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Old 05-18-2004, 04:33 PM
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Underestimated...again

Does anyone else tend to underestimate, rather than overestimate costs when doing a job? Perhaps as I gain more installation experience I'll get better at it, but it's frustrating to consistently have to adjust prices (or discount hours) when a job take longer than originally expected.

Oh well, at least after 10yrs of doing property maintenance I don't often have problems underestimating those jobs.
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Old 05-18-2004, 06:26 PM
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Do bees buzz,

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I think it's part of the fun!
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Old 05-18-2004, 08:45 PM
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A few factors involved.

I've been out for about 4 yrs on my own, and can truly say that I am just about on the verge of getting my prices straightened out. It takes some time, and is always a learning process.

The second factor is that I truly feel the market is just becoming flooded. This year I have been told some completely off the wall numbers that people have received on the same project I bid for them. Also, I have been hearing unexpectively low numbers from companies who I know are reputable but aren't at the marks I would like to see.

There's just getting to be entirely to many landscapers out there.
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Old 05-18-2004, 09:09 PM
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When you don't have historical data to look back on, even if that historical data is just you remembering how long things take to do, it's hard to estimate very accurately. But it'll come with time. For me, when in doubt, estimate my man-hours then add 30%. That usually covers it.
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Old 05-18-2004, 09:13 PM
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I'm thankful that I've been pretty accurate on my bidding for jobs, so I haven't taken a bath. Then again, I stick to what I know. For instance, I bid on a couple of fences this year (which we do not install regularly - last one was a couple of years ago). I know my price was significantly higher than the competition (fence company) and the woman was price shopping. I'd rather come in high and not get the job than come in low and get it. I stick with what I know I can do efficiently and make a dollar at - I try to stay away from the time intensive projects that drag out where more things are likely to go wrong thus preventing me from making my margins.

I will also add in some fudge factors and round up on materials or labor. For instance, if I need 8 yards of soil, I'll bid 10. If I only use 8 fine, but I'm covered if I need a little more and I'm not afraid to go and buy 10 or 12 if I need it. I may bid my labor straight - for instance two guys for 6 hours on a part of a job, but I'll factor in a full day for the dump truck or whatever other equipment they're using. Generally on these short days I'll then work in another quickie job/planting to fill out the day - where again, I charged at least a half day on the equipment even if it's only a 2 hour job. If I'm doing a little drainage work, I'll throw in a pieces part factor of $50.00 or something proportionate to the job to make sure that I've accounted for all the fittings I'll need - since I don't know what exactly is needed until I start digging.

Recovering overhead is critical. I'm sure it's been discussed here plenty. Even though warranty work is technically an overhead item and should be picked up through my overhead recovery, on some heavy planting jobs I'll throw in a factor for hours and plant material expecting something to die. On a $10,000 planting that extra $500 isn't a big deal, but it covers me and allows me also to offer a more generous warranty if I feel I need to or if it will close the deal.

I found I wasn't doing as well on the larger jobs (for me this is over $10,000). I'm focusing on smaller projects that are under $5,000 (typically $1 to $5 K) that I can get in and out of in a short period of time. I'll lump planting projects together so I can make one trip to the nursery for five or six little jobs. Line 'em up and knock 'em down. I guess making money is as much about how you bid the job as it is about how you manage the job.

One last thing, I used to break up my labor descriptions in my bid - for instance "excavate patio.... 8 hrs" and then "install base.... 6 hours", etc. Now I've just got to the point where I bid whole or half days. I generally find that I'm competitive (though most of my work is for my current customers) and that I finish in advance of what I bid for a project. 3 days for two guys can me measured very differently: 8 hrs x 2 = 16 hrs x 3 days = 48 hrs or 10 hrs x 2 = 20 hrs x 3 days = 60 hrs. The difference of twelve hours gives me travel, equipment maintenance, extra time on the job if needed, etc. I also then account for full days. If I can slide something else in great, if not, I'm fully covered.
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Old 05-18-2004, 09:44 PM
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I like the "add 30%" to estimated labour hours idea. Except in my case 50% would be more like it.

What kills me are the unknown variables that seem to pop-up on each new job. For example, the interlock walkway we've been repairing the past couple days has 6"x6" timbers used as edge restraints. We keep finding new rotted ones that need replacing and that means extra labour and material expense. It'd be easier to replace all of them, but the customer wants cosmetic surgery rather than full-bore reconstructive work done on the walk.

I have many other examples, but re-telling them will just depress me further.

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Old 05-18-2004, 10:33 PM
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Cutntrim,

Did you bid that job as a 'ballpark' estimate once you see the condition of the site or 'this is the price'?

