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job costing

Discussion in 'Business Operations' started by kris, Jan 23, 2002.

  1. LawnLad

    LawnLad LawnSite Senior Member
    Messages: 738

    It looks like all agree on the construction/installation side of job costing and how beneficial it is to do it right away.

    My challenge has always been to job cost a maintenance account (I'm sure this is where CLIP would be beneficial - don't have it though). One account takes more or less time depending on the season, as well, there are always extras for which you bill. Any suggestions here?

    I've been trying to watch my labor very carefully. I look at our billable % related to our payroll hours. If we're going to pay out the dollars in payroll... I'd like to billing a client for that time. Otherwise, that labor is an overhead cost.

    Does anyone use a program to track labor hours and how they are applied to different job functions? We use a spread sheet now, which isn't bad and starting this year, I'll finally get a weekly report telling me how many hours on the crew were spent doing mowing, bed maitnenance, fertilizing, travelling, equipment maintenance, etc. for the week. It would be easier if we had a database where I could query per person for a period of time, a crew or the company. We use an outside payroll vendor, so we don't use the Quick Books payroll function. We just dump the numbers in.

    Just curious if others have a solution for watching your over all labor costs?
  2. diginahole

    diginahole LawnSite Member
    Messages: 249


    I too spent many years developing and using excel spreadsheets for accounting and various data collection. These days I would almost call that lunacy. With the readily available and economically feasible canned packages available in today's marketplace you have a full time staff of dedicated professionals constantly improving the techniques by which we collect this invaluable information. In your case, many maintenance contractors on these pages will recommend CLIP or LAWN MONKEY. Many years of collaborative effort between contractors, accountants and programmers have gone into developing these packages to the point they are today. If you are truly inspired to collect and analyse this data efficiently and accurately look into a canned software package TODAY. I have even heard that data can be collected in the field via handheld computer with some of these packages along with many other benefits far to numerous for this constuction contractor to even think about.
  3. kris

    kris LawnSite Bronze Member
    from nowhere
    Messages: 1,578

    Sorry I can't be of much help lawnlad...I also did the maintenance "costing". We don't break it down into each task on the daily worksheets ...just the time spent on site, travel and shop maintenance. We had a couple sites that were real losers. The problem I can see with maintenance ( and you mentioned this ) is spring will take longer than late summer. Soooo if we enter this information daily it may look like the site is a loser in the spring, but it could very well make up for it in the summer. What do others do in this situation?
    Next dilemma ... what do you do if you find over time that the site is a loser ( say half way through the year )... I'm not sure I'm comfortable dumping the contract.
    Any opinions?
  4. LawnLad

    LawnLad LawnSite Senior Member
    Messages: 738

    When Estimating a Maintenance contract, I look at a property (through eye ball, or measurements) and apply a factor of time for a crew to complete the job, and we bid based on the amount of time that the crew will be there... on the average. Job costing that once we produce it is obviously a different matter.

    April/May they will be 30% over and June/Sept right on, Jul/Aug they'll be under the bid. Oct/Nov we're billing for fall clean up - so that's a different matter all together.

    With CLIP/Lawn Monkey, I'm sure you can track each customer and the amount of time you spend there (assuming you track the time in the field - which we do). I'm sure then reports are available to see if you're on the mark. You just have to be careful to see if your report in May says you're over... you have to temper that with your knowledge of the season and that your flat rate for a maintenance visit has to factor in 10 months, not just one month. But after one year of data collecting - you then have a bench mark to share with your foreman. Are they hitting the mark? If not - then why? We just haven't made this move yet... but looking at CLIP now. And on your guys suggestions, I'll look into Lawn Monkey too.

    If I see a looser mid season I'll look for ways to tighten it up during the season. Otherwise, we'll eat it until we send out renewals.

    I remember bidding my first job of the season a couple of years back. I way under bid the job (a little rusty from the winter). We took a bath on it. The following year I almost doubled the price to where it should have been originally. I explained the customer about my error in estimating the first year and that the recent cost adjustment was due to knowledge on the property. He's still with us today - at the new rate.

    We use spread sheets where canned programs (Quick Books) dont' fill in for us. Tracking labor and where the guys time is spent I think is critical to knowing if you're applying their time appropriately. As well, when you plan in the winter for the upcoming year, you'll know how much labor you need for fall clean ups, mowing, fertilizing, equipment maintenance, travel, etc.

    Anyone else track billable versus non billable hours? How do you track it? What #'s are you looking at?
  5. diginahole

    diginahole LawnSite Member
    Messages: 249

    Sounds to me more like an estimating (budget setting) dilemma. If you want to gather such comprehensive data why would you use a seat of your pants method of estimating? When you bid a job you know there will be different tasks to perform at different times of the year. You create a schedule of services and price that job to reflect the expected time it will take to perform those specific tasks. Right?? Frequent analysis of your predictions (job costing) will paint a clear picture of your predictions accuracy. Poor predictions in the spring almost certainly guarantee poor predictions come summer time. What you do with this information is up to you as a business owner. Dumping a client most often isn't the best answer, but armed with all the data, the solution should be easier to find.

    Gathering data will allow you to make more reliable predictions. I have never used Clip or Lawn Monkey but am just assuming that it would allow task specific data collection. For that matter I have never done an estimate for lawn maintenance so I could be blowing hot air here as well. It's just the way I would think I would go about it. It is the same basic principles that apply in my sector. Set a budget and keep a close eye to make sure you are achieving your goals and make corrections when necessary.
  6. kris

    kris LawnSite Bronze Member
    from nowhere
    Messages: 1,578

    Diginahole ...not sure if that was directed at me but I'll respond.
    Let me say this division is only a couple years old, so we are learning. We use measuring and factor in degree of difficulty for estimating(times collected the first year).. I then x that by our hourly rate(per cut rate) x amount of visits divided by 6 for their monthly rate ... spring & fall cleanups are estimated separately.... What happens then is that we may go over the time in spring but make up for it in the summer...perhaps I am way off on this method ... are you saying that I should look at each cut separately? eg...spring cut takes 1.5 hours and then summer 1 hour... etc? I may consider that or any other suggestions.
    I must say that most of my estimating has been right on
    the money and I am ashamed to say that the ones that were not was because I quoted them in a hurry last spring ..Sight unseen ...YES sight unseen.... I had a drawing with square footage and no knowledge of the property.
  7. diginahole

    diginahole LawnSite Member
    Messages: 249

    kris- being only a couple of years into this venture still gives you a couple of years on my experience, so please, take my words with a grain of salt.

    If your method produces the results you desire by all means stick with it. I have never been one to rob Peter to pay Paul. So for me, setting a price for each and every task to be placed on that customers schedule would make me feel confident in my proposals. It may well be overkill for the more experienced, but the desire to collect the detail of data that has been discussed in this thread indicates to me a thirst to know where and how every dollar is earned (or lost). My method may provide a clearer picture of where we stand at any given point of a contract. Then again it may not, because this is only a theory not a well thought out plan based on real world lawn mantainance experience.

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