LANDSCAPING · LANDSCAPE AND IRRIGATION · FIXED BY STEP 01

A 22-week pump skid wants half down before you bill

The pump station quotes in quarters and the vendor wants 30 to 50 percent at release, months before the job produces a single dollar of billing.

WHY IT'S A LANDSCAPING PROBLEM

Most trades' long lead gear is catalog product with a stocking distributor behind it and a resale market if the job dies. A VFD panel and a made-to-order skid have neither, so the deposit is a real commitment to one project before that project has proven anything. Worse, deposits usually get coded to a vendor expense, so the job reports a healthy margin in the same month your bank balance drops.

WHAT IT COSTS

The size of it

The cash goes out early and the cost goes to the wrong place, so your margin report says one thing while your account says another.

OVERHEAD AT $1M–$5M

15%

CFOS target 14% for landscaping.

GROSS MARGIN AT $1M–$5M

22%

CFOS target 24.5% for landscaping.

NET PROFIT AT $1M–$5M

CFOS target 10.5% for landscaping.

A booster or lake pump station is a built to order, UL listed skid made for one site's flow and pressure. Four inch and larger RPZ assemblies and their insulated hot boxes get built and painted to spec, and all of it quotes 16 to 30 plus weeks with money due at release. Order at award and the deposit hits months ahead of the first pay application that could cover it. Wait for a signed subcontract and delivery comes in after the owner's water-on date. Either way, tens of thousands of dollars leaves the account against a job with no billing history behind it.

WHAT TO DO

Three moves, in order

STEP 01

Create a job-level deposit code (or WIP asset) and post the skid deposit to the job the day the check clears, not the day the equipment ships.

STEP 02

Put a stored materials and equipment deposit line in the schedule of values at buyout with the vendor quote attached, so the deposit is a billable event on pay application one.

STEP 03

Before releasing the PO, write the GC's water-on date on the submittal cover and get written confirmation that the quoted weeks finish ahead of it.

THE FIX

Step 01: Job cost structure

Seven cost categories and three levels of granularity, built so the estimate and the ledger use the same words.

CFOS-01 · CHAPTER 1

Job cost codes that match how you bid the work

What this step changes, what it depends on, and how to tell it's installed.

BENCHMARKS

Landscaping by revenue band

All 7 bands are published. The CFOS target is beside the figure up to $10M to $25M, and the 4 bands above that are labelled modeled.

ACROSS EVERY TRADE

Cost codes the field ignores

You have 200 cost codes. The crews use four of them, and one is called Miscellaneous.

SAME TRADE

What else costs landscaping contractors money

LANDSCAPING · CFOS-06

The meter set you don't control ends your job

Every head is in the ground, the trenches are closed, and you can't pressurize a thing because the water purveyor hasn't set the meter yet.

LANDSCAPING · CFOS-01

Sleeving goes in month two and bills like nothing

Fifteen percent of your material goes under the pavement early and bills as three percent of a pay application, because the whole scope rides on one schedule of values line.

LANDSCAPING · CFOS-04

The tree can't be expedited at any price

A 3 to 4 inch caliper shade tree is 8 to 12 years in a field, so when the regional growers are short there's no rush fee that fixes it.

LANDSCAPING · CFOS-06

Your establishment clock starts when they walk it

You finished planting in April, they inspected in June, and you watered and mowed for eight weeks with no billing event attached to any of it.

LANDSCAPING · CFOS-04

An October plant list meets a September price book

You bid the plant schedule off one season's availability sheet and buy it off the next one, and no GC will write escalation language into a list that looks like part numbers.

SAME MECHANISM, OTHER TRADES

The same mechanism in other trades

CONCRETE

Eight Tons of Rebar Tagged to a Drawing That Changed

The EOR approved the placing drawings, the fab shop cut and bent to the bar list, and then somebody moved a footing. Now you own bundles tagged to grid lines that no longer exist.

DEMOLITION

Your Breaker Burns Tool Steel That Overhead Pays For

A hammer chews $9,000 of tool steel on one teardown and the job that ate it never sees a dollar of the cost. The margin looks fine and the bank account disagrees.

DRYWALL

Lead-lined board is eight weeks and non-returnable

The imaging room's board is eight weeks out, cut to the shielding drawings, and the deposit is gone the day you release the order.

QUESTIONS

What landscaping owners ask

Pump station deposit due before I can bill anything on the job?

The pump station quotes in quarters and the vendor wants 30 to 50 percent at release, months before the job produces a single dollar of billing.

What does it cost?

The cash goes out early and the cost goes to the wrong place, so your margin report says one thing while your account says another.

What do I do first?

Create a job-level deposit code (or WIP asset) and post the skid deposit to the job the day the check clears, not the day the equipment ships.

What are landscaping contractors supposed to be making?

Landscaping runs 22% gross margin, 15% overhead and 7% net profit before taxes at $1M–$5M. The all-trade average is 7%, so this trade is right on it. The CFOS target is 10.5%.

Which part of the system fixes it?

The step is number 01, job cost structure. Seven cost categories and three levels of granularity, built so the estimate and the ledger use the same words. It comes from chapter 1 of CONTROL: The Construction Financial Operating System.

OR HAVE IT HANDLED

Everything on this page is something you can install yourself, andCONTROL is the order to do it in. If you would rather buy the finished result, SPM The Construction CFO does this work for landscaping contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, run by the same author.

What a fractional CFO does for landscaping contractors

AUTHOR

JOSH LUEBKER

MASTER ELECTRICIAN · 150+ PROJECTS · $2.1B+ MANAGED

Wrote CONTROL, the 8 step system behind these figures. More about the author.