Leak #1: Unbilled Change Orders
Your crew does extra work on-site because the customer asks nicely, or because the scope was unclear to begin with. Nobody logs it. Nobody bills it. The customer gets free work and your margin evaporates.
Over a month, unbilled change orders can add up to thousands in free labor and materials. It's the most common profit leak in home services because it's invisible unless you're tracking it.
The fix is cultural, not complicated. Require written approval and billing for every scope change, no exceptions. Train your field teams that 'being nice' doesn't mean working for free.
When your team understands that every unbilled hour comes directly out of the company's profit, and ultimately out of their bonuses and job security, the behavior changes fast.
Leak #2: Labor Overruns
Jobs consistently take longer than estimated, but estimates never get updated. Your estimator quotes 8 hours, crews take 12. Fix: track actual vs. estimated hours on every job and recalibrate estimates quarterly.
Leak #3: Material Waste
Over-ordering materials, not tracking returns, and letting leftover materials sit in a truck bed. Fix: implement a material reconciliation process on every job. Track what was ordered vs. what was used.
Leak #4: Unproductive Drive Time
Crews driving 45 minutes between jobs because scheduling isn't optimized for geography. Fix: route-optimize your daily schedule and cluster jobs by zone.
Leak #5: Warranty and Callback Costs
Rework and warranty visits that eat crew time without generating revenue. Fix: track callback rates by crew and by job type. Identify patterns and address root causes through training.
Key Takeaways
- Require written approval for every change order
- Track actual vs. estimated hours and recalibrate
- Implement material reconciliation on every job
- Route-optimize scheduling and track callback rates