EIGHT CHAPTERS, SIX SYSTEMS.
Chapters 1 through 4 are the Job Profitability system: the seven cost categories, the equipment cost basis, the real overhead rate, and the estimate all three get pushed back into. Chapter 5 and chapter 6 are the Operating Model Definition: one record for accounting and job cost, and written standards for billing, change orders and notices. Chapter 7 is the heavy one and it carries four systems by itself, because the CEO report, cost to complete, WIP, the balance sheet metrics and the 13 week cash forecast are all inside it. Chapter 8 makes the standards non-negotiable. Trade Benchmarking runs alongside chapters 3, 4 and 8 supplying the numbers to hold people to. The seam worth knowing about is chapter 6: it sets the standards, and the weekly routine that holds them is the Cash Flow Cycle system.
The book is eight steps in a build order and sixty days of work, and the order is load bearing. You cannot compute an overhead rate until direct job expense has somewhere to live, you cannot align an estimate until the overhead rate is real, and you cannot run a monthly cadence against a structure that is still being built. What the chapters do not tell you is which of the eight is a one time build and which is a routine that has to run every week for the rest of the company's life. That is what the six systems sort out, and this page is the sorting.
WHAT IT MEANS.
The CONTROL to CFOS crosswalk is a chapter by chapter map from the eight chapters of CONTROL: The Construction Financial Operating System to the six CFOS systems SPM installs, which says who owns the work in each chapter, where one chapter carries four systems, and where a chapter sets a standard without building the routine that holds it.
Both artifacts are the same operating system. CONTROL is the method written down so an owner can install it himself in sixty days, and CFOS is the same method installed and run for him. They came out of the same practice, so the overlap is high and the seams sit in two specific places.
The first seam is chapter 7. It is one chapter and four systems, and it is where a self install stops. The second is chapter 6. The book gives you three standards in writing and the backbone to hold a general contractor to them, and the weekly calendar, the aging review and the collection number that keep those standards alive are a system of their own. Both seams are below, chapter by chapter.
WHERE A SELF INSTALL STOPS.
Chapter Seven Gets Read as One Chapter
It is six pieces of work. Weekly bookkeeping and books closed by the tenth, cost to complete on every open job, the CEO report on a rolling twelve months, the three balance sheet metrics, WIP reporting, and a 13 week cash forecast. Four of the six CFOS systems live in there, on four different cadences with four different owners. An owner who has worked the first six chapters in order reaches the seventh with momentum and treats it as one more evening's reading.
The Structure Gets Built and Nobody Closes the Month
Chapters 1 through 5 produce a structure and chapters 6 through 8 produce a routine, and a routine needs a person and a date against every recurring task. Most companies that read the book get the cost codes and the overhead rate and never get to the tenth of the month. The book's own words for what that costs: bad data equals bad decisions. Unapproved costs and double entries that have not hit the balance sheet make the profit and loss and the cash position both wrong, and every choice made off them is made on a number that is not real.
The Overhead Rate Comes Out With Nothing to Measure It Against
Chapter 3 produces a real overhead rate, and the book is blunt about the size of the surprise: most subcontractors are running between 25 and 42 percent while bidding 10, so they are losing 20 points on every job they win. The chapter cannot tell you whether the rate you produced is normal, because normal depends on your trade and your revenue band. A civil contractor and a low voltage contractor at the same overhead rate are in two different situations, and one of them has a problem.
The Standards Get Written Down and Go Optional When It Gets Busy
Chapter 8 is honest about this: most subs write standards down and talk about them, and when things get busy the standards become optional and everything reverts to firefighting. Busy is the enemy of productivity and it is when a shortcut is tempting and costs the most. A standard survives being busy when somebody outside the whirlwind holds the meeting, and that is the difference between a written standard and a standard.
