EXCAVATION: THE NET PROFIT QUESTION EVERYONE IS ASKING
For excavation subcontractors doing $1M to $12M: where the margin really goes, what the shortfall costs, and the system that controls it.
This page covers one problem. The full picture for this trade, including the other places margin leaks, is on the excavation 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 NUMBER TO MEASURE IT AGAINST.
Excavation contractors run about % net profit at $1M to $5M, rising to roughly 10% at $5M to $10M. The CFOS target at $1M to $5M is10%, set at 10 percent before taxes or 3.5 points better than your trade's average at your revenue, whichever is higher. 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 runs % to 23%, against a CFOS target of 10%.
THE SYSTEM THAT FIXES THIS.
What this trade should earn at this revenue, not construction as a category.
