How to charge for Landscaping, Retaining walls, Patios and Outdoor Construction

[Music] [Applause] All right, guys. If you're anything like me, maybe you love running heavy equipment, getting your hands on brand new tools, and making it pay for itself while making you a living. Well, the first thing you got to do is start to understand how to charge for these jobs. So, today we're going to be covering how to charge for retaining walls. And maybe this will help some of you guys out. Before we dive into the video, I need to know from you. Do you even like concepts like this? If you do, let me know in the comments down below or give me a big thumbs up and I'll start to make more of these for you guys. So, without wasting any more time, let's get into it. You know, one of the big problems that contractors face is they get to the end of the year and they have no money left over for themselves, but they don't know where it went. And that's because of overhead. And I promise you, if you give me 25 minutes, I'm going to show you how to allocate every single day on every single job to account for your overhead. What this is going to hopefully do is give you more profits at the end of the year and maybe make your life just a little bit easier. I'm just giving you a warning today, guys. We get really technical. It may not be as fun as some of my other videos, but I really want this to help you guys out. Let me know if it does. All right, guys. I got a text message just came in. All right, read me that text message out loud. First tree job of the season. I totally underqued. I'm working 8 hours today cutting down a tree for about $70 profit. I keep making the same mistakes over and over and over and over. Okay. So, the reason I wanted you to read that is because it happens to the best of us. And today, what we're going to be talking about is bidding and estimating. And Tim and I are going to teach you guys and walk you through a few different jobs we're doing on how to bid retaining walls. Now, the principles that we're going to be taking and teaching you today will be the same for almost any project. Now, about once every 2 weeks or so, Tim and I, even though we can bid these things separately, we take time to go together to test each other's numbers. Is that about right? Yeah. Helps me refine my skills, counterbalance them against somebody else's estimates. So, yeah. It makes you think outside the box a little bit. Absolutely. And so, we're going to take you guys with us. Hopefully, this helps you guys with your own bidding and estimating skills. And if you guys need more than what you get from today's video, go over to Dirt Monkey University. We've got a nine-part bidding and estimating series. It's over 10 hours worth of complete material. And I know that's going to kind of be like chewing on leather for a lot of you guys, but if you don't have someone like a Tim to bounce ideas and sharpen your skills, you need to do this because Keith has been in the business for a long time and you can still make mistakes if you're not watching your numbers. We're going to talk about a number of different principles today. One is micro changes and how important and effective that is. We're also going to be talking about breaking your jobs down into three components, right? which are materials, overhead, and labor. That's right. Right there with you. Yep. Yep. Right on the tip of my tongue, man. Right before I can say them, you said them. Great job, Stan. So, we're going to take you through. Hopefully, this video helps you guys out that are serious about growing your businesses. Make sure you give me a thumbs up and a comment down below. And let's get into how we charge for retaining walls and looking at some of these crazy projects we got to do. Materials, overhead, and what's the third one, Stan? labor thing we're going to talk about with bidding and estimating is what doesn't work. Now, there's some popular bidding and estimating ideas out there. One of them was made by Charles Vandercoy, and God rest his soul, I don't want to disgrace him, but I've studied his stuff, and for my company, it didn't work. Charles Vandercoy, somewhat similar to him, used to say that you should take the material cost of your job and multiply it by 2 and a half to get your project estimate. Let me tell you something. The reason that doesn't work is because your overhead cost and my overhead cost and the next guy's overhead cost doesn't match up. So to be able to cover all that and just by using the material cost doesn't make any sense. So today you're going to go with Tim and I while we do bidding and estimating and you're going to see that we actually break our jobs down into three components. The first component we break it down into is the material cost. You have to factor that in. The second component is the labor. And then the third component is the overhead. And when you have these three unique pieces of the puzzle, you can learn to manipulate each piece. And when you can learn to manipulate each piece, you can also learn to control your profits. So today, we're going to go do all of that and show you a couple