Protecting Yourself Against Rising Prices

Landscape Industry expert, Alan Sargent has kindly penned this article for us, explaining what you can do to protect your business against fast-rising landscape materials prices.  There's some really useful advice in the following paragraphs, so make yourself a cup of tea, grab a notebook and pen and take time to read it - twice - you'll be very glad you did!

Protecting Yourself Against Rising Prices

Garden building requires many different products and materials, all arriving from diverse sources, suppliers, manufacturers and countries. Compiling the products library for any project highlights the importance of efficient monitoring, buying, selecting, resourcing and delivery processes even in previous ‘normal’ times, and since the pandemic, there is scarcely a scheme that has not met with materials shortages or significant increases in price. 

Not only delivery dates, ability to order specific products in the sizes and colours selected by the designer or client, but lead times and costs of everything from the materials to transport has caused serious problems for landscaping contractors everywhere. Although customers will be aware of these issues – if they read the papers or listen to the news – they rarely relate the information and think of it as affecting landscapers. 

I would estimate that the average lead time on any landscaping at the time of writing (winter 2021) is less than three months, probably nearer six months from the production of a quotation to start date. Trying to guesstimate prices rises over a six month period is fraught, as some are rising at an alarming rate. Timber costs have risen 30 to 40% in 2021, and the quality of much of that available is lower, and probably unacceptable on a detailed scheme such a landscape project. We are not talking about first-fix carcassing of a new-build house!

Container costs have risen from £1,000 to £10,000 plus in the space of a single year, with the result that prices of materials such as porcelain or sand-stone paving has risen dramatically. How to manage those rises is the biggest problem for contractors working on fixed price schemes, won largely through price in the first place. Even the best landscapers will lose jobs on price - although they may not have supplied the lowest tender, money will have played a part in the selection process.

Therfore, it is a frightening matter to have to go back to a customer and ask for more money due to unforeseen increases in cost of materials, before or during construction. Even with strict terms and conditions, any conversation on the subject of additional costs for the same quantity of product is never going to be an easy one. Rather than hiding a paragraph within the body of your Terms, I suggest a different approach.

Include a highlighted comment in your quotation, drawing attention to an attached document concerning prices and material availability, which clearly sets out your policy on the subject. 

Suggested Text 

Something along the following lines;

MATERIAL COSTS AND AVAILABILITY

Sargent Landscapes Limited have produced the pricing schedule and therefore the original quotation based on prices as at the time of tendering. Due to world-wide shortages or materials, and huge price rises in container and shipping costs since the pandemic, we have chosen to provide you with our tender based on the current rates, rather than try to guess the prices at the time we place an order to commence  your project. 

We are confident in our labour and other construction costs, and will hold those figures regardless of material cost rises. In fairness to you, our valued customer, we will assess the actual costs of the materials schedule before placing an order, to ensure the lowest possible rates (rather than simply guessing at those future prices) This matter will be dealt with using a Variation Order, to be agreed at the time.

In the event of a shortage or non-availability of a product, we will offer alternatives, either in manufacturer or lower cost if possible/requested. This matter will also be subject to a Variation Order to comply with our contractual obligations.

We have elected to use this process to avoid any disruption or delay in commencing and/or completing your project. Until world matters resolve themselves, and supply chains are back to normal, we can only try to mitigate these potential price rises by finding the least expensive alternatives in the interests of our esteemed customers. 

Although this option is far from ideal, the alternative would be a client who insists on having everything delivered and installed on time, and within budget. Contractually, without such a caveat, the landscaper would be legally obliged to perform within the terms of the contract, with anything less subject to a Breach of Contract claim. In legal terms, be aware of caveat Venditor – Seller Beware. 

Alan Sargent FCIHort MPGCA

www.landscapelibrary.co.uk

You'll find lots of really useful articles on all things landscaping related on Alan's website, The Landscape Library.  There is a small subscription fee - but trust me, joining the landscape library could potentially save you a lot of money - and your professional reputation.

Managing Costs By Buying In Advance