We all need to make a living.

Some of this piece is specific to contractors, some to designers; but much of it applies to both.

Do we work in an industry which undervalues itself and if so, why is that? Our nearest ‘neighbour’ is the construction industry. These figures speak for themselves: look at these comparisons between the various corresponding jobs in the construction and landscape sector (source: www.payscale.com).

Construction worker Landscape Gardener

Landscape manager Construction project manager

 

Landscape ArchitectArchitectPay at site level seems to be linked more closely to agricultural pay than industrial pay. The higher up the management ladder you go, the bigger the pay gap becomes. Do we undersell our skills, or are they just undervalued by clients – is that the same thing? And what can we do about it?

Once we get locked into a price-driven market, various things start happening:

  1. Driving the price down is the main objective, so Margins are slim. This has various knock on effects:
  2. Pay is driven down. If pay is low then…
  3. Recruitment is difficult.
  4. And staff are Unhappy
  5. Slim margins mean Low Investment.
  6. Low investment and pay levels mean… Low Productivity… and
  7. More Accidents.
  8. Bad practices start to creep in: Sharp practices, hidden charges, commission, corruption, etc

Let’s look at the opposite process. If you are in a quality driven market, then:

  1. Quality is the main objective. The best way to drive up quality is…
  2. Invest more,
  3. Attract better staff, which means you have to…
  4. Pay better, and
  5. Train more, which means it makes sense to…
  6. Retain staff. To do this they have to be Happy.

The general view is that because of the tendering process, ‘cheapest is best’ is endemic. In fact, I am not sure that this is the case – it comes down to whether that market is price-driven or quality-driven. We regularly win both design and construction work in competitive tenders when we are not the cheapest. This is because experience, expertise, resources and general approach all play an important part in the selection process. The quality of the tender response is critical. Of course if the quality of the tender response is critical, then the quality of the request is equally important, or how else can a sensible appraisal be made? My impression is that over the last thirty years, tendering on the construction side has got sloppier. When I started in the industry, full Bills of Quantities were the norm in construction tenders, as were full construction package drawings. Tenders were delivered in unmarked identical sealed envelopes and opened simultaneously at a given time. These days they come in dribs and drabs, multiple extension of time are often the norm. What’s more, Bills of Quantities are a rarity (unless the contractor pays to have them done) and drawings have far less detail than they used to. One could view this state of affairs in two ways. Either it puts the contractor at a disadvantage because they are open to the sharp practices of their competitors – under-pricing tenders deliberately and then clawing back cost later – OR it puts the contractor in the driving seat because it allows them to deliver a higher quality service and work more closely with the client and design team. It all depends on the attitude (on both sides). John Melmoe of Willerby’s recently said to me ‘Price tendering is a thing of the past – it is dead’. Perhaps a bit of an exaggeration, but you can see where he is going. The bulk of his work is now achieved through partnering and negotiation. This achieves higher quality, shorter programmes, more profit and less conflict. I wouldn’t be at all surprised if the end result isn’t cheaper as well. But how do you break into a market like that? If established firms clean up all the work before it ever gets to tender, what hope is there for the others?

How do you know how much to charge – or put another way, what are the signs that you are not charging enough?

1 You have no time to market because you’re too busy serving clients

If you are constantly busy, running around after clients, working evenings to catch up – then you are not charging enough. Charging more will increase your returns, your quality of life and improve the quality of your clients – ones who appreciate you!

2 Your prospective clients compare you to someone else

If your clients are price shopping then you’re a commodity, and they are not seeing the value of your service. You quickly get sucked into the price-driven market cycle – not good!

3 Too many ‘Yes’s from practically every prospective client

If your hit rate is pushing 100%, then you’re not charging enough. Everyone likes a bargain and that’s what you are.

But other than the generalised statement of ‘moving to a quality led market’, what are the practical reasons for why you should charge more?

