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									OPERATIONS MANUAL

LAWN AND GARDEN

March 2008 Jim Willett Waywick Management Services Pty Ltd Sydney Australia 041 9874 005 karari@bigpond.com.au

Index
Page Numbers

Introduction

3

Paper # 1

Productivity & Profitability

6 - 25

Paper # 2

Tendering & Regional Contracts

26 - 40

Paper # 3

Work in the Slow Months

41 - 52

Paper # 4

Occupational Health & Safety

53 - 64

Paper # 5

Performance Indicators & Benchmarks

65 - 76

Paper # 6

Job Costing

77 - 108

Paper # 7

Recruitment & Retention of Staff and Clients

109 - 116

Paper # 8

Sales & Marketing

117 - 152

Paper # 9

Management under Case Based Funding

153 - 157

Paper # 10

Selection & Performance of Equipment

158 - 181

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INTRODUCTION How it started? Matthew Martin from the Disability Trust in Wollongong contacted me in late 2005 and together we contacted all those Business Services in New South Wales listed in the BizAbility web site as having some involvement in lawn and garden activities. Nineteen Business Services expressed an interest and a meeting was held in the Hunter Valley in March 2006 where they identified twenty-four issues for investigation. It was agreed to form a „Lawn & Garden Group‟ to study these issues at four meetings spread over two years. As many of the issues overlapped it was possible to cover all twenty-four issues in ten „Papers‟, which now form the basis of this Operations Manual. Each „Paper‟ was based on a combination of the „best practice‟ used by members of the Lawn & Garden Group and information, where available, from the commercial lawn and garden sector. Before each meeting the relevant „Papers‟ were circulated and then discussed at the meetings. Changes were made as a result of these meetings and then the final „Papers‟ were amended where required and then approved for inclusion in this manual.

Who funded it? Funding from the Federal Department of Families, Housing, Community Services and Indigenous Affairs was applied for under the „Cross Sector Initiative Program‟. In September 2006 we were advised that funding had been approved and the first meeting took place in February 2007.

How to use this use this Manual? Each „Paper‟ can be read separately but there are some cross-references to other „Papers‟ If one wanted an overview, probably Paper # 1, Productivity and Profitability, is a useful starting point. Paper #3, Work in the Slow Months, is a listing of a number of activities that various Business Services have undertaken to supplement the employment of their clients when work slows down, during periods of slower growth in gardens or when there is a drought. Cautions or Caveats The findings or best practices are based on the nineteen Business Services who were part of the Lawn & Garden Group. It is very likely that there will be better methods, techniques, practices etc somewhere out there. However it is argued that any Business Service that implements all of these ideas and adopted these approaches has a very good opportunity to improve their business performance. There are few direct

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references to the constraints placed on Business Services due to their employing people with disabilities. The prime purpose of this project was to improve the business performance of the Business Services involved. Some of the „Papers‟ are quite short in length either because there were only a limited number of points that the Group wished to record [for example Paper # 9, Case Based Funding.] or there was already a significant understanding of the issues, for example in Occupational Health and Safety [OH&S]. Paper #4 on OH&S only covers a few specific issues and spells out a general management approach to the topic. Most Business Services already have detailed procedures in place for OH&S. Paper #5, Performance Indicators and Benchmarks, suffers from the limitation of sample size. Although data was collected where available, the total sample was still too small to give a high level of confidence in the final results. Thus the indicators or benchmarks should be used with caution and are best seen as guide, rather than definitive answers. Paper #10, Selection & Performance of Equipment, is based on the findings of the members of the Lawn & Garden Group. There are no doubt other machinery suppliers who have equivalent items and with new models becoming available all the time, the findings in this paper are likely to remain relevant for only a year or two.

Contributors The following Business Services attended one or more of the meetings including the first planning meeting in the Hunter Valley: Wesley Garden Service Wangarang Industries Macarthur Disability Services Westworks Maiwel Challenge Disability Tamworth Kurri Contracting Services Tulgeen Group Challenge Southern Highlands Centacare Industries Mowmentus – Sunshine Home Windgap Foundation Coastal Disabilities Blue Mountains Disabilities Services The Disability Trust Valmar Support Services Central Coast Work Services Koomarri Psychiatric Rehabilitation Association Sydney Orange Campbelltown Penrith Hunter Valley Tamworth Hunter Valley Bega Mittagong Sydney Sydney Sydney Taree Blue Mountains Wollongong Tumut Central Coast ACT Penrith

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Two outside organizations also contributed: Honda Power Equipment Murray Training & Associates

Steering Committee Special thanks to the „Steering Committee‟ of two: Matthew Martin from the Disability Trust who represented city based Business Services Bob Manson from Kurri Contracting Service who represented country based Business Services Di Hunter, also from Kurri Contracting Services, provided secretarial services and took accurate and copious minutes.

I would like to take this opportunity to thank all those who took part and to acknowledge the contributions of all the participants.

Jim Willett Waywick Management Services Pty Ltd Sydney

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PAPER#1 PRODUCTIVITY & PROFITABILITY

Purpose The purpose of this Paper is to assist management in the task of identifying possible steps that can be taken to improve the productivity of the lawn and garden operation and its profitability. It is possible to have a very efficient or productive team carrying out the lawn and garden activities but it could still be an unprofitable activity. This key issue will be addressed in this Paper.

PRODUCTIVITY Productivity is the ratio between output and input. Improvements in productivity usually refer to the same level of inputs such as hours worked, achieving more output due to changes in the way in which the business is run. Typically in a lawn and garden operation the factors of production or resources employed to carry out the work can be grouped under three general headings:

Labour, which includes management and administration, supervisors and employees or clients.

Equipment, which includes the items of machinery to do the work such as mowers, wipper snippers, hedge trimmers etc and vehicles.

Facilities, which usually includes the office, storage areas for equipment and workshop or maintenance area.

Management Focus Based on a sample of members of the Lawn & Garden Group the main cost components as a percentage of total costs were: Staff and Clients Vehicles 55% to 70% 7% to 10%

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Materials and other Consumables Rent and Property Costs Administration, Depreciation & all Other Costs

3% to 6% 3% to 6% 25% to 30%

The last item in the above list is made up of a mix of a large number of small items. From a management point of view clearly the major single cost item in a lawn and garden operation is labour or staffing costs. This is where management time and effort should first be spent. Putting this another way-a 10% saving in „Staff and Clients‟ will yield say a 5% to 7% cost reduction compared to say 0.3% to 0.6% if the same effort were put into reducing the costs associated with „Materials and other Consumables‟. Work on the big cost areas first. The other items can be addressed once the staffing costs are producing close to their maximum output or at least, all the major steps to improving their productivity are well in hand.

Chargeable Hours versus Paid Hours In Paper # 5 „Performance Indicators and Benchmarks‟ one of the key management tools identified was the percentage of chargeable hours to paid hours. This was a measure of how many hours were actually spent earning revenue. In Paper # 6 on „Job Costing‟ the worked examples were based on a percentage of 52% chargeable hours versus paid hours. One Business Service in the Lawn & Garden Group is currently achieving 75%. Clearly the higher the percentage the better. What is preventing the work crews from improving their productivity? An analysis of these causes will provide management with a list on areas on which to take action. The management tool to identify these opportunities is „work study‟.

Work Study Work study is a valuable management tool, which can be used by management to improve lawn and garden operations. In particular work study involves method study and work measurement where: Method study endeavours to simplify the job and develop more economical methods of doing the work and

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Work measurement determines how long it should take to do a particular job. The basic procedure for work study can be expressed in eight steps: Select the job to be studied Record from direct observation everything that happens Examine the recorded facts very critically and challenge every step Develop the most economical method Measure the quantity of work involved in the „most economical method‟ and establish a standard time. Define the new method and time so that it can always be repeated. Install the new method Maintain the new standard method.

This sequence can be briefly stated as: Select, record, examine Develop, measure, define Install and maintain. This approach can be used in virtually every situation in a lawn and garden operation. For example: The loading of the trailer before leaving for a day‟s work can be subjected to the above process to minimize the time required and to ensure that no equipment is forgotten. What is the best layout in the workshop to reduce the time to load the trailers? What is the best process for the clients to adopt if they know they are going to be late? Can this be adopted as a standard procedure and used in their training? The invoicing activity can be studied using the same approach. Can the time taken be reduced and the errors (if any) be eliminated?

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The Start Point There are a number of ways to carry out a review of productivity–here is one: Start by taking an overview of the business and breaking it up into its major components, for example: Human Resources [Training, recruitment, FaHCSIA related activities such as special recording on clients and all other aspects of the business that can be grouped under the general heading of human resources.] Office [For the purpose of this exercise this could include management, sales, invoicing and pricing, accounts etc] Workshop [This could include maintenance, purchase of consumables and possibly activities that incur inside the factory or shed such as packaging etc] Field Operations [This would include all activities carried out by the work crews.] Assume you start with „Field Operations‟. Go back to pages 3 and 4 above and use the work study approach. Record everything that happens. Perhaps use a very large sheet of paper and start at the beginning of the day. The first entry might be the supervisor arriving to unlock the shed and prepare for the day. How long does this take and what did the person actually do? The arrival of the clients. Possibly record the time of arrival of the first client and the last. What steps then occurred? Did they go to their lockers and deposit their clothes etc, The loading of the vehicle. Was there a procedure? How long did it take? The departure of the vehicle? When did it occur? What maps/directions/job lists/special requirements did the supervisor take with them? How were they prepared? By whom? When? Driving pattern? Did they take the most direct route to the job? Did they divert to buy some lunches/a newspaper? Arrival at the job? Was the equipment unloaded according to a set procedure? How long did it take? Preparing the clients for the job? Was there a set method for the preparation process? Did those who take longer to prepare also help to unload or were they dressing whilst the more active clients were assisting with unloading the trailer?

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Job organization? How quickly were the various job allocated? How were they allocated? Did the equipment start at the first attempt? This process is continued for a typical day. It may be necessary to repeat the exercise and it may be advisable to do it in sections. For example, just the period from the first activity of the morning through to say leaving the building on the way to the first job.

The next step involves a critical review with the assistance of the supervisors and say some of the clients. Start the process by looking critically at every activity. For example, the arrival of the supervisor in the morning? Do we even need someone to arrive early? If so, how early? Who is the best person to arrive and what do they do on arrival? Why? Is there a best order in which things should be done? Now work out the most cost effective way of carrying out those steps that everyone has agreed are necessary. Establish how long it will take to carry out these steps. This then becomes your standard time and can now be written up as a standard procedure. Install this new method/procedure. Every now and again review the procedure to check that people are following it. If better methods have been developed, then amend the procedure and the standard times. The standard time, once it has been checked and been found to be realistic can now be used in the costing process. The standard method can obviously be used to train new supervisors or clients who are carrying out these roles. From the above process there will be number of changes. Examples of Different Approaches The trailer is always loaded the night before. Supervisors arrive half an hour before the clients and are ready to leave exactly on the hour with five minutes leeway only for late arrivals. Supervisors collect clients on their way into work in the morning. Trailers have a standard list of equipment regardless of the job, which is listed and responsibilities allocated for loading sections of the trailer to different clients. There is a checklist for each step.

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Preventative maintenance programs have been developed for every piece of equipment. These are divided up into daily, weekly, monthly and three monthly checks. There is a checklist for each. There are two sets of fuel containers. Those taken out during the day are all removed from the trailer(s) on return at the end of the day. The „new set‟ of fuel containers are loaded and all of the old set are checked during the following day to ensure that they are full. [Thus every fuel container on the trailer(s) at the start of the day is always full. Checking the other returned set is now part of the „daily preventative maintenance programme‟.]

Tracking the Improvements in Productivity As a rough rule of thumb it is usually possible to achieve about a 10% improvement in productivity in most work-study situations at the first attempt. Each time it is repeated, the size of the improvement tends to be smaller. One measure that can be used is the percentage or ratio of chargeable hours to paid hours. If this is measured say weekly for each crew then the improvements can be tracked. Unfortunately it will also be influenced by events such as lack of work or wet periods when it is not possible to work outside. However the counter argument is that if a Business Services has alternative work ready then the crews can be kept productive even though there are no lawn and garden activities. [See Paper#3, „Work in the Slow Months‟.] The following hypothetical „crew one‟ has tracked its results over a six-week period and shown an improvement from 52% to 58% in the percentage of chargeable hours to paid hours.

Chargeable Hours/Paid Hours Percentages by Week [Crew One] 60%

58%

54%

52%

50% 1. 2. 3. 4 5 6 (weeks)

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It is acknowledged that this improvement could have come from a lucky break when the Business Service was successful say in winning a tender to maintain a cemetery that was less than five minutes drive down the road. Thus the improvements in productivity had nothing to do with adopting better procedures.. There was a significant drop in non-productive driving time! However a good manager would recognize this factor and would expect to see a big jump or improvement over one or two weeks after taking on the new job. There should still be further productivity improvement through adopting better work methods.

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PROFITABILITY

Productivity and Profitability It is possible to have a lawn and garden operation operating at low levels of productivity and still be making a profit or surplus at the end of the year. It is also possible to have a very efficient business or one operating in a very productive manner but producing a loss or deficit at the end of the year. People can be working very hard but losing money or making very little. This is sometimes referred to as the „busy fool syndrome‟. The following points cover areas, especially as they relate to sales and marketing that overlap with topics that have already been covered above under the general heading of „Productivity‟. [Paper #8, „Sales and Marketing‟ will cover in greater detail some of the items, which are discussed later in this Paper.]

Breakeven Analysis The costs of operating a business can be broken into two parts: Fixed costs. Typically these are costs that do not vary significantly with output. For example rents, insurance administration etc Variable Costs. Typically these are costs that do vary with the level of activity. For example wages, fuel, repairs and maintenance etc. To achieve breakeven, that is to cover all costs for the year, a business must achieve a certain level of profitable sales. This is called the breakeven point. A business must earn sufficient revenue to cover both the fixed and variable costs. This can be expressed as an annual sales figure and expressed as say a weekly or daily sales target necessary to achieve this annual sales budget. It is also possible to express this as the number or percentage of chargeable hours with the key assumption being that when those hours are worked they will be charged out at hourly rates that cover all costs and hopefully earn a profit or surplus as well.

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Five and only Five ways to improve Profits There are only five general ways in which any business can improve its profits. They are:

Increase the selling prices

Increase the volume of business

Change the sales mix

Reduce the costs

Sell surplus assets

Increase the Selling Prices This is a key management activity. The cost of doing the work must be fully covered and ideally the price should include a profit margin. [See comments above about breakeven analysis.] Frequently a lawn & garden business must increase its prices to cover increases in costs. The amount of the increase can be based around one or more of the following strategies.

Pricing Strategies Pricing based on the costs of operation. One Business Service recalculates its costs each year and then recosts all of its contracts. Where the costs are higher than the existing prices it is a signal to increase the prices. Thus the cost of doing the work forms the basis for determining the selling price for the work.

Pricing based on competitors‟ prices. The start point is to find out who are the competitors. Generally this is done by first segmenting your market and determining in which sectors the competitors operate. In the lawn and garden market there are two fairly distinct segments, residential and commercial. Some operators service both but many service just one or the other.

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Residential The residential market is usually made up of many smaller jobs. Typically they are cutting lawns, trimming the edges and removing the cuttings. This sector generally has numerous competitors, usually „one man bands‟ and especially franchise operations such as „Jim‟s Mowing‟. Through friends or relatives it is generally possible to find out what are the current prices for domestic work. This then indicates approximately how much can be charged for a typical residential contract.

Commercial Larger jobs are usually commercial in the sense that the employing agent is an organization or a company. Public liability insurance and GST registration are normally required. The „one-man band‟ often does not own larger pieces of equipment such as „ride-on mowers‟ and „slashers‟, which are often required on the larger commercial jobs. This work usually has more price variability because there are greater differences in the type of work. Over time it is usually possible to establish an approximate indication of the pricing levels. The pricing strategy in these cases is often based around what your competitors will charge.

Pricing based on what the market will bear. This pricing approach will generally achieve the best results. Your prices are slowly but steadily increased until some contracts are lost on price. A competitive strategy might be for example to keep increasing prices until about one third of the jobs quoted are lost on price. If there are insufficient contracts available on which to quote then every attempt should be made to try and find out by how much your price was above or below the competitor(s). Sometimes the customer will tell you if asked but will not usually volunteer the information. However when you lose a contract it is always useful to investigate and try to find the reasons for not winning the business.

Increase the Volume of Business Could you do more work with the same crews? This may involve longer hours but possibly for only the peak of the season. This could then be matched with shorter hours during the slow months of the year. An

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Australian Workplace Agreement [AWA] could be negotiated if the changes cannot be achieved under the present award. Another option could be to increase the capacity to do more work by purchasing bigger/faster/more reliable machinery. Thus the hours are not necessarily increased but the productivity is, through capital investment.

Change the Sales Mix Imagine you are in the trucking business and you have two trucks. One small flat top which can carry about six pallets and one very large truck capable of carrying about twenty-five tonnes or say forty-five pallets. Clearly with the small truck you will search for suitable work, which could be small deliveries around the town. The large truck will be used for long distance interstate work. In other words you seek the work, which will suit the productive assets you own. Consider now two lawn and garden crews that work for a Business Service. Can you achieve a good match between the skills of the crews and the type of work? Can you change the type of work you seek to suit the skills of the crews? In other words can you change the sales mix to maximize the productivity of the two crews? This may require restructuring the composition of the crews. Could the most appropriate supervisor be teamed with the correct clients to do a particular type of work? This might be large mowing contracts using only ride on mowers. The other crew might be „tailored‟ to do smaller commercial work requiring lower skills. This could include training new clients for possible later moves to the other crew. The sales effort is then directed to the two different types of work to ensure there is a good „fit‟ between the job and the crew, which will ensure the highest productivity levels for each crew. That is, changing the sales mix. A variation on this approach is to segment the work by the nature of the activity and „tailor‟ the skills of the crews according to the nature of the work. A range of typical jobs could include: Job Segmentation Jobs can be categorized by the increasing level of complexity and skill necessary to do the task. The following list is not exhaustive or necessarily ranked in the correct order: Rubbish removal Lawn and garden maintenance Pruning Supply and spreading of bark chip, mulch, sand, gravel etc

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Earthworks Retaining wall construction Landscaping Landscape design Installing irrigation systems Weed spraying Paving Fence repair/painting Water blasting of paths Window cleaning Pool care Tree removal Jobs would be selected according to the best „fit‟ with the crews. Yet another aspect of sales mix is to gradually drop those contracts that entail a lot of unrecoverable drive time and focus on work, which is closer to the base and thus avoids a lot of unproductive time. In other words by changing the sales mix.

