Cutting Throats?!?

Discussion in 'Lawn Mowing' started by IronHorse3136, Feb 28, 2005.

  1. IronHorse3136

    IronHorse3136 LawnSite Member
    Posts: 12

    I am new to the commercial accounts, but I just got out bid for a Local Housing Authority project by $30,000. The total size is 122 acre over 13 properties and three counties. To get the account, you must include your expenses, equipment, crew size, insurance and workman's comp. to prove you could handle the account. The account had 502 units of which you only cut the vacant units which totaled 30 to 35 units every two weeks for 16 total cuts. You cut all of the common areas every two weeks and the office would be cut every week. I spoke to the last contractor and he used a six man crew with 4 ZTRs and two trimmers going 14 hours a day for four days to complete the job. With all of that info, I estimated my expenses to be $32,000 and bid $54,600. The winning bid was for $21,500. I saw the winner at a lawn and garden show this weekend with his two sons of 14 to16 yrs old, trying to buy a new ZTR. I guess my question is how is this guy going to finish this project and still make a PROFIT? Even though he will be working his two sons, he has to pay them atleast minimum wage, which is $5.15 per hour. Can someone explain to me how this man is going to make it?

    Employees: Estimate

    Payroll: ___$14,000.00_____ (six men)
    Insurance: ____$1,355.36_____( workman comp)
    Uniforms: ____$1,152.00_____(t-shirts, caps)

    Equipment

    Equipment Loan ___$10,286.64_____(three new ZTRs)
    Repair Parts/Labor ____$3,984.00_____(belts, tires, blades, etc)
    Fuel ____$1,120.00_____($1.98/gal @ 1.8gal/hr)
    Insurance ______$526.15_____($2 million general liability)

    Total Budget Expenses: ___$32,424.15_____
     
  2. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    He probably won't...even with his teenagers working for him. Reading sh*t like this drives me nuts.
     
  3. theturfsurfer

    theturfsurfer LawnSite Member
    from mtka,MN
    Posts: 102

    By looking at your expenses it appears that you are only using these expenses for this one property. Dosen't the insurance also cover you on your other properties? If this is your only property than your expenses are correct but if you mow other lawns you should also apply some of these expenses to them. Also, your repair/maintenance cost for the equipment seem a little high.
     
  4. LB1234

    LB1234 LawnSite Gold Member
    Posts: 3,210

    IMHO, you can't figure out his costs. You have no idea what his expenses are, how he operates, etc. Face it, you got outbid. Yes, it sucks, but you have to deal with it.

    Same thing happened to me last year (this snow season) with snow plowing. Generally speaking it was 350 per visit for this small commercial account. Someone came in for 125. Condo association asked me to match...I told them I can't even drive their for that amount of money. I wonder how the guy is making a profit also, but that's it. I'm over it. Hey, I was informed by one of the members of the association that the guy is doing a realy crappy job...not plowing certain spots, not opening up certain driveways, doesn't get it done before they open for business. I just told him that you get what you pay for. Perhaps they will learn their lesson and contact me next year.
     
  5. Charles

    Charles Moderator Staff Member
    Posts: 7,952

    I think they did you a favor by giving that mess to somebody else. Just picking up trash in Housing Authority units would be a big job and would have to be priced.
    3 counties? Man, thats alot of travel time too. At least .50 cents per mile for one vehicle + paying the help for travel time
     
  6. genoaustin

    genoaustin LawnSite Member
    Posts: 33

    4 ZTRs going 14 hours a day for 4 days (if in one location) would be 224 hours of cutting. Even if half the time was spent driving between the 13 locations, 112 hours. So these ZTRs are cutting around 122/112 =1.1 acres/hour. Either the trash is deep, or they are tiny ZTRs. Are they all gated backyards requiring 36 inch mowers?

    If the spaces are fairly open, I would expect twice that fast with the proper mower.

    Gene
     
  7. tiedeman

    tiedeman LawnSite Fanatic
    from earth
    Posts: 8,745

    last time I checked, I don' think that he has to pay his sons minimum wage at all. I could be wrong though.

    but that does stink that happened. Maybe it was for the better that this happened
     
  8. bobbygedd

    bobbygedd LawnSite Fanatic
    from NJ
    Posts: 10,178

    this is typical for larger companies with high overhead. they don't price the job to make a profit, but rather just to keep thier men working in between thier profitable accounts.
     
  9. Lawnworks

    Lawnworks LawnSite Fanatic
    from usa
    Posts: 5,407

    I know how you feel. I bid 240k based on the estimated number of hours from the company @ $25 a man hour and lost to somebody who bid 150k. Maybe I am just a dumbass, but some people must have 2% profit margin.
     
  10. tiedeman

    tiedeman LawnSite Fanatic
    from earth
    Posts: 8,745

    It could be also that that he didn't read everything properly. I almost lost my head about 4 years when I was bidding on a cemetary. I went and looked at the cemetary, without looking at the specs sheet and put a bid in to the township. I didn't realize that it encluded an extra 10 some acres, and picking up and disposing of wreathes, etc on the grave sites. I under bid it by about $8,000. I quickly withdrew my bid from the township board because they were actually going to go with me. What an embarassment for me.
     

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