Rishi (00:41)
Our guests are Arleen Barningham and Rhett Ennis. Both of you, welcome.

Arleen Barningham (00:44)
Help them.

Thank you very much.

Rhett Ennis (00:49)
Thank you.

Rishi (00:50)
So today's episode is about CFMA's benchmarker. So first section is here on what the benchmarker is and why it exists. Arleen for listeners who've heard of CFMA's financial benchmarker but never used it, what is it and what question was it originally built to answer for construction financial professionals?

Arleen Barningham (01:15)
Absolutely. So really the what kind of made this product come to life almost thirty years ago now was where are my peers at financially in the construction industry? There really wasn't a tool, a comprehensive tool out there really showing this is, you know, the financial health and performance of the industry. and so we decided to kind of reach out to our members as as an association to kind of figure out, hey, this data.

Data does exist, let's find a way to collect it and be able to give it out to our members and to the construction industry as a whole so that they can be able to see not just where they can be in terms of where their peer groups are at, but also just what what is happening in in the construction world. so it's definitely I I like to refer to it more like a report card. so it's definitely you can look at your

Rhett Ennis (02:05)
I

Arleen Barningham (02:06)
own financial statement your income

Rhett Ennis (02:07)
think

Arleen Barningham (02:09)
and then be able to see that across all these different peer groups that we do measure so we do have all of the aggregated data efforts so you can see the construction as the construction industry as a whole and then when it comes to your region your revenue the the total amount of revenue that you have the type of work that you do whether it's general specialty trade heavy construction residential and we also break it down by location and by

All the way into the different NAICS codes. So you can really kind of drill down what peer groups are most relevant to you, and then you can see how the rest of the industry is doing. And looking at the best in class, I think, is probably one of the most helpful peer groups that we look at. So you can see by your revenue size what is the best in class, and that is the top 25% performers in that particular peer group. So it just allows you to see where you can be in.

Gives you a great goal to look for rather than just looking at your pre-prior years of your own data. You're looking at the industry's data as well.

Rishi (03:08)
So in my previous life, I used to be a commodities trader and nothing like this, this kind of benchmark existed in that industry. it's great that you guys have that here. Rhett You sit on the practitioner side at CBIZ. When a contractor first sees their numbers next to the peer set, what's the reaction you see most often?

Arleen Barningham (03:16)
Yeah.

Rhett Ennis (03:16)
Interesting.

Yeah.

Yeah.

Yeah, I mean it's a it's a good question, Rishi. you know, so I I am on the other side and as a practitioner, I'm an associate member, I'm a CPA that specializes in construction, you know, I'm with C Biz. I I sit in Seattle, Washington. It's actually Bellevue, Washington, but we call it the Seattle office.

And we work with a lot of contractors here in the Northwest. we work with a lot of contractors in the western region of the US and then across the country, within CBiz. and I think, the the value of of the benchmarker is is there's a lot of value in it. But specifically to your question, when you sit down with a contractor that hasn't necessarily benchmarked their business before, their results against a peer group, if they haven't seen that, they they're

usually surprised. They're they even just the report card that Arleen was talking about, they usually haven't thought about their business in those ways before. They they're always talking about working capital and our backlog and you know, what's what's our performance here to date in terms of net income? What's our strengths of our balance sheet? But they're kind of Arleen references, they kind of see it in a in an echo chamber of their own results year year after year. And the the real value of the benchmarker, one of the real values is

letting them see it

kind of i in a in a snapshot that kind of wipes away that that echo chamber, that bubble, because it's it's completely independent of their results. And it's they're looking at and and they're looking at it in ways that they had probably haven't thought about it before in terms of the efficiency ratios and you know not just the the profitability and financial leverage, but it's like efficiency, productivity, and even some of that sales output, if they're just looking at the simple report card. In my experience, especially smaller companies,

contractors up to 50 million, they frequently already be thinking about those things at a enterprise level. They're thinking about job by job, like, you know, what's our efficiency, what's our margin of this job, but at that top level, like how do we compare to a a group of similar size companies, you know, until they've seen this, frequently it's the first time they have seen something like it. And it's sparks a lot of conversation.

Arleen Barningham (05:33)
Maximum.

Rishi (05:38)
Yeah, if I'm a contractor and I see like I'm really far behind compared to the benchmarker, I'm probably going to challenge the benchmarker as well. I'm going to ask you tough questions about it.

Rhett Ennis (05:50)
Yeah. Yeah.

Rishi (05:51)
Has that happened to you? Like somebody who's like, this ratio looks so far better than what I could do.