The Billing Standards Get Set and Never Become a Weekly Routine
Chapter 6 sets three: billing on the fifteenth of the month, a change order for every change of conditions without exception, and a notice of nonpayment on day forty after the general contractor has billed the owner. That is the standard. It is not yet a billing calendar built backward from each general contractor's pay application window, a weekly receivables review by aging bucket with the specific call and who makes it, a retention schedule per job, or a collection number anybody is measured on.
WHAT IT LOOKS LIKE IN DOLLARS.
Weekly bookkeeping, books closed by the tenth and the thirteen month CEO report are the Operating Model Definition. Cost to complete and WIP reporting are Job Profitability. Working capital at 13 percent of revenue, debt to equity under 1.0 and a current ratio between 1.3 and 2.0 are the Working Capital system. Cash flow forecasting is Cash Control, which shows week by week for thirteen weeks what the bank account starts at on Monday and ends at on Sunday. Bookkeeping looks at the past and controllers make sure it is right now, and projecting and forecasting is what makes a CFO a CFO. Four systems, four cadences, one chapter.
The book's chapter 6 gives you the three standards and the backbone to hold a general contractor to the contract terms, and it says plainly that if you do not, you will go under, and it may not be this project or the next one but it is coming. What it leaves for later is the routine: the billing calendar per pay application window, the documentation checklist per customer covering waivers, certified payroll, change order backup and the approved schedule of values, the weekly aging review, retention tracked per job as a collectible asset, and days sales outstanding measured monthly against 45 days. That is Cash Flow Cycle, system 03, and it has the shortest path to cash of the six.
EIGHT CHAPTERS, SORTED.
Job Profitability, system 02. Seven categories at level one, subcategories at level two, and phase or timing at level three, with the rule that a $1 to $12 million sub runs one and two on every project and three on phased work. Material, subcontractors, equipment, tools, labor, direct job expense, other. Labor is tracked in fully burdened dollars and in hours, both, because every employee's burdened rate is different and the estimate was built on an average.
The chapter's own answer to the objection is the part worth carrying: contractors say that if they charge for all of these costs they will never win another job, and the truth is that whether or not you put them in the bid you are going to pay for it, you are just not going to get paid for it. Without the structure a job that reads 30 to 40 percent finishes at 3 to 5 because the costs are buried and surface two or three months after the job closes.
Job Profitability, system 02, with the purchase decision in Working Capital, system 04. The true daily, weekly and monthly cost of every piece you own, off ownership duration, replacement cost, general maintenance, insurance and registration, the major repairs that happen once or twice across ownership, and a real count of annual working days. The daily figure is what job costing uses. There are thirteen months in a year on rentals, because a month rental is four weeks, and that is how you price your own iron if you want to compare it to the rental house.
The reason the chapter exists is what a bundled all-in rate hides. An excavator billed at $800 a day costs $375 for the machine, $144 of fuel on a six hour day, and $280 for the operator at a burdened $35. That is $799. The rate was the cost. Then overtime takes $49.50 an hour, a foreman on the machine at $47 takes $96 across the day, a day longer than planned takes another $375, and diesel at $5.50 takes $54 off the first six hours. It is death by a thousand papercuts.
Job Profitability, system 02, with the target from Trade Benchmarking, system 05. Eight categories: office requirements, software subscriptions, administrative expenses, employee benefits and development, owned equipment idle time and normal maintenance, insurance, non-direct job employees, and miscellaneous. Non-direct job employees is the category that decides whether the number is right, and the borderline rule is the useful part: a project manager dedicated to a few jobs at a time gets job costed, and one who floats across seven or more or runs company-wide functions goes to overhead.
Two ways to calculate it. The starter way, before job costing is clean, is every category annualised and divided by annual revenue. The way that holds is the last reconciled twelve months of profit and loss, total expense divided by the revenue at the top, redone every month after the bank reconciliation, because the number moves every month and the next bid should carry the current one. Trade Benchmarking is what tells you whether the rate you produced is normal for your trade at your size, or a finding.
