80 PERCENT SPENT. 60 PERCENT COMPLETE.
A $2.8M CMU and brick subcontractor kept finishing jobs at 80 percent of budget spent against 60 percent of the work complete. He assumed the trouble was retainage, money already earned and sitting where he couldn't reach it. The job cost report said something else in its first cycle: CMU was profitable and brick was handing the profit back. He priced brick per unit at a rate built for production wall, and soldier courses and the directional cuts around windows and doors consume labor at a different rate entirely. About 20 percent light, on every brick job, for roughly eighteen months.
Nothing here was about effort or selling. He was excellent at takeoff and his relationships were good. One blended labor code averaged a winning scope against a losing one and reported a number that described neither, so the flaw survived every review he did.
A $2.8M MASONRY SUB. SIX MONTHS IN, SOMETHING WAS OFF.
A masonry contractor doing $2.8M in CMU and brick for commercial work noticed within about six months that his estimates and his bank account disagreed. He had not chased it down, and he had personally guaranteed the company's merchant cash advances, which put his house, his vehicles and his investments behind a single missed payment.
HE THOUGHT IT WAS RETAINAGE.
That is the usual first answer and it is usually wrong. Retainage is money you have earned and cannot touch yet, so it explains a timing problem. It does not explain jobs finishing at 80 percent of the budget with 40 percent of the work still to build.
Two cash problems sat on top of the pricing one and disguised it. He was underbilled by roughly 10 percent, so the billing understated the work in place. And receivables were running at 90 days, so what he did bill came in late. Together those made a structural pricing failure present as a cash shortage, which is the reason he reached for merchant cash advances and never repriced anything.
The personal guarantee is worth stating plainly. It is standard on a merchant cash advance and almost nobody reads it, because by the time you are signing one you are too worried about Friday to study page four.
ONE CODE, TWO DIFFERENT TRADES.
The job cost report answered it in the first cycle, once labor reported by scope. CMU was making money. Brick was giving it back. A single blended masonry labor code had been averaging the two, so the report showed a middling number that matched neither scope and looked survivable.
The brick rate was the specific fault. He priced brick per unit using a rate built for production wall, which is the fastest brick a mason lays. Soldier courses and the directional cuts around window and door openings burn labor at a completely different rate. Applying one number to all of it left him about 20 percent light on brick labor.
Over roughly eighteen months that cost a few hundred thousand dollars. It never appeared as a bad job, because every job carried some CMU to average it back toward acceptable.
WHAT CHANGED, WEEK BY WEEK.
THE NUMBERS, NOT THE FEELING.
The diagnosis took one job cost cycle, because separating the two scopes was enough to show it. Rebuilding the brick rates by type and correcting the billing took about six weeks. The merchant cash advances were caught at roughly six months into their term, which is why they were payable at all: a year in, the compounding makes them very hard to clear.
DOES THIS SOUND FAMILIAR?
Contractors carrying this one usually have two scopes under a single cost code. Masonry with CMU and brick, mechanical with pipe and sheet metal, electrical with rough-in and underground. If one scope is priced correctly and the other is not, a blended report averages them into a number that looks tolerable and identifies nothing.
The tell is repetition. One job at 80 percent spent and 60 percent complete is a job. The same result over and over is a rate, and a rate is a decision somebody made once.
The second tell is a unit price used across work that is not uniform. Brick per unit is fine if all the brick is the same brick. The moment a job has soldier courses and cut-heavy openings, a single rate is charging production speed for work that cannot be built at production speed.
See how CFOS applies to masonry subcontractors specifically on theMasonry Operating System page, or book a 20 minute call and bring your own numbers.
FREQUENTLY ASKED.
