View Full Version : 65 acres/3 year contract/1 idiot
Bob E G
11-19-2008, 09:35 AM
I am in the process of bidding a 65+ acre soccer complex in Northern IL.
I am gearing up with mowers, etc and want some security that I'll have the job next year and the following.
I will be requesting the contract--I don't know if the complex manager wants that, till I met with him the Friday. And I also feel the contract would negate a yearly bidding war--I want to keep prices where they should be.
Finally, HOW DO I BID IT? I would like to include YEARLY INCREASES (how much per year), or should I bid it straight across for 3 years? IF I BID IT THE SAME EACH YEAR, I WOULD HAVE TO COME IN WITH A HIGHER PRICE FOR THE FIRST YEAR, WHICH I FEEL COULD MAKE OUR COMPANY LOOK LESS ATTRACTIVE.
I'VE NEVER WORKED A BID LIKE THIS BEFORE--
WHAT WOULD YOU DO?
AM I REALLY AN IDIOT?http://www.lawnsite.com/images/smilies/sport-smiley-018.gif
11-19-2008, 10:34 AM
No, you are really not an idiot. That is a bigger job than I could handle-way bigger. Try to determine what their motivation is for changing the way they are currently doing this job. Unfortunately, in the current economy, the answer probably is not "improved playing conditions."
The job will likely sell for what they feel solving that problem is worth and have nothing to do with what it costs you, much less find profitable. If the low bid does not financially solve whatever their current problem is - they need another mower, want to outsource the work to save pension or health insurance liability, etc. - then they are probably not going to change horses. That is not (yet) your problem or concern.
If you can bid it at a point that makes you happy and they accept it, good for everyone. Just be careful that you do not buy whatever their current problem is from them. My guess is that this is an accounting decision more than anything for them.
Somebody has to mow the place, we know that. There is a reason they do not make these decisions in July. It could be a great job if it can meet your needs or a terrific long-term headache if it meets only theirs.
I realize this has been no help in pricing it. Hope it goes your way.
11-19-2008, 07:52 PM
Add a 3% increase per year.
11-20-2008, 03:13 PM
Yeah you may not want the same price! Knock on wood gas becomes $6 a gallon, you are going to want some sort of clause in there that allows you to raise the price in the future for reasons like that.
11-20-2008, 10:08 PM
I have no idea where 53717 zip code is???
You must breakdown your costs, profit, labor, insurance (I assume you must be bonded for a project this size), maintenance, travel, downtime, expect to not be able to get into the site a least 1 or 2 times because of weather and have to make up for it timewise the next time,etc
break it down into smaller increments and then add the them together. did you notice profit is the first line item. If you cannot make a profit, which allows your company to be in business next year, you cannot bid the project. end of story, don't bid it hoping to make a profit because you won't
be smart break it down, that is what the county or whoever they are will want to see, a break down of costs AND DON'T BE AFRAID TO USE PROFIT AS A LINE ITEM. Tell them the same thing "this is a 3 year contract if we don't make a profit we won't be around to service your account"
11-28-2008, 01:09 AM
Bonds arent required for maintenance contracts.
No Dont include a yearly increase, no dont make your first year more expensive.
Bid it at what it is worth.
Statistically speaking, one of the three years will be average, one of the three years you will loose money and one of the three years you will make huge profits.
The end result, you will average out, well average.
Fluctuations in gas prices, labor, repairs on machines, weather etc are all teachnically irrelevant when bidding a long term maintenance contract.
The benefits of having a long term maintenance contract in place FAR out weight the negative of the rise in gas prices.
However if this job is over 50% of your current work, I would not bid it due to the fact that IF your first year was the worst year it would adversely harm your company to the point you would be better off without the big contract.
Dont take on big jobs like this unless it is less than 50% of your current work load.
11-28-2008, 05:14 PM
This sounds a bit simple, but my 'rule of thumb' on estimates for which I am not completely sure about is:
If you feel like you bid it too high, you bid it about right...
Feel like you bid it right, you'll be making just enough to cover expenses...
Come in cheap to land the bid, you're going to be cursing yourself...
If it were me, I would bid it high as to where I felt like I was absolutely certain I would not lose money. You can sit down and project expenses and all that, and time, but until you do a job that is much larger in scope from what you're used to, you really don't know if you're correct on your calculations.
