Who are these CRAZY contractors????????

[tlbuser]

It really doesn't sound like a viable industry to be in over there .

Agreed. You should be one of those philosopher type guys. Ever see Jason Robards in the movie "Max Dugan returns"
I missed what you said earlier about the defaulting contractor paying the tab for the job. Sometimes we get into that here with performance bonds, usually on the actual building though not site work.

 

[Renze]

Me thinks they are trying to get locked in to a long term contract later and then charge $15,000 for a toilet seat.

Thats common practice in bidding contracts. I have worked in structural steel construction, they won a bid on a newly built hospital, their bid was the cost price based on a per ton basis. (they didnt even calculate the work)

The profit came in through the small additions that werent included in the bid, like stainless steel stair bars, some balcony fences and some steel for additional support for an elevator. Those jobs were given to the company that did the main work, but was given a much higher per hour price than they calculate the bid with... Its common practice for the big guys, this is how the system works.

However, a big guy bidding low to get an entrance for his other service, is killing the smaller one man businesses that only do one type of work....


Also, how often do these guys know someone in the organisation they are bidding for, and put a dirt cheap bid on the table, and get the other half under the table ?

 

[QwikDraw]

And yeah, at $1200 a day the ASV was not profitable. CBs machines hold up better and cost less in the long run to work.

So the two guys here that don't do this for a living know more than the three that do...interesting.

 

[Pops15]

I read this topic last night and found it interesting. Not because I'm in that business but because I'm a contractor and I've had government (military) contracts.
Some random thoughts about this topic...
No one, and I mean NO ONE knows the costs involved in running a business better than the guys that have been in that business for a long time. If a guy says he needs $1000 a day to operate then he likely needs a $1000 a day. No sense in telling him he can work cheaper.

Government mandated pay rate (prevailing wage) does not apply to what a sole prop pays himself. He'll need to pay his help what the government says, but he can draw however much or however little he wants. That might be one reason guys are bidding so low. They may be willing to pay themselves $10 or $15 an hour....or maybe nothing if they're desperate enough.

One guy says he won't start his machine unless he can make 15%. I don't blame him. On the other hand there are guys that NEED to keep their machines running to cover the payments. Look at it this way...advertising, insurance, loan payments, office expenses, license for the trailer and tow rig, etc, etc all need to be paid whether you've got work or not. Some guys don't have the luxury of being able to afford to let their equipment sit until they can find work that will ensure the margin they want, so they work cheap hoping to get by until things get better.

After reading several topics about the mulching business I'm glad I'm not in it!

 

[Pops15]

Thats common practice in bidding contracts. I have worked in structural steel construction, they won a bid on a newly built hospital, their bid was the cost price based on a per ton basis. (they didnt even calculate the work)

The profit came in through the small additions that werent included in the bid, like stainless steel stair bars, some balcony fences and some steel for additional support for an elevator. Those jobs were given to the company that did the main work, but was given a much higher per hour price than they calculate the bid with... Its common practice for the big guys, this is how the system works.

However, a big guy bidding low to get an entrance for his other service, is killing the smaller one man businesses that only do one type of work....


Also, how often do these guys know someone in the organisation they are bidding for, and put a dirt cheap bid on the table, and get the other half under the table ?

I know a guy that had a contract for the mechanical systems on a factory addition. He low balled his bid. Once he had a signed contract he turned in a bill for over $150K in extras...before he had even started work!

Don't know how much the under the table deals happen. What I've see is the big jobs are bid competitively and the smaller jobs are negotiated.

