65 acres/3 year contract/1 idiot

Discussion in 'Sports Field Management' started by Bob E G, Nov 19, 2008.

  1. Bob E G

    Bob E G LawnSite Member
    from 53717
    Posts: 127

    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
    THANKS
     
  2. foreplease

    foreplease LawnSite Bronze Member
    Posts: 1,895

    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.
     
  3. SuperDuty335

    SuperDuty335 LawnSite Member
    Posts: 140

    Add a 3% increase per year.
     
  4. A-Land

    A-Land LawnSite Senior Member
    Posts: 856

    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.
     
  5. ICT Bill

    ICT Bill LawnSite Platinum Member
    Posts: 4,116

    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"
     
  6. TPendagast

    TPendagast LawnSite Fanatic
    Male
    Posts: 7,525

    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.
     
  7. HOOLIE

    HOOLIE LawnSite Gold Member
    Posts: 3,981

    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.
     
    Last edited: Nov 28, 2008
  8. garydale

    garydale LawnSite Senior Member
    Posts: 813

    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.
     
  9. NC Greenscaper

    NC Greenscaper LawnSite Senior Member
    Posts: 446

    Bob,
    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.
     
  10. barefootlawnsandlandscape

    barefootlawnsandlandscape LawnSite Senior Member
    Posts: 296

    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.
     

Share This Page