Like Pendergast said, I would keep it the same price over the 3 years, this will be a further incentive for them to sign with you.
11-29-2008, 11:06 AM
Some good suggests have been offered.
I agree that holding your price for three years is a good way to get the multi year contract.
You can offset any prices increase etc. with efficiency. It will become apparent very quickly that you can improve on how you do the work.
A three year agreement will allow you cash flow, planning and security.
The owner will love knowing his cost will be stable and thats your selling point.
The 50% maximum is a good rule of thumb. Do not get tied to tightly to any one client.
Good luck and keep us posted.
11-29-2008, 08:28 PM
This is going to be very difficult for you without prior experience with large acreage. I would heed all of the above advice, especially the 50% rule. You will need to cover your equipment cost with just one job. You will also need employees, if you don't already have them. You will find they are expensive (wages, fica/medicare, unemploy ins, workers comp.). I have tried to bid some large county and municipal jobs around this area and can't get close. I don't know what size operation you have now, but it's expensive to tool up to this size, bid it competitively, make a profit, then rebid it in three years. Because then you will have the equipment and personnel to handle large jobs. I hope this makes sense.
12-02-2008, 02:47 PM
The zip code probably don't exist. Bobby G is notorious for starting threads just to get people fired up. He just keeps changing his screen name here lately.
12-02-2008, 03:21 PM
looks like 53717 is Madison, WI
12-03-2008, 09:41 PM
Add a 3% increase per year.
I just landed a 3 year commercial and I used 3%, I explained to them materials and fuel go up and I needed to add inflation for that purpose, to sell it to them I told them that the average inflation for everything is 4-7%.
Doster's L & L
12-04-2008, 01:09 AM
I wouldn't get too excited about it if i were you. I agree with foreplease. There is a sports complex the same size as you are talking about near by. It looks really smooth and appears to be real easy mowing, but when you get that mower on the field, it jars ya to death! Plus, this kind of job draws lawn guys from all around to bid on it. You can bet they're not going to pick anything other than the low bidder. When the above mentioned field was up for bid 2 years ago, they wanted it cut 32 times per year. The winning bid was $15000 or so. Well have fun mowing that property for a whopping gross income of $9 per hour Buddy!
Bid this property if you want to, but if you screw up and win the bid, I'd think twice before signing the dotted line.
Here's an idea... chum the waters and see what surfaces. What I mean is, bid it for 100,000 or more in anticipation of NOT winning the bid. Generally, they'll let everyone know who won the bid and what the bid went for. Sometimes they'll have a print out of what each bidder priced it at. They do this in hopes that the winning bid will get smaller and smaller as the years progress.
12-10-2008, 12:18 AM
You know, I'm not even sure how to bid on a job and make a large profit anymore. It seems that if you get competitive enough to win a bid, you have to give yourself very little cushion. If I really added up all of my costs and charged the $60/hr/man, I'd never get a job. In fact, my question is:On large jobs, are you guys charging $60/hr/man or is that more on the smaller jobs? If you have three men and charge that, you're talking $180/hr. which is astronomical if it takes a whole day to mow a property. I don't think anyone would pay that. I just don't know. I just looked at a Wal-Mart that will probably take three men 5 hours to do but at $60/hr., the price looked huge. Even at $30/hr., that seemed high-$1575/month.
12-10-2008, 03:04 PM
I watched a meijer go for $ 3.75 an acre during a reverse auction last year. Something like 6 acres of turf.
12-10-2008, 08:51 PM
Herein lies the problem with those who have little or no experience bidding large jobs, actually going out and bidding at all.
Back in the day, when gas was 94 cents a gallon, ZTRs did not exist and the 48 belt drive was considered a quick machine in comparison to the "Locke" that old timers used,
The going rate nearly country wide was $40/acre.
as a 16 year old kid mowing lawns, a "normal" three acre property took a crew comprised of 2 each 48 inch scag belt drives and a 21" push mower for trim(back in the day it was common to use the 21" for most of what we use a weed whacker for today, the trimmers back then werent quite as powerful or advanced and many companies didnt even have them yet)
Now, the crew leaders back then got paid about $8-$10 and the other guys were running around $6-7 per hour.
That three man crew was in and out of that three acre property in about an hour and half.
