ONE PROBLEM, IN DETAIL

EXCAVATION: ROCK, SPOIL, AND THE CHANGED-CONDITIONS FIGHT

QUICK ANSWER

The ground never matches the report. D2 Excavating v. Thompson Thrift started as a $630K excavation subcontract, produced far more spoil than planned, and ended at the Fifth Circuit with a judgment for the sub above half a million dollars. The cost is spent before the fight starts.

This page covers one problem. The full picture for this trade, including the other places margin leaks, is on the excavation operating system page.

BY JOSH LUEBKERPublished 2026-08-06Updated 2026-08-06
WHAT BREAKS

WHERE THE MONEY GOES.

Rock, spoil, and the changed-conditions fight

Covered in full in the quick answer above. The sourced numbers and what controls it are below.

WHAT THIS TRADE SHOULD EARN

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%.

Full excavation benchmark bands by revenue

WHAT CONTROLS IT

THE SYSTEM THAT FIXES THIS.

Job Profitability System

Cost codes built against the estimate, so a job can be read while it runs.

How the Job Profitability System works

COMMON QUESTIONS

FREQUENTLY ASKED.

Classify soils in the bid, carry unit prices for rock and unsuitable material, and tie both to a written changed-conditions clause. The cost of extra spoil gets spent before any dispute resolves; the paper trail is what turns a surprise into a paid change order instead of a donation.
Excavation contractors at $1M to $5M in revenue net 5.5 percent on average, rising to 8.5 percent by $25M to $50M. The CFOS target at $1M to $5M is 10 percent, and it rises with revenue. The gap usually sits in untracked production rates, haul-off cost drift, and iron that bills nothing. Every net profit figure here is stated before taxes, the same basis CFMA reports on, so the two are directly comparable.
Because the trade pays you last and charges you first. Equipment payments and fuel run daily, trucking subs bill weekly, and the receivable lands 60 to 90 days later, minus retainage. Add one rock surprise or one failed compaction test and the quarter's cash is spoken for.
Three tiers, and which one you are in depends on how much of the work you want off your desk. Core is where you stop guessing: job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a monthly meeting that ends in decisions, while your bookkeeper keeps doing the books. Executive is where you stop touching the books, because we run the bookkeeping and the controllership as well. Strategic is where every job shows its margin while it is still running, because the job costing and WIP platform is set up and managed for you. No payroll. No scope gaps.
Sixty days. We migrate your books back to the start of your last taxable year, set up ControlQore, and build your job costing structure from scratch. Fully operational in two months.
WHAT THIS TIES INTO
Josh Luebker, The Construction CFO
Josh Luebker
FRACTIONAL CFO · THE CONSTRUCTION CFO

Former commercial project manager and master electrician: 150+ projects worth $2.1B combined, from $50,000 to $300M. Now fractional CFO to commercial subcontractors.

IS THIS COSTING YOU MORE THAN YOU THINK?

Bring one excavation job and your last full year. We will show you what this is worth in dollars before we talk about working together.

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