Landscape cost estimating expert Colm Kenny explains how contractors can avoid having their profits buried on paving projects.
Paving the patio or driveway will likely be the biggest landscaping expense a homeowner will ever face, and that’s why it can be a slow decision process for them. Just like every landscaper, each landscape project is unique, with contractors facing different challenges on every garden scheme. In order to convert estimates and quotations into live profitable projects, a consistent approach is essential to ensure that the project cost is accurately calculated. While contractors will always be asked by a perspective client at their first meeting “how much will that cost?”, some generalised figures based on a contractors previous experience may be used in preliminary cost estimates. If you are coerced into giving a potential client a ballpark figure, make sure you keep yourself well covered. A customer will always remember your initial estimate so it’s best to give them perceived value for money when you hand in your quotation and it is lower than they expected.
The key to a profitable paving project is to carefully estimate your costs —both fixed and overhead—for the project, then build in a reasonable profit margin. In order to accurately estimate the cost of each paving project, contractors need to develop, implement and refine their own techniques and checklists that will act as a template when estimating projects. The process of composing the initial template should occur over a number of projects. Once you are happy with it and have had some success in the form of winning profitable contracts, regular monitoring and modifying is required to ensure it remains accurate and up to date with price fluctuations in material costs, labour rates and general overhead expenses.
Prior to calculating the cost of the project it is important that you have a design to follow or at the very least an agreed scope of works with sufficient descriptions and measurements to base your price on. If you don’t have a plan you may be pricing for something that your client doesn’t want or even worse, fail to include an aspect or element they are expecting from you. This will certainly lead to conflict and disputes once the job commences. Having an agreed design will reduce the margin of error in calculating quotations and the risk of costly disputes. If the project is a design and build project then it really is about a customer’s perception of value for money as each contractor will be pricing something different. Presentation of both yourself and your quotation will often be the deciding factor for a potential client so it is important for contractors to impress their expertise upon potential customers at their initial meeting. While it is a straightforward mathematical procedure to calculate the cost of the materials involved in paving projects, it is the site specific factors and risks that need to be considered and allocated a particular rate in order to establish the true cost of a job. It is often only with experience and knowledge gained from past projects that this can be carried out with a reasonable degree of confidence and precision. There are a number of specific elements and site conditions that add additional costs to basic materials and installation estimates and need to be considered when pricing each paving contract.
A complex design will increase the cost as it will be slow and labour intensive to construct and will require additional resources in its construction. For example, a curving patio incorporating an elaborate pattern with a combination varying materials will require much more labour resources then a 4m x 4m square patio composed of 400 x 400mm concrete pavers. Your project will fall somewhere in between these two examples and this degree of difficulty needs be calculated and accounted for in the square meter rates.
Without doubt, limited or no direct access can potentially double the cost of a job Not only does it prevent machinery access, but it also requires more labour input due to the fact that all tasks have to be carried out by hand. This in turn will have a dramatic impact on the programme as the tedious nature of handwork will prolong the time on site, again incurring additional costs. Assessment of access should extend to items required to carry out the job such as site storage containers, skips and parking of vans and trailers. In urban areas, the cost of street parking for vehicles can be significant and should be analysed when building up rates for the job.
Apart from the difference in the supply price, the type of paving will also have an influence on the cost in a number of ways. The type of paving will determine how they are laid and what speed that they can be laid at. Generally, natural stone slabs are laid in a concrete mix and are slower to install compared to concrete based products which are laid on a sand base. Also, natural stone can be heavier to lift and transport and may even require two operatives to lay, again reducing the speed and pace of installation. Another point to note is that natural stone paving is commonly jointed with a cement based mortar. This mortar has an added cost in terms of additional materials and extra labour.
DEMOLITIONS & EXCAVATIONS
Many garden projects require enabling works to be carried out before the task of landscaping begins. Features such as existing trees, patios, retaining walls, concrete paths and even buildings may require removal while substantial excavations below the ground may be necessary before the traditional landscaping operations occur. Excavating below the ground can be a risky operation and one that is hard to quantify. For example, the detection of rock on site can add additional cost to landscapers who are in the process of excavating foundations or installing drainage. The biggest danger for landscapers carrying out these tasks is the presence of hidden services. Prior to commencing any enabling works, the contractor should investigate and confirm the location on site of all services. When establishing a rate for both demolition and excavating, I find that it is best to err on the side of caution and overestimate the cost by always taking account of the worst case scenario. This way creates a safety net should things go wrong. Don’t forget to include a cost for protecting existing site features that are to be retained. This could simply mean allowing for the purchase of some sheets of plywood to protect the existing driveway, or a roll of plastic to cover adjacent walls.
With the rising costs of landfill and skip hire in recent months, the estimated cost of waste removal needs to be included in the quotation. When calculating the cost of waste, ensure that you don’t just look at the cost of the skips but also the man hours and the fee to load, haul and dump as it can add up to far more than you may expect. Bulking is an important, yet often misunderstood term, but key to calculating the volume of waste no matter what the material. Consider the simple example of digging a 1.0 cubic meter hole with a shovel and throwing the soil into wheelbarrows; in the ground the 1.0 cubic meter of soil is in its natural state. However, once it is dug up and shovelled into the wheelbarrows the loose soil will have a lower density and a volume of 1.2 to 1.4 cubic meters. This is known as bulking, and has often caught out contractors trying to estimate the volume of topsoil and other materials that is to be removed from site.
Every landscaping project you are requested to quote for is a business opportunity. There is usually a cost associated with it, such as travelling to view the job, meeting your potential client, collecting samples for paving materials etc, and there is also the cost of your time estimating and putting the quotation together and making your presentation to the client. The cost of submitting unsuccessful quotations need to be borne by successful ones and in general this cost should balance itself out over the course of a year. Experienced landscape contractors will know the genuine enquiries from the ‘tyre kickers’ and will have a system in place to politely decline a customer’s invitation to meet with them to give them free advice.
Given the nature of landscape contracting and the numbers of contractors bidding for the same work, you can be sure that you will price more jobs than you will win. Hopefully the projects that you do succeed in landing are profitable and turn out as you as you anticipate. While you may be disappointed that you failed to land a contract, ensure that every unsuccessful quote is not a lost opportunity to improve your business and pricing template as you can convert knowledge gained through the quotation process into valuable experience relative to market pricing and positioning for future projects that you will be asked to price. After a failed proposal, continue to investigate why you didn’t get the work and use this information to your advantage on the next project you are estimating.
TOP TIPS FOR PAVING PROFIT
● Compose your own template and checklist for quantifying each potential job
● If applicable, confirm drawing measurements and quantities on site
● Examine the site for potential hazards and note measurements of access points
● Take notes and photographs to aid your memory prior to calculating rates
● Get supply quotations in writing and keep a record of them
● Have a standard professional format for presenting your quotations with concise information on them, detailing materials and key measurements
● Keep a record of all your calculations and your submitted quotation
● Before ordering large quantities of paving, seek client confirmation by showing them with a sample
● Follow up quotations five to seven days later. If unsuccessful try to ascertain why?
● Post completion, analysis if the job was as profitable as you expected. If not, find out where you went wrong and use this information for pricing your next project.
COLM KENNY, B Ag. Sc. (Land. Hort), M.Sc. Quantity Surveying. Colm is a landscape estimating specialist. He provides cost and implementation advice to landscape industry professionals, technical advisors, contractors and facility management companies. He can be contacted on 087 288 5016 or by email firstname.lastname@example.org