GRADING: FUEL, ROCK, AND OPERATOR OVERTIME
Fuel price drift on diesel-hungry spreads, rock discovery under changed-conditions clauses (the D2 case travels here), and operator overtime creeping past estimated hours: three existing pages, three standing variance reports.
This page covers one problem. The full picture for this trade, including the other places margin leaks, is on the grading 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.
Grading contractors run about % net profit at $1M to $5M, rising to roughly 5% 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 20%, against a CFOS target of 10%.
THE SYSTEM THAT FIXES THIS.
Cost codes built against the estimate, so a job can be read while it runs.
FREQUENTLY ASKED.
