CONSTRUCTION FINANCIAL DECISION-MAKING: EQUIPMENT, HIRING, AND BIDDING WITH REAL DATA.
Most of the big financial decisions in a construction company get made from memory, gut feel, and the monthly payment amount. That's not carelessness. The data that would make those calls better isn't organized, not current, and not laid out in a way that feeds the decision in front of the owner. The equipment utilization analysis takes 20 minutes with current fleet data. The hiring overhead model takes 15 minutes from the current overhead rate. The GC profitability review takes 10 minutes from 12 months of job cost history.
Every one of those calls can be worked in about 30 minutes when the financial data is current, which is the whole point. The owner with the numbers in front of him decides from information. The owner without them decides from instinct. Both get some calls right, and only one gets them right over and over. SPM builds and maintains the data behind these decisions, and the monthly strategic meeting walks through the significant ones facing the business that month. The analysis isn't the hard part. Having the numbers ready before the decision comes up is the hard part.
WHAT IT MEANS.
Construction financial decision-making is the practice of running the equipment, hiring, and bidding calls off current financial data instead of memory, gut feel, and the monthly payment amount.
The three decisions on this page are the ones that move a construction company more than any others: what iron to own, who to put on salary, and which jobs to chase. All three get made regularly, all three are expensive to get wrong, and all three have a data-based answer that takes less than half an hour to work out once the financial structure is in place.
HOW FINANCIAL DATA CHANGES EACH ONE.
The equipment decision gets made on the payment amount
A $1,200/month equipment loan payment feels more affordable than $2,800/week in rental cost. Over 52 weeks, that comparison is $62,400 in ownership cost against $145,600 in rental cost, so the loan looks like the obvious call. The ownership figure leaves out insurance, maintenance, registration, and the cost of the capital committed. The rental figure leaves out the weeks nobody needs the machine, because rental goes to zero in those weeks and ownership doesn't.
The hire happens before anybody models the overhead rate
Every hire above laborer level moves the overhead rate, and most owners run the decision off the salary alone. A $75,000 base salary hire at $97,500 fully burdened increases overhead by $97,500. At $4M revenue, that's 2.4 points. At $3M revenue, that's 3.3 points. The question isn't whether the business can cover the salary; it's whether the revenue increase the hire enables covers the overhead rate increase it creates.
The bid decision gets made without the financial data it requires
Four questions decide whether a job is worth chasing. Is the working capital there to fund this mobilization alongside the jobs already running? Does this GC relationship produce profitable work historically? Does the crew hit estimated production rates on this project type, and is the schedule compatible with current crew capacity? Each one has a data-based answer, and the contractor who asks them before putting 40 hours into a bid wins different work than the contractor who bids everything and works out the money later.
WHAT IT LOOKS LIKE IN DOLLARS.
The correct analysis is how many weeks per year the machine will be productively deployed, and what the true annual ownership cost is at that utilization. If productive utilization runs above 60 to 70 percent of working weeks, ownership wins. Below that, rental wins. Most contractors buy equipment at 40 percent utilization and fund the idle ownership cost out of project margin.
Model the overhead rate before and after the hire, then update the bid rate to match. Calculate the revenue required to hold current net margin at the new overhead rate. That revenue threshold is the hire's breakeven point, and it's the figure the decision should turn on rather than the salary itself.
THE FOUR DECISIONS THAT BENEFIT MOST FROM FINANCIAL DATA.
Count the weeks of productive deployment per year and divide by total working weeks. If the answer is below 60 percent, rent it. If it's above 70 percent, buy it. Calculate the true ownership cost including insurance, maintenance, registration, and the capital committed, not just the payment, because the payment is the one number that never tells you whether the machine earns its keep.
Model the overhead rate before and after, then calculate the revenue breakeven the hire has to clear. Make the hire after that analysis rather than before it. This is a 15 minute exercise once the overhead rate is maintained continuously, and it's the difference between adding a project manager who pays for himself and adding one who eats 3.3 points of margin.
Pull margin history by GC from the last 12 months and read it. Some GC relationships produce profitable work consistently and some sit below expectation every time. Allocate bidding time toward the profitable relationships, because bidding time is the scarcest thing a subcontractor owns and spending it on a GC who has never produced a good job is the most expensive habit in the business.
Compare the peak mobilization cash requirement against available working capital before the contract gets signed. If there's a shortfall, resolve it or defer the project start. Signing first and discovering the shortfall in week three turns a good job into a funding emergency, and the line of credit becomes the plan by default.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
Pricing
| 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.
