Estimates, proposals, bids, call them whatever you like, but one thing is certain in contracting, you need to have to ability to provide your client with a price and description of the work you are going to do for them and as a homeowner you must not settle for anything less than a detailed proposal.
Hopefully as a contractor you use a scientific process to gather all the important data in order to arrive at an accurate price that allows you as contractor to make a profit, while at the same time fulling the needs of your client.
I could spend days talking about the importance of production rate based estimating, knowing your costs, recovering your overhead, guaranteeing a profit, etc, etc…….But today we are gonna specifically talk about the dangers of ball park pricing and guesstimating.
If you are a home owner, please don’t ask your landscape contractor for a ball park price. If you aren’t willing to take the time to meet with him or her and show them your project, let them measure and study the site, then you probably aren’t serious about doing the project. A ball park is never accurate and will usually be substantially lower or higher than the actual cost to do the project. It also depends on the contractor who provides you with this ball park.
One contractor may ball park it really low in hopes of getting the project, while another contractor may ball park it really high in hopes of making money. The problem with both methods of ball parking is……..they do not know what their actual costs will be! Remember our post last month about planning your 2018 landscape? Identify what you want to get done, set a budget and then reach out to your contractor for a detailed, written proposal.
A big danger from accepting a ball park price is that the contractor will come back to you repeatedly asking for more money. He/she didn’t know the true cost to do the job and now they realize they are losing money.
If they are afraid to ask for more money, then they may skimp on portions of the job to make up for the loss, resulting in you, the homeowner, not getting a quality project and at worse, the contractor just up gives up on the project, leaving you with a big ole’ mess. I have seen all these scenarios in my 15 years of contracting.
From a contractor’s point of view, you should never, ever give a ball park. Never ever! I don’t care if you think you can ball park it close, don’t do it. The problem is you will only be close, not exact. If you are OK with losing money or OK with not getting the project because you were too high, then go ahead and ball park. It’s like gambling, you may win or may lose.
If you make it a habit of ball parking without taking the proper steps to measure and calculate, then you may hit the occasional home run...but you will strike out much more often. Do you know the worst feeling in contracting?
Finishing up a project and realizing you would have been better off to hand the client a pile of cash when you first met with them and not ever come back.
Instead you did the work, wasted a whole bunch of time, wore out your employees and equipment and still paid for the job with your own money……all because you gave a ball park quote and didn’t take the time to properly bid the project.
If you use unit pricing, like pricing jobs by the square foot or linear foot, by the pallet, by the zone, etc, then you need to be EXTREMELY careful. I do not ever recommend pricing this way. Why not? Because every job is different. Very rarely will you have two projects exactly the same. Every job has site specific variables such as: (these are just a few examples)
- Access -- a 10 pallet sod job in a front yard that is wide open will take less time than a 10 pallet job in the back yard that is fenced in – if you use unit pricing and price the back yard the same as the front then you just lost money.
- You are building a deck and the client has a very nice lawn -- They don’t want you traveling over it with delivery trucks, of course, so you will have to hand move the material to the work space. Unit price it the same way you do all your other decks and you just lost money.
- Travel time -- unit price an irrigation system 30 minutes from your shop the same way you price one 5 minutes from your shop and you just lost money (quick calculation – 4 men x 30 minutes one way = 2 man hours, job takes 3 days, you just lost 12 man hours) Who is paying those men? Who is paying for your fuel? Who is paying for your wear and tear on your trucks? You are.
Just a little food for thought here, some points to ponder. Please let me know what you think as a contractor or homeowner, we would love your feedback and in the meantime...no ball parking.