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

[WestshoreConstruction]

You're right, I don't get it. Maybe you guys can help me understand. According to your statement, you need to earn $125.00/hr/8hr. day to begin to clear a profit. Also according to you, Th mac had 140 hours on it when I left ddivinias place. Getting about an acre per hour.
So, assuming ~ an acre/hr is closer to 0.75 acres @ $170/acre = $127.50 per hour x 8 = $1020 per 8 hr. day. $20.00 above your 1,000 dollar mark. What am I missing?

AS CB said those prices are not right, don't take this as a shot at you but would you go out, work for 8 hrs and put $20 in your pocket and go home thinking your "Making it" ??? Come on, there has to be some logic in the tendering process. If contractor A is X and contractor B,C,D,E, & F are all X+1.5 +- then who is bidding the job right ? I say everyone except Contractor A. Either it be lack of experience or what have you the Person/Persons awarding the tender have to use common sense, why award a contract to a contractor that obviously doesn't know what they are bidding on and in the end it will cost us all money, legal fees to sue contractor A when he defaults, etc not to mention that 10% will now be 10.0001 because contractor A will be kicking his lunch bucket down the road. In my opinion contractor B should be the winner. Now if in this example CB was contractor F and he was X+1.5+- and everyone else was lower than I would say CB bid wrong. I was as well under bid on three tenders but I was the second lowest (Contractor B) and at the price I bid that was not making a pile either. The awarding officer even told me he doesn't know how they will complete the projects in the amount as bid. To get back to the $$$$ I will not start my machine if I'm not making at least 15% on a job, We haven't invested that kind of coin to work for free.

 

[wroughtn_harv]

Life in the city when you're this close to the country, or, welcome to contracting when times get lean....

Some people bid low because they're novices and or think making wages or better is good enough.

Some people bid low because they believe everyone else bidding is wanting to get rich off of one job and are bidding twice what they should.

But the cold hard facts is low bidding will always be with us. There is always someone willing to cut quality or whatever it takes to bid less. When they fail or are run off someone will bid even less because it's obvious the first bidder was stupid.

Then there's the other side of the coin when times get like this. That's the contracting firm doing the squeezing to make sure you're not making one more dime than is possible.

I've dealt with telcos and government entities. Invariably when times get tough they get tougher on their contractors instead of giving them some slack.

From my experience I would say that it's going to get worse for all the contractors. Cinch up your belt and prepare yourself.

 

[Cat_Driver]

PROFITABILITY SCENARIOS



INCOME

Income per acre $170.00
Acre cleared in a 8-hours day 6


EXPENSES

Bare business
Bare business hourly cost $26.84


Labor
Operator hourly salary $35.00
Maintenance hourly salary $35.00


Other cost of a standard job
Standard job hourly cost $-


Insurances for carrier
Monthly insurance charges $150.00 <- over basic business insurance but apart from mulcher insurances
Insurance expenses per hour $0.94

Carrier
Carrier hourly cost of operation $12.45

Fuel
Fuel comsumption (gal/hour) 4
Fuel cost ($/gal) $5.00
Fuel expenses per hour $20.00


Insurances for mulcher
Monthly insurance charges $200.00 <- over basic business insurance and carrier insurances
Insurance expenses per hour $2.08

Mulcher Scenario 1
Mulcher used Your mulcher
Mulcher hourly cost of operation $18.55
Productivity 100%


PROFITABILITY
Scenario 1
Your mulcher

Your income then would be : $1,020.00 per day
$127.50 per hour


Your total expense would be : $88.08 per hour

Profit would then be : $39.42 per hour
$315.33 per day
$3,784.00 per month
$45,408.00 per year

 

[Cat_Driver]

PROFITABILITY SCENARIOS TWO



INCOME

Income per acre $170.00
Acre cleared in a 8-hours day 4


EXPENSES

Bare business
Bare business hourly cost $26.84


Labor
Operator hourly salary $35.00
Maintenance hourly salary $35.00


Other cost of a standard job
Standard job hourly cost $-


Insurances for carrier
Monthly insurance charges $150.00 <- over basic business insurance but apart from mulcher insurances
Insurance expenses per hour $0.94

Carrier
Carrier hourly cost of operation $12.45

Fuel
Fuel comsumption (gal/hour) 4
Fuel cost ($/gal) $5.00
Fuel expenses per hour $20.00


Insurances for mulcher
Monthly insurance charges $200.00 <- over basic business insurance and carrier insurances
Insurance expenses per hour $2.08

Mulcher Scenario 1
Mulcher used Your mulcher
Mulcher hourly cost of operation $18.55
Productivity 100%


PROFITABILITY
Scenario 1
Your mulcher

Your income then would be : $680.00 per day
$85.00 per hour


Your total expense would be : $88.08 per hour

Profit would then be : $(3.08) per hour
$(24.67) per day
$(296.00) per month
$(3,552.00) per year

 

[Eagleview]

Don't forget things like advertising , business cards , work cloths , phone book listings , depreciation , owning and running a support truck and trailer and costs of commuting to job site or motel accommodation , costs of replacing hoses and teeth etc . And after the five year loan is paid out , your left with worn out machinery that is worth nothing and it needs to be replaced . Where do I sign up ?