Rhett Ennis (06:00)
Yes. In it that conversation does come up and what I typically respond with on either side is well let's look at the peer group that we chose for you and you gotta make sure that is a fair comparison.

whether it's based on a regional performance, because certain regions in the United States perform differently at different times. Like right now, like the Northwest, you know, we're not setting the world on fire in terms of construction, revenues, backlog and stuff. It's our market's a little bit weak. So if I was benchmarking somebody here against somebody of a similar type company, but in a part of the country that's hot, that's not a very fair comparison. So you do have to go look back and make sure that you you're giving them a fair shake. But frequently

What I find is that it's a fair enough comparison and that they just truly do have a weakness in their balance sheet or their performance efficiency leverage or you know profitability. And then you have to have a frank conversation about why that is and why they're not performing at the level of their peer group.

Rishi (06:57)
What's the most common misconception about what the benchmarker can and can't tell you?

Rhett Ennis (07:03)
from my per experience.

Arleen Barningham (07:05)
I was about to say I think very much kinda echoing what you were saying before about you know, this data

doesn't doesn't really apply to me is definitely one misconception. The other is the date how we collect the data and how people are accessing it. is probably a misconception I've been hearing a lot so in my one year of of being here at CFMA. not even yet, but just having those conversations, especially recently at our conference, we we do use a third party service to collect this very sensitive financial information. there have been questions of

Rishi (07:26)
So moving.

Arleen Barningham (07:37)
Can't someone you know use the filters of the peer groups to drill down and be able to you know identify me as their competitor and like and see their actual financials, and that is absolutely not the case. We thankfully have a large enough sample size that we can avoid that. and again, it's also be because we use this third-party service, they are in the industry of collecting and storing data.

well in in a trustworthy way. In my previous job we were very much GDPR compliant and we are very close to that which is the the European standard for for privacy protection. and we're starting to look into implementing more GDPR standards here as well on our side. But all of that data is protected. No one can just you know filter down or type in your name in some way and see you know their competitors financials. That cannot happen. And obviously as we

Rhett Ennis (08:13)
Mm.

Arleen Barningham (08:28)
Want to continue to grow the amount of data submission that we get, the more difficult it is to be able to try to narrow that down. But again, none of our peer groups have like one or two. We do have enough data to be able to fill that out. So your data is safe, your financials are not going to, be used against you in any way. This is a collaborative effort from the industry, from our members, and even from non-members and just our partners to be able to grow the industry.

as a whole and have that transparency while still holding on to data privacy.

Rhett Ennis (09:02)
Smart. Yeah, I'd say my my feeling is that most commercial job contractors would feel like there could be some value in having access to it. If if they didn't, I'd like to have the conversation with them, like Arleen said.

Rishi (09:01)
– RHett you wanna add something?

Rhett Ennis (09:18)
Yeah, worst case, you know, the you could get value out of benchmarking your results against best in class contractors. If you know, contractors love to say that they're best in class, you know, but okay, so prove it. You know, put put your numbers on paper and see where you really stack up. And I my my feeling is until you've done that, you haven't actually proven it. and I don't think there's a better way to find out than you know, the benchmarker. the the other thing is y I've suspect there could be some.

Some subsets of the industry that might be self-selecting out of using the benchmarker. And I'll I'll pick on residential contractors specifically. And this is, I admit this is somewhat self-serving because I'm a member of the residential task force and we're trying to develop more content, education, and value for our members that are residential, whether they're multifamily or single-family speculative home builders, et cetera. Like there's there's a pretty good number.

respondents in the benchmarking survey that are in multifamily or single family residential construction.

even some remodeling and stuff. So there's value in pulling, you know, participating and getting the report card as the residential builder. And I think that value is going to increase over time. But I wouldn't wait if somebody's on the fence, just do it now. and you know, I think we could probably make some improvements for the report card that would cater a little more specifically to a residential contractor versus a commercial contractor. But all the data is there. The value is there. You whatever you would want to get out of it.

you could get out of it. So I that's that's probably my one takeaway from it.

Rishi (10:50)
CFMA is a membership. I believe it tends to be non-residential. Arleen I believe there is a drive for you guys to go and have some more residential contractors. Am I thinking about it right?

Arleen Barningham (11:04)
You are absolutely right. resident we actually last year, so the twenty twenty five benchmarker was the first benchmarker that included residential data as one of those segments that that we do measure and and

ha have that data available because we just didn't have a large enough data set. It is still definitely our smallest kind of peer group area and so we definitely want to continue to to motivate. So I'm happy to hear I know Rhett and Laura as well from the CFMA side is really working hard to just get more residential contractors on board at CFMA as well as the benchmarker.

Rhett Ennis (11:40)
Yeah.

Rishi (11:40)
The next section here is inside the data collection grind. Arleen, the survey today takes a CPA roughly four to five hours to complete. Walk us through what's actually happening in those hours. Where does the time go?

