A PRACTICAL GUIDE TO LANDSCAPE TENDERING

Colm Kenny, landscape cost estimating expert, shares some tips and tricks on how to avoid the pitfalls of landscape tendering

As a contractor, receiving the news that yours is the winning tender on a landscape project can put a rare smile on your face. However, the grin can soon disappear after discovering that your winning tender is the result of an error on your part. With low profit margins required to win landscape work in the current competitive market, methodical and accurate tendering is vital for contractors. Developing and constantly applying a standard set of procedures that reduces the risks associated with quoting for work is important to achieve this success.

It is often too late when contractors discover that the tender sum for the job is too low or that they missed something within the Bills of Quantity (BOQ) or specification, or in fact have overlooked something on site that will have an impact on their intended programme of works. Contracts have been signed, materials ordered or indeed paid for upfront. What can a contractor do then? Walk away from the job? Damage their reputation? Let down their suppliers?

To avoid the consequences of inaccurate quotations and possible business failure, landscape contractors should be aware of the most common and often repeated estimating errors. Thus, they should have or implement a standard set of procedures for preparing and submitting a competitive but profitable tender.

UNDERSTANDING THE DESIGN & SPECIFICATION

If you don’t know exactly what work you are to undertake, how will you know what you are required to quote for? A clear understanding of the drawings and specifications is critical. A typical tender package includes a set of landscape drawings, a works specification and a BOQ. Once you receive the documents examine them thoroughly, highlighting any key pieces of information and make a note of any queries you may have regarding the scope of works or the specification. The specification is the one area that requires in-depth study as it is usually here where important information is overlooked.

If you receive the package by email make sure that you print out all the documents, including the drawings to scale if possible. It is easy to miss some important details if you are scrolling through a PDF on a computer screen. Familiarise yourself with the design, the nature of the works and the specification. I would also recommend that you contact the person responsible for the tender, be it the designer, the main contractor or the client directly. This will give you an opportunity to interact and raise relevant queries with the decision maker who should be in a position to answer any questions you may have. If for some reason you decide not to quote for the works, contact them regardless to thank them for inviting you to tender and ask them to consider you for future projects.

‘By giving them the precise specification the risk to you is reduced as they are fully aware of what they are quoting’

SITE VISIT & INSPECTION

Assuming that the project is ready to go, the next step is to arrange a site visit. Do this during daylight and not on your way home from another job. If possible, arrange to meet the person that invited you to quote for the works. Again, this will give you an opportunity to gather additional information. Bring all the documents with you and walk through the design step by step, taking note of risks such as access dimensions and existing services. A camera is also a useful asset to have at your disposal for recording important pieces of information and recording what risks you identify on site. Investigate your access route to ensure that any required machinery will be able to get in and out, and also examine where you will be able to park and store your materials. All this collected

PHOTOGRAPH BY ZSUZSANNA KILIAN

“Get all your quotes in writing so you have a record of the supply cost. This will eliminate any conflict over money during the course of the project”

information will influence the price you charge for the job. One practical tip is avoid visiting the site when it’s raining as you will only rush if you’re getting wet.

QUOTES FROM SUPPLIERS & SUBCONTRACTORS

Assuming you received a measured BOQ, the next step is to send o a list of required materials to suppliers. You should send the materials list to suppliers you have a good relationship with or have dealt with successfully on past projects. Two or three suppliers are su cient. If possible send the suppliers the list in a form they can edit such as Excel or Word, as it will save time for both them and you. If reproducing the list in a digital format, take care not to omit any items or details.

For soft landscape materials make sure that you read the relevant section of the specification prior to seeking supply prices. The list of materials should include the name, quantity, description, form, pot size and height. For hard landscape materials measured on the BOQ, each item should list the name, a description including dimensions, the volume or number of units required. It is important to note that the BOQ doesn’t take waste into account. For example, the project may include 100m2 of paving as measured from the drawings. However, experienced contractors know that there could be up to 10% waste for cuts, breakages etc. When receiving quotations for hard materials it may be beneficial to receive a quote for the required amount plus an allowance for waste. This price can be used as a foundation for calculating your tender rates. If small quantities of additional materials are required once the project is underway, your supplier may sell you these materials at a higher rate as transport costs etc will be passed on to you. If you have not taken account of these cost, they will eat into your profit margin.

