March 1, 2019
How fast is production?By Mark Bradley
Production rates are key to good estimating and continuous improvement. But they are not easy to establish. I’m sure that’s the reason any time I get together with a group of contractors, production rates are a common topic of discussion.
A production rate is a measure of how long it takes to do a specific task. They help us estimate better because they convert a measurement to the time it takes to complete that task. Common examples might include tasks like:
- Line trimming 1,000 ft. = One man-hour
- Planting five #5 pots = One man-hour
- Checking nine irrigation system valves
- = One man-hour
Why should I use production rates?Production rates are critical for a host of reasons. First and foremost, they make estimating more predictable and accurate. By applying a standard number of man-hours to complete specific tasks, we can more easily estimate jobs.
Many contractors don’t use production rates at all because they price work based on square-foot pricing, or material multiplier/markup pricing. If you fall into this camp, you might figure that production rates aren’t necessary. And perhaps they are not, for pricing — but you should still use production rates to calculate labour man-hours. This way, you have clear man-hour goals to give crew leads. If they don’t know the time estimated to complete a task, there is an excellent chance they will take longer than you would like.
Production rates also create a repeatable, trainable system for your company — absolutely necessary if you hope to hand off estimating to others in your company without sacrificing profit! It takes years of experience, mistakes, and lessons to become a good estimator. There is no reason to repeat those mistakes and lessons each and every time you bring on a new estimator, when he could be using your production rates to produce more accurate estimates.
And finally, production rates are key to improving the way you estimate. By analyzing how long it actually took to complete the work, we can re-evaluate our production rates for accuracy, and make changes when necessary. Even when you think they are perfect, rates are always changing. New equipment, crew experience, and more advanced materials all affect time-to-complete on jobs. Your production rates should always be used, analyzed, and improved.
Your company’s crew experience, tools, equipment, motivation, training, and site/soil conditions are all factors in your production rates.
How do I establish production rates?The biggest question I hear about production rates is, “Where do I get started?” Establishing accurate rates is not as easy as you would like to think; if it were, everyone would be using them already. Think of production rates as an investment of time. While a little costly up front, it will pay you back for years to come.
Start by looking around at some industry sources. Several books for the landscape industry provide some starting suggestions. Two veteran industry consultants, Charles Vander Kooi and Jim Huston, have both published textbooks you can order online that include some production rate samples to get you started. RS Means also publishes thousands of production rates for various types of outdoor work. Any of those sources can help you get started.
You can also get help from your peers. Networking events, association publications (NALP has maintenance production rates on their site, SIMA also publishes rates for snow), user forums and social media groups can all be used to help you gather information on what other contractors are using to estimate how long it takes to complete specific tasks.
Ultimately, the best production rates are your own, not someone else’s. There are a lot of variables in landscape work, and using general production rates is not ideal. No one else has your company’s unique mix of crew experience, tools, equipment, motivation, training, and site/soil conditions. So while you can use other rates to get started, they will never be as good as your own. While it is not always easy to collect the data, here are three helpful hints to getting started:
- Cost-based estimates:
You can never hope to have accurate job costing without building your estimates based on costs. Your estimates should be built by adding up the costs of labour (man-hours), equipment, materials, etc. Since we are talking about labour when it comes to production rates, it is essential that our estimates clearly identify exactly how many hours we have allocated for the task.
- Get to work, and share the goals:
Next step is to watch your production rates in action, but it is essential that your crews know the estimated hours when they go to perform a task. The only way you will get an accurate assessment of your production rates is if you give your crews the goals they need to hit. That way, they will work towards those goals, and if they consistently fall short, you know your rates are too optimistic. Technology plays a key role here. It is incredibly difficult and time consuming to give updated estimated vs. actual man-hour reports to crews via paper logs. Look for time tracking apps that share task information with your crews. You will find your time is tracked more accurately, and both you and your crews will always be working with the most current information.
- Keep tracking simple:
When tracking production rates fails, it is almost always because the contractor made it too complicated. Would I like to know exactly how many man-hours it takes to excavate an area, vs. filling vs. compacting vs. laying pavers? Sure! If we had that information, just imagine how accurate our estimating is going to be. Will I get that level of information back from the field? Highly unlikely! Crew leaders have a lot on their plates. It is very unlikely they can track each labourer’s movements down to the minute, to give you a perfect breakdown of time spent. Start simple. Keep your tracking general — you don’t have to know exactly how long it takes to mow, trim, edge, etc. If you just started by knowing that a 25,000 sq. ft. property takes 1.2 man-hours to fully service, and that rate was consistent across multiple jobs, simple division reveals your crews can service slightly more than 20,000 sq. ft. per hour on maintenance contracts. It doesn’t matter exactly how long each task took. You might get there eventually … but start simple.
Estimating is exactly that: an estimate. Estimates are never perfect, and neither are production rates. Variables like equipment used (or available), site conditions, crews and crew leads, materials, etc., are all really important factors in how long it takes to complete a task. While production rates help people with little experience become competent estimators; a good, experienced estimator will know there are other very important factors that influence how long a job takes. It is important that estimators do not get lazy and rely on production rates as the truth 100 per cent of the time. They are a good starting point, but they are not a one-size-fits-all solution for estimating.
Rates do not replace a great estimator
Mark Bradley is CEO of Ontario-based TBG Environmental and LMN.