different jobs. Tim, have we ever looked at two jobs that were the same? Nope. Now, you're going to hear me talk about a number of concepts today, and I want to make sure that we're all on the exact same page. The concepts are material, overhead, labor, and microchanges. Now, a lot of guys concentrate on controlling their material cost because it's easy to do. It is literally just how many blocks, bricks, stones, what do we use on a job? But see, that's where they go wrong. The second thing that they concentrate on is labor. and they forget about the third thing, which is overhead. And overhead is silent but deadly. Overhead is what kills a lot of guys because they don't even begin to understand how to control overhead. And to help you guys out, we're going to do a very brief overview on how to understand overhead right now. All right, guys. Overhead is kind of like this tractor that I'm sitting on. You've got to allocate for the expense of everything inside your company, whether it's a tractor, a skid loader, a trailer, or even just your attachments. Overhead can also be reflected in paper and the printer. All of these things cost you guys money, and it's hard to allocate those on a job site. So, here's how you do it. The very first thing I want you to do is take last year's total expenses, subtract out all of your material costs. That's things like these bricks, these pavers, remove all of that from your expenses from last year. Then subtract out all of the labor. Remove that from last year's expenses. Everything that you have left over, we're going to consider overhead. And then what we're going to do is divide by how many days you actually work. Not how many days are in the year or how many days that you work, but how many days you work on a job site. So if you work 250 days on jobs, now maybe you guys work like 270 or 80 days, but that's office work. It doesn't count. It's got to be on the job because we're going to allocate the overhead expense to the jobs. That's the safest way to do this. So, if your overhead expense, let's just say your overhead was $200,000 for the year and you worked you worked 200 days out of the year, that means you've got to earn $1,000 per day just to cover your overhead. And this is where a lot of guys go wrong. They don't allocate for that. So, today you're going to hear us talking about time as a reflection of labor and overhead. And you can see where controlling how much time you spend on a job isn't about controlling the labor as much as it is understanding the overhead. Now, this is very brief, but at least this gets us all on the same page. So, as we go forward, when I talk about time and labor, I'm also talking about overhead. But we have a system in place that we always break them down into their most basic components. Material, overhead, and labor. So, let's take a look at this project here. So, we're removing this retaining wall. And of this components of this job that comes to mind is labor. And that's determined by sight access, which there's not much on this project. You got it. They can take the fence out. They'd have to take the fence out here. And then we would get in here and work from above. So, I want to hear very quickly in under 30 seconds. Tim, what is your game plan? Take the fence out, use the miniacs, and work from up here to dig this out. And then what are we building? Two walls again. Just one wall. Where at? Right in the spot of the uh upper wall. Maybe as far back as we can get. Still keep it about 4 ft. Why do we care about 4T so we don't have to do engineering and then dig out more soil and put in geog grid? This is the first time that Tim's heard my idea and it's almost identical to his idea, but I'd like to actually push the wall back a little further and try to sell the customer on the idea that we're going to give them space around their swimming pool. Now, the only reason I want to push it back as far as possible is to give them that space. I don't care about the engineering. We can do that as a line item onto the rest of the project. We now have two different ideas that Tim and I were able to bounce off from each other. And what we'll do is we'll go back to the office and we'll break this project down into how many square feet this retaining wall is, what our access is, which affects our labor and our overhead. And then we can micromanipulate each one of those numbers because we understand and I hope you guys understand that when you make just a 3% change in a project, a literally a 3% change on a project like this will give you 50% more profit on this single job. A 5% change will give you a 75% bump in profit on this job. And if you can make a 10% change on a project like this, you'll gain a 100% bump in profit on this job or double your profits. You know what? You don't have to take my word for it. We actually have broken it down onto realworld projects where we showed exactly how to do that. Exactly. Exactly. Okay. So, I've got my price per square foot in my head. We have to We're going to have all them bushes to remove. um all this tiny pearl rock and um how many cubic feet of soil is going to have to