Buying a site work company in Florida

Site work companies prepare land and build what goes under and around buildings: clearing, grading, excavation and fill, stormwater ponds and pipe, water and sewer lines, roads, parking lots and paving. Some specialize in underground utilities, others in paving, land clearing or demolition. Customers are developers, homebuilders, general contractors, utilities and local governments, and in Florida the work closely follows new subdivisions and commercial development.

Work is bid by the project and paid as it goes, often with part of each payment (retainage) held back until the end. Public jobs bring steady demand but heavy paperwork, slow payment and bonds (guarantees from a surety company). This is an equipment business: excavators, loaders, dozers, rollers, dump trucks, pipe lasers and pavers, owned or financed, plus the mechanics and yard to keep them running. A typical company has equipment operators, pipe layers and laborers, a few foremen and a superintendent, an estimator, a mechanic or equipment manager, and an office handling payroll, job paperwork and billing.

• A mix of customers (several developers and general contractors, maybe some public work), not one builder whose next subdivision may not happen.
• Well-maintained equipment with service records, and a sensible balance of owned and financed machines. Idle financed equipment drains cash fast.
• Careful estimates, real job costs, and production rates the company tracks (pipe laid or paving placed by a crew in a day).
• Experienced foremen and operators who are staying.
• Enough bonding capacity for the jobs it wants to bid.
• A safety record that keeps insurance affordable and customers comfortable.
• Its own yard, with room for equipment and material.

Underground utility work (water distribution, sanitary sewer and storm sewer systems up to the meter) needs an underground utility and excavation contractor license from the Construction Industry Licensing Board at the Department of Business and Professional Regulation (DBPR). Certified licenses carry numbers starting CUC. Certified general contractors and certified underground utility contractors may also do clearing, grading, excavation and other site work on any project.

Paving, grading and land clearing on their own don't appear to be a separately licensed state trade, and state law bars local governments from requiring a license to install driveways. Check what applies with DBPR and each county where the company works.

A licensed company works through a person (its qualifier) whose license stays with them. If the only qualifier leaves, the company has 60 days to hire another, and meanwhile can't do licensed work except to finish existing jobs with the board's permission. Bidding on Florida Department of Transportation construction contracts over $250,000 requires the department's prequalification. Anyone excavating must notify Sunshine 811, the state's one-call system, at least two full business days before digging. Clearing, excavation and paving count as construction for workers' compensation, so coverage is required from the first employee.

• An equipment list with age, hours, condition, liens, and whether each machine is owned or financed. Have a mechanic inspect the major pieces.
• Equipment loans and leases, and whether lenders must approve a sale.
• Backlog by job, with expected margin, and how much sits with one customer.
• Job cost reports for finished projects, especially the losing ones.
• Retainage and other money owed, and how long customers take to pay.
• Environmental issues at the yard: fuel tanks, spills, stockpiled material.
• Utility strikes, safety incidents and OSHA history, including trench and excavation safety.
• Bonding capacity, and the surety's view of a new owner.
• Fill and material sources: whether it relies on one pit or supplier, and on what terms.

• Who are your biggest customers, and how much of last year's work came from each?
• What licenses does the company hold, and who's the qualifier?
• How old is your equipment, and what would you replace next?
• How do you estimate jobs, and which kinds make the most money?
• How much public work do you do, and how is your bonding set up?
• Who runs the crews, and which foremen would stay?
• Have you hit any buried lines or had serious safety incidents?