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Chapter 29 Pricing landscape maintenance.

Objectives:

Upon completion of this chapter, you should be able to

* describe the values of cost analysis to a maintenance firm

* list the features of a landscape maintenance cost analysis

* describe unit pricing

* prepare a maintenance cost estimate

The Need for Cost Analysis in Landscape Maintenance

An accurate analysis of the costs of specific tasks done by a landscape maintenance firm has several values:

* It assures that all costs to the firm are recognized.

* It permits a fair price to be charged to the customer.

* It allows a comparison of the profitability of different tasks.

* It can compare the efficiency of different crews performing the same task.

The first two benefits were discussed in Chapter 14. They are equally important in landscape maintenance. The last two warrant explanation also. A new landscape maintenance firm often believes that all jobs are good jobs. "No job is too big or too small" is the way their advertisements often read. Actually, as a firm grows, not all jobs can be accepted. There may be insufficient time or personnel to respond to every client request. The tasks that return the greatest profit for the labor invested will need to be emphasized over those that return less profit. A carefully prepared cost analysis can illustrate these different profit potentials.

The performance efficiency of several crews or laborers doing the same task can also be compared with a maintenance cost analysis. Assuming the cost of materials and the site conditions to be the same, the labor time required is the only comparable variable. Carefully kept work records documenting the crew size and hours of labor required to complete a task permit the performance comparison.

Features of the Maintenance Cost Analysis

A cost analysis of a landscape maintenance job includes

* a listing of all tasks to be performed

* the total square footage area involved for each service

* the number of times each service is performed during the year

* the time required to complete each task once

* the time required to complete each task annually

* the cost of all materials required for each task

* the cost of all labor required for each task

Unit Pricing

The most precise method of tracking job costs and determining the correct price to charge a client is unit pricing. It is also the method that requires the most time to set up because of the amount and precision of the data that is required. It is not a system that permits guess-timating. The system reduces all area dimensions and material quantities to common and measurable units, such as a thousand square feet or an acre. It measures the quantities and costs of materials used for particular projects in terms of those same units (for example, the application of one pound of nitrogen per thousand square feet of lawn area at a cost of $3.00 per thousand square feet). The initial conversion of material costs purchased in bulk quantities to unit costs that permit their use in the company's pricing system may take some time, but it is not difficult math and can be done.

Determining the time requirements for separate tasks and getting them to match the units used for calculating material costs is more difficult. The time required to perform a task is directly affected by the number of people on the crew, the type, size, and speed of the equipment being used, site conditions such as terrain, obstacles, and weather, and even the efficiency and/or work ethic of the workers. There are numerous time charts published by industry trade groups and the media that offer average unit times required to do typical landscape tasks, such as lawn mowing, shrub installation, mulching, or pruning. They are at best guidelines and should not be used as anything more than that. As a landscape company prepares to set up its unit pricing system, it must do some careful calculating of the time its crew people require to perform specific tasks using specific equipment and operating under specific conditions. These calculations can then be converted to the required time units, such as minutes per thousand square feet. It is important to realize that when one of the variables changes, e.g., the terrain goes from flat to rough or a larger mower is used, the time required per unit will change as well.

Calculations for Cost Analysis

To apply the technique properly requires practice. Study the following examples and their explanations.

Example 1

Problem:

To calculate the cost of mowing 10,000 square feet of lawn with an 18-inch power mower 30 times each year.

Necessary Information:

It takes 5 minutes to mow 1,000 square feet. The laborer receives $6.50 per hour. There are no material costs.

Solution:

Maintenance Operation: Lawn mowing with 18-inch power mower
Square footage area involved          10,000 sq. ft.
Number of times performed annually                30
Minutes per 1,000 sq. ft.                          5
Total annual time in minutes (1)               1,500
Material cost per 1,000 sq. ft.                 none
Total material cost                             none
Wage rate per hour                             $6.50
Total labor cost (2)                         $162.50
Total cost of maintenance operation
per year                                     $162.50

Square footage area involved           2,000 sq. ft.
Number of times performed annually                 1
Minutes per 1,000 sq. ft.                         30
Total annual time in minutes (1)                  60
Material cost per 1,000 sq. ft.              $165.00
Total material cost (2)                      $330.00
Wage rate per hour                             $6.50
Total labor cost (3)                           $6.50
Total cost of maintenance operation
  per year (4)                               $336.50


Example 2

Problem:

To calculate the cost of mulching 2,000 square feet of planting beds with wood chips, 4 inches deep.

Necessary Information:

The task is done once each year. It requires 30 minutes to mulch 1,000 square feet, 4 inches deep. The laborer receives $6.50 per hour. The wood chips cost $165.00 per 1,000 square feet of coverage.

