The owner ran a $4.9M concrete subcontracting operation doing both flatwork — slabs, sidewalks, driveways, commercial flatwork pours — and structural concrete: foundations, tilt-up walls, elevated slabs on commercial and industrial projects. Two very different types of work with very different labor profiles, equipment requirements, and margin realities.
They were being bid with the same overhead rate. That rate was whatever the CPA had suggested two years ago based on a general construction markup guideline. It hadn't been calculated from the actual cost structure of this specific business. And it had never been separated by work type.
The overall P&L showed a profit. But that number was a blend. Nobody knew if flatwork was profitable. Nobody knew if structural was subsidizing it. The owner bid on everything that came in front of him because he had no tool to decide which work was worth pursuing.
From the owner: "The business makes money. I know that. But I feel like I'm working twice as hard as I should be for what I'm taking home. Something's off but I can't tell you where."
The "something off" was this: the overhead rate he was using to build his bids didn't reflect what the business actually spent on overhead. And even if it had, it was a single rate applied to labor hours across both flatwork and structural — two work types with substantially different labor intensity and overhead demands.
Flatwork crews were running hard. Structural work was producing better margins but the bids were being built the same way. There was no mechanism to see that the flatwork volume was consistently underperforming until the year-end P&L came in. By then, the jobs were gone and the margins were history.
The failure chain: Wrong overhead rate → bids built on incorrect cost assumptions → flatwork underbid against its true cost → flatwork jobs completed at negative real margin → P&L blends flatwork losses into structural profit → the overall number looks fine → nobody changes the bid strategy.
CFOS rebuilt the overhead rate from two years of actual financial data in the books. Actual G&A, actual equipment overhead, actual supervision costs, actual insurance, actual administrative burden — all pulled from categorized transactions. The rate that came out of this calculation was 11 percentage points higher than the rate the owner had been using. Every bid built on the old rate had been structurally underpriced relative to actual cost. Twelve months of bids. Every one of them.
Flatwork is labor-intensive and crew-heavy — more supervision burden, more equipment per dollar of revenue, less material complexity. Structural concrete has higher material costs but the labor profile is different. A blended overhead rate applied to both means you are systematically overcharging structural work and undercharging flatwork. In a competitive concrete market, overcharging structural costs you bids. Undercharging flatwork wins you jobs you should be turning down.
Without job costing aligned to the estimate structure, there was no way to see a flatwork job's actual margin until the year-end. By the time CFOS ran the first variance reports on prior-year jobs, the pattern was clear: flatwork jobs were averaging 4% net margin. Structural jobs were averaging 14%. The business had been doing roughly 60% flatwork by revenue for two years. That imbalance was costing the owner significant profit that was invisible while it was happening.
CFOS pulled two years of financials and recalculated the overhead rate from actual categorized costs. G&A, equipment overhead, supervision, insurance, administrative — each category calculated as a percentage of direct labor. The rate came out 11 points higher than what had been used. Two separate rates were built: one for flatwork, one for structural.
ControlQore was set up with separate job cost structures for flatwork and structural work. Labor codes, material codes, equipment codes — all built to match the bid line items by work type. Every active job was set up in the new structure. Prior-year jobs were analyzed against the new overhead rates to establish the margin baseline.
With the new job costing structure live and the corrected overhead rates applied, the first monthly variance reports ran. Three active flatwork jobs were running over budget against the corrected rate. The owner's bid strategy shifted: flatwork bids were rebuilt using the new rate, which meant some bids came in higher than competitors. The owner started declining flatwork volume that didn't meet margin threshold.
Every active job showing real-time margin against correct overhead rates. Monthly variance reports running. Flatwork bid volume selectively reduced. Structural pursuit increased. The owner could now see what the business was actually making — by job, by work type, by crew.
The business didn't have a revenue problem. It had a visibility problem. Once the overhead rate was correct and job costing matched the estimates, the owner could see what was actually happening in the business. He stopped chasing flatwork volume he was losing money on. He started prioritizing structural work he hadn't fully pursued. That shift — driven by data that now existed — was worth more than any revenue growth would have been.
Day one of the CFOS engagement to per-job margin visibility live: 60 days. Overhead rate rebuilt from actual data in week one. Job costing live by week four. First variance reports running by week six.
The owner had been running this business for years without knowing which work type made him money. That's not a management failure — it's a systems failure. CFOS built the system. The owner made the decisions. That's how it works.
Concrete contractors who recognize this story usually share these patterns:
The number a CPA gives you for overhead is a starting estimate. It needs to be rebuilt from your actual cost structure annually — and it needs to be separated by work type if you do more than one.
Two different labor profiles, two different equipment burdens, one rate. The result: one work type is consistently underpriced. You find out at year-end which one it was.
By the time you know a job lost money, it's been completed, closed, and billed. Job costing that's not live during the job isn't job costing — it's historical accounting.
Without per-job margin data by work type, there's no framework to selectively pursue the work worth pursuing. CFOS gives you the numbers to make that decision before you bid, not after you complete.
CFOS Benchmarking and Job Profitability modules fix this exact pattern for concrete contractors. See how CFOS is built for concrete contractors →
If it came from a CPA and hasn't been rebuilt from your books, it's probably wrong. Schedule a call — 30 minutes.
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