be removed. Okay. On this project, the easiest way to do it is to remove that entire back fence line to gain access to it. And Tim, we have an alleyway back here on this one. Yep. Okay. So, that makes our life a lot easier, doesn't it? Yeah. You can bring and drop materials right here in the yard. Looks like they've got a swale that's a snow swale, but I'm going to guess there's an actual swale back there. So, grading is one of those things that you have to take into consideration when you're looking at a project like this. It's absolutely critical. And I want to show you exactly what I'm talking about. As we look at this grade right here, you can see that they've got this swale cut in. And that's so all the water doesn't run straight off and into the swimming pool. But this swale, I think, could be improved upon. And so this will be one of the options that she didn't call for originally that I'm going to give her when I talk to her. All right. Can take her project and make it better. Give her things that she didn't see, didn't know about. So Tim had a conundrum, guys. The gal he talked to was very uncomfortable with disturbing any soil in that area. Right. She seemed like she did not want to screw up much of the yard. And so Tim was opting to take out one section of fence and then try to skinny in between the fence and the pool and do the job, which drove his labor rate up. And his estimate came in at about $12,000 for that project. Is that about right? That was just for the wall portion cuz all the hand labor that it would take to pull all the blocks out. Yep. Carry them all in. You're not using a big machine to bring them in and out and then to take all that soil out. Yeah. That was Yep. That made my my go way up. Okay. So, I came in and I said, "Let's remove the entire fence, even though she doesn't want to do it, and we can then use equipment and do the exact same job complete, for about $10,000, what I say, $300 or so." So, what I'm going to recommend you guys do is give your customer two estimates in a case like this. One is do the job the way they want it done without disturbing anything, and maybe that jacks the price up to $12,000 or even more dollars. And then number two is give them an estimate doing the job the way that you want to do it where you uh have access with equipment and maybe it disturbs more area. But if it's going to shave 2,000 plus odd dollars off from your project, then the decision is in their ball court whether they want to save money and do it the way you want to do it or whether they want to spend more money and do it the way they want to do it. But by giving them the options, you're leaving the choice up to them. All right, Tim's got us looking at one of the easiest jobs that there is to bid, which is our retaining wall. But in this case, this wall is got really crappy access. What I want you guys to do is start to look at what jobs do you get over and over and over again and start to figure out the numbers that you're comfortable with and then you can almost boilerplate those numbers, but you have to base them contingent upon a few things. In this case, it's access, isn't it? So, here's our access. None. We got a fence and we got a wall and we got to fix it. So, if we have a stock price set in mind, a price per square foot for a retaining wall, we'd simply measure this wall out and then we would add a search charge in this case for the uh the difficulty with the access. So, let's just say, now this isn't a real number, but let's just say it's $20 a square foot to remove and replace the retaining wall with equipment given good access. Because we don't have good access, we're then going to say, "Hey, you know what? We're going to calculate the excavation and the removal separately, see what that comes out to, and then we can flip that back into the price per square foot." So, if we normally do a retaining wall for $20 a square foot, in this case, this wall may be $25 a square foot or 28. All right, one way of doing it. There's other ways we can look at this project, but we might as well boil it down into creating a formula that you can apply over and over again with slight modifications. This looks like it's all hand labor unless this fence can get moved, which on the other side of this fence is a deck. So, I don't think you can get this moved unless we take the deck out. So, even if you do remove this fence, cuz we literally go stand down there and put your arms out. Let's see how much. But you've got a really wide arm span, Tim. T-Rex. No, that's that's like 3 ft. And then tree removal. We've got to take these trees down. can't build with these trees above the wall. So, there's another obstacle in our way. You put a brand new wall right in front of that tree within I don't know how many years you think before the roots start pushing the new wall out. You couldn't even do it. Yeah. You'd have roots in your way. You have to chop them all out. Yeah. And then you don't have room for your drainage aggregate. So, you got to remove the trees. So, the actual HOA in this project gave us the bid for the other contractor minus the numbers. Okay guys,