It happens all the time and it’s probably happened to you: You’ve sold a landscape installation to a customer and thought you’d covered everything necessary to get the job done. But as soon as the project starts, other things begin popping up. Perhaps the client has a few gift plants that she wants planted, and then there’s that overgrown shrub that wasn’t visible before and now needs pruning. And maybe those shrubs you just planted should be moved over a little bit to the left.
Not a big deal, right?
Multiply the time spent by the number of changes over the course of a landscape installation and you might be losing money. This is “scope creep,” a term first coined by the IT industry to describe the tendency of a project to include more tasks than originally planned without further compensation.
Scope creep is tricky. Sometimes the client is one of those people who has to get as much as possible for nothing, or he’s just plain picky. Sometimes it’s just unexpected stumps or buried debris, storm damage, changes in availability of materials, etc. Whatever the reason for it, scope creep can be difficult to manage. No contractor wants to seem like he or she is being petty – and yet these tasks add up. Do you discuss the cost of each item as it comes up or simply add them all up at the end of the job when the bill is presented? Either way it can be cause for misunderstandings and possibly hard feelings. It’s wise to be prepared for changes that inevitably appear along the way, as an installation rarely progresses exactly the way you think it will.
Plan Ahead
The wise estimator will do his homework to avoid surprises. A lack of attention to detail can lead to disastrous consequences. Will fill be needed after tree and shrub removal? Will additional trips to the job incur extra charges? How will you handle stumps and other hidden obstacles? Is your client hard to please? Develop a checklist that you refer to during your estimation work.
Peggy Hung, a San Francisco-based designer, itemizes tasks in a detailed, standard list. “Then I add any customized tasks specifically for each project,” she says.
Some contractors will add in an amount to cover the possibility of some or all of these factors affecting job cost.
“Everyone spending money with a contractor wonders if they’re getting a good deal,” says Steve Hansen, owner of Hansen Landscaping in Castro, Calif. “We price our projects with enough profit to afford to not have to nickel and dime the client once the project starts. Then, when little things come up that could have been a legitimate change order, offering to handle it at no cost helps the client justify their decision to hire us. For requested items at a higher cost, we prepare a change order.”
Communicate with the Customer
Make sure the customer knows what you’re including. It’s hard to put too many details into a proposal or contract. The contract should include a statement, such as, “Any alterations or deviations from the work, specified above, involving additional labor and/or material costs will be performed only upon written order from the owner and will be an added charge to the agreed amount.” It’s also possible to include a statement that up to X number of hours of supplemental labor are included, if necessary, and there will be a charge of $____ for every hour of extra labor beyond that. But be prepared. Some clients will be determined to get that supplemental labor performed.
If you decide to not charge for a small change, tell the client at the time that the extra service is requested that you usually charge for extra tasks, but you’ll do it this time as a favor. This establishes that it is a favor, and that there will be a charge for any other services.
Hansen includes a list of exclusions in his contract. “Later, this might save the client from thinking something was included that wasn’t,” he says. “People tend to be optimistic that the project includes everything. The exclusion list includes items discussed as an option but not part of the contract, and it’s as – if not more – important than the list of included items.”
A final inspection of the site before beginning the project should always be done, especially if the project has been delayed since the original contract was written, or if it’s a newly constructed building.
Managing Job Costs
If you’re aware of how an installation is going, you’ll know if there’s room for some flexibility in your treatment of problems or requests that come up. If your materials or labor costs are running lower than expected, you might be more open to throwing in a few extras; but if you’re over budget, you obviously won’t be as willing to be as magnanimous. Still, you can’t judge this until you’re aware of where you stand, so review your current cost situation as often as possible. If you’re not on-site or ordering materials, make sure the person who is there keeps you informed. It’s just as important to know what the extra cost of additional labor, material, delivery, etc., is when pricing a change in the project. If possible, don’t give an off-the-cuff price. Tell the customer you’ll be in touch as soon as you’re able to check the cost.
Change Orders
When the requested service or product goes beyond a minimal change, it’s time to write a change order. Similar to the original contract, a change order doesn’t have to contain all of the components. The essential information is the description and price of the add-on or deletion, the terms of payment and the signatures of both parties. Some contractors add an “administrative fee” to additional work in order to cover the cost of a separate delivery, set-backs in the schedule, etc. Others simply add the additional costs into the price, especially if line item pricing hasn’t been included in the original bid.
Nancy Wise, vice president of administration of Wise Landscape in Kissimmee, Fla., has been in business for 20 years. She still finds it difficult to maintain a balance between customers and cost. “To keep the customer happy without being taken advantage of is a major issue that most landscape companies deal with,” she says. “We really pay attention to changes and create change orders on a regular basis. We have the client pay for the change order immediately after the change has been completed. This tends to make them think about changes before they request them.”
Pricing deletions can be just as important. If you’ve already ordered materials and had them delivered to the job site or your business, you have extra costs for moving, storage and/or maintenance until you can sell them to another customer. A restocking charge can be used to cover these additional costs and an explanation of the charge can be included in the change order, if necessary. Adding a restocking charge can help your customer understand your cost of making the change and, hopefully, will discourage more deletions.
Enough is Enough
There’s a point in every job when it’s wise to consider how far you’ll go to make the customer happy. If it seems the changes are unending, you might have to wrap up the job by telling the customer you have another job scheduled with a deadline and they might need to find someone else to help them. If the customer is displeased and the result is a slightly smaller final payment, consider whether it’s worth it to move on to a new project which might be less demanding and more lucrative.
Opportunity Knocks?
Managed correctly, scope change can turn out to be the source of additional work – and income.
Joel Lerner, who also owns Joel Lerner Environmental Design, has faced clients who add subtle changes to the scope of a job as it progresses. “This type of client can be a cash cow for a company or can zap a company’s creative energy, depending on how your company frames the conversation and contracts the job,” he says. “Landscape professionals should clearly state that all changes must be in writing and a fee will be charged for additional work. It’s not the client’s fault if you give away your work for free – it’s yours. The client is simply trying to get the most for his money. It’s your job to set the policy that you can’t work for free and stay in business.” PLD