Here are a few:

  1. Not all your time is chargeable. If you are a garden designer or landscape architect, then this is particularly true. Probably only half your time, at most two-thirds can be charged for. Here’s the problem – in a 40-hour week, especially starting out, you’re going to spend half that week pounding the pavement (or more). You need to network, build your site/portfolio, blog, make phone calls, write proposals, and on and on. Once clients come in, you’ve got administrative work to do – somebody has to send the invoices, pay the taxes, and buy the toilet paper.
  2. Feast or famine. While you’re doing all that work you’ve got, who’s going to be doing the marketing, networking and getting the next job? Probably should be you – which means you’ll then have to take more time out doing that.
  3. Bills, Bills, Bills. As well as the rent, rates etc., there’s all those hidden costs – software, insurance, accountancy, coming here! Etc. etc. etc.
  4. Setting your own value. I bet you have something that you buy regularly, but only when it is on offer. If you make a habit of allowing others to negotiate your price down, or always expecting a discount, then it sends a message about how both they and you value your service. They will always try it on. You set the price – you set the value. If you want to offer a better deal, then don’t offer a discount. Drive a hard bargain for a decent price, but then over-deliver. That way the client will respect you but also think that you offer a really good service and recommend you. Getting a good price in the first place also allows you to be more flexible over small things that crop up along the way.
  5. You can only sell each day once. Consultancy and service industries are like hotel rooms – you can only sell your time once, and if you don’t sell it then it is lost for good. Your charges need to take account of this in two ways. Firstly, you need to cover for the down time, but also, when you are really busy you should sell the last bits more expensively. When customers book a hotel room or a flight, they always get a better deal when they book in advance online. Leave it till the day they travel and they’ll pay through the nose. It follows that you can charge more for last minute approaches by clients – and this is not unscrupulous – last minute rushes and running around are always disruptive.

untitledLook at this graph – it sheds some light on the relationship between value, price, and how a client sees the service they are buying. At the top is ‘Nuclear event’ – which basically means when a client has no choice but to hire you. This refers to the sort of service that you don’t have any real choice about and are not in a position to quibble about price – the business equivalent of calling the fire brigade. Bottom right is ‘Commodity services’ where you will be hired purely on the basis of price. The further to the bottom right you go, the less there is to distinguish between suppliers of service. The sweet spot is about 2/3 of the way up towards the left – ‘Hired for experience’, although you will notice that trusted brands also make an appearance.

Along the way, let’s look at a few other practices that go on.

Commission

In the insurance industry, we are outraged when we learn that an insurer has passed our details on to someone else because they get a commission payment. What’s more, in foreign defence contracts and the like, such payments are classed as corruption. Why should it be alright therefore for a client to pay for a sculpture, piece of furniture or the like and the designer or contractor get a ‘secret’ payment? It’s not alright; it’s dishonest and lacks transparency. Don’t get me wrong – there is nothing wrong with an honest commercial mark-up – as a contractor you buy the furniture and you sell it to the client. Their contract is with you. If you are a garden designer and you take such payments, then you are either greedy or you’re not charging enough. Charge a decent rate and then you are free to recommend what works best rather than being tempted by whichever supplier pays you the most. And don’t be fooled; if it didn’t sway specifiers’ minds, then suppliers wouldn’t make such payments. (If you want to read more about this, I covered it in an earlier post in more detail: ‘Should Designers Take Commission Payments?’)

Who supplies what?

Should designers supply plants and other products? This is a difficult one – although many of you will probably already know my views on this – I have hardly made a secret of them. To my mind the process works best when it is crystal clear. It should be clear which part of the process the client is buying from which person, and who is responsible. In many ways, design and build is the clearest in this respect – there is only one person to go to when something goes wrong. That is how the world mostly works – if you buy a car or a telephone and something goes wrong, the manufacturer cannot blame ‘the designer’. However, let’s accept that that is not always possible or desirable to procure everything on this basis.

