Accurately bidding on landscape projects is crucial to the success of your business. This is where you will make the most money or lose the most amount of money as a landscape business owner. Knowing how to bid landscaping jobs will help you to not only know what to charge clients for your work, but to also evaluate your bidding process from the start when a client first contacts you to the end of the project.
You want the ability to compare the estimated numbers for a project to the actual numbers when that project is completed. This is a necessity if you hope to identify areas in your business that need to improve whether it is in the field or during the bidding process.
There are several ways in which you can work to bid landscaping projects, but we prefer and recommend a software that can track all of your projects and provide you with the reports based on the data provided to make decisions that will improve your bidding process and the work that you complete in the field.
How to Bid a Landscaping Job
There are a few ways in which you can bid a landscaping job. We prefer a method of creating production rates for each step of the process in the service that you provide to be able to calculate the total time necessary to complete that project which will allow you to apply the labor necessary to that, along with the amount of overhead required to make that money back and the materials. However, this does take some time to accumulate the data to create those production rates.
That is why most people may opt for a square footage price that they apply to the square footage for the project. It is much simpler, but it does not provide you with the data necessary to be able to evaluate your efficiencies in the field and to improve your business.
Either way, using a software will help you automate your bidding process. If you are interested, you can learn more about the How to Hardscape Headquarters software and how it can help your bidding process.
There are two different types of clients that you will bid on in landscaping. They are the residential and commercial clients.
How to Bid Commercial Landscape Jobs
Commercial bidding is based on a drawing provided by a general contractor or some sort of plans that you can base your bid on. Nothing is left to you to create a specification for and to create a design for the project. You typically need to be the lowest bidder on that project, so understanding what you need to be profitable on these projects is extremely crucial because you can quickly lose jobs because you are not the lowest bidder or take on projects that are not profitable. Not to mention it takes a minimum of 30 days to get paid for commercial work after completion, so you will need the cash flow necessary to withstand the bills that flow in while you wait to get paid for the work you did.
This makes bidding commercial work a fairly easy process in which you can follow the processes below to be able to create a bid that you are satisfied with. The main necessity would be to find those commercial clients and network with general contractors to be able to receive request for quotes from them in order to acquire those commercial leads. Once those are accumulating, you can then work on your bidding process.
You can find commercial landscape jobs to bid on by joining various websites that post work from commercial and government clients open for bid. Here you will be able to access work posted in your area of service to begin bidding on based on the information that they provide along with the plans. It is important to learn how to read plans and measure based on those plans along with being extremely detailed with the materials that they specify and the installation requirements. Missing a small detail could win or lose you the project. Or if you do win a project and it turns out the material they specified was a much more expensive material than what you had included in your bid, you will be out the difference as you will be required to follow the specification provided.
How to Bid Residential Landscape Jobs
Residential on the other hand is completely up to you as the landscape contractor to create a plan and to bid on the work. This requires some creativity and some knowledge of products to be able to create a plan for the client to approve and for you to base your bid around that. Sometimes clients will come to you with an already created plan for you to bid on. However, these clients are typically shopping around to numerous contractors and depending on the way that they inquire about your services they could just be looking for the lowest bidder as well. If they just email you the plan and ask you to quote them on it, you have not built rapport with that client and they may not even know you and your business and are likely doing this to several other contractors. These are the types of jobs you may want to avoid if at all possible. You want those clients that seek out your company.
Residential is usually less based on the lowest bid and more so on you and your business’ reputation. Building rapport with a client from the moment they contact you to the consultation process and onwards to the end of the project is an important part of the process when bidding residential landscape jobs. You also need to acquire the leads to be able to bid them in the first place.
Bidding Landscape Jobs Using Unit Rates
Unit rates or square foot pricing is the easiest way in which you can bid landscaping jobs. Simply measure the area of the project that you are bidding and multiply by your rate. This will provide you with the amount you are going to bid for that project. The difficult part is coming up with your unit rate for each aspect of the work that you do.
The advantage to using unit rates for your bidding process is that it is fast. The most difficult part is actually being able to come up with your unit rate for the various projects that your business takes on. The unit rate needs to take into factor a variety of things like your labor, overhead, profit, and possibly even material. And you could require multiple different unit rates for the various materials on the same type of project or even multiple unit rates based on the types of jobs.