 

[cbturf]

These contracts are "firm fixed price" there are no change orders here. Each contract is a stand alone deal having one makes no difference towards getting another. These guys that I am talking about have no idea what a 1200 acre job takes, they over estimate what their machines can do. Like I said in one proposal last month "If a guy is currently working with two CTL's with Gyrotrac heads and getting two acres per day, why should I think that i can show up with two CTL's with Gyrotrac heads and clear ten acres per day." The machines are the difference, Palmetto told me he had $90k worth of warranty work done on his ASVs. I have done cheap work, we all have, but my cheap work was where there were only 80-100 small trees per acre and I spent more time commuting from tree to tree than I did actually grinding. These places are thick though I have been in the jungle in Panama and it was in the same ballpark with the job in SC and TX. I have learned the hard way how difficult this business can be and with a lot of help from Fecon and others I have started to do well. But even when I was new I would NEVER work for $200/acre. Like I have said before I can go broke sitting on the couch watching Oprah why leave my family and bust my tail for the same result.

 

[Robbie Hegwood]

This is all disheartning news to here. I have been studying a few contract lettings and this will shock some, probably not CB. To protect some interest I will be vaige but a recent 200+ acre job with roughly the same requirements went for $190.00/acre. The sad part is there where 10 other contractors lined up behind him for $300.00 / acre or less. This was not all easy mulching either.
A trend I see as well is the big contractors with large equipment do not have the work they used to either and are getting into the little jobs. The problem is they can actually profit more due to the speed of there machine's. So it is severlly hurting the smaller operations.
There is no real solution.
1. Poor economy
2. Too many mulching contractors (mainly startups)
3. Some contractors not doing accurate cost breakdown
4. The people awarding the contracts with (I don't care attitudes) if they default

Smarter mulching is the word today!!

 

[Timark80]

The same bs bidding is going on here in my area.A few weeks ago some dirtbag underbid me on a 100+ acre pine plantation.
The low bid was $240 per acre!
I can understand if you want to mow someones lawn for $240 an acre but when it comes to mulching 3"-5" inch brush so thick you can't walk through it $300 an acre is my bottom dollar.This is high and dry no mud.
The low bid should have been closer to $400 per acre.

 

[AlanB]

CB, even the firm fixed price contracts usually have wiggle room when they are that size and when they get going they "relook" etc. etc. and somehow come out ok.

We struggle with this constantly, one thing is how you read the wage grade job descriptions and how they apply. Some contractors just flat do not care about them, pay their guys what the guys will work for, and hope not to be caught. Sometimes they could be using a different wage grade then you would even think had anything to do with it, maybe he decided that instead of an "Mulching equipment operator III" (I am making stuff up that seems obvious to you that is what your guys are, he bid it to pay as landscape worker -4 who pays money for the joys of being here working. I have seen this get real screwy (PM me to hear the back story on my employment)

Last one I bid that drove me about nuts, 5 of us bid, 3 of us, all know each other, bid against each other fairly regularly, 76K, 77k, 78k I think I was middle, the difference was slight pencil sharpening here or there, another out of towner took a flyer at 126 I think it was and the guy that got the contract got it at 33K. Still upsets me when I think about it.

I still do not know how they got by with it, but they did not do what was in the contract (yes, I watched closely) but they still got paid, plus I believe they got some change orders through.

I guess at this point I am just ranting but if you ever do figure it out, let me know.

Last contract I was on for the previous 17 years or so, the company I work for lost. Was told, and I believe it that the winning company one with a bid with 1% profit. (multi million dollar contract) but still 1% is a mighty, mighty narrow margin. Rumor has it that same company got the contract I am working now as well

Another deal at times is to do substandard work, say it is done, then argue to get paid, or go in and do the cream, get paid and roll out on the difficult stuff and declare bankruptcy, put another letter on your sign, bid higher on the rebid. I have seen that happen so much it makes me truly sick, then have contracting explain to me that "they are a different company" and I am pointing out that the letters stuck on thier truck sign are peeling off showing the old company name still and the same guy is driving the same truck and they "won" the contract to fix the building that "they" had built. Urrrghghhhhg

Let me know if you sort it out.

 

[ClearViewGroup]

the lowest we ever charged per acre when we were in the business was $1,000....I cant understand how they do it for what they do it for...even at $500 an acre it seems crazy....compare what traditional land clearing contractors charge....an acre goes for $2000 around here....sheesh....$170 an acre wouldnt even get me outta bed in the morning...