Arleen Barningham (11:55)
So just again having initial conversations, doing a little bit of market research and data collection, it seems a very good portion of it is just it is a very manual process right now. you can go to financialbenchmarker.com to either download an Excel spreadsheet with all of the survey questions, you can fill it out online. and then we also have bulk submissions if you are say a CPA firm and you have multiple clients that you have been given permission to provide their financial data.

as well. So it is a very manual process. We do ask a lot of questions, but at least in our opinion, that it's as it's pretty pared down as best we can so it can still be valuable so that we're able to do all of the calculations for all of those ratios that are really helpful to see, you know, to do those calculations rather than just have the revenue numbers themselves. And I think not only just the manual process of it, it's that data, it does exist.

Just some people don't know where to find it. So the main things that you really need to be able to fill out the survey is your balance sheet and your income statement. Those are the two main ones. So your balance sheet has your assets, your liabilities, your equity, then your income statement has your revenue, direct costs, all your different expenses, and your net income. Once you have those numbers, you're gonna be able to fill out the majority of that of the survey. However, it does seem that some people just they don't know where.

how to locate that line item and be able to plug it in. So we are, I know we'll we'll talk about a little bit more, but it's just difficult to be able to extract that information and then manually enter it in this separate system. So we are trying to to find different ways to ease that process.

Rishi (13:31)
So the person who's filling this survey, are these CPAs, are sitting in an accounting company like CBIZ or they're like an in-house accountant who are directly working for the contractor?

Arleen Barningham (13:46)
We do have CPAs that are doing a very good portion of it. but for some quite a lot of the general contractors, they're they're doing the their CFOs are doing it as well. so these are people that are very literate in when it comes to to the financial information, but it's a lot to to get and just be able to extract the information and then put it someplace else. and we also have found because we do have the survey open from usually

Rhett Ennis (13:57)
Okay.

Arleen Barningham (14:13)
Between March and June, we do have kind of this larger gap to be able to collect that information because it does also take these companies time to be able to close out their year so they know those numbers are accurate and the definitive final. So that that does tend to also add to that time as well.

Rishi (14:30)
I'm glad that you brought out the close out. We've worked with contractors. Actually, one of them I remember, they're six months behind in closing out their books.

Rhett Ennis (14:38)
Mm-hmm.

Arleen Barningham (14:38)
Yeah, that's that's the majority.

Rishi (14:40)
Rhett, you've been on the filling out end of that. What's the hardest part and what do firms do to make it survivable?

Rhett Ennis (14:49)
Yeah, I think, you know, because we do

We do kind of both 'cause we do like a we do a bulk submission from our office 'cause we're we're SICPAC members and there's a an agreement between SICPAC and CFMA. Basically you provide twenty-five data sets and that gives you full access to to the to the benchmarker. And that that allows us to to use it throughout the year, not just on the twenty-five that we submit, but more than that if we want to to do to benchmark client results for our internal use and to share with our clients. But for us

It's more about having a really having a financial statement that is correct and accurate in terms of GAAP performance with you know revenue recognitions done right, you got your over and under buildings reconciled to WIP, you got your retention classified properly against contract assets liabilities. Basically, if you have everything cleaned up and and presented nicely in a balance sheet income statement the way it should be, for external financial statement users.

Translating that data into the benchmarker inputs doesn't take that much time. Like if if for one of us, like if you've got a completed finance statement package that's ready to go to draft to send to a client, it probably only takes us half an hour to put all the data in the benchmarker if that. So it's more of the prep work to get your to me, it's getting the books right, getting the statements presented correctly. And once they're once they're there, everything's tied out and reconciled, popping the data into the benchmarker doesn't take that much time.

Rishi (16:14)
So the data that goes into the benchmarker, is it like GAAP compliant or there's like a benchmarker compliant statements we need to prepare as contractors?

Rhett Ennis (16:22)
I think

I think the assumption is that it's

GAAP compliant. especially anything that's gonna be have been submitted by a CPA will have been through either at a minimum a compilation process. My suspicion is it's most of the reviews reviewed and audited results that's being put into the data from from the CPA firms. As Arleen mentioned, that's quite a bit of the data. So most of it's gonna be GAAP compliant and having been through, you know, some attestation procedure by a CPA. Or it's coming from a high quality general contractor or the CFO.

is inputting the data themselves and they've probably been subject to an audit or review for multiple years and have a good set of books that's going in. So I think your question is how reliable is the data on a GAAP compliant basis? I have I my feeling is it's very strong.

Rishi (17:08)
Thank you. That time cost to submit the data creates real resistance to participation. How does that resistance affect the quality of the data set and by extension, what everyone else gets out of it?

