Using P4P for a MASSIVE Commercial Contract... Determining Budgeted Hours

Hey everyone. Mike Gandies with landscapebusinesscourse.com Today's kind of.

A behind the scenes video.

I'm at command center and today Liz and I are going to be going through a commercial contract for one of our franchisees. They're in the process this winter of switching over to P4P instead of hourly rates. So if you don't know what I'm talking about, P4P is where we pay based upon performance, pay for performance instead of an hourly rate to the employees. In order for that to work, you need to know the budget hours for every single visit and every single service throughout the entire year. Which makes 12 month contracts a little.

More complicated just because you got to.

Schedule them a little bit, you know, take a little extra time to schedule them for brand new contracts. Once you're in the flow of fee for feet maybe takes 10 or 15 minutes. In this case, this one probably took us 20, 30 minutes because it was just already a very large contract. It's been established, they have a whole bunch of verbiage in the scope of work. And what we're doing is taking the price that that has been accepted because this is an accepted contract. It's one of our franchisees that's been established and is switching over to Augusta. And so what we're trying to do is take that monthly price and now turn it into budgeted hours for every single visit. We've never been at the property, we're literally just using Google Maps. And so what we're gonna try to do is basically just give a rough outline of budgeted hours for every type of service, whether it be trimming bushes, mowing, edging, coming during the winter visits. Every single visit needs to have a budget hours, because you can't just say, oh, we're gonna spend 10 hours per week. Because some weeks you don't need to do anything. It's the middle of winter and then nothing's growing. And other weeks you gotta do a leaf cleanup or you gotta trim bushes and that takes way longer. So this kind of behind the scenes a little bit, maybe a little bit.

Of a different video.

But if you're considering switching to P4P and you're concerned because you have 12 month contracts, it's absolutely possible this is one of the longest ones you'll ever see today, 20 to 30 minutes because it's a massive contract. But if you're doing even residential contracts, you can do these in a matter of a few minutes. Just converting them from a dollar amount per month over to how many Budget hours we actually spend on each service, on each visit. So hopefully this is helpful for the franchisees. Make sure you check out Academy. The full version of this whole conversation is on there. But anyways, thanks so much, everyone, for watching and enjoy.

Are you actually making the contract for him too more streamlined to give back to the customer?

No, no, They've accepted.

Like, not.

The contract is fine. It's just. Now how do we put into P? So there's the thing. So you can see it's not like large spaces of lawn. It is just along the roads, basically, and then the little tiny front lawns.

Right.

So I don't think I have.

Oh, I can look at that.

Cool. We could format it just so he knows for next time. It. It just can look just like an estimate.

So, like, this is all the lawns.

All right.

Just the front yards.

Oh, yeah, I remember those from the pictures. Yeah, that's nice.

So it's pretty.

Straightforward. Oops.

We'll see what he has. But is 24 enough even?

Probably not, but they've already accepted and he's locked in for two years. So he wished he went higher because they had a bat nye.

He said, do they use service autopilot? Can we go in their service autopilot and see what they have been spending or. They're not clocking in.

They're not really clocking in. So it's a matter of really just, like, kind of putting together a rough draft of, oh, there's some non P4P workers. Josh, be careful.

So it's almost like you need to put it together the way you think. And then we adjust the hours.

Yeah. So what I want to do is just kind of be like, okay.

So we have.

We have mowing, then we have, like, mate turf maintenance. Right. So, like, this is really just all mowing. You got March, November. So let's assume nine months of the year. Let's do 36 mows. 36 mows. And then during the winter is the part where they still come weekly.

Okay.

I mean, just blow things up.

What we're doing here in the video is basically we take the total amount, the total of the contract. So right now, $2,400 per month. Multiply that by 12. It's like $28,000. And then we divide that by their hourly rate. And so the target hourly rate in this case is $60 per hour that we're trying to get per man hour. And so when you take 28,000, whatever it is, divide that by $60 per hour. You're going to get 480 total man hours that should be spent on this contract if we're going to meet our target of $60 per hour. So basically what we're going to do is we're going through the contract, we're going through each service that needs to be done. And then we're trying to figure out, literally without ever being there, just trying to figure out what we think the budget hours would be. Given the total amount of budget hours we have for the whole contract, we're trying to figure out how many budget hours should be on each service. This is very important for P4P because a MoW and leaf cleanup in the middle of fall is going to take a whole lot longer than a mower in the middle of summer when there's no growth. That's what's very important about P4P is actually making sure that the visit and the budgeted hours are accurate as the year goes on and as different services are required, not every week is gonna be different. So basically what we're doing is we're taking those 480 budgeted hours and we're trying to divvy them up between the different services like mowing, bush, trimming, edging, et cetera. So that's kind of how P4P works when it comes to contract work. Since it's not a la carte. We're the monthly price to the customer never changes. But we have to allocate budgeted hours to every service and every visit.

