06 / CONSTRUCT
FROM SPECULATION TO RE-EvALUATION Landscape quantity specialist, Colm Kenny explains how contractors can improve profits with smarter pricing
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here is little doubt that the past 18 months have been among the toughest for Ireland’s landscape contractors since the banking crisis sent the economy into freefall in 2008. Demand for landscape services fell away as the economy stuttered to a halt. The wider Irish construction sector was left littered with abandoned building sites, and large infrastructure projects quickly became a thing of the past. Industry rates came under relentless pressure as contractors chased an ever-dwindling amount of work. Furthermore, landscape contractors who had predominantly engaged in construction activities attempted to stabilise their businesses by tendering for contracts in the maintenance sector. As a result, rates decreased across the entire industry.
CURRENT MARkET STATISTICS The landscape industry has always been viewed as a poorer relation of the construction industry. Having little information and statistics available on the value of the landscape contracting industry, the only way we can gauge the level of activity in the market is to look to our construction industry cousins. The Central Statistics Office’s latest report of Production in Building and Construction Index is the first point of call when attempting to measure activities. This report, published in August, recorded a 16.6% increase in civil engineering activity and 6.9% increase in non-residential building. The volume of output in building and construction was recorded as being
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1.9% higher in the third quarter of 2013 when compared with the preceding period. While there was a decrease of 7.4% in the volume of residential building, the change in the value of production for all projects was up 3.6%. Ross Carew, Executive Secretary of the Association of Landscape Contractors of Ireland, commented that “the mood of a wide range of our members across the country is one of cautious optimism with numerous members experiencing a rise in the number of enquiries
“The landscape industry has always been viewed as a poorer relation of the construction industry” and projects commencing on-site in recent months, and hopefully with the introduction by the Government of the Home Renovation Scheme, it will lead to an increased level of work and create more direct new jobs for our members over the coming months”.
TIME TO RE-EvALUATE Looking at these recent figures you would have to feel positive about the future. The economy is improving and hopefully, with the increased demand for homes and the recent home improvement tax incentives offered by the government, more homeowners and homebuilders will create an increase in demand for landscaping services. As we begin to embark on another year, it is now the ideal time to re-evaluate
HORTICULTURECONNECTED / www.horticulture.ie / February 2014
your rates to make sure you’re still competitive, but not at the expense of your profitability or ability to provide high quality service. In order to reassess your rates you must calculate what your current business overhead costs are. Ask yourself have certain costs, such as insurance, increased? Have certain costs, such as staff costs, reduced? Once you get a clear picture of what your current overheads are, you’re one step closer to becoming more competitive. You may find that your overheads have actually increased in the last 18 months but you have failed to take this into consideration when tendering for work. You might have been wondering where all your profits have disappeared from the job that you thought was a lucrative one. There has been a high level of frustration within the industry over the last number of years with low pricing, especially on some of the larger contracts that were up for tender by local authorities around the country. But the truth of the matter is that these contracts were won by companies who know exactly what their overheads are, have found methods to reduce those overheads and understand how to charge for them. The companies that won the contracts are still in business so all we can do is presume that they are turning over some level of profit. And something else you should keep in mind: a company’s overheads will change over time and no two companies have the same overheads. That is why it is important for landscapers to review their costs on a constant basis.