Job Profitability, system 02, with the bid floor from Trade Benchmarking, system 05. The problem the chapter states is the clearest sentence in the book about why job costing fails from day one: estimators think in phases and timelines, and accountants think in line items and cost codes. So the estimate and the job cost report describe the same project in two languages and nobody can compare them while there is still time to act.
The fix is that every single dollar in the estimate maps to a job cost code in the same language and structure, and it gets done in a room with the estimators, the project managers, the superintendents, the ops manager, the controller and the bookkeeper in it. You start with a cost everybody agrees on and work down to the ones nobody has ever been asked about, the safety glasses and the ladders and the random hardware store run. None of it is right or wrong. It just has to be the same across the whole business, or it is data nobody can use.
Operating Model Definition, system 06. The myth the chapter takes apart is that any software with cost segregation means job costing is happening. Most bookkeeping services understand general accounting and not how job costs should flow off an estimate, so the setup makes sense to them and does not fit construction, and the result is either too generic to use or too complicated for the team to keep straight. Three failures the chapter spells out: equipment payments booked as an expense when they are a capital asset, with a $5,000 to $12,000 cleanup bill behind it; retention left on the invoice so it reads to the federal government as revenue and gets taxed on money that may never come in; and labor dropped into overhead when it belongs in cost of goods sold, which hides the true overhead percentage and talks you into cutting your price on the next bid.
The chapter's test is the one to steal, and it is a thirty second test. Ask your project manager where the money went on a project as of last month. If he can pull it up line by line off the estimate while you are standing there, the system works. If he has to ask accounting, wait for a report, or download a file and work on it, you know what to fix.
Operating Model Definition, system 06, and the chapter whose routine lives in Cash Flow Cycle, system 03. Three standards in writing: billing on the fifteenth of the month, a change order for every change of conditions without exception, and a notice of nonpayment on day forty after the general contractor has billed the owner. Plus the one that unblocks a company: the project manager is trained and authorised to send everything under a set dollar figure without the owner touching it.
The mindset is the reason this is chapter 6 and not an appendix. You hold the general contractor to the contract terms you both agreed to, and if you do not, you will go under, and it may not be this project or the next one but it is coming. Putting these structures in place is what turns a spreadsheet into money in the bank, and if the operations are not dialed in, the financials cannot fix it.
Four systems, and the reason this page exists. Weekly cost approval, books and bank reconciliations closed by the tenth, and the thirteen month CEO report are Operating Model Definition, system 06. Cost to complete on every open job and WIP reporting are Job Profitability, system 02. Working capital, debt to equity and the current ratio are the Working Capital system, 04. Cash flow forecasting is Cash Control, system 01.
The chapter's four numbers are the ones to carry: revenue is your multiplier, so if you are losing money then revenue accelerates the problem. Active cash flow is payments received minus payments made, which is why a bank balance can look fat in December and run out in February. Gross margin is the foundation everything else is built on. Net profit is the gravy on top of a salary and the reward for the risk, and it is the number that decides whether you stay in business. The diagnostic that comes out of watching all four: if gross profit is at or above the industry average and net margin is low, the problem is overhead.
Read as one chapter it is a long evening. Run as four systems it is a weekly forecast, a monthly close, a monthly job review and a quarterly balance sheet read, and problems are not obvious in month one, which is the whole argument for looking every month.
Operating Model Definition, system 06, with the numbers from Trade Benchmarking, system 05. The chapter's rule is that standards have to be non-negotiable every time, and you follow the standard even when a change order comes in, a delay hits, or a payment is late. Its motto is worth repeating: if it is worth doing once, it is worth doing right.
The action step is the one most owners can do this week without any of the rest of it. Write down the three biggest problems you have had this year, work out what would have prevented each one, and build a standard around each. Start there and build from what hurts. Trade Benchmarking supplies the gross margin, net margin and overhead targets you hold people to at your trade and revenue band, because a standard with no number behind it is an opinion.
THE OUTPUTS, NAMED.
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.
| 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.