Arleen Barningham (17:22)
So I think I can speak to that a little bit is that it yes, it does, significantly decrease the the amount of submissions that we're actually able to get. and it it is a bit in intimidating just no, we have to rush to be able to get this to close, to be able to to participate. so there is definitely

you know, we're not as statistically reliable as I I know we can be. we do we are still I think the the best benchmarker on the market when it comes to this because I think we do have more data to collected than than most others. and again we're looking out to full members that are part of all these different kind of sub industries and and all this different type of work whereas

Other benchmarkers they do tend to focus on either just their clients or at just a specific section of the industry. So we're able to give them a broader view. So it is still statistically valid. It's again it's helpful just to kind of guide you to, hey, this is where I can be, this is where the industry is.

and there's there's no doubt in that, but yes, when it obviously the more data the better. so it is unfortunate that there is that that time effort to be able to close out in time before the survey ends. we would love to obviously extend it longer if at all possible, but if we if extending it any further, the final report would be so are so far out of date. and and that's why we we do try to kind of push a little bit there.

So we do want to to work with them to see if if there is a way that we can adjust that so that maybe we can open it for a little bit longer or find a way that they can submit after the fact and still be able to to incorporate that data accordingly.

Rhett Ennis (18:57)
I think – Arleen makes a great point though that

in order to have the most value for the members that want to use the benchmarker, the sooner the members can get the data in the more reliable and relevant that information is. Not reliable isn't even the issue. It's the relevancy of it. Cause the the further into arrears you go, the less relevant it is with the current environment in terms of economics and, you know, construction outputs that are taking place. So it's already a pretty generous window, I feel like. so yeah, I don't think there'd be any

Really any ability to extend it longer that you know without diminishing the relevancy of the information. if anything, you'd want it to go the other way where you accelerate the the window to close it sooner so that the there's less time gap between when a contractor is benchmarking say their data right now here in 2026 against data that really was only input through the end of December of 2025, right? So

Arleen Barningham (19:53)
It's a hard balance to to weigh and and I think we have a pretty good system as is, but obviously there's always room for improvement. So we're we're looking into to some additional

Rhett Ennis (20:03)
The

the good news is the construction industry doesn't move exceptionally fast in many ways. So even data that is six months trailing is still pretty darn relevant. You know, we're not moving at the speed of AI here.

Rishi (20:14)
Yeah.

What does it take to get a benchmark that's genuinely representative? How many participants, what mix of trades and revenue bands?

Arleen Barningham (20:24)
So the past few benchmarkers, we've been staying at about fifteen hundred submissions, which is again a very great number that we're very proud of.

We have been doing kind of some rough numbers crunching into the total addressable market that could possibly actually submit to the benchmarker. with the rough number we came to was about two hundred thousand. at least that's how many members that we could have at CFMA, that we could target with the benchmarker. Obviously at for me, the s thinking statistically, like a five percent of that, so ten thousand, is is

my is my current goal to reach hopefully in the next five years. I know that's very ambitious, but that's something that that I'm working for. I'd like to I'm very hungry. I want I want to be able to to get it there because I truly do think it is possible. So for me that's you know looking at the the straight numbers that way. And so it's we are already we're again slowly but surely continuing to ramp up each and every year. So I

I think

it's something we can reach in in the next five years, especially with our modernization, which I know we'll again discuss a little bit further on in this interview. So that's kind of where we see it but as it stands right now at that 1500, it is still statistically relevant considering who uses the benchmarker itself. And again, it's it's the best that's out there right now. So being able to just have the tool available where it is now is still fantastic.

ahead where we could be for the for the construction industry.

Rishi (21:49)
Yeah, CFMA has no competition in anyone trying to do this. I'm glad that you guys are striving towards the best benchmarker though.

Rhett Ennis (22:00)
Yeah. I mean I'd say too on that you think about the companies that participate in C FMA, you know, so we have fifteen hundred out of whatever that,

Arleen Barningham (22:01)
Absolutely.

Rhett Ennis (22:12)
that denominator could possibly be. I feel like it's a really representative group of high quality construction businesses in the United States. Like high quality companies are CFMA members. So we're getting, you know, I I don't think if we doubled the number of participants in the data that it would meaningfully change. That's kind of my my thought on that. Like I was actually looking at one of the

benchmarker results for a peer report and report card for one of my customers this morning. And their peer group that we benchmarked them against was heavy construction, like 10 to 25 million across the United States. And that that subset was 49

participants, which is a pretty good number. That's a pretty that's plenty I to me that's plenty strong. Yeah, that's plenty strong to benchmark a single company against. And it provide a lot of really good insights on like where they were coming up short. Like they're really heavy on assets. Like they have a ton of equipment and they they're a little shy on equity and they're, you know, some of those key ratios on leverage were off. And you look at the data and it's like, well, these other companies, there's 50 of them just like you in the US and they're doing similar

Rishi (22:53)
Mm.

