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Np Cap Seasonal-All Inclusive

Discussion in 'Commercial Snow Removal' started by forestfireguy, Oct 4, 2010.

  1. forestfireguy

    forestfireguy PlowSite.com Addict
    Messages: 1,276

    I've turned away several opputunities to bid no cap seasonal contracts on commercial porperties in the last couple years, more and more RFP's are coming out with these all inclusive no cap specs that I hate. I'd take a bracketed per inch any time, even a seasonal with a cap, those are the best. Cash flow and really can't lose. Anyway to those who have done these, what are the short falls, obviously the average over the past several years is very important as it getting a multi year deal. We are looking at one that close to $55,000 for snow and landscape maintenance, thats each year for a 3 year deal,if I build my seasonal to the 10 year average. Beyond that, the boss here isn't into shooting craps...........How often do you get burned with a 3 or more rough years in a row?
  2. Mick76

    Mick76 2000 Club Member
    from Maine
    Messages: 2,157

    We've had 3 wierd years.... 3 years ago 132", 2 years ago 91" and last year 53".... our average in my area is 86"..... if you do the three year average on the above its 92"....... If you bid them right you'll make $ as long as you get a 3 year deal. I'd take the gamble on a 3 year deal over per push anytime!
  3. Longae29

    Longae29 PlowSite.com Addict
    Messages: 1,953

    I bid seasonal no caps all the time, you just have to secure the contract long enough that the averages work in your favor. Guaranteed cash flow is always a + in my book.

    Edit: Also make sure you are very comfortable with your $/hr rate, and see if you can get your salt supplier to lock your rate for a term.
  4. forestfireguy

    forestfireguy PlowSite.com Addict
    Messages: 1,276

    Thanks for the replies guys, we just sat down and talked about it. Our 10 year average is just shy of 42", I built the bid at 40", close enough. The cash flow and the close averages were enough to sway the boss. I have one supplier who laughed at me when I asked for a fixed price for 3 years, one said he'd check, the other hasn't returned my call.
  5. blowerman

    blowerman PlowSite.com Addict
    Messages: 1,275

    Why guys think "seasonal bids" should have a cap is beyond me! It's seasonal for a reason. Should they pay less is it only snow half as much as a normal season? Then why charge more beyond a seasonal price.... That isn't seasonal to me!
    Don't worry about a cap, check your average winter snowfall and go for three years.
  6. snowman5313

    snowman5313 Member
    Messages: 86

    I am with blowerman. Snow falls are up and down. We ave 46" a year. A few years ago we had 103". Yes we lost money on them but we made out good since we can go to the bank and show that no matter amount of snow for the year we will have income. But seasonals are only about 30% of my bids. The rest are per push/inch.
  7. forestfireguy

    forestfireguy PlowSite.com Addict
    Messages: 1,276

    We like caps beacuse it's a no lose deal..............

    Pretty simple, business, any business is about minimizing risk. Some risks are justified. Some aren't.

    Taking a no cap, all inclusive seasonal is a risk, no matter how you cut it. I'm not worried about a big storm or a few bad winters putting us under. But we are fortunate, a good sized company for the landscape and snow industry, but we aren't where we are now because we didn't think through these things. Smaller contractors really need to watch these kinds of contracts. A single "big storm" say a 23 incher like we had lat year can make the difference between acceptable profit or working in the red. Say you were at 38" on a 40" cap. 21 inches of that storm just became revenue generating work, if it was a no cap deal you're pretty much working for free for that last 21 inches. And I don't know about anybody else, but working for free isn't why I'm up at 3 AM or for 24-36 hours..........

    Think about it, depending how you price and what your costs are, IF you needed to move a big loader in to clear a large lot and he spent 10 hrs on site you'd pay close to $4,000(here at least) thats a lot of profit eaten up, possibly more than they had in the job(you never know)............Building bids to the average for seasonals and having a cap makes things fair, gives prop mgrs/buliding owners a budget (which most love), and a cap is the contractors insurance, many, certainly not all are understanding of this and accept this cap without too much trouble. I know someone will say "blizzard clause" but isn't that the same as a cap????

    We offer credits towards landscape maintenance if we don't receive 75% of the cap in accumulation, ties maintnenance and snow together, which is big here since EVERYBODY with a mower is a landscaper these days, the one truck show can't genrally keep up with snow on a site he can cut in a day.
    Last edited: Oct 4, 2010
  8. Longae29

    Longae29 PlowSite.com Addict
    Messages: 1,953

    I understand everything you say about having a cap, but I dont understand why a property manager would accept it. If it goes over, then their benefit of being able to budget goes right out the window. I think seasonals with overages and refunds should be called what they are..."per push"
  9. forestfireguy

    forestfireguy PlowSite.com Addict
    Messages: 1,276

    For exactly that reason we would prefer bracketed per inch pricing. We have several "seasonal with cap" contracts. People can budget for an average year. We budget for an average year. Excesses in the mood of ma nature are not really something you can set a firm plan for, and as contractors responding to a potentially hazardous condition why should we lose if the winter is bad.
  10. second income

    second income Member
    Messages: 82

    Amen to seasonal with a cap and tied to landscape services. As I mentioned in another post we are contractors and not insurance companies with actuarial tables to work with. Forest Fire Guy, I miss North Jersey, I moved to the Shore Area 15 years ago and was shocked at the lack of snow plowing expertise in this area
  11. forestfireguy

    forestfireguy PlowSite.com Addict
    Messages: 1,276


    I've heard that from others as well, that south Jersey is lacking in snow removal expierience. Seems like there's plenty of contractors, just not doing a great job. I know a few guys down there that do very nice work, others not so good.

    I kinda knew the seasonals w/ cap VS all inclusive, was a regionalized thing, but I wasn't really sure. I just hope they don't grow in popularity.
  12. tjlands

    tjlands Senior Member
    Messages: 579

    Whats up Ed

    I think there is a difference North Jersey- South Jersey.
    People are cheap down here, and the nationals are constantly pushing prices down.
    I amazed at some of the prices people are throwing at me this year for seasonals.
    Which by the way I will not take anymore this year.

    For this thread topic- My seasonals have no cap, have to be a min of three years and all of them have to agree to a Blizzard Clause. 10" or more or back to back storms etc.
    If not for that my core area which received 5x its annual snowfall last year would have killed us.
  13. forestfireguy

    forestfireguy PlowSite.com Addict
    Messages: 1,276


    Is that SeaGirt are thing working out????

    And I agree people have this perception that the "shore" shouldn't get snow and if it does removal should be free, or real close. We have had pressure from the nationals, thankfully many have come and gone, their quality just doesn't meet expectations in our area. Every few years one has several big box accounts, they seem to rotate through. Sometimes they find people willing to put up with what they offer, most times they are around 1-3 years and things go back to the local contractors. We are pretty close to NYC and the affluent and "high powered" real estate market here is very demanding of its' service providers.
  14. tjlands

    tjlands Senior Member
    Messages: 579

    the Spring Lake deal is on the outskirts of my range but I am putting in a bid, when I get to it.
    Am dealing with manpower and equipment issues first. Picked up alot of work within sight of my shop which is great, but it will limit my range and my subs that I use are capped out.
    Looks like another fun year. Might have to buy a new truck+plow or two to keep the new accounts in house.