Reduce the Costs The section on productivity has already addressed a number of these issues. By following the work-study approach many of the unnecessary costs will have been identified and hopefully plans put in place to have them removed or reduced. However the focus of work-study tends to be on existing operations. It may not prompt a manger to ask some of the more strategic questions such as vacating the present premises and moving to a smaller building. Should we open a new site on or close to the major new contract which would eliminate travelling time altogether? One approach is to use work-study for all operational or variable costs and then to have a formal meeting say twice a year when all other costs are debated. The profit and loss account is a useful start point with every cost listed to at least be examined. This might raise issues such as: What level of insurance do we really need? Could we drop all our fixed telephone lines and just reply on mobile phones? When vehicles are due for replacement should we switch to only diesel powered utes? Could we heat only part of the workshop during the winter?

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Cost reductions should also be investigated in other areas such as accounts and invoicing. Does the accounting software have the facility to produce a „works order‟ which the supervisors could use and it then becomes the basis for raising an invoice? Would this reduce errors and save time in the office? Could the person handling phone orders also do the job planning?

Sale of Surplus Assets This activity or direction is likely to yield the lowest benefits in terms of improving the profits but is included for the sake of completeness. Frequently organizations are reluctant to sell assets, which have reached the end of their economic life. The manager or supervisor will make comments such as: “ you never know when we might get another job like xyz when this machine could be ideal!” “we won‟t trade in the old trailer because it may be needed again” “a spare ute is always handy to have” “we always keep a few of the older mowers as spare parts” “we tend to keep old computers because you don‟t get much for them and they could come in handy” The end result of this approach is sheds full of junk which occupy space. In the case of vehicles there are costs of insurance, registration and so on. Then there is always the temptation to respond to the request: “look, I could take the old ute home as that will save you needing to find space for it each night”. Before you know it, someone has established the right to a vehicle and when it is finally sold, the staff member asks for another vehicle or some form of compensation.

Generally it is best to trade the item of equipment in when purchasing the replacement. For items with no trade in value such as older computers for example, it is better to dispose of them or offer them to staff/clients for a nominal value. Good housekeeping in a factory situation usually requires „a place for everything and everything in its place‟. This normally does not include surplus equipment, which can often be seen dumped on a mezzanine floor or thrown in the corner of the workshop. This is poor housekeeping and often leads to accidents as the areas become congested with junk.

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A good question to ask is; Lets assume that we did need that particular item of equipment again! What would it cost us to buy another in similar condition or how much would it cost, to hire it, to do a particular job?‟ A simple decision rule could be: If it hasn‟t been used in the last twelve months-sell it or dump it! The proceeds from the sale of surplus assets contribute directly to the results for the year in which it is sold. There are indirect benefits already referred to above in terms of good housekeeping and possible savings from not needing to maintain the equipment/vehicles.

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Management of a Lawn & Garden Business Service

In most businesses there are generally only a few key things that a Manager really needs to concentrate on to manage the business profitably. Expressing this a different way - a manger must learn what are the key levers to pull to improve or maintain the profits of the business. What are the key levers to pull in a Lawn and Garden Business? Chargeable Hours In Paper # 6, „Job Costing‟ there is a worked example, which explores the costs of carrying out a typical job. The costs are based on actual results from a number of the members of the Lawn & Garden Group. The principal cost components per hour in the worked example in that Paper were: Supervisor Client/employee Equipment Fixed costs $41.00 $5.20 $2.00 $4.00

Based on the above figures the key cost or largest cost per hour to „manage‟ is the supervisory cost. This has the added advantage of ensuring that the time of the clients/employees is also used to the best advantage. This is due to the fact that the supervisor is part of a team. Each supervisor usually has under their direct control say three or four clients/employees. If the supervisor‟s time is being efficiently used it is likely that the clients‟ time will also be efficiently used. To effectively manage the supervisor‟s time the most direct management tool is chargeable hours. If every hour the supervisor is paid, can be charged out to a customer, then it is theoretically possible to achieve 100%. Expressing this a different way-the supervisor has no down time or time when they are not being productively employed. [A realistic figure is hopefully in the 60% to 75% range.]

Pricing This is another key area to manage. As mentioned above it is possible to be working very efficiently but not be making any money. The prices charged for the work are too low.

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To avoid this a manger must ensure that two things are happening: The figures used to quote on all work are realistic and capture all the current costs. The process for establishing accurate costs is set out in Paper#6, „Job Costing‟. The second key thing to check is that the actual time to do a particular job is the same or close to the time quoted for the job. To „manage‟ this, a manager should take a few jobs each month and check that the actual time to do the job and the quoted time are similar. Preferably the job should be taking less time than that quoted. Start with any new work to ensure that the quotes have been done correctly. If possible the person doing the checking should be different from the person who prepared the quote. If the times are incorrect then the prices should be renegotiated or if that is not possible then prices on other jobs will need to be increased to cover the shortfall.

The Breakeven Level of Chargeable Hours The third factor to manage is the level or the total number of chargeable hours worked in any given period. For example in the worked example in Paper #6 „Job Costing‟ the breakeven level of sales is achieved at around 45% chargeable hours to paid hours. Below this level there is not enough revenue to pay for some of the fixed costs. This is important, if there are significant „slow periods‟ in the year. A loss in one month must be made up in later months. It is generally easier to avoid the need to „play catch up‟. Every manager and supervisor should know the number of chargeable hours in the day required to achieve breakeven and to achieve budget. To summarize: Senior management need only focus on: the chargeable hour percentages the monthly checks on times quoted for work and times actually taken using current costs ensure that the business is operating above the break even level of sales. With these three basic controls it is possible to ensure the business is being effectively managed.

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Clearly there are many other aspects to managing a lawn and garden business particularly as they relate to the people side of the business. All these activities must also be addressed but from a financial management control perspective only the three areas identified above are significant from a strictly economic point of view.

MONTHLY MANAGEMENT REPORT A hypothetical monthly report prepared by the manager of a Business Service could be presented to the General manager along the following lines:

MONTHLY REPORT
April 200x Chargeable Hours

ABC LAWN & GARDEN

Week 1 Week 2 Week 3 Week4 Week 5 Total for Month Target Average for Year to Date Comments: Crew One. The supervisor on sick leave in week2. New contracts starting this month estimated to increase % to average of 46% for remainder of year. Crew Two. New supervisor still settling in. Weeks 2&3 two key clients on sick leave. Overall still have too many small jobs. Main problem excessive travel times and size of jobs. Three quotes delivered in last two weeks for retirement homes. Expect to know outcome in one week. Monthly Cost Checks [Minimum 5] Customer Quoted Price BP Service Station, Smith St Ross Retirement Centre St Joseph‟s School BP Service Station, George St Police Station, Ross Energy Australia $90 $890 $510 $110 $90 $1780

Crew One 52% 44% 56% 54% 50% 52% 55% 53%

Crew Two 31% 23% 24% 33% 36% 28% 48% 31%

Estimated Cost $85 $1120 $520 $90 $95 $1530

Variance $5 ($230) ($10) $20 ($5) $250

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Comments: The only major concern is the Ross Retirement Centre. It is on a fixed contract for seven more months but we are going to ask for the work at their other retirement centre where we know the Manager is not happy with their existing contractor. We plan to save some money on that job to offset the loss at the Retirement Centre. Variances on other jobs not significant except for Energy Australia where the customer is happy with the work and we expect to be able to maintain the profit margin. Profit/Loss We are still operating below our break even level of sales due to the performance of Crew Two as set out above. We expect that it will take a further three months before breaking even. Other : [The Manager would then comment on any other aspects of the business.] Signed ……………….Manager.

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POTENTIAL RESULTS IF CHANGE IS IMPLEMENTED In the example referred to in Paper #6 „Job Costing‟ on page 19, reference is made to a chargeable hours figure of 52%. If this figure could be increased to 58% it could have a significant impact on the annual profit of $30,000. Based on the following key assumptions: Extra work could be found for the garden crews to fill the time now available due to the improvements in efficiency. The profit margin in those sales was similar to the other work. There would be no other significant costs to carry out the extra work excepting possibly some minor additional cost for the extra operating time of the equipment. The impact could be: Additional sales revenue $31,000 Cost Savings $34,000 Increase in the annual profit from $30,000 to

$95,000

[Note that some Business Services are currently operating at around the 75% of chargeable hours to paid hours.]

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SUMMARY AND CONCLUSIONS

There are three key actions that management must undertake:

1. Ensure that the annual revenue or sales of the lawn and garden operations are sufficient to cover both the fixed and the variable costs over the year. In other words to operate above the break even level of sales. 2. Ensure that the prices charged (ideally) for each job are greater than the cost of doing the job. 3. Ensure that the work crews are employed in productive activities for as many hours as possible during each and every working day.

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PAPER # 2

TENDERING AND REGIONAL CONTRACTS Purpose This paper sets out to provide background information on tendering and contracts.

Disclaimer The comments made in this paper are designed to assist all members of the Lawn & Garden Group. Some of the observations are critical of the tender process and the organizations including State and Federal Departments that let and administer the tenders. Not all the criticisms apply to all those mentioned but are included to alert Business Services to the possibility that some could apply to the tender(s) in which they are interested.

GENERAL CHARACTERISTICS OF TENDERS The majority of the following comments apply to tenders in New South Wales and can be found on the internet at www.tenders.nsw.gov.au, just follow the links: Procurement Guidelines December 2006 Code of Practice for Procurement

It is expected that the contents would be very similar if not identical for all other States and Territories.

Objective The objective of tendering is straightforward: “The NSW Government wants its procurement activities to achieve best value for money in the expenditure of public funds while being fair, ethical and transparent”.

Code of Conduct The NSW Government has a Code of Conduct to which the State Government Departments, the tenders and service providers are all expected to adhere.

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Standards of Behaviour All the participants are expected to behave in accordance with the following standards: Honesty and fairness Accountability and transparency No conflict of interest Rule of law No anti-competitive practices No improper advantage Intention to proceed Co-operation Further details defining these terms are available in the documents outlined above. However a common sense definition applies in virtually all cases.

Practice Requirements The processes should be designed in a manner, which reduces costs for all parties, and there should be a commitment to best practice. Some of the areas where this commitment can be demonstrated are: Client focus, service quality and value for money outcomes Ethical business practices Management of procurement risk Tendering and contract management Co-operative relationships Non-adversarial dispute resolution Planning and management of human, physical and financial resources Environmental management Occupational health and safety management, and workplace injury management Workplace practices Industrial relation Training management Aboriginal participation Supply chain management Payment practices, including reflective practices down the contract chain Innovation in design, service provision, processes and use of technology It is interesting to note that there are no specific references in the latest Code of Practice to the employment of people with disabilities unlike the reference to „Aboriginal participation‟.

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Sub Contracting There is specific reference to-“A service provider who contracts with the client agency is accountable to the client agency for the standards of performance, behaviour and ethical conduct of all the service providers down the contact chain”. Thus if say a Business Service enters into a sub-contract relationship with a successful tenderer then they would be expected to operate to the standards as laid down in the original tender. Note that further comments are made later in this paper about this subject.

Tendering Categories There are three main generic tendering categories: Open tendering. As the name suggests this occurs where a tender is open to all comers. Multi-stage tendering. This is used to cull a large number of tenderers based on their response to an „Expression of Interest‟ or „Request for Tender‟ documentation. Thus a number of „pre-qualified‟ tenderers are identified. This could be used to establish a panel of contractors to undertake a series of similar activities in an ongoing work programme. Limited Tendering. This involves limited tendering or direct negotiation. It is usually used in emerging situations, for specialist work and where there are a limited number of service providers known to be able to carry out the work.

Evaluation Criteria All tenderers are expected to be familiar with and comply with the „Code of Practice”. The evaluation criteria are to be clearly stated in the conditions of tendering and should be consistent with the proposed contract requirements with the aim of identifying the best value for money. The criteria will be weighted depending of the nature of the tender. Some of the factors, which could be included, are: Whole of life costs including disposal Ability to meet code requirements Innovation offered Delivery times offered Quality offered Previous performance of tenderer Experience of tenderer and personnel proposed Capability of tenderer including technical, management, human resource, organizational and financial capability and capacity

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Tenderer‟s occupational health and safety management practices and performance Tenderer‟s workplace and industrial relations management practices and performance Tenderer‟s environmental management practices and performance Tenderer‟s community relations practices and performance Value adding components such as economic social and environmental development initiatives, if appropriate and relevant to the procurement Conformity to tender with requirements

Tender Negotiation The “Code of Practice” includes the provision for negotiations to take place if there is a level of non-conformance or lack of value for money in submitted tenders All participants are to be advised before negotiations commence.

Debriefings If a tenderer has been unsuccessful, the Department is available to explain how their tender performed against the evaluation criteria rather than against the successful tenderer. Thus enabling them to improve future tenders.

Compliance There are no specific reference in the Code about how the compliance with the tender is carried out, only references about reporting breaches and how to deal breaches of the Code.

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TENDERS AND CONTRACTS IN NSW

The difference between Tenders and Contracts The legal definition of a tender and a contract can be identical with the same conditions applying to both. The common practice however is to refer to a tender, as a „Government Tender‟ with the implication that it is managed according to the terms and conditions as set out in the „Code of Practice‟ and the „Procurement Guidelines‟ already outlined in this Paper. A contract is usually a written document, although it can be verbal, which sets out the requirements of the task. They are usually less formal in nature and frequently do not involve the same processes as tenders, especially the „Standards of Behaviour‟, as set out on page 2 of this Paper.

Who Lets Tender and Contracts? Many of the State and Federal Government Departments let tenders. Some of the better known are: State NSW Department of Housing NSW Department of Education Sydney Water Catchment Roads and Transport Authority [RTA] RailCorp Power Stations and electricity distribution facilities National Parkes NSW Police Federal Department of Defence-Housing Department of Defence-Military Facilities Department of Veterans Affairs

In addition to the federal and State Government Departments many of the local Government authorities let tenders or contracts: City Councils Water boards Gardens

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There are a range of non-profit organizations: Schools Churches Retirement Homes and Villages There are a range of „for profit‟ organizations Factories Motels/hotels/tourist operations Commercial buildings Mining operations

How Big is the Market for Tenders and Contracts? The total value of the tenders and contracts market in New South Wales has not been estimated. The combined turnover of the eighteen Business Services that make up the Lawn & Garden Group is estimated to be around $4 to $6 million. One indication of total size of the market is the value of the NSW Department of Housing tenders for the area from Mt Druitt to Katoomba, of $1.7 million. This is made up of seven separate tenders each valued at $200,000 to $300,000. The total market in New South Wales is guesstimated to be in excess of a hundred million dollars. There is plenty of room for Business Services to increase their market share. Especially as the above guesstimate does not include any allowance for the domestic residential market.

Market Segmentation The market can be segmented as follows: Residential and Small Commercial Segment This market is serviced by franchisees, typically one person operators, members of the „grey army‟ and other individuals, often operating without insurance cover or registered for GST. Small Commercial Segment and Small Contract Segment Typically two or three person small businesses, including Business Services meet the needs of this segment. This could include landscaping businesses that would include these services as part of their overall operation.

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Large Contracts and Tenders Segment Major operators including those with regional or Statewide coverage would operate in this segment. For example a company may have a regional contract from a major bank to cover the State or a region. In some of the smaller towns the work could be sub-contracted by the major contractor.

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BUSINESS SERVICES AND TENDERS/CONTRACTS

The Experiences to Date About half the members of the Lawn & Garden Group have either had experience with tenders or are currently involved in a tender. Almost all are supplying services under some form of contract arrangement. These can range from a simple note on the requirements of the job to a set of conditions similar to those found in a Government tender. Many of the Business Services are part of larger organizations that provide accommodation services or operate retirement villages and nursing homes. These inhouse arrangements include informal/formal contracts specifying the work involved. Some commercial organizations such coal mines and water authorities have a variety of arrangements but nearly all state their requirements in a format that could be construed as a contract and thus enforceable by law.

The Advantages Sales and Marketing Once say a $100,000 contract, measured on an annual basis, has been secured the management team is then free to seek out other work. Compare this to say domestic residential work. Assume each job yields sales of say $50 and there are four jobs per annum per customer. It requires 500 customers to achieve sales of $100,000 in a year. Or if there were eight visits a year with each visit yielding $50 it would still require 250 customers to equate to sales of $100,000. Administration Assume the same situation as under „Sales and Marketing‟ above. In the case of the $100,000 contract, depending on the terms and conditions it is likely to require a monthly invoice. Twelve invoices per annum but probably with a reasonable amount of supporting information. The 250 or 500 customers will require a minimum of four or eight receipts for each payment. A total of 2,000 transactions in each case. Some may be in cash, some will be invoiced but all must be recorded and in some cases will require visits to the bank to lodge the cash. Work Planning and Efficiencies Many of the tenders are for work, which is geographically concentrated. For example a NSW Department of Housing tender may have say 1200 homes/units/apartments in the one tender but they may only be located at say

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50 sites or estates. Thus a work crew can move from job to job with minimal loss of time. One Business Service for example has one crew permanently assigned to service one tender. The planning task is relatively simple when compared to a variety of jobs spread across a town or part of a city. Seasonal Work Variations Many tenders and contracts call for regular visits to given locations including periods of low seasonal growth. These requirements help to reduce the variation between the months of high and low workloads.

The Disadvantages Time to prepare tender documents A typical Department of Housing tender in western Sydney could contain 1200 units/apartment/dwellings spread over 50 estates which would require individual visits when preparing a tender. This work can be very time absorbing.