Arleen Barningham (22:56)
It's a great number.

Rhett Ennis (23:21)
levels of revenue with less equipment. maybe you should be leasing some rather than buying so much darn yellow iron. You know, that's those are the conversations that it leads to.

Rishi (23:30)
The next section here is what the data actually tells contractors. Rhett Of everything in the benchmarker, which two or three metrics do you find most diagnostic when you are sizing up contractors' health?

Rhett Ennis (23:45)
Yeah, it really comes down to the the financial ratios that that you mentioned and it's kind of the same. The capacity, the character,

Yeah, and then the the capital, right? So you're looking at the working capital the company has, you're looking at the total equity the company has and how everything else interacts with that. And the report card does a really good job of highlighting where company's successfully managing their working capital and their assets and their liabilities and where they're coming up short against their peer group. So I mean, the first thing I'm looking at is their financial ratios for for working capital and you know, AR turnover and stuff. The kind of the

the hidden benefit that people don't talk about that much, I feel like though, it or as much in the benchmarkers, like the productivity ratios with the the revenues per FTE and the gross profit per FTE, you know, and those numbers, there's a huge range on those outcomes depending on what you do in construction. You know, the the gross profit earned per FTE might be exceptionally high for a GC that subcontracts out a lot of their work, but for us for you know a subcontractor that's self-performing a ton

keeping an eye on that, trend of your gross profit per FTE against your peer group is something I don't think and there's more businesses should be doing it more often and they're not doing it enough. And this is probably like the best place to get that number from. So

Arleen Barningham (25:04)
I was about to say also that's right. so we just recently had our CFMA annual conference. and myself and the chair and co-chair of the Financial Benchmark Committee were able to do a presentation there and we decided to pull the audience this exact question is which which metrics were most valuable to them. And it was a resounding EBITDA

Rishi (25:04)
So if I am good, good.

Arleen Barningham (25:27)
Think that was a g again being able to kind of look at that operational profitability and their their cash generating power, that the EBITDA kind of ratio so looking at the EBITDA versus your total revenue is how we calculated in the benchmarker. And that seems to be something that really resonates with them.

Rishi (25:44)
So this is kind of a little bit controversial. If an employee at one of these companies and you are handing out all these benchmarks to my owners, they're going to cut my wages.

Rhett Ennis (25:54)
well luckily a lot of these employees are union and the owners don't have power to cut wages, right? I but that's a good it's a good point, Rishi, because if you're benchmarking your results and you have solid revenue per FTE

relative to your peer group, but your gross profit is down against your peer group. You have to weigh whether or not is that a personnel cost issue? Are we overstaffed? Or is it such that we have other costs, like we're fat on overhead in other ways, and that's what's driving down our gross profit per employee? And those are nuanced conversations and it's a case by case analysis. I would be surprised if there was that many cases though where

There was not staffing decisions made, but like salary decisions made on these benchmarking results. Staffing probably and you should be looking at your staffing levels relative to your revenue volume, and this is a great way to do that.

Rishi (26:45)
Thank you. And the flip side, which widely watched metric do you think is overrated or gets misread most often?

Rhett Ennis (26:53)
I think, there's a few ratios that that come out that come through in in the report card and the peer report.

I tend not to get too excited on like some of the backlog ratios and some of like the turnover ratios. I really get concerned with like AR and day day sales outstanding, that is key. You've got to be watching because cash collection cycle is so important to a contractor. But if in one period in time your backlog to like like your backlog to working capital ratio gets a little bit skewed, timing matters a lot there. Like what's what jobs are wrapping up and what

you're getting started can shrink or balloon your work your backlog number very quickly and if you know as long as you're seeing stability really in that working capital number I'm more concerned with stability of working capital than I am volatility in in backlog as long as backlog doesn't have a continuous negative trend of shrinking that's a problem so track that but a single blip in that ratio doesn't concern me that much.

Rishi (27:48)
Sureties – look at these numbers differently compared to your firm, Rhett What would be the difference?

Rhett Ennis (27:55)
I mean the sureties are making credit decisions with the financial statements and the results of the benchmarker.

What we're looking for first and foremost is accuracy. Like that's our number one job is to ensure the accuracy of the statements, they're in compliance with GAAP. Everything's fairly stated materially. And then we're putting our stamp of approval on that. We're attesting via review opinion or an audit opinion that everything is fairly stated in accordance with GAAP. That has I'm not saying I think this company's credit worthy. I'm just saying the statements are accurate.

