WINNING BIDS THAT LOSE MONEY.
The bid wins, the contract gets signed, and the job gets built. Then the closeout comes in 8 points below the estimated margin. Everybody worked hard and nobody knows what happened. The distance between winning a bid and making money on the job is called profit fade, and it's structural. It's built into the estimate inputs before the first day of work, and field execution can't fix an estimate that was wrong from line one.
Here's the part that stings. The crews did their job, the schedule held, and the closeout still came in low. That's because the numbers feeding the estimate were off before anybody picked up a tool. An overhead rate that's too low, a burden rate from 18 months ago, a production rate borrowed from a different job, and a change order nobody billed all cost margin in the same direction. None of that's visible from the field, so the conversation turns into a search for somebody to blame instead of a look at the four inputs that caused it.
WHAT IT MEANS.
Profit fade is the difference between the margin estimated at bid and the margin at job closeout.
WHERE MARGIN DISAPPEARS BETWEEN BID AND CLOSEOUT.
Overhead rate mismatch
The estimate uses 10% overhead while the business is running 18% overhead. Every job won at that estimate carries 8 points of overhead cost the bid never captured. On a $500K contract that's $40K of overhead that has to come out of somewhere, and it comes out of net profit. This is the most common cause of profit fade and the hardest to see, because it's invisible inside the estimate structure.
Stale burden rates
The estimate uses a labor burden rate calculated 18 months ago. Workers comp renewed at 12% higher, health insurance went up, and FICA held while the benefit package changed. The new fully burdened rate is $44/hr and the estimate used $38/hr. On 5,000 labor hours that's $30,000 in untracked labor cost, absorbed into the job margin before the first day of work.
Production rate assumptions
The estimate assumes 200 LF of pipe per day based on a previous job in similar conditions. This job has a high water table, a tight right of way, and a different soil type, so actual production is 140 LF per day. The labor budget is exhausted at 70% of the installed quantity, and the remaining 30% costs 43% more per unit than estimated. That one is a field problem, and it stays diagnosable as long as the job cost report is current.
Unbilled change orders
The GC directs scope changes throughout the job and the PM executes them. Three change orders totaling $28,000 go unbilled because the PM is focused on the work and the billing window closes before the paperwork gets done. At closeout, $28,000 of completed work sits as cost with no matching revenue, so the job closes $28,000 worse than it should. This is a billing discipline problem.
WHAT IT LOOKS LIKE IN DOLLARS.
A job bid at 22% gross margin closing at 14% has 8 points of profit fade. Run that comparison across every job you closed in the last 12 months and take the average. If the average fade is 6 points, you have a 6 point structural problem sitting in your estimate inputs, and no amount of field effort corrects it.
CLOSING THE DISTANCE BID TO CLOSEOUT.
Build a bid to closeout comparison for every job completed in the last 12 months, comparing the gross margin in the estimate against the actual gross margin at closeout. The comparison puts the problem into one number instead of four arguments. The inputs, meaning the overhead rate, the burden rates, and the production assumptions, are where the correction happens.
Every line in the estimate maps to a job cost code. When they line up, the bid to closeout comparison is automatic. When they don't, you can't compare bid against actual because the categories don't match. The alignment happens once during onboarding, with the estimate template mapped to the job cost code structure, and every bid after that produces a comparable closeout.
Don't wait for closeout to see the fade. The PM job cost scorecard review each month shows estimated against actual by cost code while the job is still running. When labor is trending 12 points over estimate at 50% complete, the CFO flags it, the PM explains it, the cost to complete gets updated, and the WIP reflects reality instead of optimism. There are still 6 weeks of job left to manage at that point.
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.
