– Productivity is important in any business, and there are several ways to measure it. But the best way is to keep it simple, clear and actionable. For the green industry, that means measuring the hours—the ratio of budgeted hours to actual hours, that is. If 100 hours are budgeted for a job and it gets done in 90 hours, then productivity is at 111 percent. If it takes 110 hours to complete the job, productivity is at 91 percent.
Measuring hours means setting up estimating and routing systems, so labor budgets are clearly understood on the front end and tracking systems are in place to keep up with actual hours on the back end.
Most landscaping professionals base the labor portion of their estimates on production rates. For example, installation of a 3-ft. caliper tree might have a production rate of 3.5 labor hours, which includes digging the hole, moving the tree from the truck to the hole and planting the tree. Ten trees will require 35 hours of labor plus hours for travel, preparation, demolition, mulching, staking, cleaning up and watering. Sources for production rates include the Professional Landcare Network, other publications and websites. Modify these based on your specific market and capabilities.
If you’re pricing in a way that doesn’t show labor hours easily, there will be no way to track productivity. For example, some organizations estimate based on unit pricing, i.e., pricing 3.5-ft. caliper trees at $750 or another price they believe is competitive. This method shows no labor hours.
Creating a process
The hours associated with these estimates ultimately must go from sales (whoever estimated the work) to administration and production. Administration can set up labor-tracking systems and input the budgeted hours from the estimates as part of its standard new job process. Also, admin needs to be aware of sold work for billing and job costing. Software can facilitate this tracking, although simple spreadsheets work. Production staff need the hours so they can hold their crews accountable, and they need the hours to know how to schedule the work. As hours are worked, production inputs the hours on the tracking tool, so it can generate productivity reports.
Setting up these systems isn’t complicated. Keeping up with imputing data is the difficult part, but it’s worthwhile to know how to correct and improve performance and projects. As jobs are completed, the productivity numbers indicate if the estimated hours are more than or less than what was projected.
With construction, look for trends or patterns. There might be a pattern where jobs heavy in sod (or some other function) have poor productivity. If so, the crews need help with their production methods in the field, or the production values being used in the estimating process are too low. Either way, you can fix it, but only if you know the numbers. You might find poor productivity isn’t related to a function, but it’s related to a salesperson, an estimator or a crew. If someone’s jobs are consistently over budget on labor, he needs help estimating. If a crew struggles to hit good numbers, it needs training.
Maintenance estimating also uses operational values. There are plenty of published values for mowers of difference sizes. Edging hours can be based on the lineal feet of the edge path divided by average walking speeds. Other functions, such as string trimming and blowing, require some judgment. Again, there are published values, but there’s huge variability in how this gets done. There’s even more subjectivity for pruning and leaf removal; however, there still can be a baseline expectation for labor hours.
Over time, labor-tracking systems will show actual maintenance hours for the jobs. If the productivity metric is consistently high (more than 100 percent) for a particular job, decrease the budgeted hours for the next season. This is a profit opportunity you’ll want to lock in. If the metric is low (less than 100 percent), analyze routing, equipment use, training issues, job scope and scheduling. There might be opportunities to increase productivity in any or all of these areas. If not, there’s a business decision to be made about the price of the job. It’s time to ask for an increase.
Keeping productivity at 100 percent or better is important to being profitable. It’s no secret we work in a labor-intensive industry, so driving results is a matter of understanding, tracking and reacting to productivity.
Gandy is a partner at Envisor Consulting. Reach him at email@example.com.