Likewise, when contacting subcontractors to solicit bids do so as early as is possible. Solicit at least three subcontractors for each separate scope of work. Help those who might give your company an advantage by giving them as much information as possible. Give them the specification of the works that you wish for them to quote for. By

“It is important to note that the BOQ doesn’t take waste into account”

giving them the precise specification, the risk to you is reduced as they are fully aware of what they are quoting. Get all your quotes in writing so you have a record of the supply cost. This will eliminate any conflict over money during the course of the project.

Once you have received the supply quotes, analyse them carefully. If you have then in a format such as Excel, it should be possible to compare them side by side. Don’t just look at the bottom line; study the individual items to see where there is a large price variation between suppliers. Are they pricing to spec? If there is a large discrepancy between suppliers, contact the lower priced supplier to see if the rate quoted is correct and to specification. Obviously if you are satisfied that all suppliers are pricing the same materials to the same spec and you are happy to deal with the lowest priced tender, you can use their rates as your base rate when building up your tender rates.

RATE PRODUCTION

Producing a rate for each item contained in the BOQ is the main area where mistakes will be made. Some rates will be too high making you uncompetitive while a low rate may cost you money. Striking a balance is a hard thing to accomplish. The most accurate method to produce rates is to use first principles estimating technique. This process requires having accurate knowledge of all the cost associated with the works. Anticipated direct and indirect costs of the resources required to complete the project as well as your profit combine to calculate the item rate. Direct cost resources include the machinery required, labour costs, materials and also subcontractor costs, while the indirect costs are your general overheads and operating costs. Once you have all the information gathered you will be in a position to produce a rate by tallying both the direct and indirect cost and adding on your desired profit percentage. What percentage you choose is up to you but it should be su cient to give you a decent profit margin to continue on in business. Using this approach will ensure that you produce an accurate, accountable and competitive rate.

TENDER COMPILATION & SUBMISSION

Prior to finalising the tender document a final check is essential to reduce inaccuracies. Review specifications, drawings and notes for any scope of work that may have been overlooked. Once this is done and you are satisfied with your compiled rates, fill out the BOQ careful. The most common errors that occur at this stage are mathematical ones. Ensure that you have not misplaced decimals and that the arithmetic is correct. If possible have someone spot check rates and totals. Ideally every item in the BOQ should have a rate beside it. If you are unable to provide a rate for an item, ensure you inform the relevant person in writing when returning the tender. Also make sure your quote contains complete company and personnel information including.

Aim to get the tender completed in good time to avoid being under pressure. If you are under time pressure you are more likely to make a mistake. Take a copy of all completed documents prior to submission. If you are sending the tender by post get it registered. If you are delivering the documents by hand, make sure you receive a receipt as proof that your tender has been handed in on time. Just like finishing an exam, once you have handed in your proposal don’t dwell on it. Move onto the next one.

IMPROVING YOUR TENDER TECHNIQUES

Like everything else in life, practice makes perfect. The more experience you gain estimating and tendering, the more e cient you will become. Keeping a record of your rates and submitted tenders will allow you to build up a comprehensive rate book. This will save you time tendering for work in the future. After all, any associated costs associated with pricing tenders come directly out of your pocket.

With fewer numbers of landscape projects out for tender, it is more important than ever for landscape contractors to reduce their risk of profit loss and missed projects due to bid errors. Submitting a bid on a project entails taking on considerable risk. The contractor is counting on his tender being complete, accurate, and profitable if he submits the winning bid. By knowing the most common estimating/ bidding errors, the contractor can be more diligent and take the necessary time to review their bids before submitting them.

Developing and consistently applying standard tender preparation procedures can help achieve the goal of having accurate tenders with minimal errors. It takes time and a considerable amount of e ort to develop and periodically review these procedures, but since the risk to contractors is so high, the time and e ort will be entirely well spent. ✽

COLM KENNY, B Ag. Sc. (Land. Hort), M.Sc. Quantity Surveying. Colm is a Landscape Estimating Specialist. He provides cost and implementation advice to landscape industry professionals, technical advisors, contractors and facility management companies.

He can be contacted on 087 288 5016 or by email info@landscapeqs.ie

PHOTO: NICK NORMANN

TIME TO HAND OVER THE KEYS?