But you can give him to this. You can give him this rough thing and he can say, no, this really doesn't take this long. Or this is really what it takes.

So if you did one hour for winter visits time that by 16, that'd be a total of 16 hours for the year. So you're have to shave off some of these other ones.

This 32 hour one can.

Well, you have to take.

We could do six hours times four visits. I think I'm gonna take eight. I do too.

So if we take it from here, eight, if you.

If they eat the debris for this year, we can raise the price.

If we use exactly these numbers, his hourly rate.

Would equal $58 because we.

Were using 60, but now we're slightly over.

And is this include. This is including his debris. So he may have the e debris one year to give the guys enough budgeted time and then know he needs to raise it for debris.

But 15, 1500 is what we've paid for supplies. Wait, no, we only paid 200.

Now this is your debris.

300?

Yeah.

Only 203. We only paid 303 though.

Yeah. And then we bought the treatments we need.

We need this almost double.

He really needs a trailer here for this one.

He does.

And probably not a trailer for each of these visits. Do you see what I'm saying? This is probably only a pickup truck.

Right? I know, but there's four.

You're giving him 200 for the whole year? Yeah.

It's only two pickups for the whole year. So I think.

I think this could be right.

This.

It all depends on if that number is right for the mowing and edging visits. If it's actually 8 to 11, or if it's going to be more like 14.

But it could be kind of like sound. If they accurately clock in and out every year, I mean, for the whole year, he'll know for sure that they need to go up and they'll know like it's a really tight route. Really. They're not traveling.

Yeah. That's why I'm okay with even the 58 hour. Like if you can hit these numbers for the mowing, edging visits, I'm okay with it. Because still, $58 an hour is not bad. When they're at the same place all day long, there's no mo. There's no drive time.

Well, they're driving, but.

So all the verbiage that was there can be completely simplified.

We can just give him the raw thing. He can set up all the visits and then I could. I could just reformat that so he can see they give it in an estimate form every time, like we do now.

Yeah.

So a la carte. And then list all of that other stuff in just simple.

Well, I know, but this is really just for him. He's already got the contract. This is just a matter of figuring out what these budget hours, if they're accurate. And so that way he can put them into service autopilot, separate visits.

Right. And he might look at them and go, no way. But then he'll have to take it off somewhere else.

Right, Right. So it was a starting point for him. So he can start juggling around hours.

We could do three trimming visits.

That would help a lot.

Cause the parameters were 12 inches growth. Right. Do you think there's 12 inches growth? There's not gonna be 12 inches between May and August.

Well, it's 12 inches. Want 12 inches between bushes.

Yeah.

So I'm just going to put remove fourth trim. That's an option. And then.

Tree trim. That's not going to take many hours, though. This is the one that's good because 32 hours, it's a nice big chunk that 32 hours could be distributed into two hours each on one of these visits.

But if you want to keep it separate and have one day that you just trim, it's much faster.

Honestly, though, even if these are a.

Little bit lower and he's able to get 55 or 50, I'm okay with it. Because literally, the guys don't move.

Exactly.

Stay in the same place.

Yeah.

Okay.

That's a good starting point.

I will email him and just give him the numbers. That way he can start moving them around and see if he can make it work.

Right.

We have no idea, but he should have a better idea of how long that takes.

And then in the academy, you can take that one and he can see from now on how to do his bids.

Right, Right.

We did the Raw and then actually scheduled them.

Well, really, it's gonna look similar to this in terms of telling them, like, what they're doing, how many times, etc.

So.

Okay, cool. I'll send them this and then give him this.

Like, hey, this could be an option.

Does he have other ones?

He has a whole bunch of residential ones, but those ones should be pretty simple. I'll give him this, and then in his service autopilot, I can look at the contracts he has for residential.

Does he know how to set them up in service autopilot?

Well, we have the training on there, so, yeah. Cool. Awesome.