Also keep in mind that insurance , registrations , loan interest etc. costs 24/7 , not just when the machine is running .

 

[Robbie Hegwood]

Well done Cat Driver. I was working on that same thing, The sad part is those numbers are still conservative. Like Iron said that didn't acount for the truck or trailer to move it.
Plus those numbers are not factoring in any down time time due to breakage.
Someone asked this. The reason I was talking about 2 machine's was for the Alabama job of 1200 acre's. If you can clear 4 acres a day that is still 300 working 8 hour days. After breakdown's, rain, holidays (government land and family), and low productions days. You will have to use 2 machine's to finish in 1 year.

 

[PILOON]

Really want to see bids all over the place?

Look at snow remouval contractors!
Always a new guy on the block that thinks one tractor or one truck will make him rich real quick.
They come and go and change every year but then the consumers are also to blame as very often they don't look at quality work, just cost and often switch for mere 2-3%.
Real zoo and lots of upset consumers.

 

[SSP&M]

$170 per acre for mulching!!! all i can say is wow. This is crazy...its happening in our area too. not quite that low though. You cant mulch for that and do even a somewhat of a good job and then come out to the good on top of all that.....man its just simple math and it dont work. One break down and its gone.....and everyone in the mulching business knows that its not "if" its "when" am i going to break something....$300 hyd hose, teeth, track/undercarrage, fire damage, etc.

 

[Eagleview]

It really doesn't sound like a viable industry to be in over there . In Australia , they charge by the hour . Charging by the acre can't work as there are too many variables . What happens if you come across a huge wind blown tree laying in the scrub , it could take hours to mulch that one tree . Which trees are to go and which trees stay , It is impossible to see every inch of a property when quoting , sometimes the scrub is impenetrable or the risk of snake bite is too high to walk through it all . Also little triangles and odd shaped pieces of land bounded by a creek or escarpment etc makes it very difficult to work out how many acres you are dealing with and the owners will NOT be 100% truth full with you (unless it is going your way). Over here it is by the hour , a skid steer with a head gets around $150 per hour , a 260hp Fendt tractor with an FAE head gets $400 per hour and a PT400 gets $500+ per hour . A tree lopper over here gets $3300 per day for an 18 inch chipper . Every one knows where they are at with a clock , it is easy for all concerned to keep an eye on the hours .

 

[tlbuser]

My direct costs not my profit are more than these guys are bidding. I have done the math and at GOVERNMENT MANDATED pay rates and other considerations like insurance, fuel, machine replacement maintenance and repairs you need to make $1,000 per day before even a penny goes in your pocket.

Yeah, $1200 gross a day is minimum with a skid steer...more for a larger machine.
And the comparison on an acre at ddivinias and an acre in the south are two completely different types of brush/trees. ddivinias place looked like spaced out cedars and the southern acreage sounds like very dense growth.

AS CB said those prices are not right, don't take this as a shot at you but would you go out, work for 8 hrs and put $20 in your pocket and go home thinking your "Making it" ??? Come on, there has to be some logic in the tendering process.

This is where the mulcher math gets interesting. CB said he needed $1,000/day to cover all costs. Then Quickdraw says $1200/day isn't even enough for smaller equip. I was using the numbers I was given to make a real comparison to what was covered in the topic. "The other guy can't do it for that amount. Yet, the two of you are hundreds of dollars apart on what it costs to start the day, no profit.
Would I work for $20/day profit, maybe not, but what about the hourly wage set forth in the contract? As an owner/operator I'd be paying that wage to myself plus the $20.

Plus those numbers are not factoring in any down time time due to breakage.
Someone asked this. The reason I was talking about 2 machine's was for the Alabama job of 1200 acre's. If you can clear 4 acres a day that is still 300 working 8 hour days. After breakdown's, rain, holidays (government land and family), and low productions days. You will have to use 2 machine's to finish in 1 year.

Yea, CB said his $1000 included maintenance, repairs, replacement, insurance, etc.

The biggest difference is how everyone, when selling, says how great their equipment is and what great production numbers they have. Then when it's down to a numbers thing, the production numers go from ~ 1 acre/hr to less than .5 at best.

Am I surprised that you guys can't agree, nope. That's why I never got into that business. Way too many variables and a tad too much hype.

Similar problem we all have, when to decide to accept a contract bid and when not too. So, go ahead and be mad at them for trying to do their job by the rules given.