Consequences of under quoting on a tender Should a Business Service under quote on a tender which could have say a two year duration then the financial implications could be very serious. It may be possible to withdraw but there could be financial penalties and it would prevent the Service from applying for tenders in the future. Consequences of not reading a contract carefully. Members of the Lawn & Garden Group emphasised the importance of reading the contract carefully. You cannot necessarily assume that a contract from the same organization will be identical. One Service in particular mentioned how they had been forced to repeat work due to changes in the contractual conditions. Consequences of not visiting a site(s) before submitting a tender. One Business Service failed to visit a particular site only to find that the single storied dwelling was on a steeply sloping site and that the gutter cleaning would require a supervisor with special equipment/training to clean the gutters due to the height. Consequences of the loss of a contract If a render is a major part of the business turnover and the tender is lost then there could be some disruption to the Service until the sales were again built up.

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Criticisms of Tenders Some Business Services have stated that companies who know that they won‟t be held to the specific requirements as set out in the tender documents, have won Government tenders. In other words they assume that the conditions or standards of the tender will not be enforced. This point has been specifically raised with the NSW Department of Housing and they were quite specific that this point is now being addressed and demonstrated the point by showing examples of documentation where successful tenders were being forced to go back and complete the work to the standards, as set out in the tender documents.

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HINTS ON COMPLETING TENDERS

Data and other Information Required It is a regrettable but true fact, that many civil servants need to protect themselves, thus all the „boxes‟ must be filled in and thus the person responsible can demonstrate that the decisions made, exactly conform to stated policy, for letting tenders. Do not skip or omit to supply any of the requested pieces of information when preparing the tender. Many tender documents require identical information. Much of this is of a statutory nature. It is strongly recommended the „Auto Text‟ feature in Microsoft Word be used. Blocks of text can be stored and recalled to place in tenders. This can include time absorbing details such as the insurance policy numbers or details about individuals CV‟s. One of the characteristics of nearly all Business Services is that they have strong human resources departments and personnel. Thus details about training and personnel with formal training skills can be highlighted. References are often required. Again these can be organized well before the tender is due and repeatedly used for tenders, contracts and in many situations to „strengthen‟ the sales offer. They too can be stored in „Auto Text‟ and easily placed in documents. Many of the larger companies have an impressive list of prior or current clients. Don‟t be discouraged. If you clean the local Coles car park and sweep the forecourt of the Caltex service station then you are quite entitled to list Coles and Caltex as two of your clients. Insurance covers by Business Services are extensive. Make a point of highlighting the insurance cover. WorkCover and OH&S concerns are often at the back of the minds of people evaluating tenders. Clearly a Business Service poses special problems, at least it could do, in their minds. Thus this area should receive special attention.

Non-Conforming Tenders Some tenders make reference to the desirability of better methods etc and the willingness to receive proposal, which will ensure better outcomes. Note however that the area of non-conforming tenders is sometimes quite confusing. Some tender processes will not even accept a tender that is non-conforming. Back to the „box ticking‟ process again. It is advisable to check how to put in a non-conforming tender. Some organizations require the original tender to be completed as specified and then the non-conforming section to be included as a separate section or appendix.

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Don‟t make counter offers. Any non-conforming tender is a counter tender. First submit a conforming tender and then submit a non-conforming tender.

Sub Contracting Note that if you submit a tender and propose to sub contract portions of the work as head tenderer you will still be responsible for completion of the work to the standards as set out in the tender.

How are the Tenders monitored? Reference has already been made to this aspect of tendering. It is interesting to note that one large organization is no longer able to submit tenders for the NSW Department of Housing due to poor performance with previous tenders.

Record Keeping Depending on the level of detail in the tender it is likely that the tender will require some form of recording of the work carried out and the possibility of the „books‟ being inspected. It is suggested that the required information should be built into the supervision process so that those records can „double‟ as the records required by the tender, thus avoiding additional work.

Management of the Relationship There are two strong reasons for maintaining good relationships with those letting the tender. When the tender is up for renewal you want to have established a good track record. When, hopefully only occasionally, someone in your team does not carry out the work to the required standard your good relationship with the supervisors of the tender will enable the work to be rectified with little adverse affect on the relationship and the tender.

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SUGGESTIONS ON WINNING CONTRACTS AND TENDERS [Note that additional information on sales and marketing will be included in Paper#8 Sales and Marketing.]

Business Plan Assumptions It is assumed that the Business Service has resolved the following: Either formally or informally the Business Service has worked out which market segment(s) it is going to target. The equipment and skill base of the crews have been matched to those of the target markets.

Growth Plan/Market Research The Business Service could/should identify the growth path that it is likely to develop over the next year or two. For example a Business Service with a small turnover may decide to diversify away from residential work to increase the commercial work and smaller contract work. Once the type of work has been broadly identified then a detailed search should be made of the potential work within the working circle of the Business Service. The working circle might start with say a radius of around one half of an hour driving time from the Business Service. This working circle could be increased if there are insufficient potential customers found in the first search. A careful examination of the local street directory will show all the areas of open space. These are usually coloured in green and thus golf courses, school playing grounds, parks and reserves all are fairly easy to identify. Larger organizations such as schools, factory sites, TAFE‟s, hospitals etc are usually identified in a street directory and can be added to the list. The Yellow Pages can be searched by postcode on the internet to identify further customers. A quick glance of the local newspaper may yield further leads for customers. From this examination a potential list of customers can be prepared ready for an approach.

Marketing Approach Develop a standard format for your quotations, probably using the „Auto Text‟ feature mentioned above. [See Paper #8, Sales & Marketing]

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Gain some basic knowledge about your competition. You, a member of your staff or a close friend may obtain a quote from your competitors and engage them to carry out a job. This will enable you to evaluate their pricing and the quality of their work. It is very helpful to understand your competition and to analyse their strong and weak points. If you have strong competitors start by working in those areas where they do not operate or are known not to be strong. This could be based on the type of equipment or the numbers of employees working for the competitors. Two sources of information are the local lawn and garden equipment suppliers and possibly sales people who visit your premises. One of the strong offers a Business Service could make would be to do the work for Free! Consider the cost. It is assumed that your Service is seeking additional work and thus has spare capacity or employees who could fit in additional work at no extra labour cost. Thus to do the work for the first time for free would only cost the Service the variable costs of using vehicles and equipment. The offer to say the owner/manager of the factory is “we will sweep your yard/car park cut the lawns and collect the rubbish just to show you what we can do. If we do a good job and you are happy with the work here is the proposed annual contract. If you are not happy with the work then that will be the end of it and you will incur no costs for the work we have already done!” Possible staring points when seeking more commercial work: Start with a small contract. Examples could include: Builder‟s Clean. Approach local builders wit the offer to tidy up the block after the house/unit has been completed. Hopefully this will be ongoing if irregular work. It could include landscaping the site if the Service can offer those skills. Real Estate Agent. Real estate companies often are responsible for letting properties. Some are also responsible to absentee landlords and have considerable latitude to employ people in various capacities to do work on properties. Develop a relationship with an agency to look after various types of properties. Local Government Many local government authorities have facilities. Many also have their own „works departments‟ to look after their facilities. However there are a continual stream of one-off events many of which require some additional labour input before or after the event. The annual Australia Day barbecue, the dragon boat races, the annual picnic rases, the once a year international food fair in the main street are all examples. Can your Business Services become the „fall back‟ option when there is additional labour work required? From this relationship can you gradually become „indispensable?

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Contracts and Tenders From this base gradually expand your activities to secure the work through annual or longer contracts and begin to submit tenders for appropriate work for you Business Service.

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PAPER #3 WORK IN THE SLOW MONTHS Purpose This paper lists a number of ideas that members of the Lawn and Garden Group and other Business Services around Australia have identified, that could be used to employ people productively, during periods when there is insufficient outdoor lawn and garden work.

How to use the Contents of this Paper Some, if not many of these ideas, will not be appropriate to all Services but hopefully some will offer possibilities. Most of the ideas have been „road tested‟. They are all presented in a similar format to assist you by making it easy to quickly scan the contents for their relevance to your own situation.

Selection of Projects The following projects are not ranked in any particular order. Some will suit Services located outside the bigger centres and vice versa. Note carefully that the assumptions behind the ideas may not be applicable to all Services and it is essential that prudent checking be carried out before proceeding. Just because they are listed, is no guarantee of success. It is recommended that a Business Service identify those of the most interest and then proceed to collect their own information. This list will be updated as new projects are identified and where more relevant information about existing projects becomes available.

OH & S In preparing these notes the OH & S considerations have been noted where they are known but care should be exercised to ensure that the processes are safe to operate. No formal evaluations have been carried out. Key safety issues may not have been raised and caution should be exercised. Note that in the FaHCSIA „Continuous Improvement Handbook‟, there is an attachment near the end of the manual titled, „Safe Work Checklist‟ that provides a useful guide to the initial steps required.

Economics of Operation Where figures or specific operational data is available and is considered reliable it has been included. Note however that prices and costs will vary widely and again Business Services are urged to carry out their own evaluations.

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Elimination of the Slow Months The starting point of course is to eliminate the problem altogether. Some Services have deliberately set out to secure work that is less susceptible to variation. For example where the contract calls for a mix of work including sweeping, removal of rubbish and general „clean up‟ which is necessary even during the height of the summer or during the colder months then the variation in the volume of work can be reduced. For example: Contracts involving maintenance of factory exteriors Car parks around say supermarkets Areas which members of the public use and thus litter accumulates Facilities where appearance is important to the customer and thus it is necessary to maintain high standards even if it only involves the removal of a few weeds etc. Examples could include some aged care facilities, head offices and State and Federal Government Offices.

The NSW Department of Housing tenders often call for a regular visits to the various locations to ensure that all the common areas are kept clean etc. These tenders provide regular work schedules with the understanding that at some times of the year, say after periods of rainfall, there will be more time required to maintain the green areas.

Scale of the Problem All Services are to some extent different thus it is difficult to generalise. The size of the problem can vary over time. For example at the beginning of a dry period the volume of work may not vary significantly but as a hot dry summer progresses the volume of work can continue to decline. Some Services have reported that the variation in the volume of work between a „standard‟ workload and a slow period is about a day a week. In other words about 20%. One Business Service has worked on reducing the problem of the slow months. It has managed to reduce the variation in sales between the busy month of November and the slow month of July to 14%. In the slower months the staff and employees are also encouraged to take their annual leave.

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Useful Hints to Enhance Existing Services Many if not all of these „hints‟ have already been adopted or practised by nearly all the Services but are listed as a reminder. They are not considered significant enough to rate the title of „Project‟ but could offer chances to both expand existing services and to generate some additional work in the slow months.

Additional Services that could be offered, when on site: Washing out „wheelie bins‟ Stacking firewood away in a shed Painting fences Cleaning gutters Trimming trees [generally trees that do not require a ladder to reach the branches to be trimmed.] Spraying for weeds Yard clearing Council clean ups. [Helping older people get goods out ready for collection]

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PROJECT-KINDLING Brief Description Cutting, splitting and packing dried kindling into plastic bags for sale through retail outlets. Marketing The target market is homeowners who need kindling to light their domestic fires, usually during the winter months. Note that many of the larger cities do not permit open fires or actively discourage them. The key is to establish a number of suitable retail outlets prepared to stock the product. For example, petrol stations will often stack bags of kindling, sometimes on pallets, on the forecourt. Distribution As usual this is the key to the success or failure of many business activities. The Business Service that prompted this write up has secured an arrangement to supply bags of kindling to a firewood merchant who has a contract in turn to supply a number of petrol stations across one of the regional areas in an eastern State with bagged firewood and kindling. Thus the distribution is assured, no doubt at some loss of margin. It is interesting to note however that the labour involved and difficulty of packing the kindling was the reason given by the firewood merchant for their interest in using a Business Service. Manufacturing One of the keys is finding a good source of dried wood. One of the best sources is offcuts from timber processing plants that use kiln dried timber. For example timber mouldings are sold „cut to length‟ and thus there are a number of short lengths produced as off-cuts that are usually less than 300mm in length. Should longer lengths of timber be sourced then they will need to be cut to length. This will involve the use of a cut off saw. There are a number of models available. A „pop up‟ cut off saw has a number of safety features, which may make it more suitable for use in a Business Service. A second hand saw of this type should be about $5,000. Note you may also need a sawdust extractor; say another $1,000 depending on its size. Another source of timber for kindling is off cuts from framing timbers as this material is also kiln dried. [The kiln drying process, as the name suggests, removes most of the moisture.] Because this timber is larger in cross section it will need to be split. There are at least two ways of doing this, cutting with an axe or splitting using a wood splitter. An axe has its problems. GMC Power Tools produce a simple wood splitter and can be purchased from „Bunnings‟ for about $499. They will probably not carry them in stock but will be able to source them. When operating, both hands must be used to hold down the switches, which activate the ram, which splits the wood. At least one Business Service is operating one of these machines.

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The split wood is packed into bags, which are pre-printed with the weight of kindling showing on the front panel. A simple bar sealer will seal the plastic bags. People There are OH&S issues when using machinery. The use of gloves is clearly recommended if the timber is prone to splintering. As machinery is likely to be involved close supervision is necessary. There are a range of jobs when producing kindling with some tasks suitable for less skilled employees. Economics With a stack of wood waiting to be split/packed and very little start up time, this is a good process to „have in the corner‟ and can be operated during „quiet times‟. One person supplying timber to the splitting machine, one operating the splitting machine, one collating the split timber and packing the bags and finally one weighing the bags then sealing and packing on to pallets, makes up a possible crew. Clearly there are many ways to arrange the work crew including only one person doing all of the above functions. Note that the above assumes the timber is all cut to length. If not a crosscut drop saw would be required with usually a non-disabled person/supervisor to operate it.

Points to Note Distribution is the key. In New South Wales kindling is sold by weight and there must be at least one set of scales on the premises that have been approved by the State Government. [See www.fairtrading.nsw.gov.au] Note that many retail outlets will already have supply sources resolved so you may need to find new outlets or develop relationships with existing retail outlet and possibly their suppliers. Contacts/Further Information Moonya Inc. Wonthaggi. 03 5672 3411

PROJECT-PAVING SLABS Brief Description Concrete is mixed using a standard portable concrete mixer seen on any building site. The mixed concrete is then poured into moulds to produce the concrete paving slabs. Marketing Generally this is the starting point by identifying local outlets that are prepared to stock and sell the finished product. Possible outlets are:

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Garden Centres Sand and gravel yards Landscape Gardeners Hardware and building material outlets Note that local areas may have a preference for particular sizes and styles. It is also possible to make coloured concrete products and slabs with pebbles imbedded etc. Manufacturing One Service involved in this activity uses it when their lawn mowing crews return early and they wish to maintain the chargeable hours for their employees. The sand, cement and aggregates are purchased in bulk. The cement mixer is started and the crew physically shovels the correct mix into the mixer and proceeds to fill the moulds. Finished products are periodically delivered to the local garden centres. The local sand and gravel yard assisted with advice on the correct mix and also stocks and sells some of their output. People Attention needs to be paid to ensuring that the correct mixing procedures are followed. The work is fairly physical but by changing positions/tasks at intervals the workload can be spread and by working with smaller batches the amount of heavy work can be reduced. Economics There is often a wide variety of prices paid for the ingredients but with some patient negotiations, especially using the point that this is on-going work it is usually possible to secure significantly lower prices than the standard retail price levels. Freight is also often a major cost consideration. If the quantities purchased can be in full truckloads, say 10 to 12 tonnes, then the cost of freight per tonne can be reduced. Note that the aggregates can be stored outside. Points to Note The clean up time needs to be noted as part of the process. Contacts/Further Information None available.

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PROJECT-HOME HANDYMAN SERVICES Brief Description A range of services offered is similar to that supplied by a tradesman or an experienced DIY‟er. Examples could include repairing fences, house or shed painting, building low height retaining walls etc. Marketing The most likely source of work is existing clients of the lawn and garden service. Ideally the supervisors would identify the opportunity and ask if the owner would like a quote to repair/fix etc the problem. This is also the time to suggest “that we would like to do the work during the months of x to y as we can bring a full crew(s) to complete the work in a short time period etc etc”. [Note that the Service is avoiding the temptation of offering a price reduction.] Manufacturing Not applicable except to comment that some tools and equipment will be required depending on the scale of the work undertaken. People Clearly the start point is at least one person, usually the work crew supervisor, with the necessary skills to carry out the work. In NSW various licenses are required for different types of work: If the work has a value of less the $1,000 [labour and materials combined] then no licence is required. For work that falls into the category „minor trade work‟ and has a value greater than $1,000 a license, costing $109 is required. The individual will need a Certificate I in General Construction, which must include certain topics. Further details can be obtained from the NSW Office of Fair Trading. There are a number of different licenses required depending on the nature of the work. Economics Clearly there are opportunities to both sell „labour time‟ and depending on the nature of the work, to undertake projects and where clients are working under the direction of a skilled supervisor reasonable hourly rates could acheived. Contacts/Further Information Matthew Martin at The Disability Trust, Wollongong, tel 02 4227 3800 is in the process of setting up a service along these lines.

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PROJECT-CLEANING Brief Description A number of Services have cleaning operations. In some cases the nature of this work has more attraction for females than males especially if the only other option is outdoor lawn and garden work. Frequently the cleaning work is of an institutional nature such as a local health service facility where the work can be carried out during normal working hours. However the work is nearly always year round and cannot usually be activated at short notice or during the slow months. An exception is „builder‟s cleans‟. Essentially this work consists of cleaning up a building site when the construction work is finished. This can also be a „good fit‟ with a landscaping service where the lawns and garden are laid out after the „builder‟s clean‟ is finished. A variation of „builder‟s cleans‟ is working for a real estate agency that is responsible for letting residential properties. After the tenants move out, some landlords ask the real estate agent arrange to have the property commercially cleaned. Again this is work that can be done in normal working hours. Marketing Cleaning can cover a wide variety of tasks and thus the marketing needs to be tailored to suit the specific cleaning work proposed. In most cases it will require an experienced supervisor to both manage the work and to obtain new work. The cleaning market can be segmented as follows: Domestic house cleaning. This is usually carried out by a single operator and/or by a husband and wife team. They may have a franchise for the area with work allocated on a geographical basis and payment may be on a cash basis. Small-scale commercial work. This would include work such as Doctor‟s rooms, other health professionals and small office areas. This work would typically be done by a small business with the owner probably doing some of the cleaning work. Unlike the above segment it is likely that the customer will require the cleaning company to be registered for GST and carry all the usual insurance covers. Large contract cleaning work. Typically this work would be won on a tender basis with a large organization winning the work. They may then subcontract the work to other local cleaning businesses. It is probable that a Business Service would work in the „small scale commercial work‟ segment. Manufacturing Not applicable.