Solution:

Maintenance Operation: Mulching plantings with wood chips, 4 inches deep

Note:

(1) To obtain the total annual time in minutes:

a. divide the square footage of area involved by 1,000 [10,000 sq. ft. / 1,000 = 10]

b. multiply by minutes per 1,000 sq. ft. [10 x 5 = 50 minutes]

c. multiply by number of times performed annually [50 minutes x 30 = 1,500 minutes]

d. enter answer under total annual time in minutes

(2) To obtain the total labor cost:

a. divide the total annual time in minutes by 60 minutes [1,500 minutes / 60 minutes = 25 hours]

b. multiply by the wage rate per hour [25 hours x $6.50 = $162.50]

c. enter answer under total labor cost

Note:

(1) To obtain the total annual time in minutes:

a. divide the square footage of area involved by 1,000 [2,000 sq. ft. x 1,000 = 2]

b. multiply by minutes per 1,000 sq. ft. [2 x 30 = 60 minutes]

c. multiply by number of times performed annually [60 minutes x 1 = 60 minutes]

d. enter answer under total annual time in minutes

(2) To obtain the total material cost: a. divide the square footage of area involved by 1,000 [2,000 sq. ft. / 1,000 = 2]

b. multiply by material cost per 1,000 sq. ft. [2 x $165.00 = $330.00]

c. multiply by number of times performed annually [$330.00 / 1 = $330.00]

d. enter answer under total material cost

(3) To obtain the total labor cost:

a. divide the total annual time in minutes by 60 minutes [60 minutes / 60 minutes = 1 hour]

b. multiply by the wage rate per hour [1 hour x $6.50 = $6.50]

c. enter answer under total labor cost

(4) To obtain the total cost of maintenance operation per year:

a. add total material cost and total labor cost [$330.00 + $6.50 = $336.50]

b. enter answer under total cost of maintenance operation per year

The Completed Cost Estimate

A full cost estimate for maintenance is simply an enlargement of the previous examples. For convenience, all of the maintenance operations that deal with the same area of the landscape are grouped together in the estimate. Study the following example and note the calculation of all figures.

Data

I. A landscape requires the following maintenance tasks and equipment:

a. 24,500 square feet of lawn cut 30 times each year with a power riding mower

b. 500 square feet of lawn cut 30 times each year with an 18-inch power hand mower

c. all lawn areas fertilized twice each year

d. 5,000 square feet of shrub plantings fertilized once each year

e. shrubs pruned once each year

f. 400 square feet of flower beds requiring soil conditioning once each spring

g. flowers planted once each year

h. flowers hand weeded 10 times each year

i. flower beds cleaned and prepared for winter once each autumn

II. Calculated time requirements for the maintenance tasks:

a. a power riding mower cutting 1,000 square feet of lawn in 1 minute

b. an 18-inch power mower cutting 1,000 square feet of lawn in 5 minutes

c. lawn fertilization requiring 3 minutes per 1,000 square feet for spreading

d. shrub fertilization requiring 5 minutes per 1,000 square feet

e. pruning time for shrubs averaging 60 minutes per 1,000 square feet

f. soil conditioning for flower beds requiring approximately 200 minutes per 1,000 square feet

g. flower planting requiring 600 minutes per 1,000 square feet

h. weeding of flowers requiring 60 minutes per 1,000 square feet

i. cleanup of flower beds in the autumn requiring 400 minutes per 1,000 square feet

III. All laborers receive wages of $6.50 per hour.

IV. Material costs:

a. lawn fertilizer at $5.00 per 1,000 square feet

b. shrub fertilizer at $6.00 per 1,000 square feet

c. conditioning materials for flower beds at $3.00 per 1,000 square feet

d. flowers for planting averaging $125.00 per 1,000 square feet

V. Overhead and profit. To convert the cost analysis to a cost estimate, additional charges for overhead and profit must be added. As described in Chapter 14, these charges may be figured as a percentage of the total cost of the maintenance operation. In this example, overhead costs of 10 percent ($54.85) and profit allowance of 25 percent ($137.11) could be added to the $548.45 cost to the firm. The price quotation to the client would then be $740.41.

NOTE: Many firms apply different overhead and profit percentages to different parts of a project, rather than using single percentages, as in this example.

Practice Exercise

Complete a cost estimate based upon the following data. Add additional overhead costs of 10 percent and a profit allowance of 25 percent.

I. A landscape requires the following maintenance tasks and equipment:

a. 12,000 square feet of lawn cut 25 times a year with a power riding mower

b. 600 square feet of lawn cut 25 times each year with a 25-inch power hand mower

c. all lawn areas fertilized twice each year

d. all lawn areas raked once each spring with a 24-inch power rake

e. 700 square feet of shrub plantings cultivated with hoes twice each year

f. shrubs pruned once each year

g. shrubs fertilized once each year

h. 250 square feet of flower beds requiring soil conditioning once each spring

i. flowers in 250 square feet planted once each year

j. flowers in 250 square feet weeded by hand 10 times each year

k. flower beds in 250 square feet cleaned and prepared for winter once each autumn

