PRODUCTION RATES VS ESTIMATING ASSUMPTIONS.
Most construction margin leakage starts before the job begins, in the distance between the production rate used in the estimate and the production rate the crew delivers in the field. If your estimate assumes a crew installs 400 linear feet of conduit per day and they're consistently delivering 320, every similar bid is 25% under-labored before anyone picks up a tool.
The estimator did their job. The crew did their job. The margin disappeared anyway, and nobody in the building did anything wrong. That's what makes this the most common source of systematic underbidding in commercial subcontracting: there's no villain to point at, just an assumption that was true once and hasn't been tested since. The number in the estimating template came from a good week on a good site. The number in the cost report came from a year of ordinary weeks.
WHAT IT MEANS.
A production rate is the measure of how much work a crew can complete in a unit of time, such as linear feet of pipe per day, cubic yards of concrete placed per hour, or square feet of drywall hung per crew-day.
The rate in the template isn't wrong on purpose. It came from somewhere real, usually the best stretch a crew ever put together, and then it sat in the file for three years while wages went up and the sites got tighter. Nobody re-tested it because nobody owns re-testing it.
FOUR WAYS THE ESTIMATE GETS IT WRONG.
Best-day assumptions instead of average-day reality
Estimators anchor on the best they have seen their crews do, which is a productive stretch on a straightforward project with no coordination issues, good weather, and an experienced crew. Field reality includes Mondays after long weekends, crews waiting on inspections, GC coordination delays, material deliveries that come in late, and the training drag while a new crew member gets brought up to speed. Average-day production is typically 15 to 25% slower than best-day production.
Busy-month utilization instead of full-year reality
A fiber splicing contractor we worked with was pricing T&M work based on the production rate his crews hit during their busiest months, when every technician was fully deployed and there was no slack in the schedule. Overhead doesn't stop between jobs. In slower months, the same crew's effective production rate, measured against total labor cost including down time, was 30 to 40% lower than the busy-month rate.
Stale rates that haven't been updated for wage increases
A labor production rate stated in dollars rather than hours compounds the wage increase problem. If your fully-burdened labor rate went up 8% this year because of prevailing wage adjustments or market competition, and your estimating template still uses last year's dollar rates, every bid is understated by at least 8% on the labor line. The rate was right the day somebody typed it in.
No feedback loop between estimates and field actuals
The most common one runs like this: the estimator builds the bid, the project runs, and the PM reviews the cost to complete. The estimator never sees the final variance, so the bid assumptions never get tested against what happened. Next month's bid for similar work uses the same assumptions that caused last month's overrun.
WHAT IT LOOKS LIKE IN DOLLARS.
The estimate assumed 95 LF per crew-day across 1,710 LF, which is 18 crew-days at a $6,200 per day burden rate, for estimated labor of $111,600. The job cost report came back at 74 LF per crew-day, which is 23.1 crew-days at a $6,400 per day burden rate after a wage increase, for actual labor of $147,840. That's a labor variance of $36,240 over, a 32% overrun on a single phase. On a $420,000 job with a 22% target gross margin, that variance alone erases 8.6 points of gross margin, and the job that was supposed to close at 22% closed at 13.4%.
HOW CFOS CLOSES THE DISTANCE.
The job cost structure tracks labor by phase in hours and in dollars. Both are required to compute an actual production rate, because hours tell you productivity and dollars tell you cost. Track only one and you get the symptom without the cause.
At job close-out, the estimated and actual production rate get calculated for every major labor phase. Both numbers go into the estimating database so the next bid can see them. A rate that never gets written down is a rate that never improves.
Production rates get sorted by project type, site condition, and crew composition. A future estimate can then select the right rate for the right job type instead of using one blended number for everything. A tight downtown site and an open pad don't run at the same rate, and the file should say so.
Estimating templates get updated quarterly with current fully-burdened labor rates. Wage increases flow through immediately instead of sitting in last year's file. This is the cheapest item on the list and the one most often skipped.
After every project close, the estimator and the PM sit down together. They cover what rate was bid, what rate was delivered, and what drove the variance. That conversation is worth more than any estimating software upgrade.
Variance gets tracked systematically across a trailing 12 months. Phases that consistently overrun flag a production rate that needs adjustment. One overrun is a field problem, and three overruns on the same phase code is an estimating problem.
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.
Pricing
| 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.