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People As already indicated at least one experienced supervisor will probably be required to win the work and to supervise the contracts. Economics This is a viable area of activity in which to be involved. There are numerous small businesses in this sector that are making a living. Points to Note Some clients who have been working in the lawn and garden area are very reluctant to be involved in cleaning work and vive versa for the clients in the cleaning area. Contacts/Further Information There are several Business Services running cleaning businesses.

PROJECT-FILLING SILT BAGS Brief Description Long narrow bags are filled with material and then used on building, construction and major projects to prevent soil and other solids from being washed away. These bags are frequently seen on road construction sites and other earth works. Marketing The Business Service involved in this activity supplies its local council with silt bags. It will be necessary to approach the major users in any given area to find out who are the current supplier(s) and to investigate the feasibility of becoming an alternative supplier. Possible customers could be anyone involved in civil engineering activities including home builders. Manufacturing Existing bags will need to be examined but a supply of empty bags will be necessary together with a method for closing the bag where the filling occurs. The material for filling bags will be required in volume and is likely to be delivered in bulk. A simple filling operation will need to be set up. All these activities could be located inside a building or under a suitable covered area such as a lean-to.

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People No special skills are required apart from competent supervision. Economics The Service currently involved in this activity reports that it is profitable. Points to Note It is suggested that the local market requirements are accurately identified, as there may be specific local needs. Contacts/Further Information Paul Osland. The Mai Wel Group. 02 4932 8599

PROJECT-FIRE BREAKS Brief Description A Business Service in the Hunter Valley has a number of customers including coal mining and industrial service companies supplying the mines in the area. These companies typically occupy large areas. Firebreaks need to be regularly maintained. To the extent that the customer permits the scheduling of work to suit the Business Service, the firebreaks are maintained in the slow months. Marketing As the above description implies this depends on customers who occupy large areas which require firebreaks. Coal mining is a good example of these attributes. Manufacturing Not applicable People The existing supervisors and gardening crews are generally well suited to this work. Economics Subject to the terms and conditions of the contracts with the individual mining companies.

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Points to Note These opportunities are likely to be limited but maintaining similar sites such as water catchment areas and under high power lines may also be possible opportunities. Contacts/Further Information Bob Manson. Kurri Contracting Services 02 4937 5782

PROJECT-FLUSHING WATER MAINS Brief Description Mid Coast Water in the Taree area has given a contract to a Business Service, Valley Industries, to flush the water mains where the distribution network has a layout where the water is not continually flowing. Typically this is found in no-exit streets. One supervisor and a client are continually involved in flushing the pipes as described above. Marketing There is only one customer-the local water supply authority. Manufacturing Not applicable People There is considerable map reading required plus a good understanding of the correct procedures for flushing the pipes. There is only work for one supervisor and one client. Economics A vehicle is required but the contract price covers these costs and the contract is profitable for the Service. Points to Note The contract calls for a regular year round service and thus it could be argued that it does not assist during periods when the lawn and garden business is less active. However the idea is listed, as there may be opportunities in other areas to do the work for only a few months of the year. Contacts/Further Information Murray Relf. CEO, Valley Industries. 02 6552 8888.

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Conclusion The best solution is to avoid the problem altogether by selecting work that does not fluctuate throughout the year. However often this is not possible and „fill-in‟ jobs to keep the people productively employed are very helpful to any Business Service. At the time of preparing this „Paper‟ all of these activities were being undertaken by various Business Services. To repeat the comments at the start of the „Paper‟, these ideas are not a guarantee of success, as often local conditions will have a major impact on the outcome. However they are some of the ways in which Business Services have overcome the problem of finding additional activities during periods when the lawn and garden business is at a low ebb. *********************************************

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PAPER#4 OCCUPATIONAL HEALTH & SAFETY

Introduction The purpose of this paper is to investigate some of the issues that are specific to lawn and garden operations. There is a large amount of published material on the general subject of occupational health and safety that is readily available to all Business Services. Indeed most, if not all Business Services will be operating with completed documentation as part of their „good management‟ practice. This paper does not seek to duplicate this material. The aim is to briefly review those areas and/or ideas that will further enhance existing OH&S practices. It seeks to add ideas and suggestions from those working in lawn and gardening operations. Acknowledgement The following Business Services have kindly allowed their material to be used in preparing this Paper. They have asked that where appropriate, acknowledgement should be made and specifically state that no liability is accepted, should any other individual or organization use all or part of this material. Kurri Contracting Service- Hunter Valley, NSW Eloura Business Services-Blue Mountains, NSW

Safety And Efficiency Any commercial operation in Australia must satisfy the requirements laid down by the relevant safety authorities, in the State in which it operates. The penalties for breaking the law in this area are severe. The costs are significant. There are plenty of cases, particularly in New South Wales where the annual costs incurred by Business Services for WorkCover, the name for the local State government authority responsible for OH&S issues, have increased substantially due to claims made under the legislation. All managements are faced with these realities. The only way to turn this challenging environment to the advantage of a Business Service is to both meet the requirements of the legislation and at the same time endeavour to ensure that the most efficient methods consistent with that legislation are adopted. Expressing this a different way: there are a number of safe ways in which say a trailer can be loaded and unloaded by people with disabilities. However there will be only a

53

small number of ways, possibly only one, in which a trailer can be loaded and unloaded both safely and efficiently. By looking at both the business needs of the activity as well as the safety needs efficiency gains can be achieved as well as meeting the OH & S requirements. For example later in this paper reference is made to a Safe Operating Procedure [SOP] for a lawn mower. One SOP states: “Check sump oil. Ensure dipstick is clean. Note colour of the oil. If sump oil is black an oil change is required with next maintenance schedule.” Thus as part of the SOP at least part of the maintenance programme is also being supported. Another example refers to the issues such as the correct way to lower the tailgate on a trailer and the „best way‟ to load mowers on to the trailer. To achieve the most efficient methods it is recommended that „work study‟ practices be adopted. The techniques referred to in Paper # 1 „Productivity and Profitability‟ on Work Study are repeated below: Work Study Work study is a valuable management tool, which can be used by management to improve lawn and garden operations. In particular work study involves method study and work measurement where: Method study endeavours to simplify the job and develop more economical methods of doing the work and Work measurement determines how long it should take to do a particular job. The basic procedure for work study can be expressed in eight steps: Select the job to be studied Record from direct observation everything that happens Examine the recorded facts very critically and challenge every step Develop the most economical method Measure the quantity of work involved in the „most economical method‟ and establish a standard time. Define the new method and time so that it can always be repeated. Install the new method

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Maintain the new standard method. This sequence can be briefly stated as: Select, record, examine Develop, measure, define Install and maintain. The suggestion made here is that management should meld the activities of both OH&S and efficiency or lowest cost operations to gain benefits while satisfying the requirements of the relevant legislation.

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Organizing the Total OH&S Environment

When considering the range of OH&S issues that potentially face all Business Services it is helpful to develop a framework to ensure that all possible issues are covered. It is recommended that each Business Service should commence with a review of their OH&S responsibilities under three general headings:

The Business Service site under the control of management: In addition to the base from which the work crews operate this general heading includes the time that clients spend in the workshop areas and in the vehicles. In other words it covers all those periods of time other than on the premises of a customer who uses their services.

The work sites where the work crews carry out their tasks: This heading covers all the sites where the employees carry out their work tasks. It would also include any work done internally for the organization. For example if the parent organization managed or owned say accommodation facilities and the lawn and garden crew worked at these sites then there would be a SOP completed for these sites as well.

The equipment used by the crews to carry out their work tasks: This heading includes all tools and equipment used on the premises of the clients and used in the workshops or on the site under the direct control of the Business Service or its parent organization. For example if say a small area in or near the workshop was used to pack river sand into bags for a builders mix then these processes would also be included.

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The Business Service site under the control of Management: A site risk analysis is designed to identify in a logical manner the risks associated with working on that site. Clearly the normal place of work or in the case of a lawn and garden operation the base from which the work crews leave and return each day needs to be evaluated. If there is more than one site then both sites will require a risk assessment. As identified above if the parent organization has other sites such as accommodation or say a retirement home where the work crews maintain the grounds then a risk assessment must be carried out for those sites as well. Particular attention should be paid to the workshop area of a typical lawn and garden business as this will an area of high use by the employees as they load and unload vehicles and possibly assist with some of the maintenance tasks, cleaning of equipment and other routines. Should there be other activities on the site as discussed in Paper#3 „Work in the Slow Months‟, then they too will need to be covered in the risk assessment for the site.

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The work sites where the lawn and garden crews carry out their tasks: Potentially every site where work is carried out will require a site risk analysis. Clearly this is a major task. However if the sites are essentially the same then a generic or „common‟ site analysis could be used provided the risks are covered. For example a typical three bed roomed house on a level site could be very similar to another residential property also on a level site. Thus the one site risk analysis could cover that group or class of job sites. Thus it would be possible to have a series of generic site risk analyses to cover a number of possibilities. Where there is a site with specific risks then a site risk analysis will need to be carried out. For example: In the Hunter Valley, a Business Service, Kurri Contracting Service, has a contract to maintain the grounds at Orica Explosives. As part of the site risk analysis one section of the work method statement reads as follows: Hazard Risk Priority Fire, Explosion Death, burns, amputation. 3 (very unlikely, could happen but Broken bones, hearing loss probably never will) Safe Work Method How these hazards are to be overcome No flammable materials to be carried by individuals-including cigarette lighters. Safe smoking areas are clearly defined Mobile phones-only to be used in emergencies. Turned off at other times. Materials stored in bunkers, magazines, laboratories not to be handled by our staff. Obey all safety signs, barriers If alarm sounds, move quickly to designated areas and follow instructions from supervisors, Orica wardens (red/blue hats) Report smoke, smell of smoke, fire immediately and move to evacuation area.

     

The equipment used by the crews to carry out their work tasks: Each piece of equipment requires a „safe operating procedure‟ or SOP. There are three key steps when collecting the necessary data for the preparation of a SOP.

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1. The Owner’s Manual The start point for collecting the information is the owner‟s manual, which accompanies each piece of equipment. For example the owner‟s manual for the Honda HRU 216 mower contains the following points. [Note the numbered points refer to the Honda manual.] 1. Never mow while barefoot or wearing open sandals or thongs. Wear long trousers and heavy shoes. 3. Make sure the lawn is clear of sticks, stones, bones wire and any debris. They could be picked up and thrown by the blades, resulting in possible injury to the operator or others or damage the machine. 14. Stop the engine whenever you leave the mower, even for a moment. 23. Never cut the grass while walking backwards. 26. Mow across the face of a slope, NEVER up and down the face of slopes. Exercise extreme caution when changing direction on slopes. Do not mow on steep slopes.

2. Risk Assessment of the Equipment All manufacturers are required to conduct a „risk assessment of plant‟. For example Toro Australia Pty Ltd have conducted a risk assessment of their „Mid Mount, Zero Turn Mowing Equipment – Petrol or Diesel‟ which describes the hazard, the risks associated with that hazard, the possible consequences and the proposed supplementary risk control measure. It then addresses the question, „Are the control measures practicable?‟ and concludes with a statement about the action to be taken. In the case of this piece of equipment, the document runs to 20 pages. The agents or distributors who sell the equipment on behalf of the manufacturer will be able to supply these risk assessments.

3. Risk Evaluation by the Business Service The final piece of data collection is that carried out by the Service itself, when taking into consideration the employees who are members of the work crews. Individuals with a range of disabilities who operate equipment will do so in different ways, which in turn gives rise to different risk assessments. Management takes these different situations into account in completing the risk assessments.

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Completion of the Safe Operating Procedures Based on the three areas of data collection above: The Owner‟s Manual Risk assessment of the Equipment Risk evaluation by the Business Service It is now possible to complete a SOP. Some Business Services have developed a system that incorporates various task assessments and training needs into the one document, which records the training of each individual member of the work crews. Eloura Business Services for example has developed an integrated system that incorporates both a SOP and task assessment. It is also used for training purposes. Here are the first 12 of 21 steps when operating a push mower: Skill Level 1-7 2 2 Task Number 1 2 Standard Operating Procedure Steps Required Using two employees-Remove unit safely from vehicle. Place on level ground. Check fuel tanks and refuel if required (at a designated location avoid any grass surface if possible and secure the fuel cap) Check sump oil. Ensure dipstick is clean. Note colour of the oil if sump oil is black an oil change is required with next maintenance schedule Check cutting blades if necessary. Remove boot from spark plug/Tip in correct/Free rotation. Reverse procedure to set mower to original position. Set blades at maximum height. Move mower with a clipping disposal bag to site location. Determine area to be cut: discussion may be required with supervisor. Set blade height (according to ground contour and customer requirements) check with the supervisor if you are not sure about the blade setting. Check site for hazards. Ensure that area is clear of people and small children and animals. Ensure personal protective equipment is worn and this includes ear and foot protection. Set throttle in start position placing right front on the front wheel of mower to stabilize. Pull starter cord until mower starts. Set throttle to full forward position Date --/--/-Date --/--/--

2

3

3

4

3 2 3

5 6 7

3 3 2 2 2

8 9 10 11 12

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Hand Arm Vibration Following overseas developments, particularly in this case, the European Community, a new safety area of „hand arm vibration‟ is under active consideration by the relevant authorities in all States and Territories in Australia. As part of any organization‟s OH&S responsibilities where their employees use handheld power tools of any descriptions Business Services will in the future need to take these factors into account. Queensland already has developed a policy in this area with other States and Territories expected to have policies in place by 2010/2011. In other words, within about three years or within the time span or working life of some pieces of equipment that are currently being purchased by Business Services, these regulations will apply. Will these items of equipment meet the proposed hand arm vibration standards when the new regulations come into force? What is it? Many hand held power tools vibrate. If an operator is subject to high levels of daily exposure to vibration then there is a significant risk of the operator developing a vibration related disease. An example is the „white finger‟ disease suffered by people who are frequent users of chainsaws. By establishing a daily exposure level it should help to avoid vibration related diseases. If an operator is exposed to levels above the daily exposure limit then the employer has to carry out a risk assessment and introduce control measures. Exposure is measured by taking into account how much a particular piece of equipment vibrates [the vibration magnitude] and for how long in any given day the operator is actually using the piece of equipment. [the exposure duration] The combination of these two factors gives the daily exposure, which ideally should be below the limit. Obviously a machine with little or no vibration can be used all day and will not exceed the daily limit. Measures The employer must take into account some or all of the following: Ensure that the vibration risk is analysed correctly Equipment is selected producing the least possible vibration Suitable accessories and protective clothing such as handles with vibration damping features, handle heating where appropriate and anti-vibration gloves are used Appropriate maintenance programmes for equipment Limitation of the duration and intensity of the vibration Adequate rest periods Informed employees Medical surveillance programmes.

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Necessary Activities It is important to ensure that: The data used was measured against the correct standards The test data uses the same reference data as the equivalent vibration value The data source comes from an accredited test laboratory Compliance and Recommendations The following are some of the hints that have been given to businesses in the European Community: A risk analysis to be carried out as soon as possible Exposed employees to be completely informed All equipment to be maintained as per the instructions of the manufacturer to maintain the performance of the machine Dull cutting tools shall be sharpened, repaired or taken out of service When new equipment is purchased, machines with significantly lower vibration shall be preferred if the purchase criteria and technical performance is equal or better Vibration reduction programmes should be initiated immediately Example Stihl for example have produced „vibration tables‟ for their range of equipment together with a „hand arm vibration calculator‟ based on an Excel spreadsheet. The values are entered and the spreadsheet calculates the daily vibration exposure. Their tables include the following headings: Model number of machine Daily exposure time Time sequence operating mode (idling/full load/nominal speed) Standard Equivalent vibration level handle left a hv,eq[m/s2] Equivalent vibration level handle right a hv,eq[m/s 2] Daily vibration exposure handle left A(8)[m/s2] Daily vibration exposure handle right A(8)[m/s2 ]

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Recommended Action Until the relevant authorities have published the standard and the related values the only guides are those used in the European Community. It is recommended that equipment suppliers be asked for their European values and different brands be compared using those values. This will enable a Business Service to compare different machines but will not necessarily ensure that the machine you purchase will meet whatever are the agreed values that are finally used in your State or territory. At least you will be able to rank the machines by their „hand arm vibration‟ values.

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CONCLUSIONS This is a very demanding part of any Business Services and occupies considerable management time. OH&S has a significant body of „black letter law‟, which is very prescriptive and it is extremely difficult when employing people with disabilities. The Business Services in the Lawn & Garden Group have stated that there are no short cuts and each Service has to deal with the challenges, which are unique to their own particular circumstances. *******************************

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PAPER # 5 PERFORMANCE INDICATORS & BENCHMARKS

Purpose This paper lists a range of performance indicators that management can use to assist them in their management tasks. The benchmarks were progressively established during 2007 and 2008 by recording the actual results achieved by various members of the Lawn and Garden Group. There are a number of factors that will impact on individual Services thus the benchmarks that are established, will need to be interpreted, depending on individual circumstances. However they are a useful method to alert management where to look, for possible improvements in performance.

Caution The results from only twelve Business Services were collected and in four of those cases there were some missing items of information. Caution should be exercised when using this information. Differing methods of collecting data, recording it under different headings in the accounts and different treatments particularly of overhead costs presented many difficulties. Hence the tentative comments in some cases.

Performance Indicators The performance indicators or performance standards are designed to cover the following general headings: Overall Business Performance Sales and Marketing Performance Operational Efficiency Variable Costs Their number has been kept as small as possible because it has been shown that by selecting a few key indicators and concentrating on their improvement, it is the best way for management to achieve results, reasonably quickly.

Benchmarks As the members of the Group progressively use the performance indicators it will be possible to list the results. From this data a series of „benchmarks‟ will be established.

