One produces 35–50% gross margin when priced right. The other produces 18–28%. Your blended P&L shows one number. Here is how to see both — and why it matters for every decision you make.
Service work cost is dominated by truck overhead, dispatcher time, diagnostic labor, and callback rate. New construction cost is dominated by direct labor and material on specific phase-based jobs. Averaging them into one P&L produces a blended margin that correctly reflects neither business line — making every pricing and capacity decision less accurate than it should be.
New construction billing follows a pay app cycle. Service billing should happen within 48 hours of job completion. When service work is lumped into monthly billing cycles, the primary financial advantage of service work — faster cash — disappears entirely. Monthly service billing on $800K per year in T&M work funds $33,000–$65,000 in unnecessary float.
The most common pattern: service work is underpriced relative to its per-call overhead cost and new construction covers the gap. Or the reverse — a high-margin new construction GC relationship subsidizes a service book that is losing money on high-frequency calls. Without separating them, neither subsidy is visible and neither can be corrected.
SPM builds two parallel job costing streams — service work and new construction — each with its own cost codes, billing cadence, and margin reporting. Service calls are individual jobs with call-level cost tracking: labor by technician, material by call, vehicle allocation, and callback labor as a separate quality metric. New construction jobs have phase-based cost codes tied to the pay app schedule.
Every completed service call generates an invoice within 48 hours. Not at week end. Not at month end. Within 48 hours. ControlQore generates the invoice from the time and material entry at job completion. The cash timing advantage of service work is only captured when billing matches the faster cycle of the work itself.
For each service call: vehicle cost allocation (annual truck cost divided by annual calls per truck), dispatcher or answering service cost per call, and shop overhead per call. Add to direct labor and material. Compare to average invoice value. If per-call overhead plus labor and material exceeds average invoice, service work is losing money on every call — regardless of what the blended P&L shows.
After 90 days of parallel job costing, SPM produces a monthly margin report showing gross margin for service work and new construction separately. Most contractors find that one side is performing significantly better or worse than assumed. The data drives pricing corrections, billing changes, and capacity allocation decisions that the blended P&L never allowed.
This contractor did $800,000 per year in T&M service work and $1.5M in new construction. Blended gross margin: 19%. After separating in ControlQore: new construction at 28%, service work at 11%.
Per-call overhead was calculated for the first time. Service labor rates adjusted. Some customers left. The ones who stayed are profitable.
In employee bonuses paid after the service book was corrected.
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