But I'm also thinking along the lines of a surety, like how is this company actually performing in terms of their credit worthiness? And so I'm not saying I think like a surety, but I I I'm keeping them in the back of my mind as I'm analyzing a financial statement or doing a benchmarking report like this, because I know that ultimately that's what the contractor wants. They want to maximize their credit worthiness to obtain surety credit, you know, financing credit for purchasing.

equipment or property equipment, new office, or even you know, outside the business, you know, buying new property and leasing it back to the business, etc. So it's all about well it really it's about performing adequately against your peer group, but it's also presenting it correctly for for your financial user to then give that company credit.

Rishi (29:09)
Tell us about a time benchmarking data changed someone's mind. A contractor who was sure they were performing well until they saw where they actually sat.

Rhett Ennis (29:20)
Yeah, I I can I can speak to that because it's really conversations that I do have. I have a client who is you know they're not they're not that super large. They're you know in the thirty to fifty million dollar range. and I remember the first time I went over the report card with them.

They had some weaknesses in their results. specifically as related to working capital and their asset ratio. They were they were asset heavy compared to their peer group. And you their surety had been telling them that for years. I had been telling them that for for years. But we didn't it wasn't until like our second or third year of working with them that I actually said, Look, you're gonna sit down and go over this report card with me. And we did, and it was like, it was literally like a light bulb going up. And the owner was like, it's like I

I get it now. And I think I think about that in this context, a lot of construction business owners are they didn't come up, you know, through the financial ranks of their business. They're operators, they're engineers. They don't speak the language of finance the way we all do. Like that's that's how that's how we talk, but it's not how they talk. And they don't

you know, if you speak in debits and credits and like you're talk constantly talking in accounting and finance terms, a lot of them don't understand it. It it's not how they're built. I whenever I'm asked to speak, I always bring up a a book. It's called Making Numbers Count. It was written by Carlos Star and Chip Heath, I think. It basically just

breaks it down how most humans are terrible at understanding numbers. They're awful at it. Like there's no difference between a few and like a thousand. Most people just don't understand it. So you have to make information visual for most people, especially non-accountants, to understand what it means. And that's where I think the the real power of of the benchmarker and report card is for non-finance people to see their results against

peer group that's relevant to their interests and it's like look the numbers say one thing but here's where you're weak here's where you're strong and here's where you're okay and then they can key on that like weakness they immediately there's like why are we weak and then once they see that triggering point then they can look at the numbers and understand what the number means. But if you start with a number and be like you're at 4.8% and your peers at 11.8% they're like cool you know great yeah but you say you're weak and you're at 4.8 and you're

Peer groups at eleven point eight, they're like, why am I only at four point eight percent? Now I get it. So

Rishi (31:43)
Yeah, very well said. We are actually pretty good at comparing things, but if you give us absolute numbers, we humans are very bad at those.

Rhett Ennis (31:49)
Correct.

Correct.

Rishi (31:52)
How certain a contractor uses this practically? Is it a once a year board exercise or something that should be shaping decisions quarter to quarter?

Rhett Ennis (32:02)
Okay. I can start with that too, Arleen, unless you had one. I have I have clients that in their internal financial statement package they provide to their management teams or executive teams, they're including their key ratios every month.

Arleen Barningham (32:04)
Yeah. No, please.

Rhett Ennis (32:15)
So maybe not the full like, you know, 18 or whatever key ratios from like the report card from the benchmarker, but like the seven or eight key ones that they're most focused on for their operations. so they'll have like basically a a cover sheet with their financials with a few graphs again, because people, a lot of guys, especially construction guys that were engineers, you know, they don't

They can't read a balance sheet and understand it, but they can understand graphs. So like cover sheet with graphs and like key ratios against the benchmark are like here's the benchmark results for 2025, here's where we're at in 26, our working capital, you know, our leverage ratio, our gross profit per FTE, here's where we're at year to day. And that's a monthly package that goes to their management teams. So I to me, that's like what a best in class contractor should do.

Rishi (33:01)
The next section here is modernizing the benchmarker. Arleen, there's a modernizing project underway to automate data collection through software integrations. What's the vision and what does success look like?

Arleen Barningham (33:17)
So that vision kind of going back to what we were saying before, whether it's the time factor, whether it's it's you know, it just takes your company a long time to to be able to close out your year, that data does still exist. a lot of people use these different ERP systems, and these are all software companies that as CFMA we actually already have great relationships with. so we're trying to reach out to them to find, hey, if we could just have like this kind of API integration, the

user – signs into financial benchmarker.com, they say yes I want to participate. This is the ERP I use.

And then we immediately just grab that information and bring it over. You fill out your general profile and you're done. I mean that we were hoping that could cut the time greatly and also just it because obviously everyone already has their day job. They have plenty of other things to do. The last thing they usually want to do is get to the survey. If there's a way we can do just like one, two clicks and you're done, that's that that's kind of my vision, is is again just make creating that ease.