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Continuous Improvement The process of benchmarking against your peers and identifying better ways of doing things is of course no different from the steps set out in the „Continuous Improvement‟ Handbook produced by FaHCSIA as part of the Quality Assurance (QA) Certification process and indeed the above performance indicators and benchmarks should be able to be used as part of the evidence to demonstrate that a Business Service has indeed a process underway to improve its operations

Comparison between Business Services This is difficult for the very straightforward reason that different Services use different definitions for various items and treat different expenses in different ways. The following definitions have been used to ensure that the figures used for different Services can be compared:

Sales This includes both internal and external sales. For example if a Service cuts the lawns for an accommodation service operated by the organization and lists these sales as „internal‟ they would be included in the sales figure. Related sales. Where a Business Service operates some other activities such as cleaning or packaging using the same supervisors and employees who work in these other activities from time to time then their sales would be included in the total figure. For example when there is no lawn or garden work and the work crews are employed in other activities then those sales should be included. The simple test is did any of the employees or supervisors spend time to generate this revenue? If they did, then include it as part of the sales figure. The key assumption here is that the non-lawn and garden work was only a small proportion of the total annual sales, say less than 10% to 15%. Where the financial results for different activities are grouped together and are not readily segregated then provided the lawn and garden activities make up the majority of sales, then they can be used. The sales figure excludes all grants from FaHCSIA and any other State or Federal funding source. It also excludes all „other income‟ from say investments or profits on the sale of assets.

Sales Range The various members of the Lawn & Garden Group have been grouped according to their level of sales. This is designed to make comparisons between Services easier and to maintain confidentiality of data from Services.

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The sales ranges are: $0 to $250,000 $250,000 to $500,000 $500,000 +

Net Profit or Surplus/Deficit or Earnings before Interest and Tax [EBIT] The „bottom line‟ on the profit and loss account is to calculated after: Including all revenue sources. For example all grants from FaHCSIA and any other sources such as income from the sale of assets etc. Head Office or other overheads that the Business Service is expected to bear part of the costs are to be included in the total costs. Deduct any interest or tax that is applicable to this part of the organization. The difference between the total revenue from all sources and the total costs is the earnings before interest and tax and this is the EBIT figure.

EBIT/Sales This ratio or percentage is in common use by many businesses. Generally management should be working on gradually increasing the EBIT/Sales figures from year to year. Expressing this another way, the organization is working to increase net earnings as a percentage of sales.

Grant Income As the name suggests this is the sum of all the grants from State and Federal Governments. In most cases this will consist only of grants from FaHCSIA.

Grant Income/Sales At this stage there are no guidelines on the appropriate range of results that could be considered.

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Direct Employees In the context of this paper direct employees are defined as those people who are directly involved in doing the work. They could also be defined by those who use tools or equipment to do the work. Thus sales representatives, office staff, training staff are not „direct‟ employees. On the job supervisors who often assist with the work would be regarded as „direct‟ employees. Thus direct employees include both disabled employees or clients and supervisors. Non-disabled casual staffs that are directly working in the business would also be included in these figures.

Full Time Equivalent [FTE] Staff And Employees An employee‟s hours or work for the time period under review [typically annually] are expressed as a full time equivalent. For example: Assume that an employee works say 988 hours in a year. Note these are actual hours worked and does not include any loading for overtime, if it is paid. Further assume that for the organization in question that a standard week is 38 hours. Thus 988 divided by 38 is 26. 26 weeks is exactly half of a year or 0.5 of a full time employee. [38 x 52 = 1976 hours]. This employee would be expressed as a 0.5 FTE.

Sales /[FTE] Employee This ratio or percentage is calculated by dividing the sales as defined above by the number of direct employees also defined above. No conclusions have been reached at this stage but it is likely that the figure must be considered in conjunction with a number of other key indicators.

Wages Wages are defined here as direct wages paid to employees and exclude all wage-on-costs such as long service leave, holiday pay, superannuation, workers compensation etc.

Wages/Sales There are two different measures used here: Direct Employees Wages/Sales This is the ratio or percentage of wage costs, as defined above, to sales.

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All Staff And Employee Wages/Sales This figure is defined in the same way as above but includes all those people who are also involved in running the business such as the manager, sales representative, administration staff, training staff etc.

Chargeable Hours The numbers of hours that an employee has his or her time charged out on a job are the chargeable hours. For example if an employee works 6 hours in total with say 4 hours spent on one job in a given day and that those 4 hours were charged out to the job and the other 2 hours were not charged out then the chargeable hours for that employee would be 4 and the paid hours 6.

Paid Hours The hours actually paid to the employee. This would include time spent for morning and afternoon teas, personal breaks and waiting time at the beginning and end of the day. Paid hours are almost always more than chargeable hours. Occasionally the paid hours are equal to the chargeable hours.

Chargeable Hours/ Paid Hours This ratio or percentage is a measure of how efficiently the labour time is being used in the organization. Clearly the nature of the work has a major impact on this ratio. For example there could be less travel time with fewer larger jobs.

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THE INFORMATION COLLECTED FROM SERVICES [Note that the results referred to in the following section are presented in a spreadsheet on page 75. It may be convenient to have a copy of the spreadsheet available as the various indicators are discussed.]

EBIT/SALES Earnings before interest and tax [EBIT] divided by the sales, are a widely used yardstick in business. It is a measure of the profitability of the business. Are sales being achieved with a good margin of profitability? Examples of high profitability are often found in the software sector. Low profitability or low EBIT to sales ratios are often found in traditional sectors such as retailing. Clearly few, if any, Business Services pay tax thus the formula could be restated as: Earnings (or surplus or profit) less interest divided by external sales. It is difficult to generalize but one figure sometimes quoted, is an EBIT to sales figure of 10%. Results from members of the Lawn and Garden Group are as follows:

BUSINESS SERVICES A B C D E F G H I M N O

-30% 0% 72% -111% 3.8% 5.4% 38.3% 23% 0% 0% 7.4% 5.3%

The Business Services, A through to F are all in the turnover group $0 -$250,000. Their results in all the following tables tended to show the widest variations and when preparing the data they tended to have the greatest definitional difficulties.

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GRANT INCOME/EXTERNAL SALES This is a measure of how dependent the Business Service is on grants from State and Federal sources. Clearly the higher the level of external sales relative to grant income, the less dependent is the Business Service on grants as a source of revenue. The value judgement is made that the lower the level of grant income to external sales the less dependent on the Government(s) and hence the more independent, is a better situation for the Service. Thus a low percentage is the aim. Results from members of the Lawn and Garden Group are as follows: BUSINESS SERVICES A B C D E F G H I M N O

36.4% 41% 767% 12% 108% 187% 56% 87% 22% 22% 42% 48%

There appears to be no particular pattern that would indicate one position is better than another except to note a degree of consistency with the Services with the higher turnovers. [G through to O.] SALES PER DIRECT EMPLOYEE [$000’s] This is a measure of the average volume of sales per annum achieved by all those people directly involved in carrying out the work. BUSINESS SERVICES A B C D E F G H I M N O

$22.0 $14.1 $15.1 $7.5 $19.0 $14.0 $20.3 $13.2 $15.2 $30.7 $29.4 $22.1

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It is often used in retailing and other industries as a measure of productivity. The apparent common sense argument would suggest that it is better to have a higher level of sales per employee. Note however the trap of just chasing work to achieve sales without profit. There is a need however to generate „gross margin‟ dollars to pay for fixed and variable costs and it does not always denote profitability, as well priced work will give a business good profitability even if the staff are not highly productive. The results must be viewed alongside the EBIT/Sales results.

WAGES/SALES Two different ratios or percentages have been calculated. One includes only direct employees as defined above and the other includes all employees. Wages of Direct Employees/Sales

BUSINESS SERVICES A B C D E F G H I M N O

51.8% 83.9% 126% 161% 121% 125% 50.1% 69% 42% 56% 81% 82%

There are very clear changes in the results when compared with the different turnover levels. Those Business Services, G, H, I, M, N and O, were in the two highest turnover groups, $250,000-$500,000 and $500,000+. Their wages to sales percentages ranged from 42% to 82%. Those Business Services in the sales group, $0 -$250,000 ranged from 52% to 161%. Many of the Business Services in this group also recorded losses.

Wages of all Employees/Sales There were considerable difficulties in comparing this data due to classification issues. How do you allocate the cost of employing staff that have responsibilities across a number of activities within a larger organization? These figures have limited if any useful application. Note that the results for Business Services B, C, D and E were not possible to classify and thus could not be used.

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BUSINESS SERVICES A B C D E F G H I M N O

81.8%

147% 61% 104% 60% 68% 91% 87%

CHARGEABLE HOURS/PAID HOURS This indicator endeavours to measure how effectively the people are being employed, by tracking the downtime. It could be used as a measure of efficiency. For example if the lawn and garden job for the day was on the same site as the Business Service and thus incurred no travel time and the work lasted for the full day then the percentage of chargeable hours to paid hours for that day could be 100%. Contrast that with numerous small jobs dotted all over a town involving considerable travel time between jobs then the potential for a low percentage of chargeable hours to paid hours is very likely. This makes the key assumption that none of the travel time is paid for by the customers. No Business Services were collecting this data on a regular basis and thus the following data at this stage is limited.

BUSINESS SERVICES A B C D E F G H I M N O

60% 96% 57% 58% 49% 67% 75% 79% 66% 66% 71%

The results for those Business Services in the lowest turnover group, $0-$250,000, varied widely like many of the other results. However in the two higher sales turnover groups, $250,000-$500,000 and $500,000+ [ G through to O] the results were much more consistent ranging from 66% to 75%. Again it is worth noting that all of these were operating at or above break-even levels.

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CONCLUSION The results for those Business Services in the lowest sales turnover group, $0 $250,000 varied widely. There were difficulties in obtaining data that was consistent with the definitions referred to above. It is recommended that in view of these difficulties and the small sample size that no useful performance indicators, for lawn and garden operations with a turnover of less than $250,000, have been established.

For the Business Services with a turnover greater than $250,000 some tentative conclusions have been reached: Sales per direct employee of around $15 to $20,000 appear to yield good results as measured by the EBIT/Sales figures. The wages/sales percentages for direct employees in the range 50% to 80% again yielded reasonable results. Chargeable hours/paid hours were around 65% to 75%.

Based on other work and the relative ease of obtaining reasonably accurate data it is suggested that the chargeable hours/paid hours is a good starting point. An initial benchmark of 65% has been used by some of the Business Services involved in the Lawn & Garden Group as a starting point. They have found that when working towards this percentage a number of other key issues have been uncovered. The resolution of those issues has improved the profitability of their Services.

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PERFORMANCE INDICATORS AND BENCHMARKS [All figures in $000‟s unless otherwise indicated. The columns A to O are the figures from the contributing Business Services.]

INDICATORS & BENCHMARKS SALES RANGE $0-$250,000 $250,000-$500,000 $500,000+

A
X

B
X

C
X

D
X

E
X

F
X

G

H

I

M

N

O

X

X

X X X X

EBIT/SALES GRANT INCOME /SALES SALES PER DIRECT EMPLOYEE ($000’s) WAGES/SALES DIRECT EMPLOYEES ALL EMPLOYEES CHARGEABLE HOURS /PAID HOURS

-30% 36.4%

0% 41%

72% 67%

-111% 12%

3.8% 108%

5.4% 187%

38.3% 56%

23% 87%

0% 22%

0% 22%

7.4% 42%

5.3% 48%

$22.0

$14.1

$15.1

$7.5

$19.0

$14.0

$20.3

$13.2

$15.2

$30.7

$29.4

$22.1

51.8% 81.8% 60%

83.9%

126%

161%

121%

125% 147%

50.1% 61% 67%

69% 104% 75%

42% 60% 79%

56% 68% 66%

81% 91% 66%

82% 87% 71%

96%

57%

58%

49%

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PAPER # 6 JOB COSTING Background The purpose of this paper is to describe the process for developing accurate job costs for Business Services involved in lawn and garden operations. It is assumed that the reader will only have a slight acquaintance with accounting and thus some of the explanations may be rather lengthy for those with an accounting background. In this paper reference is made to two different hypothetical organizations, the ABC and XYZ Business Services. The two Business Services are both involved in operating a lawn and garden business but one is larger than the other and has a more complicated structure. Their profit and loss statements are included in Appendices I & II and it is suggested that you may like to print off a copy of the figures for the ABC Business Service, as frequent reference is made to it, in this paper.

Some Background Information When running any business there are usually three key accounting documents required: The balance sheet The cashflow statement. The profit and loss statement. These three pieces of information are interrelated and provide management with different types of information for different purposes. The Balance Sheet The balance sheet is a „snapshot‟ of the business at a point in time and is a measure of the net value or financial worth of the organization at that point. Typically in the annual accounts the balance sheet will be followed by the words „as at the 30 th June 20XX‟. Usually the figures for the previous year will be shown as well. Thus the reader can see the change in net value from one year to the next. Many organizations also prepare a balance sheet at the end of each month as well as at the end of the financial year

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The format of the balance sheet is similar to the following: Statement of Financial Position Balance Sheet 30/6/20XX Current Assets Cash Monies owed to Organization Stock Total current Assets Non Current Assets Property, Plant, Equipment Total Assets Current Liabilities Monies owed to others Interest current Provisions Total current liabilities Non-Current Liabilities Repayment of loans Provisions Total Liabilities Net Assets

$20,000 $400,000 $1,400,000 $1,820,000

$4,000,000 $5,820,000

$60,000 $100,000 $200,000 $360,000

$300,000 $250,000 $910,000 $4,910,000

Thus a bank for example or some other financial institution would first look at the „net assets‟ and see how this figure had increased or decreased over the past few years. From this information and a review of both the cash flow and profit and loss statements it would quickly begin to assess whether or not the organization was increasing or decreasing in value. A bank could then assess whether or not it is a good credit risk, for say a loan. When a private individual or a couple approaches a financial institution for a loan, usually a „Personal Statement of Financial Position‟ is completed, which in effect is a combination of a balance sheet, listing assets and liabilities and a profit and loss account showing monthly expenditure and income. With this basic information a bank or other financial institution is able to form an opinion and decide whether or not to offer loan finance or a mortgage.

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The Cash flow Statement Somebody once said, “businesses don‟t go broke, they just run out of money”. Where did the money come from during the year and where did it go? In our personal finances we usually all operate with a formal or informal cash flow statement in mind. For example, on a monthly basis our cash inflows might come from the salary paid into our bank account plus perhaps some interest income from investments. Our cash outflows might be say, living costs for the month, mortgage payments and say a payment into a savings and investment account. Thus a simplified personal cash flow statement over three months might look like this: Month One [In this month everything is going normally] Cash inflow Salary Interest income Total Inflows Cash Outflows Monthly living costs Mortgage payment Savings & Investment Total Outflows $2,200 $800 $500 $3,500

$3,000 $500 $3,500

Month Two [In this month there was an unexpected vehicle repair cost. To cover the unplanned cost the „savings & investment account‟ was used to cover or „pay‟ for this expense.] Cash inflow Salary Interest income Total Inflows Cash Outflows Monthly living costs Mortgage payment Unplanned vehicle repairs Borrowing from S & I account Total Outflows $2,200 $800 $1,500 ($1,000) $3,500

$3,000 $500 $3,500

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Month Three [The monthly living costs were reduced by $200 to help rebuild the savings and investment account.] Cash inflow Salary Interest income Total Inflows Cash Outflows Monthly living costs Mortgage payment Savings & Investment Total Outflows $2,000 $800 $700 $3,500

$3,000 $500 $3,500

A business operates in a very similar manner. Many businesses prepare a cash flow statement on a monthly basis and prepare an annual cash flow statement, which is presented as part of the annual accounts. This shows historically where the money came from and how it was spent. However probably even more important is the very sound management practice of forecasting the cash flows over the coming months. A typical forecast cash flow statement could look similar to the following with only one figure, the „opening statement‟ of $10,000 in February, being known. All the rest of the figures are forecasts. Note the closing balance at the end of April. The assumption is that the level of sales would fall in April with a resulting decline in the closing cash position. One assumes that the organization has access to an overdraft facility to cover this shortfall. In June, part of the overdraft is repaid. Thus management can anticipate the likely months in which cash will be „tight‟ and ensure that plans are in place to cover any shortfalls.

CASH IN Opening Position Receipts from Sales Interest Total CASH OUT Wages and other Costs Material Costs Other Costs Repay bank Total Closing Balance

February $10,000 $8,000 $1,000 $19,000 $9,000 $4,000 $2,000 $15,000 $4,000

March $4,000 $12,000 $1,000 $17,000 $8,000 $5,000 $2,000 $15,000 $2,000

April $2,000 $6,000 $1,000 $9,000 $8,000 $3,000 $2,500 $13,500 ($4,500)

May ($4,500) $14,000 $1,000 $10,500 $6,000 $2,000 $1,500 $9,500 $1,000

June $1,000 $16,000 $1,000 $18,000 $7,000 $4,000 $2,000 $3,000 $16,000 $2,000

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The Profit and Loss Statement The profit and loss statement or account [often referred to as the „P&L Statement‟] tracks the performance of the business over time. It records how profitably the business has traded. It starts with the revenue or sales and then deducts the costs of achieving those sales to give a profit or loss. It is usually produced each month and has a format similar to the following: ABC BUSINESS SERVICE Profit and Loss Statement for the Year to 30/6/06 Sales Interest income FaHCSIA Grant Total Income Expenditure Administration Raw Materials Head Office Costs Depreciation Equipment Purchases Motor Vehicles Salaries & Wages Employment Costs Total Expenditure Surplus/Deficit $50,000 $10,000 $60,000 $30,000 $10,000 $30,000 $205,000 $40,000 $435,000 $30,000 $250,000 $50,000 $165,000 $465,000

Brief Comments on the items listed above in the Profit and Loss Account: Sales This heading would normally include both internal and external sales. Typical internal sales may occur for example when the accommodation facilities owned by the same organization that runs the Business Service have their lawns cut by that Business Service. Interest and Other Income Other income could also include profits from the sale of assets. Perhaps a car or a piece of equipment has been sold for a profit. These gains could be included as income. FaHCSIA Grant In addition to the Federal government income or grants there may also be income from a State Government Department. Note that there is considerable debate between different Business Services as to how to „treat‟ the FaHCSIA income or grant. Some Business Services include it in their profit and loss account as shown above, some remove it completely and endeavour to make a profit without taking into account any of the FaHCSIA grant while others

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include only some of the grant. In the following section two different approaches are used. There is no „right‟ way and this is a policy decision for senior management and the Board. Expenditure Note that the headings above have been deliberately reduced by placing a number of items under a generic heading. Many of the standard accounting packages such as „MYOB‟ and „Quick Books‟ have suggested breakdowns for the different cost or expenditure headings. Administration This heading includes in this example, a mixture of other costs such as postage, telephone etc. Raw Materials One of the characteristics of lawn and garden operations is that they are mainly in the business of selling their labour and do not use significant quantities of raw materials. In the case of say pallet manufacturing there would probably be a special heading for „timber‟ and possibly for „nails‟. For a lawn and garden business, raw materials would include consumables such as wipper snipper cord, petrol for mowers, hand tools, brooms etc. Head Office Costs Depending on how the accounts are structured these costs could be deducted before calculating the „surplus/deficit‟, as in this case, or deducted after working out the bottom line. It is generally considered beneficial to deduct the head office costs in the above format as it continues to remind the managers of the operating units that services are provided by the head office department. It has the added advantage of enabling the mangers to continually raise the issues of the cost of running the head office. This keeps some pressure on the CEO to control these costs. Depreciation Typically „not-for-profit‟ organizations such as Business Services do not pay tax and are thus not concerned with all the issues surrounding the tax implications of depreciation and the associated tax benefits. However assets do wear out as they used. It is generally prudent for a Business Service to provide for the replacement of the asset. For example, a mower may be considered to have a useful life of say three years. Assume that the cost was $12,000 and its replacement would cost about the same. By placing $4,000 a year in a special account it would mean that by the end of the third year a sum of $12,000 would be sitting in the account ready to fund a replacement mower. Equipment Purchases As the name suggests, this item covers the cost of purchasing new items of equipment. Motor Vehicles This includes all the operating costs of the vehicles such as fuel, repairs, registration etc.

