Business Practices and Project Management
This domain tests the commercial side of landscape work: estimating, labor burden, margin versus markup, contracts and change orders, scheduling, insurance and payment risk.
Building the estimate
Cost is materials plus labor (wage x hours x burden) plus equipment, subcontractors, overhead and profit. Labor burden for payroll taxes, insurance and benefits commonly adds 25-40% to the base wage and is the item most often forgotten. Overhead is recovered across all jobs; it is not attributed to a single project.
Margin versus markup
Margin is a percentage of price; markup is a percentage of cost. Price = cost / (1 - target margin). To earn a 25% margin on an 8,000 cost: 8,000 / 0.75 = 10,667. A 25% markup on the same cost gives 10,000, which is only a 20% margin. That difference is where bids quietly lose money.
Contracts, changes and risk
Every agreement states scope, price, schedule, payment terms, exclusions, warranty and a written change-order process. Bill progress payments, often with 5-10% retainage, and collect lien waivers from subcontractors and suppliers. Carry general liability and workers compensation, and verify subcontractor certificates before they mobilize.
Worked example
A job carries 96 estimated labor-hours. A three-person crew produces about 6 productive hours each in an 8-hour day, or 18 crew-hours per day. Duration = 96 / 18 = about 5.3 working days, so schedule 6 days and price weather risk explicitly rather than absorbing it.
Traps
Confusing markup with margin; leaving burden, mobilization, disposal fees and permits out of the estimate; performing extra work without a signed change order; and mobilizing before a signed contract and deposit are in hand.