To be able to participate, you get all of the benefits of being able to participate in the benchmarker. So you get your two free peer reports, you get access to the PDF as well. you just you gain all that access with very minimal time and effort on your end. and we can again just bring it all over instead of having to manually look back and forth and enter it into into the system. so that's kind of step one. Step two is also just really looking at the user interface.

Rishi (34:41)
Mm-hmm.

Arleen Barningham (34:44)
And making it a little bit easier to navigate. We've had we get a lot of customers' report calls just kind of trying to understand how to get to that report card, how to put in their data. So that's another thing that we're really working on now that we want to kind of ramp up and again just make it a little bit more exciting to look at and making it more visual as you were explaining.

healing

and attracting. And again, it allows you to mu much more quickly being able to see a chart or a graph. You can as you can be much more efficient in deciding, hey, these are decisions I need to make to to be able to to better my my company and see what what we can do.

And then future things down the line, do there's always the always the question, do we want to integrate AI in some way? Because again, this is very sensitive information. We're trying to be very careful about that. And when it does come to construction, there are a lot of variables and nuances that in a a basic AI would not be able to know or understand. So it would require a lot of training, a lot of just conversation back and forth, so that that type of service would actually be usable.

Rhett Ennis (35:48)
Yeah.

Arleen Barningham (35:56)
We don't want it to just spew out generic answers. We want to actually help help our customers any way that we can in a very valuable way. So those are the kind of things that we're looking at. And then the next kind of step that seems very duh moment would be can we go further than financial? We also have the heavy equipment comparator, which is something we've had since 2021. We've only been doing it every other year, but maybe there is a way that we can continue to

Rishi (36:16)
I don't know.

Arleen Barningham (36:23)
Grow that. Again, working out with different partners that we have in heavy construction to be able to better define the type of metrics that they do use. And then again, just continue to grow with that benchmarker and the data, the data set that we're able to draw from to again just again have that base set that just currently does not exist in the construction industry. And then right now we do use PAS1 to be able to look at the different salaries.

Benchmarkers and then maybe we can go maybe even into technology and security and continue to grow not just the financial benchmarker but the construction benchmarker presented by CFMA.

Rhett Ennis (37:00)
That those salary data. We we haven't even touched on that in the conversation so far, but it's I get as many questions on salary comparisons and data for benchmarking as as I get on financial questions like how's my company performing year to date? How am I paying my employees? And is it comparable to the market? That is very valuable information to a contractor.

Arleen Barningham (37:04)
I know.

Rishi (37:19)
Mm-hmm.

Yeah. Yeah. So we are a software company and we integrate with several of the ERPs with the APIs. The APIs are pretty bad. want to say. And it's, it's very tough to work with these APIs. We spend so much time figuring stuff out. like, and I just feel like there's probably not enough incentive for the ERPs to go after and build these unified APIs.

Arleen Barningham (37:23)
Yeah.

Rhett Ennis (37:32)
Yeah.

Arleen Barningham (37:33)
Yeah.

Yeah. So a lot of the conversations we have had so far to kind of get that kick started, I can't reveal names at this time. but the the excitement is there, which i which is exciting obviously. to just to that that hope and that vision is there. It's just the execution and I I keep saying I I don't want to commit I d obviously we need to commit to a time frame, but I want to do everything with intention and i we're we're not just you know going at it just

to go at it. There is a full vision and a product roadmap that makes sense and we're we're not going to rush into it and it becomes sloppy and again just not a useful tool. This is a kind of kind of a pillar in the industry and we want to keep it that way.

Rhett Ennis (38:25)
Okay.

Rishi (38:26)
Yeah, also you guys are dealing with a lot of politics on this industry when you try to do stuff like that.

Arleen Barningham (38:30)
Yes. Absolutely. So we're

we're treading lightly, but we we know that there's so much more potential there and we want to be able to harness it.

Rishi (38:42)
Pulling data straight out of contractors' ERP systems solves the time problem, but it raises new ones. Data consistency across platforms, chart of account differences, security and confidentiality. How are you thinking through those?

Arleen Barningham (38:58)
so we are like I was said before, we are looking into

just using different data protection agreements, using those kind of GDPR standards as a as a guideline. so obviously we want that information to be protected. We're gonna do double opt-in from both sides. Yes, I want to share my data with the CFMA benchmarker is step one, because to to me data privacy that's key and and that that's a ha the highest priority for me. Second, when it comes to the consistency of it, that's where we're working directly

These ERP systems one-on-one, and again taking our time to make sure that we have that kind of one-to-one depending on which ERP system you're using. thankfully, the way that we have the survey currently set up, it is very, basic template balance sheet and income statement information we're collecting, and then we will do the calculations RRN for all of those ratios. so just to have the those base numbers to compare to in the different peer groups. so it should

keyword should be a little bit easier in that respect. But again, we want to take our time and really make sure that again we're doing it intentionally and in the the most accurate way possible and without diminishing the value that the benchmarker adds.

