LANDSCAPING · LANDSCAPE AND IRRIGATION · FIXED BY STEP 01

Retention is held a year while you still send a truck

Your final ten percent stays out until the warranty walk, and you spend the entire hold period running crews back out there to earn it.

WHY IT'S A LANDSCAPING PROBLEM

For everyone else, retention is a financing cost with nothing operational behind it. Yours has a crew, a truck, and replacement material attached to it for twelve straight months, so the job keeps consuming cash long after you closed it in your reporting. The bond line stays committed that whole period too, and that's the same capacity you need for the next bid.

WHAT IT COSTS

The size of it

You've got ten percent of contract value plus a year of unbilled maintenance visits held out there, and a bonding line that won't release for the job you're trying to win now.

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.

Most trades finish, demobilize, and then wait on retention with no cost line still running. Landscaping has a one year plant guarantee past the last production day, and that guarantee is an active obligation: watering, mowing, and replacing anything with 25 percent or more dead branches per UFGS 32 93 00. The money stays out for 12 to 15 months while your spending continues the whole time. On public work a maintenance bond usually rides the same period, which ties up bonding capacity on a job you already finished and can't bill.

WHAT TO DO

Three moves, in order

STEP 01

Keep the job open in job costing through the warranty period with a warranty and maintenance code, so post-completion visits hit the job that created them.

STEP 02

Price the warranty year in the bid with a visit count and put it in the schedule of values, so there's something billable at the walk.

STEP 03

Build a one page retention receivable list by job and expected release date, and review it monthly next to your available bond capacity.

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

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.

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.

SAME MECHANISM, OTHER TRADES

The same mechanism in other trades

CIVIL

Your retainage is waiting on 70 percent grass

You finished grading in month three and utilities in month six, and the last 5 to 10 percent of your contract is locked behind a seed bed that has to hit 70 percent cover.

CONCRETE

Done in June, Retention Releases When the Building Opens

Footings, foundations, and slab-on-grade are the first real dollar volume on the site, so you bill most of your contract early and then wait on a building you left a year and a half ago.

DEMOLITION

Demo Goes First And Gets Its Retention Back Last

You work five weeks and wait twenty months for the money. Your retention rides the prime's substantial completion on a building you left before the foundation went in.

QUESTIONS

What landscaping owners ask

Landscape retention held for the one year plant warranty?

Your final ten percent stays out until the warranty walk, and you spend the entire hold period running crews back out there to earn it.

What does it cost?

You've got ten percent of contract value plus a year of unbilled maintenance visits held out there, and a bonding line that won't release for the job you're trying to win now.

What do I do first?

Keep the job open in job costing through the warranty period with a warranty and maintenance code, so post-completion visits hit the job that created them.

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.