINST.
Civil contractors have about 7% net profit at $1M to $5M, rising to roughly 10% at $5M to $10M. The CFOS net profit target is 10.5% before taxes at $1M to $5M, the trade's average plus 3.5 points, never below 10%. A problem like this one lives in the distance between those two figures rather than in a loss on any single job.
Gross margin over the same bands is 21% to 23%,against CFOS targets of 23.5% and 25.5%.
THE SYSTEM THAT FIXES THIS.
Cost codes built against the estimate, so a job can be read while it is open.
FREQUENTLY ASKED.
