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Improve Your Estimates and Your Productivity in 30 Minutes a Week

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Business Advice

Dan dragged his boots through the door of the diner where he was meeting Bill for a quick lunch meeting.  They’d only planned a light casual lunch – no shop talk. But one of Dan’s top foreman had just gave Dan his notice. He was leaving.

“I won’t find a replacement that good in mid-season.” shrugged Dan. “This one is going to sting.”

“What reason did he offer?” asked Bill.

“He got another job,“said Dan, “But he was a different person these past few months. I’d been working him hard, and he kept complaining about getting the worst of the work. He felt his jobs always had too few hours and he was burning out trying to meet the goals.”

“Was he right?”, asked Bill directly.

Dan was quick to answer, “More than I’d like to admit. The wet weather set us back this spring. We’re barely keeping pace with our sales goals and our schedule is off by 3 weeks because of the rain. We’re getting aggressive on our hours to make sure we sell enough work. Probably too aggressive, but we lack a systemized approach to estimating. Job hours differ depending on who quotes the job.  And, yes, we’ve been too aggressive to try to win work lately. That, and the person quoting the work has never actually done the work…mistakes happen. But sales blames our crews. They say we can’t sell jobs because our crews take too long.”

Bill kept going. “But it sounds like you agree, at least somewhat, with your crews. You’re not confident in your estimates a lot of the time.”

“Honestly, yes. It costs us on some jobs, and I hope we make it up on others. We lack consistency. I have 3 people here who put prices together…but give us all the same job to price and we’ll come up with 3 different prices.”

“Sales people are often good with people, but lack experience in the field. Operations people are good in the field, but might not be the right fit for sales.  But when you’re estimating a job, you’re straddling both sides of the fence – sales and operations. But if they’re out of balance, then so is your business. In reality – there is no fence – there is only the customer.”

Dan jumped in. “And nothing good can come out of any mistake on our estimates:

  1. When hours are under-estimated, there’s no money in the job. It’s easy to sell, but I burn out my best field crews trying to hit unrealistic deadlines…or they take shortcuts, and I’m back 6 months later spending 3x as much time fixing issues.
  2. When the hours are over-estimated, we get out-priced. And even if we do win the work, the crews slow down and use up those extra hours. We rarely finished under-budget.”

“So what can I do?”

Bill took a bite of his pie, then looked up to respond to his worried friend. “Naturally, sales wants to keep hours, and therefore prices as low as possible. This will help them sell the job. But your field staff wants as many hours in the bid as possible.  This way, they will finish their jobs on time, without feeling burnt out. Would you agree?”

“Exactly.” said Dan  “And neither side is ever happy.”

“Every company has the same problem with sales and operations. On the surface, it’s a conflict, but can’t you see they both have the same goal?”

“No.” said Dan. “They have the opposite goals – sales wants less hours. Operations wants more hours.”

“They have opposing wants, continued Bill. But they have the same goal.” Bill began to sketch as he asked Bill a few questions…“Your sales staff, would they rather work for a company that’s stable and secure, and can afford to pay them what they are worth, or a company that struggles to meet payroll and could go under with the slightest downturn in the market?”

“The stable company, of course.”

“And would you agree that your field staff feel the same? Do you believe they would like secure jobs where they are paid at the best levels in the industry?”

“Of course.”, agreed Dan.

“Then, “ continued Bill. “Their goals are not different. They want the same thing. In fact you all want the same thing. Everyone wants to work for a busy, profitable company that can not only offer stable employment, but above average pay.”

Bill slid his sketch across the desk to Dan.

Sales vs. Operations:  The Illusion of a Conflict

“What you need, “Bill continued. “Is better communication.”

“Both sales and operations think their goals are in conflict. In fact, their goals are the same, but they think they need to achieve them differently.  What you need to do is align both, not with what they think they want, but on the common goal that they both share.”

Looking up from his sketch, Bill turned his attention again to Dan. “What’s stopping you from bringing those two groups together before the estimate goes out the door? How much would it cost you to bring a foreman back half an hour early on a Thursday to review estimates before they are presented to customers? A 30 minute discussion that will cost you less than $100 can save you thousands. When the people that do the work are involved in planning the work,

  • Hours estimated are more accurate
  • They help plan optimal crews and equipment to reduce the costs and time to complete
  • They help plan better material use that reduces waste
  • They can identify suggestions in the design that could save time and increase value to the customer and/or profit for the company

“The system works. Foremen cannot stretch the hours or else sales will suffer and they will be less likely to hit their production goals for the year.  If you haven’t set production targets for your crews, ask yourself “Why not?”. If you’re not keeping score, you can’t blame them for hardly trying.”

“Your foremen will  also have been involved in estimating the hours, so they cannot just point the finger at salespersons or estimators for underestimating jobs. Salespeople will understand better how to reduce hours by injecting value and productivity into the design (and estimate) instead of setting unrealistic expectations for the crews. Having your foremen help value-engineer your estimates can only bring two things:  a better price for the customer, or a better profit for the company. Sometimes even both.”

“I’ve always wanted to do it,“ said Dan, “We just get…”

“.. so busy.” Said Bill. “I know.  But just ask yourself: Are you really too busy to take a couple hours a month to review estimates? Or are you too busy because your operations people never had a chance to improve your estimates?”

Making it Work For Your Business

To read more on setting and communicating productivity goals for your crews, check out any/all of these articles…

https://www.lmnblog.com/lmn/2011/encouraging-employees-to-think-like-entrepreneurs/

https://www.lmnblog.com/lmn/2010/performance-evaluations-that-work/

https://www.lmnblog.com/lmn/2011/effective-employee-bonus-system/

And hear how other successful landscape companies are making it work in their organizations….

Read how Gelderman’s Landscaping is improving communication and accountability for greater success and profit.

Read how M+S Architectural built an incentive program that works!

The Landscape Management Network is budgeting and estimating software, plus an unsurpassed collection of tools, systems, procedures and processes and online training built specifically for landscape contractors who want to get more from their business. For more information, check out www.landscapemanagementnetwork.com.

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