To me it seems obvious that the next best thing is if the client pays a reasonable price for the design part of the process and gets clear unbiased advice. The contractor then does the rest. The clue is in the name – the contractor does contracting and the designer does designing. In some cases, perhaps because the contractor doesn’t have the skills, or perhaps because the job is too small, it can make sense for the designer to supply the plants. But to my mind, this only works when the designer procures, supplies and actually carries out the planting. They are in fact then acting as a contractor, but it also makes the liability envelope clear should something go wrong. Otherwise the responsibility chain gets very tangled. What if a designer supplies the plant, but a contractor plants them and someone else is looking after them? See what I mean?

Clawback

I’ve touched on this earlier. However, I’d like to explore it in a little more detail. At the point of awarding a contract, the client is in the maximum position of power. The (prospective) contractor wants the job and there is always the real possibility that if he doesn’t jump through hoops, then the client will go to the next cheapest on the list. It is of course not in the client’s longer term interest  to force the price down at this point, and this is one of the drawbacks of the tendering process when price driven. Because once the contract is awarded and the work is well underway, the boot is on the other foot. It is too difficult and expensive for the client to kick the contractor off site. Generally, he wants to get the job finished as soon as possible, which requires the co-operation of the contractor. At this point the contractor has the scope to make hay – charge more or less what he wants for extras and variations and claw back all that money he artificially cut from the tender in the first place. Both practices are short-sighted and unethical. How do we protect ourselves against this? Work with good consultants and reputable clients and don’t get drawn into these games. And don’t expect to win every job. It is always possible for someone to undercut you, but it frequently means they can’t deliver a good quality product or service, so the practice is not really sustainable in the longer term.

So… in summary it is best to be:

Clear

Quotations and proposals should be clear and unequivocal and make a good basis for any future variation. Drawings and specifications should be well defined, comprehensible and unambiguous.

Honest and fair

… even when there are easy opportunities to be otherwise. This is the only way to earn respect and build a business.

Compete on quality, not price

That way you get the sort of clients you want and a decent return for what you do.

(This piece was originally delivered as a talk at FutureScape in November 2015.)

Shark-infested waters? (or how to survive in the top end of the residential development market – and enjoy it)

The development market has a reputation for being cut throat and being populated by swaggering macho developers who only care about the bottom line. Is it really as bad as that? In the thirty years or so that I have been involved in this market, that hasn’t entirely been my experience. Sure, it has it’s share of predators like any other market. But despite that, I have found most developers to be personable and intelligent.

The stakes are high though – these are often for properties valued in the high millions. Because of this, sites are densely developed, which in turn leads to all sorts of technical and logistical problems. So this is not a market for the timid, but there is plenty of opportunity.

Croc
Typical developer? Not in my experience…

The first step is to understand the client. What are developers about? Are they all greedy, short-sighted individuals who only care about the profit? Do they all have enormous egos? Will they always go for the cheapest option? Of course not. Instead they are (mostly) ordinary people trying to build something of value, although admittedly they are perhaps more comfortable with risk than most of us! My first rule of thumb is:

  • Give them what they need rather than what they want. Most developers may not understand what is available –they may know more about property than you, but you know far more about landscape than them. They will probably base their expectations/ideas on what someone else did on their last project. This can be very frustrating, particularly if they act as though they know everything. However: this is your chance to shine and show how much better than the opposition you are. Go beyond their expectations – surprise them!
Pavilion, St Johns Wood. A scheme that met the client's brief, but exceeded his expectations.
Pavilion, St Johns Wood. A scheme that met the client’s brief, but exceeded his expectations.

But to do this, you must have a least a basic understanding of how the development process works. Let’s look at some of the background. First, funding for development.

  • Funding – how does it work? Most people have the idea that it is all a developer’s own money behind a project. In fact, it has always been the case that developers have sought the majority of funding from banks and other institutions. In the (good/bad?) old days, it used to be possible for developers to get funding for about 80% of a project. Often, this would be calculated on the basis of final value. Given that the market would be rising and that a developer might expect to make a margin approaching 20%, this would mean that he (for it is mostly men) could get all the costs funded by loans and pick up the profit at the end. And then came the credit crunch!
    It's all about the money?
    It’s all about the money?