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Salaries and Wages In this particular example these are the direct payments made to individuals and payments to the Australian Tax office made on their behalf. Employment On-Costs These are significant and are usually around 20% to 25% of the wages and salaries. They include annual leave, long service leave, sick leave, Work Cover, superannuation etc. Surplus/Deficit The difference between the total income for the period and the total expenditure is the surplus or deficit. Most organizations prepare a profit and loss account monthly. Some have accounting systems that produce a daily figure. Some only prepare profit and loss accounts every three months and one or two organizations only prepare accounts once a year. In the „for profit‟ sector this item is usually called the „profit /loss‟ figure or the famous „bottom line‟.

COSTING

Introduction This part of the paper looks difficult but it is lengthy rather than difficult. It is not possible to take shortcuts if there is to be a reasonable understanding of costing.. The big consolation is that a Business Services only needs to go through this process once a year or whenever there is a major change in one of the underlying cost factors such as a major wage increase. Once the cost factors are established then they can continue to be used with confidence. The approach adopted for the remainder of this paper is to „work backwards‟. That is, the start point is the completed quotation, as it would be presented to the prospective customer. Then the various sources of information used to prepare the quote are identified and the method of calculating them is investigated. Three different costing approaches have been developed. The „Short cut‟ method. This is not recommended as it fails to accurately capture the costs of doing different jobs but it is better than guessing. A correct method using the entire FaHCSIA grant in calculating the cost factors. Another correct method using none of the FaHCSIA grant in calculating the cost factors.

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[Note that the opening phrase begins above in two of the cases using the words „a correct method‟ rather than „the correct method‟. There are a number of different ways of calculating the various cost components. All should give approximately similar outcomes.] Before we start, a number of the members of the Lawn & Garden Group were visited and a question was asked about the hourly charge out rate. The answers varied widely as different methods were used and there were a number of different ways to express the costing basis. The answers therefore cannot easily be compared but they are listed just to show the range of answers.

$27 per hour per employee $90 per standard three-bedroom house to clean the gutters $45 per hour including GST $57 per hour for a full crew $98 per hour for a full crew without travel time $181 per for a full crew including GST and heavy equipment $85 per hour for a full crew $60 per hour for a full crew $33 for a standard 3 bedroom home minimum and $44 for a standard 3 bedroom home [target] $350 per day for a full crew

The point will be made later in this paper that the final price presented to the customer „the quoted price‟, does not need to be linked to the cost of doing the job. If someone says, “here is the job and the price I am prepared to pay is $100”! You have the choice, accept or reject. If your estimated cost is say $105 and you have no other more profitable work available to you at that point in time you may well accept the job. [But at least you know by how much you are cutting your margin!] Note that reference is made to the „cost of the crew‟. With most of the Business Services involved in the Lawn & Garden Group a „crew‟ consisted of: One supervisor Either three or four clients/employees/people with disabilities. Generally a „king cab‟ ute can sit the driver (supervisor) and three or four passengers.

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The ‘Short Cut’ Method of Costing The following method is not recommended as it fails to appreciate all aspects of an adequate costing system. However it will help to put you somewhere in the correct area as far as your costs are concerned. In simple terms you are going to carry out lawn and garden activities for the next twelve months, which will cost some money. You sell the output of that service to recover the costs. Essentially you estimate how many jobs you will do in the coming financial year and the number of hours on average you will spend on each job. Multiply the two figures together and you have the estimated number of chargeable or worked hours for the coming year. You are in the fortunate position in that you know that you can sell all your available hours. You have three crews that work for so many weeks of the year and for so many hours per day. This works out to 2640 hours per anum in total, for the three crews or 880 hours for each crew. ( Later in this section the origin of these figures are explained in some detail.) Based on the figures above on page 81 for the „ABC Business Service‟ the total costs to be recovered after deducting the FaHCSIA grant and the interest income, is $220,000. Divide the total costs to be recovered of $220,000 by the total hours planned to be worked of 2,640 and the hourly rate is $83.33 or say $83 per chargeable hour for each crew. Thus an hourly charge of around $83 for each crew will allow you to just break even and recover all your costs. The absolute basics of costing are in the above. You have a bundle of costs and a limited number of hours in which to cover those costs. Divide one into the other and provided your budget is correct and the number of hours you work are the same as your estimate and all your customers will pay the rate you require, then you will come out at break even at the end of the year. In the absence of a more detailed approach this method will at least put the Business Service in the „right football field‟ but not perhaps in the right part of the field.

There are a large number of drawbacks in the above, simplified world:

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What happens if one job is next door and your team can walk there and the other is two hours drive away but only takes the same time to do the actual work? Using the above method the same price would be charged for both jobs. What happens if you have two jobs, each lasting one-hour but one only requires two people to complete it and the other four people? Using the above method the same price would be charged for both jobs. What happens if there is another activity, say packaging, which your gardening crew become involved in during the quiet times of the year? How do you separate those costs out and most importantly make sure that you understand what your costs are for doing the packaging work? What happens if there is the prospect to secure a very large contract that would suit your gardening crew and you know that you will be able to do the work much faster than your usual jobs? How do you cost this job? There is the need to understand the costs of different types of work, as this will enable you to win more work and to identify the more profitable work. To do this you need to have a reasonably good costing system. Don‟t leave it to your accountant. It is not difficult to grasp and once you have it operating it is surprising how easy it is to manage. Let‟s go!!!

A Correct Method using the entire FaHCSIA Grant

The Prospective Customer You have been keeping your eye on a factory site that has had a „For Sale‟ on it for a number of months. One day the sign has disappeared so you contact the agent to find out who is going to move in. The new owners [MNQ Corporation] are contacted and you are asked to prepare a quote to clean up the area outside all the buildings and if the work is satisfactory you will have the opportunity to provide an annual contract to maintain the premises. You visit the site and make suitable notes about the work and submit the following quotation:

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QUOTATION

Quote Number 123 Date 7/07/06

Attention: Bill Smith MNQ Corporation Job Address: 27 XYZ Street Strathfield, NSW Description Remove all rubbish, trim trees including those near power lines. Remove broken pallets and rubbish from rear of site and cut lawns. Spray rear fence line with roundup. Clear area and sweep between fence and eastern wall of factory. Remove rubbish and sweep area to west of factory. Trim shrubs, remove rubbish sweep car park at front of factory. Cut lawns on nature strip and trim shrubs. Fertilize all lawn areas. [no charge] NOTE: Trees are growing through the power lines on the factory site-owners responsibility. Quote to trim trees and remove debris attached. Extras Tip Fees [3 trips] Tree lopping -Quote from FGH Tree Doctor attached. Quoted Price GST Total

$450.90

$150.00 $2,750.00 $3350.90 $335.09 $3685.99

To prepare the above quotation a „Work Sheet‟ or Job Sheet‟ will be required. This simply records all your estimates about the job and the assumptions you have made in preparing the quotation. Various figures have been used and the source of these figures will be explained in the following pages. Quotation Work Sheet QUOTE NUMBER 123 Prepared by _AJW__ Date 1/7/06

Customer/Location

Bill Smith MNQ Corp

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27 XYZ Street Strathfield, NSW

Site Visit/details of work From the rear of the site [north]: Remove broken pallets and rubbish. Cut lawn [1 hour- ride on mower], spray rear fence line Roundup [0.5 litres 0.25 hours] Note 1 crew to remove metal parts [2.0 hours] West Clear area between fence and wall of factory and sweep [0.5 hours] East. Remove rubbish and sweep [1.5 hours] Trees above power lines. FGH Tree Doctor quote $2750 +GST. South [facing road] Trim shrubs [hedge trimmer, blower vac, broom], remove rubbish sweep car park [1 hour 2 push mowers] Nature Strip Cut lawns, trim shrubs [1 hour 1 push mower] Site easy access 30 minutes from base. Fertilize all lawn areas. Special comments-Easy site access-note old engineering site with nuts and bolts in grass on lawn at rear of factory 3 loads for tip

VARIABLE COSTS Labour Supervisor spray roundup, fertilize and trim shrubs rear and front [1.5 hours]

Clients Rear West East South Nature Strip Total Combined hours Supervisor Clients

ride on mower 1 hour 3 clients x 2 hours collect rubbish 6 hours Clean & sweep 0.5 hours Clean and sweep 1.5 hours Clean and sweep 1 hour Cut lawn push mower 2 hours Cut lawn push mower 1 hour 13 hours 14.5 [say 4.0 crew hours] 4.0 hours x $41 12 hours x$5.20 $164.00 $62.40

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Equipment 16 hours total Travel Time 0.5 hours 0.5 hours x $33 $16.50 16.0 hours x $2.00 $32.00

FIXED COSTS 16 hours Profit 16 hours Total 16 hours x $7.00 $112.00 $450.90 16 hours x $4 $64.00

Extras Tip Fees Chemicals Fertilizer Outside Sub contractors FGH Tree Doctor $2750.00 3 x $50 no charge no charge $150.00

Total GST Total incl GST ********************************************** Information required for Job Costing

$3350.90 $335.09 $3685.99

The above job sheet or quoting notes used a number of figures. The following notes will show where these figures were obtained. There is a physical reality about job costing! You need to understand intimately the way your lawn and garden crew operates. Much of the costing work involves estimating the time it will take to do certain activities. Fortunately nearly always the activities are very similar as the same type of work that has been done many times before. For example, standard times can be established for a range of activities:

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How long in the morning does it take to load/unload the vehicle and get everyone on board ready to leave? On arrival at a job how does it take to unload and be ready to start? On completion of the job how long does it take to load all the equipment and team and be ready to leave? When the work site is on a slope what extra time should be allowed for a job? For each of the above activities you can establish some „standard‟ times. For example it always takes about 10 minutes to unload the trailer when the crew arrives at the job. This then becomes one of your „standard‟ cost components

On Site Inspection of a Prospective Job This begins with an accurate statement of the work to be done. [It often helps to state this in some detail, especially if it is a new customer, as this is likely to prevent later disputes about the scale of the work included. It also helps in dealing with competitors as many competitors will not be prepared to present a „professional looking‟ quotation. [See Paper #8 Sales & Marketing] In lawn and garden operations the work needs to be broken down into its essential components. The usual starting point is to have some working papers that record the calculations and the estimates for various costs. The „Quotation Work Sheet‟ or whatever name is used, which lists all the possible costs that could be incurred on a typical job is used.

Fixed Costs & Variable Costs It is necessary to first separate the fixed and variable costs. Some of these costs are easy to identify and collect whilst others are subject to considerable debate with no precise right or wrong method. Job costing relies on the profit and loss statement or budget as its principle source document. The other pieces of information required to prepare accurate job costs are usually found in the work papers used to calculate the various figures used to prepare the profit and loss statement. Fixed costs do not vary with the level of activity. A good example is rent. The rent is fixed usually for at least a year and often for a longer period. Regardless of the level of activity the rent does not alter. For example a second shift using the same land and buildings does not alter the rent. Variable costs vary with output. For example to cut twice the number of lawns will require more labour hours. Probably double. The amount of petrol used will vary

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with the volume or level of activity. Thus two examples of variable costs are direct labour and petrol. Typical Variable Costs in Lawn and Garden Work The direct labour involved in lawn and garden work would include supervisors and clients. This will include all the on-costs such as superannuation, Work Cover, long service leave etc. Equipment costs. Both the operating costs such as fuel but also the costs of repairs and maintenance. The amount of repairs and maintenance is assumed to vary with the amount of use. Vehicle operating costs are considered to be a variable operating cost. Typical Fixed Costs in Lawn and Garden Work The salaries and other on-costs of staff and management who are not involved in the physical activity of lawn and garden operations. Administration and Head Office costs. Depreciation is an interesting issue. If the vehicle or mower just sits in the shed you could argue that the piece of equipment is not being used and thus no write off or depreciation occurs. From a costing point of view depreciation can be treated as either a fixed or a variable cost.

Forecasting the Future Workload and Calculating the Variable and Fixed Costs for the ABC Business Service Number of Chargeable Hours or Worked Hours per Year Total numbers of days are 52 weeks x 5 days per week or 260 days. From this total, the following days are deducted: Annual Leave 20 Public Holidays 10 Long Service Leave* 1 Sick Leave* 4 Training/Planning* 5 40 [*This is an average figure spread across all staff and clients and is based on previous years figures. Each individual or business Service will have its own approach.] The number of available working days in this example therefore 220. Again, based on previous experience, the management has decided that the number of chargeable or worked hours in a typical day is only 4. Expressed in another way, the assumption that this management team is making for the coming year is that they are

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only going to spend about 52% of the available time actually working on jobs. This decision has a major impact on the costing for all jobs. The number of chargeable hours or available hours for work per year is therefore 220 x 4 or 880 hours for each client/employee and for each supervisor. FaHCSIA Grant The management of ABC Business Services know that the FaHCSIA money needs to be taken account in their costing system. They have decided that rather than deduct this all from their fixed costs they will deduct half from the supervisors costs and half from overheads. An alternative would be to simply deduct all of the grant from the fixed costs. The total FaHSCIA grant is $165,000. Thus $82,500 will be deducted from the supervisory costs and $82,500 from the overheads. Variable Costs-Labour The management of ABC Business Service has decided that they will calculate the hourly cost of the supervisors and the clients or employees separately. Their reason is that sometimes the composition of the teams change and they wish to capture these costs as accurately as possible. A simpler method would be to assume that all crews are standard with say one supervisor and three crew members. There are three supervisors. Their total annual cost to the Service including all wages, superannuation, long service leave, sick leave, carer‟s leave, Workers Cover etc is $190,000. From this total the FaHCSIA grant of $82,500 is deducted to leave a total of $107,500. From the calculation above on chargeable hours we know that each supervisor will spend 880 hours working on jobs. The three supervisors will thus spend 880 x 3 or 2,640 hours in total. The average cost per hour for a supervisor is therefore $107,500 divided by 2,640 hours or $40.72 per hour or say $41 per supervisor hour. There are 12 [full time equivalent] clients who work in the Service. Note the actual number is higher with some people only working a few hours per week and others for longer periods. But in terms of full time equivalent people, it totals 12. The total number of hours is calculated in the same way as the supervisors. Thus 12 clients x 880 hours per annum is 10,560 hours. The total wage cost with all add on costs comes to $55,000. The average cost per hour for a client is therefore $55,000 divided by 10,560 hours or $5.20 per hour $5.20 per client hour

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Variable Costs Equipment The „equipment‟ costs included a variety of costs such as raw materials, repairs and maintenance. To simplify the costing process the management of ABC Business Services decided to include all the costs together and assume that whenever a supervisor or client was working with a piece of equipment the costs would be the same. They know that they are probably underquoting for the cost of operating say a ride-on mower and overstating the cost of working with say a wipper snipper. Depreciation Raw Materials Repairs and maintenance Total $10,000 $10,000 $6,000 $26,000

They have further assumed that when working all three supervisors and all 12 clients will be using a piece of equipment. Thus the total number of hours equipment will be in use is 13,200. [3 supervisors + 12 clients x 220 hours = 13,200.] The equipment cost per hour is $26,000 divided by 13,200 or $1.97 say $2.00 per worked hour. [Note that the management of the ABC Business Service often provide free fertilizer as an „added extra‟ because they can buy in bulk and many customers only have small areas to fertilize.] Variable Costs Vehicles There are four vehicles in the fleet of ABC Business Services, one of which is used by the Manager. Total vehicle costs per annum are forecast as follows: Operating expenses including fuel, registration etc $30,000 Depreciation $10,000 Total $40,000 The cost per annum of the manager‟s car is estimated at $10,000 leaving $30,000 to be recovered if possible from the customers. The $10,000 for the Manager‟s car will be treated as a fixed cost. A sample of one month‟s jobs were investigated and the following information was collected: 80% of jobs were within 0.5 hours of the base 10% of jobs were within 1.0 hour of the base 10% of jobs were within 2.0 hours of the base Based on the forecast number of jobs for the year each crew was projected to spend about 300 hours per annum in their vehicles. With three crews the total was 900 hours. The total cost of the three vehicles was $30,000, after deducting the cost of the Manager‟s car, or $33.33 per hour say