The disadvantage is that unit rate pricing does not provide you with data that you can revisit and dissect each step of the process while you were in the field to discern where the inefficiencies are in your business. It also cannot provide the same data to improve your bidding process in the office. Additionally, every project is going to be different in its own way. So you would require unit rates for numerous different scenarios for the various services that you provide.
For example, you would not have the same unit rate for installing a driveway that you would for installing a backyard patio. There are different access routes, equipment used, and even materials. So applying the same unit rate to each of those will not be accurate. Then if you are going to take the time to create unit rates for a variety of different installations and the access that you have to those, you are essentially creating production rates which is our preferred method of bidding landscape jobs.
Bidding Landscaping Jobs Using Production Rates
Production rates require time to set up and to acquire the data, but it is the most accurate way to bid landscape jobs while also providing you with data on the backend to evaluate your business to decide where you can improve whether in the bidding or installing process.
Production rates breakdown the process of your installation one measurable step at a time. So this would require you to keep track of the hours it takes you and your crew to complete those steps of the process in the field. For example, if you are installing a backyard patio you would break your production rates into excavation, base preparation, screeding, laying, edge restraint, jointing compound, cuts, cleanup, and anything else you would add in. You may also break down your laying production rate even further to include the size of stone you are laying because they lay at different rates. Same with your access to the backyard which dictates the type of equipment that you would bring into the project. And also with the length of the run that you have from the road to the backyard for the excavation and base preparation.
Production rates allow you to customize the bidding process to your company and to the project. They also allow you to continuously improve on inefficiencies in your process by job costing at the end of each project to compare the actual numbers to the estimated numbers. This will reveal those inefficiencies whether it is in the bidding process or in the field.
You can use your production rates to provide the number of hours that the project will take you. You can then apply those hours to the labor necessary for the project based on their wage or their salary while also adding in a factor for the other calculations for their insurance, bonuses, incentives, taxes, and the cost to train those employees before they become efficient.
You can also use the hours that you calculated to factor in your overhead costs to the project. Your overhead costs are everything that your business pays for that does not stay on a project. Equipment, vehicles, tools, marketing budget, lawyer and accountant fees, phone, and so on all play into this overhead amount. To figure out how much overhead goes into a project, you need to know how many hours per year you have to work. You then divide that by the amount of hours the project will take you. For example, if you have 1,000 hours in a working year and the project you are bidding is going to take 100 of those hours, then it will take you 10% of that year to complete that project so you should be taking 10% of your overhead costs for the year and adding that into your bid.
You then need to calculate the materials necessary for that project and add that to your quote with a markup amount if necessary. You would then add in your profit percentage that you want to make for the work that you are completing by dividing the inverse of that percentage against the total of labor, overhead, and materials. A 10% profit margin has a 0.9 inverse (100% – 10% = 90% = 0.9 expressed as a decimal). If your total labor, overhead, and materials equals $100, then you would divide $100 by 0.9 to provide you with $111.11 which is a 10% profit margin on $100.
Breaking this process down seems daunting, but to create accurate unit rates would require you to do the exact same thing to ensure that you are recovering all of your costs anyways. Production rates just provide that fine amount that will allow you to evaluate your bids during and after the process while also creating a system-based business in the process that allows you to hand off your estimating to anyone with minimal training.
How the Headquarters Software Can Help
This is where the How to Hardscape Headquarters software fits in. This software will act as the headquarters to your project-based business where you are bidding commercial or residential projects. It takes the production rates that you create and allows you to create a quote in minutes that is accurate and allows you to job cost after the completion of the project.
It takes everything that we have talked about through this article and makes it simple and easy to use every step of the way while also incorporating numerous other benefits and features to users including being able to create a budget, add users and give them specific permissions, create a production rate and material catalogue, have a Client Relationship Manager that allows you to track and convert leads, and so much more.
If you are interested in learning more about the How to Hardscape Headquarters software, you can see all of the resources available including course content on learning how to hardscape among several other topics that will help you grow your business.
Or if you are interested in learning more about the bidding process, you can find our articles on knowing your numbers here