I remember a thread about redoing other peoples mistakes recently...
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Old 05-19-2004, 07:26 AM
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On a repair job you could give a base price for the job knowing the labor you'll need to reset the pavers and you might then include replacement of X timbers. Then put in a stipulation that if more ties must be replaced once you start digging, each additional one will be $X - based on material and installation. Or make it additional time and materials. A $25.00 timber might be priced at $75.00 to include one hour of labor and the material expense, or whatever makes sense for you.
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Old 05-19-2004, 08:20 AM
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We'll bid anything but a repair. You just can't estimate what you'll run into or how extensive the mess is until you get into. Our own mistakes, I'll take a hit on, but I don't like to take a hit on someone elses mistakes! All repairs are billed time/materials.
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Old 05-19-2004, 11:37 AM
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I didn't give a firm price on the job. I gave him three options:
A) minor repairs to allow a few extra years before re-doing the landscape as a whole
B) major repairs to the existing walk (i.e. replacing ALL of the timbers and relaying basically all of the bricks
C) scrap what's there and go to an entirely new design

He chose "A" and the "minor" repairs have taken longer than anticipated, but I'm hoping he'll understand the added expense when billing time comes up. He seems to be a pretty easygoing guy...

I will discount some labor though, since he's interested in us re-doing his whole landscape in the future.
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Old 05-19-2004, 07:29 PM
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I struggled with this a lot at first. I didn't anticipate how long jobs would take, and I needed every job just to survive. I worked for free way too much. Slowly and steadily I got smarter and more careful when bidding. I would say the big turning point was reading "The Complete Estimating Book With Labor and Equipment Production Times" by Charles Vander Kooi.
I would suggest that you discuss all extra charges in detail (and get a written change order) before extra work is completed. Also, I would be cautious about discounting current labor to get future work- I have done that in the past only to find some other landscaper working the customers "next project".
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Old 05-19-2004, 07:40 PM
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When you discount your labor - people expect that in the future and they don't value your time as highly either since they see you do not... why should they then value your time?

I learned a lesson about pricing early on when I was knocking on doors in the neighborhood as a wee little lad, all of about 12 or 14 years old. It's funny how people attach value to something that is more expensive. People would ask how much I charged and I replied $8.00 per hour, and they'd scrath their head/chin and remark that it seemed quite high. Within the year I was charging $12.00 an hour (realizing that when I hired friends and paid them $5/hr I wasn't making much). People didn't sratch their heads as long when I said $12, and when I began saying $15.00 per hour folks replied, "Well, you must know what you're doing." By the time I was 16 I was charging $21.00 an hour, and by 18 I was charging $23 or $25 an hour (memory fails to the exact amount). By this time it was an accept or reject the proposal. For my age/experience/equipment, etc I started to hit the maximum people were willing to pay at around $25.00 when I was 18 or so. I didn't discount my rates and I realized that folks were either going to bite the bullet and pay to have the work done or they were going to shop around. Either way, there was always going to be someone willing to pay my asking price - and I was going to give them good value! Why work for less?

People have asked if I offer senior discounts, etc. I've always replied no - because it doesn't cost me any less to provide service for one person or another. Arbitrarily lowering your price for whatever reason shows that you have no basis for how you charge. You should be charging for your services based on your costs, overhead and profit. As soon as you discount your price you've taken away your profit and perhaps even your ability to pay for your overhead.

If you want to do something nice, figure in two or three flats of flowers for each job, don't include it in the bid - and plant them at the end of the job - tell the customer it's a gift from you. They'll appreciate the gesture, as they will a hand written thank you card after the job, but discounting your work, particularly work you've already completed, is one of the worst things you can do in my opinion.
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Old 05-19-2004, 09:44 PM
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Funny, and somewhat related story.

I have a garden maintance program with several visits through the season. After spending too much time to getting a clients gardens back in shape they thought they would be smart and cancel the second service, "Because the gardens look pretty good and we don't need that service." Things would have been out of hand if a maintenance visit was skipped.

I politely, and quickly, replied "that's no problem. However, I don't offer partial services. We can skip the service but I won't return for the following visits."

My client said go ahead and hasn't questioned my services since. It was a moment that gave me the warm fuzzies.
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As a father I was always aware that I was raising my sons to leave home, marry, establish families, and be men who could stand on their own two feet. We must fulfill our own destiny. I really wasn't concerned about what they might 'do' but I wanted them to 'be' good men.
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Last edited by jwholden; 05-19-2004 at 09:46 PM..
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Old 05-20-2004, 09:18 PM
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Maybe I've come across sounding more distressed than I actually am. If I do discount my labor, they won't be aware that I have since they haven't tracked how many hours we've put into the job.

More than likely I won't discount anyway, but if I do then it'd be to charge maybe $35/man-hour rather than the usual $40. Anyway, I definately won't lose money on the job done...just gain a little more knowledge.

I agree with the idea of billing T&M on repair work. Similarly, I do not give flat pricing on spring or fall cleanups...to hard to say exactly how much will be required until you actually do the work.
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Old 05-20-2004, 09:42 PM
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The best control for this is to check and double check your numbers before you submit the bid. Then, while at the job, make sure all change orders are signed. All changes no matter what you act upon should be in writing, and don't allow someone to ask you for a little thing here and there...Add all those little things up and you have your net profit sitting in a 55 gallon barrel at the end of the year rather than in your bank account where it should be.
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