ONE CONTRACT. FOUR KINDS OF COST.
These three trades combine work that other trades keep separate. A concrete sub pours and leaves. A mechanical sub fabricates in a shop at one labor rate, installs in the field at another, commissions controls with a third skill set, and then carries service and warranty obligations after the job closes. Each of those has a different cost structure and a different risk, and all of them bill under one contract. If your cost codes are labor, material, subcontractor and equipment, the four are invisible, and a job that closed thin tells you nothing about whether the shop was slow, the field hit congestion, the controls scope was underpriced, or the warranty work has been eating a closed job for a year. The structure has to break out the four before any of them can be managed.
Target gross margin across these three trades runs from the mid twenties at the small end to the low thirties at the top, with net profit targets rising through the bands. That spread is wide enough that a company can be inside it and still be losing money on two of its four cost types, which is why a trade average is a starting point and never a diagnosis.
WHAT IT MEANS.
Mechanical job costing is harder than most trades because a single mechanical, plumbing or HVAC contract routinely carries four different kinds of cost at once, prefabrication in a shop, field installation labor, controls and commissioning, and warranty or service work after substantial completion, and a cost code structure that treats them as one bucket of labor and material can't tell you which of the four lost the money.
The reason this goes unnoticed is that the four cost types have different clocks. Prefab happens early and its variances are visible fast. Field labor variances appear during the middle of the job when everybody is busy. Controls and commissioning problems appear at the end, when the schedule is compressed and there's no time to price a change. Warranty and service cost comes in after the job is closed and reported, so it sits against a job nobody is watching any more, or against overhead where it disappears entirely.
So the same job can report a decent margin at closeout and lose two points over the following year, and the report that would have caught it was never produced, because the job was finished.
FOUR COST TYPES, ONE INVOICE, NO VISIBILITY.
Shop and field are two different labor rates and usually one cost code
Prefabrication is the most profitable hour a mechanical contractor sells, because it's controlled, repeatable and off the critical path. Field installation is the least controlled hour, subject to congestion, other trades and access. Pooling them into one labor code produces an average that describes neither, so a company can't tell whether to move more work into the shop, which is usually the single highest-value operational decision available to it. The two need separate codes and separate rates before that question can even be asked.
Controls and commissioning get bid as a percentage and cost what they cost
Controls scope is often priced as a fraction of the mechanical value because it's hard to quantify at bid time, and then it's performed at the end of a job under schedule pressure by the most expensive people on the payroll. Where it isn't its own phase, the overrun distributes itself across the whole job and reads as general field inefficiency. Contractors who break commissioning out as a phase usually discover it's been running at a loss for years while the installation carried it.
Service and warranty work hits a job that's already closed
A closed mechanical job carries obligations. Callbacks, warranty repairs and the service work that follows all consume field hours after the job has been reported as finished. If those hours post to overhead, the closed job keeps a margin it didn't earn and your overhead rate climbs with no explanation. If they post nowhere in particular, the service division looks unprofitable and the construction side looks better than it is. Either way the decision about which customers and which equipment are worth servicing is being made without numbers.
Material is bought in two entirely different ways
Long-lead equipment gets procured with a deposit months before installation, while pipe, fittings and duct are bought against the schedule. Those are different cash events and different risks, and a single material cost code hides both. A deposit paid in March against equipment installed in September is cash out and no revenue for two quarters, which is a working capital question before it's a job cost one, and it's the reason a growing mechanical contractor can be profitable and short of money at the same time.
WHAT IT LOOKS LIKE IN DOLLARS.
Pull the labor cost on your last closed job and try to split it into fabricated and installed. If that takes an estimate, the two are pooled, and the highest-leverage decision in the business is being made on a feeling. This is the first structural change to make and it's the one with the fastest payback.
Look for a controls or commissioning cost code on a closed job. If the scope was bid as a percentage and coded to general field labor, you have no idea what it cost, and the overrun has been reported as installation inefficiency every time.
Take three jobs closed more than a year ago and find the hours charged against them since closeout. If the answer is none, the hours went to overhead and those jobs are reporting margins they didn't keep.
Total the deposits paid on long-lead equipment not yet installed. That's cash you've spent against revenue you can't bill, and on a growing mechanical contractor it's often the largest single reason the bank balance and the profit and loss disagree.
FOUR PHASES, AND ONE RULE FOR CLOSED JOBS.
Shop fabrication, field installation, controls and commissioning, and service or warranty. The estimate has to carry them separately first, because a cost structure finer than the estimate produces cost with nothing to compare it against. Do it with the estimator in the room, over four one-hour sessions, and the result is that every job can be read by phase from the first month.
They're different people, often different pay scales, different insurance exposure and very different productivity. One blended rate makes prefabrication look less profitable than it's and field work look better, which biases every decision about where to build. Two rates, both fully burdened, and the shop-versus-field question becomes arithmetic.
One cost code per closed job that accepts warranty and callback hours for as long as the warranty runs. It costs nothing to maintain and it's the only way the margin you reported at closeout survives contact with the following year. It also tells you which equipment lines and which customers generate callbacks, which is a purchasing and estimating decision worth real money.
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.
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