One of the most difficult and tedious tasks to be performed by a contractor is preparing an estimate for his prospective client. Costing and estimating is the heart of a business. Its here that you can make or break your company. Proper estimating is the difference between profit and loss.
Costing and estimating a job in landscape construction requires skills that are gained with experience. We have all gone through it and sometimes it was a costly lesson; however, in order to succeed we had to learn. Estimating landscape maintenance is not quite as complex, but here too, one needs the experience to make sure your business is on a profitable track.
Up until a few years ago, costing was a manual process. The contractor did a take off sheet, where he listed all the materials he was going to need. He shopped around for plant material, irrigation components, sod, etc., and came up with a unit price. With the use of a calculator, it was easy to total the cost per item. The biggest problem was figuring out the labor, and its usually the labor that kills you on a job.
Each job required the same routine. It was a long, tedious, manual process, but something that was and is absolutely necessary.
Some contractors, in order to shortcut the process on future jobs, used previous proposals as carbon copies with a few minor variances. Using this method, the contractor made more on some jobs than others, had a few losers thrown in and figured it all balanced out in the end. This has been somewhat successful for many contractors; though others had more losers than they could financially handle, causing their companies to go under.
So is job costing and estimating an art or a science? With the dawn of the computer age, it really has become a science. Computers and computer software have made these tasks easier, faster and more accurate.
There are also several good computer programs available that are addressing the specialty problems attached to the bookkeeping area of the business. Many of the programs were created out of necessity by and for companies already in the green industry. Surprisingly, these companies specialized in mowing and chemical spraying.
The software was originally created out of the need for scheduling routes and keeping a more detailed bookkeeping system for invoicing and billing than was available in generic bookkeeping programs. They have since expanded their services to include all aspects of the green industry.
Smaller companies have been slower to implement estimating and job costing by computer, and the general consensus is that these contractors are just now taking the time to learn how to use this segment of the software. Once they do begin using it, however, they seldom use the manual estimate method again.
The larger contracting companies began using these programs out of necessity. The software freed them up to expand their businesses, and allowed them to see what areas of their estimates needed to be adjusted to show a profit rather than a loss.
Now, there are as many software packages for the green industry to choose from as there are in any other given field. The contractor should take the time to study the different programs to see which one will best fit his particular needs.
This is easier than one might think, as most companies offer a demo package, which includes a CD sample of the program that is either a slide show or an interactive mock-up. They also offer free downloads on their Web sites of the same demo for those who are anxious to look and do not want to wait for a package to arrive by mail.
Tim Shields, owner of Compuscapes, has been building software packages for the green industry since 1989, when his brother, who had taken over the family landscaping business, asked him to develop software for the business. Shields has a degree in computer science and was up to the challenge.
Most of his clients are full-service landscape contractors. He has a pre-qualification questionnaire for prospective clients that he uses to help the contractor determine if his software will fit their particular needs.
The program is a full-fledged system, with add-on modules available to fine-tune it to the particular client. The main module includes estimating and job costing. With this program, the contractor can set the price of the material and labor with all the hidden expenses added in. It will not only give a report showing the profitability of the job, how much labor its expected to take, etc.; it will produce a proposal that can be presented to the contractors prospective client.
Once the job is sold, the estimate goes through a conversion phase, setting the client up in a data base, the project up for job costing purposes, and prints out work orders for the installation crews. If its a maintenance job, the system will put it on a route schedule. This is all done automatically from within the program.
From that point, actual costs are tracked either from material that is being purchased or taken out of inventory and labor being expended for the job. Job costing and revenue are tracked throughout the installation and upon completion a profit/loss report is generated.
The basic cost of this software is $2995. It comes with a 30-day money back guarantee and a yearly support plan that includes unlimited support and upgrades. This product is a character-based Windows program that looks like a DOS program. Future updates will include improved graphics. They also offer a rental program for $195 per month for month-to-month rental, with the use of a validation key.
Joe Kucik, owner of Real GreenSystems, started his own lawn care business after graduating college. A year had not passed before he realized that he needed a software program designed for his business. His brother was a computer programmer, so Joe designed a program, and his brother wrote it.
When some local competitors saw the program and wanted to use it in their business, he sold it to them. Thus began the software company. He has maintained both businesses ever since. When his brother decided to leave the company, Joe bought him out. Joe McPhail, who had been with him for six years, became his new partner.
McPhail says, This software was designed primarily for chemical applicators, but over the years, a lot of the clients have gone full service, and as they have done that, the software has been updated to cover their needs in these different areas.
The most recent update is an irrigation module in which a detailed proposal can be presented to the client, naming every fitting thats going to be used. It has an area that is used to provide a description of the job and any special instructions. The estimate is integrated into the database upon acceptance, followed throughout the installation process and a profit/loss statement is printed out upon completion.
Two days of on-site set up is included in the original price. The client is required to fill out a questionnaire prior to the installation. This information is added to the software before being taken to the contractor. By the time the software installer leaves the contractors office, the system is up and running. This includes the input of part numbers, zip codes, etc. It comes with a six-month money-back guarantee.
Kucik has found that the longer a client has to evaluate the software, the less chance of return. In 15 years, theyve had approximately a dozen returns. Six months gives them a chance to know the clients needs, so that they can configure the software for his individual business.
The basic cost is $4500 for single user, $6995 for multi-user and includes six months of unlimited tech support. After that, support is optional. They have an ongoing unlimited support and updates charge from $60 for single users to $85 per month for multi-users.