    These days, it is a lot tougher. A developer may have to find a much bigger chunk of the land purchase costs himself. After that, he is still likely to be looking at having to find about 45% or so out of his own pocket. This means that on most projects there are co-investors, which can make the client a somewhat multi-headed beast. The bank will also have monitors in place (generally surveyors) who look after the funder’s interests and make sure the project progresses smoothly and with minimal risk.

A typical scheme for planning with clear simple graphics and plenty of green on the plan or as much as the space between the buildings will allow!)
A typical scheme for planning with clear simple graphics and plenty of green on the plan or as much as the space between the buildings will allow!)

Funding is only part of the story though; planning also plays a critical role (as with any development).

  • The role of planning. No project can progress without local authority planning consent. Although this may seem like a fraught process and just another headache, it is actually a significant business opportunity. Few schemes can expect to get a smooth path through planning without at least some landscape input, especially on sensitive sites. This means that a commitment to a comprehensive landscape scheme can be built in to the project plan from the beginning. It’s also your opportunity to dazzle the client with your design skills and understanding of the market! The first stage is generally before the application. Initial discussions with the planners (‘Pre-app’) will often include some landscape material. The main application will almost always include a landscape plan an other drawings. It is important to make proposals that are affordable here, but not driven solely by budget. You have leverage over the client here as he will want to get planning, but push him too far and you will not be popular. there will generally be other consultants involved in this process as well, often guided by a planning consultant. Once planning is achieved, the next hurdle is ‘discharge of conditions’. Normally when a scheme is granted planning consent, certain conditions are imposed, one of which is usually landscape. Before that section of the work can be started on site, the planning condition needs to be discharged with detailed drawings, samples etc. There is quite often a gap between consent and discharge, with the scheme having moved on in the meantime. The planners will be looking to make sure that there is no watering down of the proposals, but some deviation form the detail of the original is normally accepted.
The Lancasters - a good example of how we achieved quality in a difficult contractual situation.
The Lancasters – a good example of how we achieved quality in a difficult contractual situation. Stock was all pre-tagged, testing certificates required for all the fill materials and followed up by a rigorous site inspection programme.

Although the production and release of information is generally driven by the planning process, there will be other times when detailed information needs to be produced, mainly as a case of integrating the landscape design with other parts of the development. Perhaps the most important thing however, is how to ensure that your designs are translated correctly into a polished landscape. For a lot more detail on how we achieve this, best to read my blog post ‘How do you deliver quality in a project’ posted in March 2015. However – here is a potted guide:

  • Control of process and quality. Clearly the most important tool to ensure quality is good documentation. The quality of the drawings and specifications are critical. They should be clear and concise, as detailed as they need to be – that is they should have enough information for someone to build the scheme without improvising, but not so much that they become snow-blind! Once you cede control of the decision-making to site staff, you cede control of the quality of your scheme. That is not to say you can’t draw on their experience and expertise, but make sure you define the things that are important. Poor drawings and spec are the biggest complaint from contractors. Planting material is often difficult to specify accurately to achieve really good quality. for this reason, we often persuade clients to spend a little extra and pre-tag key items. Nurseries will generally hold stock for a period between detailed design and installation. The client does not own this stock, so there are no contractual complications, but all the tenderers have to go to the same source. Beyond this, we also use a rigorous process of insisting on samples of materials and workmanship, testing certificates (especially for soils), certified sources and so forth. We are terrier like in this, because it sends a message about the level of quality we expect elsewhere and means that contractors do not try and take short cuts. Finally, make sure you have sufficient fees for inspection. The client will expect you to visit the site on a regular basis during the construction process – indeed you will need to for your own sake to ensure quality.

Which brings me on to the final point – pricing. You need to be realistic on this. bear in mind that stages may be widely spaced – it is not unusual to have a gap of 2-3 years between enquiry and completion on these sorts of projects, sometimes longer. Your fees will need to take account of this as well as the myriad meetings you will need to attend. But in any case, in this market it is much better to compete on the basis of quality, not price; so don’t be shy!

This was first delivered as a lecture at the Landscape Show in late September 2015.