1.5 times 3 is 4.5 man hours. 3 acres at $40 per acre is $120 bucks.
The operational costs for a crew back then ran about $17 per man hour so it cost the company owner $76.50 to make $120 so a profit of $43.50. it was typical to get about 8 lawns per day in with a crew like that so a company owner could expect to make just shy of $350 per day, per crew of profit.
This was pretty much the "going rate" back in the day.
Now take that SAME lawn today, but now you have ZTRs and modern trimmers.
ONE guy with a ztr can mow 8 of those a day EASY with the right gear.
Lets say two guys mow 10 of those for ease of math and make the equation comparible.
You pay those guys what? $14 per man hour? it COSTS you about $30 an hour just to run a crew.
TWO guys in and out of a three acre property at $120 per visit is 1.5 man hours (45 minutes total time there) is $80 per man hour.
The company grosses $1200 per day for a two man crew. They are billing out at $80 per man hour,
But here's the catch, 3 acre homeowners were paying $120 per lawn cut back in 1988!
So why can't they pay the same 20 YEARS later??
That property costs you (1.5 *30) $45 to cut compared to the old man $76.50 (chock that up to technological advances that allow improved efficeiency) so you go home with $75 from that lawn instead of the old man back inthe 80s who got $47.50
Heres where the problem came in. New guys,never having bid a lawn before, having no idea what they were doing went out and bought a ZTR and became a landscaper, they figured they could do the job faster and better than it had been done in the past (which is true with the equipment avaialble today) and so becaue they can do it faster, thought they should charge less!
So alot of guys are runnign around with more equipment and more costs and charging $40 perhour instead of acre!
Heck with the cost ofequipment these days and the going wage you have to pay your guys it COSTS $30 per man hour. So for every hour spent you the owner bring home $10 per hour.
Hmmm I think they pay that at walmart for a shift supervisor.
Here's a tip, STOP bidding lawns at per hour, unless every time you go there you charge them a different price (i.e week one you were there it took 2 hours so $80 and week three it took 3 hours because of rain so $120)
Bid by the sqaure foot.
Find out your production rates for equipment (ie 48 rider cuts 48,000 sq ft per hour or whatever) that will give you an amount per sq ft.
Then accurately measure the property.
But always remember never fall below $40 per acre or you might as well work at walmart.
12-10-2008, 09:52 PM
This is a contract I'd salivate over. I have 3 8' or larger Ransomes/Jacobsen machines which would make mincemeat of this property in less than 4 hours. If no trimming was involved, I'd bid it at $600/cut and make money hand over fist. $600 x 32 cuts is $19,200/ year. I guarantee I'd make money, but some would probably under bid me, but that's the lawn business...........Lynn
02-10-2009, 01:59 PM
Hoolie stated it about best. We have the Parks and rec division of a very large city in the KC Metro are. It has 65 properties and close to 225 acres of moving in it some very small some are close to 30 acres. First almost exclusively municipalities always go with the lowest bidder. Second you can't bid this like commercial because you will be so far and above everybody else you won't even be looked at. You have to bid by the time spent on a job and quote accordingly. The biggest reason that government contracts are so popular is that one there big and two they always pay on time.
02-10-2009, 02:14 PM
I have yet to get a signed 3 year contract for any commercial account:nono::laugh:, I only can "assume" or get a verbal conformation now that I will keep my loyal customers. This economy is flat out cut throat, accounts that we once overlooked I am considering bidding on. Here in Memphis it is a customer market you have 5 LCO bidding on every job. We can thank the media for education folks on good lowballing techniques, and this season it an't getting any better:nono:
02-10-2009, 02:35 PM
Yes, you really ARE an idiot.
But your posts are funny. I think you have too much free time, you really should seek help.
03-03-2009, 03:34 PM
We are currently looking to bid 39 Acres of municipal cemetaries over 14 different locations. Never bid on anything like this before. Any ideas?
The Elements Group
03-03-2009, 07:39 PM
1oo to 120 / acre just for basic maintenance if there are alot of open runs, maybe a little less if alot of trimming and such then lean toward the higher end
03-03-2009, 07:44 PM
That's a good number to go with. Using 52" Wright Standers.
03-03-2009, 09:39 PM
Add a 3% increase per year.
That's right ... this is called an "escalator clause" !!
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