Peter O’Toole, President of the ALCI and Director of Peter O’Brien Landscaping, articulates some tough questions or Ireland’s aging landscape construction sector

“I have seen ‘The Family Business’ described as an oxymoron in that a family is all about unconditional love and forgiveness, and a business is quite the opposite”

The recent recession impacted on every part of our economy and the landscape sector had no immunity card to play. Despite hopeful discussions and predictions that many Irish people had built up big reserves in savings and that they would spend a lot of this on renovating their houses and more importantly would splurge huge amounts on their gardens (in lieu of going on that second and third holiday and being less vulgar than upgrading to the new car). It never happened. Contraction in the economy was mirrored in the contraction of size of landscape companies. Ironically, the number of landscape contractors (individuals or companies o ering ‘landscape’ services’) increased, tax compliant or otherwise, incrementally in ratio to the continuation of the recession.

Most landscaping companies are typically owner managed enterprises, having evolved from the owner initially starting up the business and growing it as demand increased along with their reputation. Landscaping, especially on the private garden and small commercial scale, relies on that personal input and control because this is what provides the basic things such as confidence from the client as well as satisfaction on behalf of the contractor (on the understanding that financial gain alone is never enough for a successful business). This scenario naturally leads to company owners remaining in the position of the identifiable individual who must be in charge of all aspects of the business. This was probably brought to light when the recession was hitting hard

“This leads to a lot of continuous pressure on the owner and leaves them forever tackling the present and never affording themselves the opportunity to plan the future”

and individuals who were at the stage of their hard working and successful career, were now drawn back to take up the helm again at a stage when they should have probably been heading towards comfortable retirement. This could be described as bad strategic planning and is an undesirable and unwelcome situation, albeit di cult to avoid in such a business as described. It also allowed others who had not yet reached those mature years, the opportunity to refl ect on their own situations and a chance to plan a di erent strategy.

If the typical landscape company described survives for more than a few years, it generally evolves into a family business. This is naturally the most desirable scenario from the point of view of pride and an extension of family values such as trust, reliability and dedication and all the rewards that follow these. However, I have seen ‘The Family Business’ described as an oxymoron in that a family is all about unconditional love and forgiveness, and a business is quite the opposite. This said, the most successful family businesses, from any sector, are generally those who bring on board high level leadership and business skills with energy and vision from outside. This mix proves to be healthy and combines the best qualities of both sides. If this setup is successfully adopted as a business model there is no reason why the original owner of the company cannot head towards retirement, or go on to explore di erent business avenues, recognising the entrepreneurial skills they possess to have started and run a business in the fi rst place.

Ask yourself the question: are you happy to carry on as the main fi gure in your business for as long as you physically or fi nancially can, or are you better setting up a more stable situation, which doesn’t require your constant input? The latter might present you with a big psychological challenge initially, but would possibly allow you to explore, develop and apply your business in new, more rewarding ways.

This obvious advice is perhaps more important in the situation where there is no possibility or willingness of family involvement in the ongoing business. This leads to a lot of continuous pressure on the owner and leaves them forever tackling the present and never a ording themselves the opportunity to plan the future. Expanding the business ensures a more secure future and rewards the hard work put into it over the years. It can provide a valuable income with minimum input or even a company which has a real saleable value. Failure to plan for this will lead to possible di culties at retirement age, not least being the liability of employees with both the fi nancial and human cost of redundancies.

Prior to the last recession we experienced a boom (nothing new in that cycle) especially in the building sector to which we are closely allied. This led to the obvious situation, where landscape companies expanded in an attempt to supply the ever increasing demand for their services. It is generally discussed and agreed that the same explosion of growth in this industry is not going to happen again, but like the last time, the uncertainty of the future is the only predictable factor ahead of us. It is important that we plan for the future and try to avoid the mistakes of the past.

“Ironically, the number of landscape contractors increased, tax compliant or otherwise, incrementally in ratio to the continuation of the recession”

The most important thing to decide in the strategic plan for your business is to decide what size you want it to be. Avoid growing or shrinking accidentally or by factors outside your control. Decide if you want to remain a small company carrying out work which will allow you achieve big margins or a larger company with a management and business structure which will probably deliver smaller margins on a bigger scale. Don’t be too proud to seek professional advice from such areas as accountants or business consultants who can help develop your business model. Planning and setting goals are basic principles in any business but quite often, landscape contractors are typically ‘too busy’ working to step back and a ord themselves time to carry out these essential core business activities. ✽ .

PETER O’TOOLE

Dip. Hort. (Kew) is the President of the Association of Landscape Contractors of Ireland, a Director of Peter O’Brien and Sons (Landscaping) Ltd and a leading commentator on Ireland’s Landscape Contracting sector.

He can be contacted on

01 845 2555 and peter@obrienlandscaping.com

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