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$33 per hour for travelling time. Fixed Costs The remaining costs are all fixed. They are: Rent Depreciation Administration Advertising & Promotion Head Office Costs Equipment Purchases Heating, Light & Power Telephone Manager‟s Car Total $15,000 $10,000 $20,000 $2,000 $60,000 $10,000 $4,000 $3,000 $10,000 $134,000

From this total is deducted the share of the FaHCSIA grant referred to above of $82,500. Thus the net amount is $51,500. These costs are going to be recovered on an hourly basis. The total number of hours is 13,200 and thus the cost per hour is $3.90 say: $4.00 per worked hour. Note that these fixed costs could decline in terms of dollars per hour if the volume of work increased above the forecast levels. For example, if you could double the number of crews and hence the number of hours worked but did not need to increase any of your fixed costs then the amount to recover the overhead costs could fall to $2.00 per worked hour. The $2.00 „saved‟ could now go to increasing your surplus for the year. The variable costs however would remain at around their current levels because you would need to pay your new supervisors and clients for every hour they worked. Profit Margin. It is possible to include a component to achieve a certain profit. For example all the rates could be increased by 10%. Provided all the assumptions were correct the organization should gain a 10% margin on costs. There are a variety of ways in which a business could aim to achieve a profit. For example based on knowledge of your local market and the pricing practices of your competitors your pricing strategy might be:

Domestic/residential work Small commercial work Large commercial work

Cost only/no margin Cost plus 15% Cost plus 10%

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For the ABC Business Service management they have decided that they no longer wish to rely on the $50,000 of interest income and they wish to make in addition 5% on sales or $12,500 for the year. Thus the total surplus they are aiming for is $62,500. They know that they can‟t increase their prices on the domestic work, which is about 30% of the worked or chargeable hours. Their calculation is therefore 70% of 13,200 hours or 9,240 hours, say 9,000 hours must „earn‟ the $62,000 or $6.88 per hour, say $7.00. $7.00 per chargeable hour on all non-domestic/residential work A Correct Method using the none of the FaHCSIA Grant All costs remain the same except where the FaHCSIA grant has been used to „reduce‟ the costs in the case of the supervisors and overhead recovery. Supervisor cost per hour. In the above method the management of ABC Business Service had decided that they use half of the FaHCSIA grant or $82,500 to reduce the cost of the supervisory staff with a resulting figure of $41 per supervisory hour. The Board has had a change in policy and decided that none of the FaHCSIA grant will be used for this purpose. The total cost of the three supervisors per annum with all their on-costs such as holiday pay, long service leave, WorkCover etc is $190,000. From the calculation above on chargeable hours we know that each supervisor will spend 880 hours working on jobs. The three supervisors will thus spend 880 x 3 or 2,640 hours in total. The average cost per hour for a supervisor is therefore $190,000 divided by 2,640 hours or $71.96 per hour or say $72 per supervisor hour. Fixed Costs The remaining costs are all fixed. They are: Rent Depreciation Administration Advertising & Promotion Head Office Costs Equipment Purchases Heating, Light & Power Telephone Manager‟s Car Total $15,000 $10,000 $20,000 $2,000 $60,000 $10,000 $4,000 $3,000 $10,000 $134,000

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Due to a change in policy part of the FaHCSIA will not be deducted from the total of the fixed costs, as was the case in the above method. The total costs of $134,000 are going to be recovered on an hourly basis. The total number of hours is 13,200 and thus the cost per hour is $10.15 or say $10.00 per worked hour.

The Impact of the Changes on the Quotation for the MNQ Corporation The new quotation using the new figures for overheads and supervisory costs is: The supervisory costs increase from $164 to $288. The overhead costs increase from $64 to $160. The revised quotation is therefore:

QUOTATION

Quote Number 123 Date 7/07/06

Attention: Bill Smith MNQ Corporation Job Address: 27 XYZ Street Strathfield, NSW Description Remove all rubbish, trim trees including those near power lines. Remove broken pallets and rubbish from rear of site and cut lawns. Spray rear fence line with roundup. Clear area and sweep between fence and eastern wall of factory. Remove rubbish and sweep area to west of factory. Trim shrubs, remove rubbish sweep car park at front of factory. Cut lawns on nature strip and trim shrubs. Fertilize all lawn areas. [no charge] NOTE: Trees are growing through the power lines on the factory site-owners responsibility. Quote to trim trees and remove debris attached. Extras Tip Fees [3 trips] Tree lopping -Quote from FGH Tree Doctor attached. Quoted Price GST Total

$670.90

$150.00 $2,750.00 $3570.90 $357.09 $3927.99

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QUOTED PRICES USING THE THREE DIFFERENT APPROACHES

Based on the example of the quotation for the MNQ Corporation the impact of the three different approaches to costing is: QUOTATION „Short Cut Method‟ [Using all FaHCSIA Grant] Using all the FaHCSIA Grant Using none of the FaHCSIA Grant

Description Remove all rubbish, trim trees including those near power lines. Remove broken pallets and rubbish from rear of site and cut lawns. Spray rear fence line with roundup. Clear area and sweep between fence and eastern wall of factory. Remove rubbish and sweep area to west of factory. Trim shrubs, remove rubbish sweep car park at front of factory. Cut lawns on nature strip and trim shrubs. Fertilize all lawn areas. [no charge] NOTE: Trees are growing through the power lines on the factory site-owners responsibility. Quote to trim trees and remove debris attached. Extras Tip Fees [3 trips] Tree lopping -Quote from FGH Tree Doctor attached. Quoted Price GST Total

$444.00

450.90

670.90

$150.00 $2,750.00 $3344.00 $334.40 $3678.40

$150.00 $2,750.00 $3350.90 $335.09 $3685.99

$150.00 $2,750.00 $3570.90 357.09 3927.99

[Note the „Short Cut Method‟ quote based on $83 per hour for a crew totalled $332. However for comparative purposes the same profit margin of $112 used in the other two examples was added to give a total of $444.00.] Assume for the moment that the decision had been made to use the costing method, which included the full use of the FaHCSIA grant in calculating the different cost factors. After preparing the annual budget for the coming year the administration or accounting team would provide the operations people with the following cost factors to use in preparing quotes:

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Cost Factors for the 200x Year [Using all of the FaHCSIA Grant] All figures are based on hours Labour Supervisors Clients/employees

$41.00 $5.20

Equipment [Must include every hour worked by supervisors and clients] $2.00 Travel Time [Based on each vehicle sent to the job] $33.00 Fixed Costs [Based on every hour worked by supervisors and clients] $4.00 Profit [Based on every hour worked by supervisors and clients] $7.00

Alternative method based on a crew of one Supervisor and three Clients Cost per crew hour $108.60 [Note this includes the cost of a supervisor, three clients, equipment, fixed costs and a profit margin. See Appendix III for details. Travel time where applicable would need to be added to this figure.]

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OTHER COSTING ISSUES The above example using the ABC Business Service assumes that the Service is not involved in any other activities. This makes the exercise more straightforward than the typical Business Service. Most operate in more than one business area or activity. In these situations it is usually necessary to separate out the various costs. Fortunately many of the standard accounting packages can carry out this function once the allocation of costs has been resolved. In the following example the results for the XYZ Business Service are shown in the combined profit and loss account. On the following page the revenue and costs for the two business activities are separated. Allocating Fixed Costs XYZ BUSINESS SERVICE PROFIT AND LOSS BUDGET 2006/07 1,000,000 Sales Gross margin 230,000 Other Income 20,000 Income [incl Gross Profit] 250,000 EXPENSES Personnel Sub Total 150,000 Depreciation/Occupancy Sub Total 150,000 Administration Sub-Total 580,000 880,000 Total Expenses (630,000) Trading Position before Governments Grants Government Grants 600,000 ($30,000) Operating Surplus/Deficit

The XYZ Business Service operates both a lawn and garden business and a packaging business. On the following page management has separated out the revenues and costs and recorded the basis of separation in the column headed „Allocation‟. Note that different methods are used to allocate these costs: For example the rent is apportioned on the basis of the floor area used by the two activities. The space occupied by the lawn and garden operations is about 25% hence the share of rent for lawn and garden has been calculated as $20,000. The bank charges have been allocated on the number of invoices issued by each of the two activities. It was decided that the volume of transactions, would reflect most accurately the banking costs, hence the use of this measure.

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In the case of the interest income, the Board made the decision to allocate it 50/50. For example all the fuel for the lawn and garden operation was purchased from a different source than the packaging operations. Thus the costs could be allocated on the origins of the invoices. XYZ BUSINESS SERVICE PROFIT AND LOSS BUDGET 2006/07 Allocation Sales Cost of Sales Labour Materials Vehicles Gross margin Other Income Income [incl Gross Profit] Expenses-Personnel Salaries & Wages Salaries & Wages on costs Sub Total Depreciation/Occupancy Rent Depreciation Sub Total Administration Audit/Accountancy Advertising & Promotion Bank Charges General Expenses Heating, Light & Power Fuel Motor Vehicle Expenses Freight [inwards] Repairs & Maintenance Telephone Sub-Total Total Expenses Trading Position Government Grants Operating Surplus/Deficit 1,000,000 770,000 600,000 60,000 110,000 230,000 20,000 250,000 120,000 30,000 150,000 80,000 70,000 150,000 60,000 10,000 10,000 220,000 40,000 50,000 30,000 60,000 80,000 20,000 580,000 880,000 (630,000) 600,000 ($30,000) Actual Actual Actual Actual Actual Actual Board Lawn& Garden 600,000 470,000 360,000 20,000 90,000 130,000 10,000 140,000 60,000 15,000 75,000 20,000 30,000 50,000 36,000 4,000 6,000 132,000 10,000 28,000 20,000 5,000 45,000 12,000 298,000 500,000 (360,000) 400,000 40,000 Packaging 400,000 300,000 240,000 40,000 20,000 100,000 10,000 110,000 60,000 15,000 75,000 60,000 40,000 100,000 24,000 6,000 4,000 88,000 30,000 22,000 10,000 55,000 35,000 8,000 282,000 380,000 (270,000) 200,000 (70,000)

Actual Actual

Floor A. Actual

Sales Actual Invoices Sales Floor A. Actual Actual Actual Actual Sales

CBF

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Capturing Costs As is already apparent from the above calculations there are a number of decisions to be made by management on how to treat certain costs. Frequently additional information is required. For example it was assumed that as the people completing the „Quotation Work Sheets‟, used by ABC Business Service above, recorded the travel time, it was relatively easy to go though a number of Work Sheets to calculate the average travel times. If the business has had a major change during the year, say merged with another lawn and garden operation, it would be necessary to rework the costing figures.

Semi Variable Costs There is a category of cost known as semi-variable costs. As the volume increases there are „step‟ or „jumps‟ in the levels of costs. For example above a certain point of production the factory may require a further quality control person. These costs could be regarded as semi variable. It is probably unlikely the lawn and garden operations will use this category in their costing methodology.

Job Costing Records Job costing records together with their working sheets should be retained and if possible should be coded in such a manner that they can be readily retrieved. If a similar job occurs then the working sheets can be consulted to assist with the new quotation.

Back Costing This is the very straightforward process of checking the actual costs against the quotation. It is a very useful exercise as it can identify where the organization is either performing well within the estimated costs or is failing to meet the estimated times for completing the work. Clearly there can be numerous reasons for deviating from what was an estimate in the first place but it is instructive and can act as a self-correcting mechanism if used correctly. Ideally the person carrying out the back costing or checking of quotations against actual results should be independent of the person who prepared the initial quotation. This task could be carried out by a junior member of the administration staff and used as a training exercise. Where there are found to be on-going differences, then the estimates used to prepare the quotes should be adjusted. It is of course useful to uncover the reasons why they need to be adjusted. This can help to identify a „continuous improvement‟ programme where the aim is to gradually improve efficiencies in doing the work.

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Pricing Strategies Relationship between Costs and Prices As already mentioned there is no direct relationship between costs and prices. An organization can set a price without any reference to the cost of providing the product or service. Frequently organizations „work backwards‟ by first finding out what is the selling price in the market place and then working out [costing] whether or not they can supply at a profit. Clearly costs influence prices. An organization cannot continually sell at prices that do not recover its fixed and variable operating costs. They simply run out of money and cease operations. There are further notes on different pricing strategies in Paper #8 „Sales and Marketing‟, which cover issues such as „penetration pricing‟, marginal costing and competition.

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CONCLUSION

There are a number of different ways to analyse the costs of doing a job. The key challenge is to capture all the key or major cost components so that management has a good understanding of the costs of doing a particular job. The manager is then in a good position to negotiate with the prospective customer knowing that to give ground on an item that has little impact on the cost but will win the work, could be a good move. A good understanding of the costs also allows the management team to focus on the major cost components. Why spend time and energy on reducing a minor cost when the same effort could be put into reducing a major cost item? Job costing needs to be kept under constant review. If jobs begin to take longer than estimated this should signal to management that something has changed and needs to be investigated. A good costing system can be a big help when running a business.

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Appendix I Case Study ABC Business Service only operates a lawn and gardening service. The profit and loss budget for 2006/2007 year is as follows: ABC PROFIT AND LOSS BUDGET 2006/07 250,000 50,000 165,000 $465,000

Sales Interest Income FaHCSIA Grant Total income Expenses Personnel Salaries Superannuation Staff training &welfare Client wages Client superannuation &other Long service leave Sub Total Depreciation/Occupancy Rent Depreciation Sub Total All Other Costs Administration Advertising & Promotion Head Office Costs Equipment Purchases Heating, Light & Power Fuel Motor Vehicle Expenses Raw materials Repairs & Maintenance Telephone Sub-Total Total Expenses Operating Surplus/Deficit

165,000 15,000 10,000 50,000 4,000 1,000 245,000 15,000 30,000 45,000 20,000 2,000 60,000 10,000 4,000 5,000 25,000 10,000 6,000 3,000 145,000 435,000 30,000

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CASE STUDY Appendix II XYZ Business Service is a larger Business Service with a lawn and garden operation and a packaging operation.

XYZ PROFIT AND LOSS BUDGET 2006/07 Sales Gross margin Other Income Income [incl Gross Profit] EXPENSES Personnel Sub Total Depreciation/Occupancy Sub Total Administration Sub-Total Total Expenses Trading Position before Governments Grants Government Grants Operating Surplus/Deficit 1,000,000 230,000 20,000 250,000

150,000 150,000 580,000 880,000 (630,000) 600,000 ($30,000)

To assist management gain a better understanding of their business the accounting team has separated the results for lawn and garden from the packaging activities as follows:

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XYZ PROFIT AND LOSS BUDGET Allocation Sales Cost of Sales Labour Materials Vehicles Gross margin Other Income Income [incl Gross Profit] Expenses-Personnel Salaries & Wages Salaries & Wages on costs Sub Total Depreciation/Occupancy Rent Depreciation Sub Total Administration Audit/Accountancy Advertising & Promotion Bank Charges General Expenses Heating, Light & Power Fuel Motor Vehicle Expenses Freight [inwards] Repairs & Maintenance Telephone Sub-Total Total Expenses Trading Position Government Grants Operating Surplus/Deficit 1,000,000 770,000 600,000 60,000 110,000 230,000 20,000 250,000 120,000 30,000 150,000 80,000 70,000 150,000 60,000 10,000 10,000 220,000 40,000 50,000 30,000 60,000 80,000 20,000 580,000 880,000 (630,000) 600,000 ($30,000) Actual Actual Actual Actual Actual Actual Board Pol. Lawn& Garden 600,000 470,000 360,000 20,000 90,000 130,000 10,000 140,000 60,000 15,000 75,000 20,000 30,000 50,000 36,000 4,000 6,000 132,000 10,000 28,000 20,000 5,000 45,000 12,000 298,000 500,000 (360,000) 400,000 40,000 Packaging 400,000 300,000 240,000 40,000 20,000 100,000 10,000 110,000 60,000 15,000 75,000 60,000 40,000 100,000 24,000 6,000 4,000 88,000 30,000 22,000 10,000 55,000 35,000 8,000 282,000 380,000 (270,000) 200,000 (70,000)

Actual Actual

Floor Area Actual

Sales Actual Invoices Sales Floor Area Actual Actual Actual Actual Sales

CBF

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Appendix III Further Explanatory Notes. A quotation has been prepared for a straightforward job using the figures identified in the Paper. The following figures are based on the method that uses the entire FaHCSIA grant in calculating the various costs. It assumes that the figures are based on the budget for the coming year, 200X. Cost Factors for the 200X Year All figures are based on hours. Labour Supervisors Clients/employees

$41.00 $5.20

Equipment [Must include every hour worked by supervisors and clients.] $2.00 [For example if the quote was based on two hours on the job for one supervisor and three clients then there would be 2 hours for the supervisor and 6 hours for the clients giving a total of eight hours. Thus the equipment cost would be 6 x $2.00 = $12.00] Travel Time [Based on each vehicle sent to the job] $33.00 [If for example two vehicles were sent out to do the job and the Business Service were able to charge travel time then the total cost for travelling would be 2 x $33 or $66.] Fixed Costs [Based on every worked by supervisors and clients] $4.00 [This is an identical calculation as for „equipment‟ above. How many hours were spent working on the job? If it were two hours on the job for one supervisor and three clients then the total number of hours would be 6 and the total cost $24.00]

Profit [Based on every worked by supervisors and clients] $7.00

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[Note this is the same calculation as „equipment‟ and „fixed costs‟ above.]

The above calculations can be simplified by working out the cost per crew hour provided the composition of the crew is not changed. The following calculation assumes a standard crew of one supervisor and three clients. Cost per crew hour $108.60 [This figure is calculated as follows: One supervisor Three clients [3x$5.20] Equipment [4x$2.00] Fixed Costs [4x$4.00] Profit [4x$7.00] Total Cost per hour $41.00 $15.60 $8.00 $16.00 $28.00 $108.60

Thus with a standard crew of one supervisor and three clients only two figures are necessary to prepare many quotes, a crew cost per hour of $108.60 and a travel cost per hour of $33.00 where you are lucky enough to be able to charge for the travel time. Note that the above „cost per crew hour‟ assumes that the Business Service is able to include a factor for profit. A quote for a small commercial job based on three hours of work and half an hour of travelling time. The quoted price would be: Crew cost [3x$108.60] Travel time [1/2 x $33.00] Total GST Quoted Price $325.80 $16.50 $341.30 $34.13 $375.43

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PAPER#7
RECRUITMENT & RENTENTION OF STAFF AND CLIENTS

Purpose This topic covers the general area of management and development of staff with specific reference to the recruitment and retention of staff and clients.

