This blog was originally posted by TBG & LMN CEO Mark Bradley on Landscape Trades.
Unbillable time is one of those things that every company gets far too comfortable with, because it happens every single day … and it’s easy to hide. Unbillable time isn’t just limited to overhead staff, either. The time you spend estimating, accounting, fixing equipment, selling; none of it is passed to a customer. Unfortunately, that’s not even the worst of it.
The worst kind of unbillable time are the hours spent by field staff that don’t generate any revenue. Not only do those hours cost payroll, they are lost opportunities for sales. Every hour wasted not completing jobs or contracts are lost opportunities for sales. And in landscaping, lost hours and sales are two of the most precious things we can waste. We have a limited season, and we have a shortage of skilled workers. Wasting field labour hours on unbillable time might just be the most expensive error you can make.
Consider the difference between these two companies:
- ABC Landscaping has three crews of three persons each, doing design/build/install work. They generate about $1.2M in total sales from their three crews. When tracking their unbillable time, they find that 25 per cent of payroll hours go to unestimated, unbillable tasks.
- XYZ Landscaping has the same number of people and crews. However, they’re more efficient; only 15 per cent of payroll hours are unbillable. If their crews could build jobs at exactly the same speed as ABC’s staff, XYZ would generate about $1.37M in sales — a 15 per cent increase in revenue and productivity with exactly the same payroll, equipment and fixed/overhead expenses.
XYZ is going to be a lot more profitable than ABC at the end of the year. And XYZ is also able to bid cheaper and make more profit, since overhead, payroll and fixed equipment expenses are a smaller percentage of their overall revenue.
Here are some ways to reduce that unbillable percentage, so we can bid more competitively and earn a fair profit:
Communicate and plan at the end of each day.
Getting feedback at the end of each day not only builds more accountability, it gives you time to think/plan/react and adjust to incoming information. When seven different people are coming at you with seven problems at 6:30 in the morning, you don’t have time to react properly. You make snap decisions that are often just the least-worst option. Crews should phone or email (email is better since it’s documented) a status update each day, just before the end of the day. This gives you more time to adjust to changes and formulate a better plan, so you hit the ground running in the morning. If you’re looking for a proven method for end-of-day communication, download the free 4 o’clock 4 app on either iTunes or Google Play to improve end-of-day communication. Insist that all your foremen/crew leaders submit their report by no later than 4 p.m. each day. I know you’ll be surprised at what one email a day can do for your business.
Create job planners.
Equip your crews with complete lists of estimated hours, equipment and materials for every job so they can make timely requests for materials they need for the next day, or the day after. Institute a daily deadline (try 1 p.m.) where all material orders must be in to the office, or to your vendors. This will reduce the number of hours crews are forced into “make busy” work, while waiting on materials to be delivered.
Add loading and driving hours to time estimates.
You might be asking yourself, “What does it matter how I recover load and drive time, as long as I do it?” You can recover this time as estimated hours, or overhead hours, or even by adding an unbillable percentage to the cost of your labour. All those methods will recover the costs,
but only one actually helps to reduce unbillable time.
By accounting for load/setup/driving/cleanup time in the hours estimated for each job, you are actively tracking and getting timely feedback on those hours. If a crew knows it has 150 man-hours to get a job done, and every hour spent at the yard or driving is counting down their available hours, they’re far more likely to be inspired to plan better, move faster, and reduce stops on the way. If your jobcosting doesn’t start until they get to the site (which is what happens when you don’t include loading/driving hours in your estimates), it’s too easy for that time to just vanish into a massive pool of unknown, unaccounted-for hours.
Although you can only estimate a.m./p.m. prep time in a design/build/install environment, you can include drive time in maintenance estimates. Counting drive time against the next or previous maintenance job will almost certainly increase urgency to get to the job, and reduce stops
along the way.
Stocked, organized trailers.
Fully stocked and labelled trailers reduce time wasted loading and unloading, but more importantly, they prevent forgotten items and wasteful trips back and forth to vendors or the shop. If you’re losing a couple of hours a week to vendor or shop runs, it’s less time on-site completing work — which is reducing your sales. You will also find there is less planning, juggling and forgetting when crews have their own dedicated sets of tools — and they tend to take better care of them as well.
Fuel tanks at the yard.
You might pay a bit more for fuel, but you’ll save countless unbillable hours waiting and fueling at busy gas stations in the morning. Plus, only one person needs to be clocked when you’re fueling at the yard. One crew member can stay a few minutes later to top up your tank while the others clock out for the day. Crews who stop on their way to jobs have everyone in the truck clocked in — it’s expensive on payroll and costs you valuable minutes in the morning or on the way home.
Start earlier.
Starting earlier in the day typically finds fewer commuters on the road, so you will spend less time idling in traffic.
Daily inspections and regular maintenance.
It’s frustrating for everyone to get to a jobsite, only to find equipment or tools don’t work like they should. Daily inspections and regular maintenance schedules will help reduce the number of times your crews get caught with under-performing or unsafe equipment. You can save a few dollars skipping maintenance, but the costs to your productivity add up in the long run.
