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Realization rate for design build companies

Discussion in 'Business Operations' started by landtastic, Dec 8, 2005.

  1. landtastic

    landtastic LawnSite Member
    Posts: 13

    With the slow season having crept up on us I decided to do some internal disection of our company and find out where we can do better. I started with our realization rate; now that I have that number I am having a hard time finding any info on the web for similar companies to compare against. Anyone out there have an industry average or comperable info?
  2. landtastic

    landtastic LawnSite Member
    Posts: 13

    Am I asking for to much info or is no one watching their rate?:confused:
  3. BSDeality

    BSDeality LawnSite Silver Member
    Posts: 2,850

    realization rate as in hours spent to hours billed? i'm not that familiar with the term, could you explain it more in detail?
  4. landtastic

    landtastic LawnSite Member
    Posts: 13

    Sure, thanks for the follow up. Total money collected (gross) divided by total man hours. For us, we billed a total of $260,000.00 in builds this season and It took us a total of 3124 man hour to do this amount of work, so our realization rate is 83%. Plus or minus some clerical errors and uncollected payments going to collections. I know the averages for other industries but cant find anything on design construction. You have any idea on where an average would be?
  5. BSDeality

    BSDeality LawnSite Silver Member
    Posts: 2,850

    wouldn't $gross/hours = your hourly rate?
  6. MacLawnCo

    MacLawnCo LawnSite Bronze Member
    Posts: 1,847

    I love to talk numbers, but your title had me confused.

    The 83% number you have found is really your gross hourly revenue of $83/man hour.

    However, I have said before that comparing numbers to other companies based on gross revenue will not be entirely accurate. You need to compare your gross profit numbers. This will essentially take your direct costs out of the equation and will give you a better picture of how your actual opperation compares to averages, if you can get people to volunteer there numbers.

    If not, call PLANET ( www.landcarenetwork.org )and ask them if their operating cost study includes design/build companies. I know it includes maintenance but did not specifically look for instalation. This would be a great first step since they will show bad, average, and good companies in terms of gross and a % of sales.
  7. landtastic

    landtastic LawnSite Member
    Posts: 13

    Ok, that is good info to know. I went and saw a guest speaker a few months back and he refered to that equation as the "realization rate". I figure that they are interchangeable definitions though I will research it a little more. Thank you for the links MacLawn, and the info BSdeality.
  8. hoskm01

    hoskm01 LawnSite Fanatic
    Posts: 5,690

    Is 260k your labor only billing, or total job costing? ie. do you need to subtract parts and other costs from that number before arriving at labor?

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