Rishi (40:10)
Yeah, Rhett. You want to add something?

Rhett Ennis (40:13)
Yeah, think thinking it through, you know, it

If CFMA and the benchmarker are able to rely more on the technology partners to get data from, in in theory, at least you might be able to get more reliable data because you kind of take out the human element of where they're inputting data and are they inputting it because is every contractor inputting it consistently into the right buckets, especially if you get into like the gross profit versus overhead versus you know G and A expenses? I can easily see there being a lot of noise in that data.

pre-post modernization. Like i everybody you have to think critically about that no matter what. But I could actually see that being stronger with a more automated approach to this than it is currently, which you know that's the that would be a positive outcome.

Rishi (40:58)
Yeah, actually one of the things is that all these ERPs are very customizable. it's one contractors kind of books may look very different compared to other contractors books in the same ERP.

Rhett Ennis (41:03)
Yes.

Yep. I er you know, everything's pretty consistent from cash to revenue. Once you get below revenue, it's the wild west, you know? Yep.

Rishi (41:20)
Yeah.

Rhett, if the survey went from 5 hours to 15 minutes, what changes? Does participations actually follow? And does the data get better or just bigger?

Rhett Ennis (41:36)
Yeah, I think I think touched on the that data quality potentially getting better. I I definitely see an outcome possibility where it does. I certainly think if you remove the barriers to entry and getting people to participate, you get better numbers. I I think personally, I think we can get to, you know, three, four, five thousand people participating, companies participating in the benchmarker, that is that is a fantastic result. And maybe that helps us get there.

I think more more participation will really start to help out those lesser represented specialties in construction, especially like we talked about earlier with residential. you could start you could start seeing more value in the regional data. Cause if if I pull like a far west region, especially subcontractor, you know, doing masonry and there's only four of them, that's a small group. But if they we have four times as many submissions, that if that group goes to 16 to 20, that's a much better data set for.

to be looking at, right? So there's a lot of value, I think. The further, the more niche you go within the industry, the more value there will be as we grow the number of participants.

Rishi (42:39)
Yeah, actually, I remember looking at the benchmark and some of the niches there's like only four or five participants.

Rhett Ennis (42:44)
Right. And that's

that's where it could really get more horsepower is getting more of that data. I feel like again, we talked about earlier with that, you know, heavy construction, twenty-five to fifty million, that's already pretty solid. Like that's strong, but there's some of the s the more specialty groups that we could strengthen substantially.

Rishi (43:01)
The last section here is looking ahead, as for both of you. Arleen, make the pitch. Who should be participating in the benchmarker who is in today? And what's the first step for a listener who wants in? And Rhett, anything you'd add for the CPAs and CFOs listening? Go ahead, Arleen, first you.

Arleen Barningham (43:20)
I was about to say

Everyone needs to participate. Every single person. No, we primarily look at what we consider our our CFMA general members. So that's your general contractors, subcontractors, developers, construction managers, architects, engineers, principals, and material and equipment suppliers as well. and as long as they have that their prior fiscal year is closed, obviously it's the survey is closed for this year as as we end in June. so anyone that had their twenty twenty five closed before then

It could have participated so when it opens next year in March 2027, you have your 2026 financial financial year closed out. You just have to go to financial benchmarker.com. You'll see a tab there for survey, and then you can just get started right away.

Rishi (44:06)
Thank you. What about you, Rhett?

Rhett Ennis (44:08)
Yeah, I'd say, you know, for a CFO for a controller that was listening to our podcast right now and they never s you know, tried the benchmark or submitted data, pulled reports, you know, absolutely you first of all the it it it costs very little time to try it out. but the the gains you can get from it is is just so much in terms of

concrete data that you can present to your executive team, your owners that they're just not gonna get anywhere else. And again, I kind of like touched on earlier in our conversation, a lot of contractors love to say they're best in class, but how do you know if you're not actually comparing your results to best in class? So if you're you know if you're a CFO on this call and you're like, I'm best in class, but I've never done the benchmarker, I challenge you to prove it. You know, I think proof's always in the pudding and again, giving your

other owners and you know the relevant parties in your company visibility on a you know on a graphical basis, not just pure ratios and numbers, but giving them something to chew on that they can digest is there's just a ton of value in that.

Rishi (45:14)
Yeah. Arleen and Rhett, thank you so much for coming onto this podcast.

Rhett Ennis (45:20)
Yeah, you're very welcome. Thank you, Rishi.

Arleen Barningham (45:20)
Thank you for having us.