II. Time requirements for the maintenance tasks include:

a. power riding mower cutting 1,000 square feet of lawn in 1 minute

b. the 25-inch power hand mower cutting 1,000 square feet of lawn in 3 minutes

c. lawn fertilization requiring 3 minutes per 1,000 square feet for spreading

d. lawn raking with a 24-inch power rake requiring 10 minutes per 1,000 square feet

e. hand hoe cultivation of the shrubs requiring 60 minutes per 1,000 square feet

f. pruning of shrubs averaging 60 minutes per 1,000 square feet

g. shrub fertilization requiring 5 minutes per 1,000 square feet

h. soil conditioning for flower beds requiring approximately 200 minutes per 1,000 square feet

i. flower planting requiring 600 minutes per 1,000 square feet

j. weeding of flowers requiring 60 minutes per 1,000 square feet

k. cleanup of flower beds in the fall requiring 400 minutes per 1,000 square feet

III. All laborers receive wages of $7.00 per hour.

IV. Material costs include:

a. lawn fertilizer at $5.00 per 1,000 square feet

b. shrub fertilizer at $6.00 per 1,000 square feet

c. conditioning materials for flower beds at $3.00 per 1,000 square feet

d. flowers for planting at $125.00 per 1,000 square feet

Achievement Review

A. List four ways in which a cost estimate benefits a landscape maintenance firm.

B. What seven items of data are required before beginning a maintenance cost estimate?

C. Figure the total annual time in minutes for a task that is done five times a year, involves 6,000 square feet of area, and requires 7 minutes per 1,000 square feet to accomplish.

D. Figure the total material cost for mulch that is purchased to cover 1,500 square feet of area and costs $125.00 per 1,000 square feet. The mulch is applied once each year.

E. Calculate the total labor cost for a job that requires a total of 420 minutes. The worker assigned to the job is paid $6.00 per hour.

Jack E. Ingels

State University of New York

College of Agriculture and Technology

Cobleskill, New York
The Completed Cost Estimate

                                         Number of        Minutes
                      Sq. Footage          Times            Per
Maintenance           Area               Performed         1,000
Operation*            Involved *        Annually *       Sq. Ft. *

Lawn
  Mowing--rider       24,500 sq. ft.        30               1
  Mowing--18" power   500 sq. ft.           30               5
  Fertilization       25,000 sq. ft.         2               3

Shrubs
  Fertilization       5,000 sq. ft.          1               5
  Pruning             5,000 sq. ft.          1              60

Flowers
  Soil conditioning   400 sq. ft.            1              200
  Planting            400 sq. ft.            1              600
  Hand weeding        400 sq. ft.           10              60
  Autumn cleanup      400 sq. ft.            1              400

                          Total          Number of        Minutes
                          Annual           Times            Per
Maintenance              Time in         Performed         1,000
Operation*              Minutes **      Annually *       Sq. Ft. *

Lawn
  Mowing--rider            735             None
  Mowing--18" power         75             None
  Fertilization            150           $125.00         $250.00

Shrubs
  Fertilization             25           $126.00          $30.00
  Pruning                  300             None

Flowers
  Soil conditioning         80           $123.00          $1.20
  Planting                 240           $125.00          $50.00
  Hand weeding             240             None
  Autumn cleanup           160             None

                          Total          Material
                          Annual         Cost Per          Total
Maintenance              Time in           1,000         Material
Operation *             Minutes **       Sq. Ft. *        Cost **

Lawn
  Mowing--rider           $6.50           $79.63         $279.63
  Mowing--18" power       $6.50           $78.13         $228.13
  Fertilization           $6.50           $16.25         $266.25

Shrubs
  Fertilization           $6.50           $72.73         $232.73
  Pruning                 $6.50           $32.50         $232.50

Flowers
  Soil conditioning       $6.50           $78.65         $229.85
  Planting                $6.50           $26.00         $276.00
  Hand weeding            $6.50           $26.00         $226.00
  Autumn cleanup          $6.50           $17.36         $217.36

                                                       Total Cost of
                                           Total        Maintenance
Maintenance             Wage Rate          Labor         Operation
Operation *             Per Hour *        Cost **       Per Year **

Lawn
  Mowing--rider           $6.50           $79.63         $279.63
  Mowing--18" power       $6.50           $78.13         $228.13
  Fertilization           $6.50           $16.25         $266.25

Shrubs
  Fertilization           $6.50           $72.73         $232.73
  Pruning                 $6.50           $32.50         $232.50

Flowers
  Soil conditioning       $6.50           $78.65         $229.85
  Planting                $6.50           $26.00         $276.00
  Hand weeding            $6.50           $26.00         $226.00
  Autumn cleanup          $6.50           $17.36         $217.36

                                                         $548.45
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Title Annotation:Section 3 Landscape Maintenance
Author:Ingels, Jack E.
Publication:Landscaping Principles and Practices, 6th ed.
Date:Jan 1, 2004
Words:2635
Previous Article:Chapter 28 Winterization of the landscape.
Next Article:Chapter 30 Safety in the landscape industry.
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