UDS Green Industry Software, Inc., offers a graphics-oriented program. The contractor scans pictures of landscapes into the computer, or uses a digital camera. He has the clients house on-screen to add each piece of plant material with the drop and drag feature. The computer keeps track of each item added.
This information is imported into an estimate that includes all the labor, soil amendments, etc., for the landscape design plan. A proposal is created and presented to the client, with before and after photos. It can produce a talking demo of the plan and plant material, called a play.
The client understands pictures of real plant material around his home. This is what sells the job, says Brain Dontje, one of the owners. He adds, Our clients tell us what they need, and we add it to the program.
This program will track man-hours and material used, creating a job costing report. Their largest client base is landscape contractors, design/build contractors, and an almost equal number of nurseries, who use it for billing, production, invoicing, inventory control, order entry and chemical applications scheduling. The software has libraries available of plant names, descriptions, and images. It also has the capability to make tags, which requires a thermal transfer printer to be connected to the computer.
They offer on-site training. This program is a Windows-based program, fully integrated into Microsoft Office. As with the others, it has a standard annual renewal fee for updates and support.
Clip Software, developed by Sensible Software, Inc., can be used by just about any business in the service industry. Its best known as the software for scheduling and routing, because it remembers if the contractor didnt do a job or delayed a regular maintenance job. It then puts that job back on the schedule for the next day. When the job is posted as complete, it not only reschedules that job, it puts a line item into the history of the account.
If a start and stop time were entered, which is part of the job costing of maintenance work, it will reveal what the contractor made per man-hour. This is very important because if the contractor is not making enough per man-hour to cover the companys hidden costs, there will be a lot of losers on the books. These losers drain the resources of a business.
This software helps the contractor identify losers, increase the price, or drop these clients and replace them with clients who are willing to pay what is necessary to cover the costs of the job, plus make a profit.
Now the contractor has a very profitable company with the same number of clients, same equipment, and the same number of employees, because the need to address job costing has been met. Taking a moment to type in the start and stop time before a job is posted as complete will put it automatically into the history.
It will also update billing, scheduling, routing, and job costing. It updates notes to the file, showing what has been done on each work order, giving you a running history for each client. This software does not have to be manually adjusted for scheduling if theres a delay on a monthly-scheduled job.
Sixteen months ago, a new version was released with a project planner module, assuring profitability before work begins. To estimate, set up part numbers ahead of time. Using a shrub as an example, take the initial cost of the shrub, add labor overhead, add cost to cover the guarantee on live items, then add in an overall profit increase of 10 or 15% and set it up as a unit of one. This process should be completed on all part numbers used by the contractor.
Clip has two additional programs. One is called Bid Right. It is strictly for estimates. The second is the Projects Module, which links to the Pro Version of Clip. In addition to the estimate, when the contractor enters the start date of a project, the program prints out tasks for the crew to complete, and when they finish the tasks, posts those tasks as complete. At any point, you can print out what portion of this project has or has not been completed.
Upon completion, the client is billed from Clip. A profit/loss statement is printed out. If there is no profit, the prices assigned to the part numbers are reviewed and adjusted to assure that from that point a profit will be made.
The cost of the full program is $3800. However, it is recommended that the contractor start out with the Clip Light or Classic program to get started with Clip. Although these will not do the job costing as in-depth as the full program, the learning curve is shorter, and the investment smaller.
The cost of Bid Right is $795, and it is a stand-alone product. Inventory control is not a part of the program at this time. It is an investment for a landscape company; however, most clients say that it has paid for itself within the first month or two. After that, it is generating additional revenue for the company.
Other advantages include the link to Dig Software, from Design Imaging Group, a program using digital cameras for the before and after pictures. Set it up with part numbers, create your design, then import it into Clip, which will take the part numbers and create and estimate.
Contractors dont realize how these programs can automate their business, freeing up time to work on the companys growth, says Alan Moses, who has been with the company for three years. Clip will also link to QuickBooks and other accounting programs for payroll, and to mapping programs for routing. It has a return policy of 30 days, and an annual renewal fee that covers updates.
Richard Deering developed Service Communications Software, Inc., 25 years ago. He has been in the lawn care business for 30 years. His son, Andrew, runs Soft-N-Green lawn care business in Columbus, Ohio, and uses the software for his own business.
Says Deering, The majority of my business is lawn care. My software allows the contractor to prepare the proposal electronically, sell the job, and then schedule the crew to install it. They can track the materials and the labor it took to install the job. When clients call in and their sprinklers dont work, theres a built-in scheduler that they can go to, check everyones schedule, and tell the homeowner on the phone that someone can be there Thursday at 3.
Cost of this software begins at $1000 for a single user. Annual support and update packages are available.
Paul Jackson is the owner of a fairly new company called Lawn Monkey Software. It started out as a lawn-mowing program, then due to client demand added a spraying program. Now its becoming an everything program, with a new landscaping module coming out this summer. The original program also provides an accounting program. It has job costing and project modules.
The contractor inputs all the variables, and from this information, the software calculates the variables cost, how much should be charged for them, and how many hours it takes to install each item, which can be tracked.
As with all the programs, you have to keep the computer updated with current prices. Their largest client base is the spraying industry. Depending on the features needed, this software costs from $379, $489, and $749. Updates during the purchase year are free, and then there is an optional annual upgrade cost of $200.
This is a sampling of the programs available to you. Just as it is vital to your business to have the right equipment in the field, it is important to have the business end run as efficiently as possible. Learning the programs and entering the information may be time-consuming, but when the long-term labor savings are considered, the revenues reaped in the future will make it well worth the effort.