Continuous Improvement This paper should be read in conjunction with the FaHCSIA „Continuous Improvement Handbook‟. The Handbook identifies the need to continually develop the performance of all Business Services and states that the process operates at two levels: At the individual Business Service level At the sector level. The Lawn & Garden Group also operates at the two levels: Individual Business Services are identifying areas for self-improvement by working together. At the sector or sub-sector level the Lawn & Garden Group is identifying opportunities and setting performance benchmarks [see Paper # 5 on “Performance Indicators and Benchmarks”.] The Handbook also outlines the „continuous improvement model‟ at two levels: At the level of the individual Business Service: BUILD KNOWLEDGE, UNDERSTANDING & OWNERSHIP ASSESS CURRENT PERFORMANCE IDENTIFY & REVIEW EXAMPLES OF GOOD PRACTICE IDENTIFY & PRIORITISE IMPROVEMENTS At the sector or sub-sector, in the case of the Lawn & Garden Group:

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NETWORKING, PEER SUPPORT & INFORMATION SOURCES QA CERTIFICATION DISSEMINATION OF GOOD PRACTICE BENCHMARKING PROCESSES

THE OBJECTIVES The tasks differ between the two groups of people, clients and staff, employed by Business Services. Clients Clients or employees in this context are defined here as people with disabilities. Frequently a Business Service is not in a position to select the person with the skill set best suited for the position. Each person with a disability presents him or herself to the organization with their own unique skill set. The Business Service is usually in the position of accepting a person with disabilities if it has a vacancy and the person meets the criteria as set out by the Department of Families, Housing, Community Services and Indigenous Affairs. This puts a Business Service in a different position to a business that operates in the „open‟ market because that business is free to pick and choose a person who will be the best fit for the job. A Business Service accepts the person and then finds the most appropriate position for them within the organization. The need for the business to adjust to the requirements of the client rather than vice versa has a major impact on the type of businesses in which a Business Service will become involved. There is recognition that the activities undertaken by Business Services must have a variety of openings that will be reasonable matches with the likely skills of the clients. The short-term business objective is therefore to train the client for the position, which is the best match with their current skill set. Depending on the individual, this could change over time as further training equips the individual for positions requiring more advanced skills. As the client develops and becomes a productive member of the work team, the Business Service needs to recognize the value of the skills that the individual client has developed and thus a second objective becomes the retention of that individual within the business.

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Staff Selection of staff has a different starting point from that of clients. The Business Service can approach the open job market and recruit the person that best fits the position description. Thus the first part of the objective is a careful analysis of the position followed by a good selection process. Retention of staff is generally a more critical factor with staff than it is with clients if for no other reason than the fact that the staff generally have many more options, than clients. Thus the second part of the objective is to retain the staff.

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RECRUITMENT& RENTENTION - STAFF Most of the following remarks focus on supervisors as these positions make up the bulk of non-disabled staff in lawn and garden operations. Job Specification/Description The process starts with an up to date job description with measurable outcomes. The better job descriptions focus on the outcomes that the organization is seeking to achieve and not over emphasising the processes. Once the supervisor understands the outcomes that are expected then the „how‟ of achieving them, subject to adequate controls, can be best decided in the „field‟or on the job. It is very important that the job description be kept up to date, as it is often a source document in any performance counselling or industrial relations issues. The argument that „I was never told that it was part of my job‟ is difficult to sustain if the task is referred to in the letter of appointment and/or is included in the job description. Casual to Permanent Appointments The policy of initially employing casual supervisors to cover for permanent staff when they are on leave, sick leave etc has a number of advantages. Management can identify potential recruits and offer them casual employment. The casual supervisors are then observed as they carry out their work and based on their performance some can then be offered a permanent position. Supervisor Development Programme A Business Service, not part of the Lawn & Garden Group, has a programme of selecting people who have completed a TAFE course after leaving school and bringing them into the organization as trainees. They then work as a trainee supervisor in a number of departments including administration. When a suitable supervisory vacancy occurs they are then promoted into that position. This has proved to be a very successful programme for that Service. Another Business Service, which is part of the Lawn & Garden Group, increases the number of supervisors employed in the busy months as a method of dealing with seasonal workloads and controlling costs. This has the added value of enabling management to identify potential permanent employees. When a vacancy occurs, the Business Service has some potential choices when selecting new supervisors. Potential backgrounds for possible consideration as supervisors include: Mechanics or people with some mechanical aptitude. Gardening or landscaping skills are clearly very relevant and have the added advantage that it is a sector that usually does not attract high wages. Typically members of the Lawn & Garden Group have appointed males to supervisory positions usually because nearly all the clients are also males.

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While there may be a reluctance to appoint female supervisors, Business Services have reported good successes with female supervisors even though nearly all the work crews have been males. Other desirable attributes include, budget counsellor, family counsellor, conflict resolution skills, ability to give clear straightforward instructions, grief counselling etc. It was acknowledged that the list is potentially endless but the overriding skills were the ability to direct and relate to the clients. Measurement Based on discussions with around half of the members of the Lawn & Garden Group, none were formally measuring the turnover of staff or clients but all could source the necessary data to measure this factor, if they needed too. It was evident that the retention of staff in particular was not a major issue. The movement of clients from one Service to another did occur but the driving force or reason was almost always due to the carers. Frequently the parents or carers were moving home and a relocation of the client was one of the outcomes of that decision. The „portability‟ of case based funding and the desire to switch from one Business Service to another was not yet seen as a major reason for the loss of clients.

Length of Service In response to the question: “Ideally what is the minimum length of time you would like a supervisor to stay with your Service?” The answers ranged from two to five plus years with most expecting supervisors to stay for five years or longer. The reasons for the length of service were usually put down to a combination of two factors: The supervisors are committed to the position and there is a genuine commitment to working with people with disabilities. The recruitment processes were generally able to select suitable people for the positions. In two Services, both in small towns outside the main population areas, the remuneration for the number of hours worked were an attraction, with the suggestion that other options for the same level of pay were limited in those towns.

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Supervisor’s Attitudes Informal discussions with a small sample of supervisors suggested that the opportunity to take part in the decision making processes and thus to influence the direction of the business were another aspect in the retention of supervisory staff. They felt that they were part of the management team! Scale of the Enterprises A related factor to the supervisor‟s attitudes is likely to be the relatively small scale of the businesses operated by the members of the Lawn & Garden Group including those with the higher turnover levels. Typically the supervisors share an office or occupy a room close to the manager and are thus either taking part in day-to-day decisions or are very aware of what is happening. Standard and Scale of Human Resources Management in Business Services The professionalism and level of involvement of human resources people in this part of the disability sector is significantly in advance of nearly all businesses of a similar size, in „outside‟ industry. The basics are implemented properly. Apparently simple activities, such as a monthly barbecue or regular staff/client meetings, have the beneficial effect of also keeping the supervisors involved and making them feel part of the team as well. The „rub off‟ effect on to the supervisors is a factor in helping the retention of the staff. Pay Rates as a Retention Strategy Clearly Business Services generally have only limited opportunities to pay above the award rate. However the following points have been made: The conditions of employment, especially the freedom to operate in a reasonably independent manner is an attraction to those people who like a degree of freedom in the way in which they organize their work. This often acts as an „offset‟ to lower wages. Salary packaging is a strong selling point and often needs to be explained in some detail. One Business Service has a simple A4 sheet with two columns, one showing the net take home pay before salary packaging and the other column showing the impact of salary packaging. The use of a vehicle to travel to and from work is an added advantage.

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Performance and Retention One Business Service manager made the observation that the level of retention had been affected when they had begun to measure productivity. “If you are recruiting and retaining staff that no-one else will touch it is likely that your retention will be higher than average but then how well is your business operating?” When they began to measure output and insist on improvements, two of the four supervisors resigned. They were replaced and output has increased plus the two new supervisors have remained with the organization.

RECRUITMENT& RETENTION - CLIENTS Recruitment and Referrals of Client Where „Transition to Work‟ programmes exist, the Business Services involved, report that school leavers and their carers have responded positively to the proactive approach taken by Business Services. The Department of Families, Housing, Community Services and Indigenous Affairs Department are investigating the current problems with referrals from Centrelink. Internal Promotion of Clients There may be limited opportunities for internal promotion but one Service employing people with psychiatric disabilities has been able to promote clients into supervisory positions. A common practice in „outside‟ industry is the appointment of „Leading Hands‟. This is typically for a position that reports to a supervisor. The Leading Hand is given some limited authority over a small number of fellow workers for a specific task(s). An example in lawn and garden work might be where say two or three clients were trimming edges using whipper snipers. Say in a cemetery. One client would be asked to direct the others to ensure no areas were overlooked. Usually a small additional hourly payment is made to reflect the added responsibility. Case Based Funding None of the existing Lawn & Garden Group members reported any of their clients making use of the flexibility of case based funding to shift from one Business Services to another. There were however cases of clients moving, for all the traditional reasons, such as carers moving to new locations.

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CONCLUSIONS These notes set out to briefly review what members of the Lawn & Garden Group are currently doing to recruit and retain staff and clients. The Group had a lengthy discussion about this topic and concluded that it while it was difficult to quantify and/or describe many of the successful steps necessary to recruit and retain staff and clients, they were nevertheless, the outcome of good management practices. By addressing the issues and dealing with the people fairly and consistently one of the key outcomes was the retention of good staff and clients. Equally the loss of good staff and clients was a signal to senior management that there were outstanding issues to be addressed.

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PAPER # 8 SALES & MARKETING

INTRODUCTION

The future prospects for a service industry such as lawn and garden operations look very promising. It is difficult to comprehend a person living in say China or India cutting the lawns of a retirement home in Wagga Wagga. This somewhat nonsensical statement is another way of saying that a service industry such as lawn and garden will not be transferred overseas, as has happened to much of the packaging work done by Business Services around Australia. A characteristic of the modern Australian economy is the growth of the services sector in both the private and public domains. This Paper sets out to address how a service based business in the lawn and garden sector can achieve a level of sales to ensure profitability and long-term growth. In Paper#1 on „Productivity and Profitability‟ there were a small number of activities identified, that a lawn and garden business needs to concentrate on, in order to achieve success. One of the issues discussed in that Paper was the need to achieve a breakeven level of sales. That is, enough revenue generating business to cover the costs. This requires profitable sales. In this Paper there are references to customers and clients. They are used interchangeably and both refer to the purchasers of the services provided by Business Services.

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MARKETING STRATEGY Companies and organizations in both the „for profit‟ and „not for profit sectors‟ identify in their strategic plans a course of action that will enable them to achieve their goals. A sub set of this strategy is often found in their marketing plans, usually expressed as the marketing strategy. This is the process by which a business identifies those parts or segments of the market where the application of its particular strengths will result in sales from enough potential customers, willing to pay for work at price levels that will enable the business to make a profit. There are three key points in the last sentence: Match the skills of the workforce to the needs of that part or segment of the market in which you choose to compete Ensure that the market segment is large enough to enable your business to achieve at least a break-even level of sales. The price levels, which the selected segment will pay for the work, are higher than your costs of doing that work.

This Paper will concentrate on the first two of these points. The third point relating to prices and costs has already been covered in Paper#6, „Job Costing‟.

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THE SECTOR

Definition of the Sector The market in which the members of the Lawn & Garden Group operate can be broadly described as „Lawn and Garden Maintenance‟. However in addition to this sector some Business Services are capable of carrying out a much wider range of work. For example during the winter months or when there is a low rainfall period many other work opportunities are often carried out..

The Size of the Sector The sector is large. The following method used to calculate the size of the market is not accurate but will give some indication of size of the total market: On the Internet, the Yellow Pages list a wide variety of activities. For the total Australian market the number of entries for the selected activities are as follows: ACTIVITIES Lawn Cutting & Maintenance Landscape Contractors & Designers Gardeners Tree Felling and/or Stump Removal Total NUMBER OF ENTRIES 5054 8162 2722 3751 19689

To gain some appreciation of the size of the market the following assumptions have been made: Lawn cutting and maintenance contractors are all assumed to employ only one person. Typically they are owner operated. This will understate the size of the market, as it is known that some of these businesses employ more than one person. However some will have ceased operations while other will have commenced operations. No allowance has been made for the „informal sector‟ consisting of people who cut a few lawns in their local area and are not listed in the Yellow Pages. Landscape contractors and designers are all assumed to employ two people. Gardeners are all assumed to be owner operated and are operated by the owner/manager. Tree felling and/or stump removal businesses are all assumed to employ two people.

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There will also be other individuals and businesses involved in the sector but have their businesses classified under other heading in the Yellow Pages. For example under headings related to property services. Another very broad assumption is that each individual generates about $60,000 of turnover per annum. This will probably be on the low side for the bigger businesses but possibly on the high side for some owner operators. Based on these broad assumptions the size of the Australian market is somewhere in the order of: ACTIVITIES NUMBER OF BUSINESSES 5054 8162 2722 3751 19,689 NUMBER OF EMPLOYEES 5054 16324 2722 7502 31,602 VALUE OF TURNOVER 30,324,000 97,944,000 16,332,000 45,012,000 $1,896,120,000

Lawn Cutting & Maintenance Landscape Contractors & Designers Gardeners Tree Felling and/or Stump Removal Total

This works out to about $90 per head of population and covers all residential, commercial and State and Federal Government work that is carried out in the sector for the above activities over a year. Please note that if the figure of $90 per head of population is used to calculate the size of a local market it is very likely to give an incorrect answer. Consider for a moment a city area, which has a number of high-rise buildings with apartments/units versus say the Southern Highlands of NSW with larger homes surrounded in many cases with very large lawns and gardens. Using the $90 per head figure is almost certain to give an incorrect figure for market size in both cases.

Market Share held by Business Services Based on other studies the share of most markets held by Business Services is very likely to be less than 5%. Some estimates have been made of market shares in rural and regional Australia and they invariably show that the share held is small. This is excellent news as it means there is plenty of room to increase sales. To summarize the sector is large, growing and Business Services typically hold small shares. The challenge is how to grow a profitable share of this market for each Business Service involved in the sector.

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Competitors There are a number of different groups of competitors: Franchise and well-organized Independent Operators The sales turnover for a small business with a lawn-mowing round is almost totally dependant on the business skills of the operator. The sales leads generated by the franchise are passed to the franchisee and their ability to convert a lead to a sale and then to convert a one-off job to a regular customer will be the major factor in determining their annual income. During the „slow season‟ the better operators will have identified opportunities from their customer base for rubbish removal, tree pruning and other work to increase their income during this period. Note that the better organized independents or franchise operators „swap‟ clients or customers as this allows them to group their customers and thus reduce the travel time between jobs. The number of regular customers serviced by a franchisee will vary but a range of 200 to 300 customers would be typical figure. Based on an average of 15 jobs per annum per customer at an average value of $40 the turnover will range from around $100,000 to $150,000. The minimum level of turnover the franchise would usually consider for a lawn-mowing round is $1,000 per week or say $50,000 per annum. The „Grey Army‟ and other occasional operators The number of players and their turnover in this part of the sector is very hard to estimate. Undoubtedly they do have a share of the market. Their pricing is often variable and new players enter and old players leave the market frequently. Unfortunately they often give the residential sector a false impression about prices as they often operate without appropriate insurances and avoid GST by accepting cash for the work. Company Operations Larger organizations with two or more employees generally hold the largest market shares. Although smaller in number they are equipped with more substantial equipment and are often the only organizations capable of successfully carrying out the work involved in the larger tenders. Included in this group are businesses that are described as „Property Services‟ which includes some very large companies that tender for major Federal Government contracts both within Australia and overseas.

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Growth Trends As mentioned above, the services sector in the Australian economy is growing. This applies especially in the general area of housing with the size of houses increasing and with higher disposable incomes also being used to purchase second homes. Negative impacts include the projected increase in weather variability including more severe dry periods which is likely to impact on the lawn and garden market, the move to larger homes on smaller blocks of land with consequently smaller gardens and the growing percentage of apartments and units. Residential There is a move to encourage older people to remain in their homes and they frequently seek assistance with the maintenance of their properties. With increasing wealth, homeowners are electing to seek others to provide more services including those associated with the care and maintenance of the areas around the home. Commercial Outsourcing and increasing society expectations concerning the appearance of cities including industrial areas are ensuring a steady growth in commercial work for lawn and garden operators. Over time the expectations of ratepayers on Council and other authorities increase. Councils are expected to increase the number and/or size of parks, walkways, playing fields and improve the appearance and care of the areas under their control. State and Federal Governments Similar pressures apply to all Government Departments. Clearly some are doing more than others. However a general disquiet about the apparent run down in public assets is leading to more attention from elected officials to the general appearance of publicly owned facilities. Corporations and other quasi publicly owned entities Water boards, power companies etc are equally under some pressure to maintain at least the appearance of their facilities. Again these are all opportunities for lawn and garden operators.

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MARKET SEGEMENTATION Segmentation allows an organization to take large amounts of data and reassemble it in a format, which is easier to understand and hopefully will enable management to direct their efforts to achieve certain outcomes. For example a Business Services involved in the lawn and garden business might start with a simple breakdown into residential and commercial. The market can be segmented in a wide variety of different ways. There is no right or wrong segmentation-it depends or what management wishes to examine and where and how they want to increase their understanding of their business. Segmentation is measured over a period of time. It is usual to take a full twelvemonth period, as this will capture seasonal variations and tends to even out any unusual events such as a one-off major opportunity, which artificially stimulates the market. However a period as short as say a month could be used as long as management was aware of any unusual events. For example the coldest month of the year or the month when most people take holidays or an unusual combination of dates, for example when ANZAC day and Easter fall in the same month could produce results, which don‟t reflect the business activities throughout the year. Some of the more typical segmentation approaches are listed below.

Residential and Commercial Segments Assume that a Business Service wishes to better understand its current mix of business and that it has two lawn and garden crews. It could start by finding out how much business each of its two teams is doing in the following two segments. The final outcome could be a table as follows: Team One Team Two No of Total Value No of Total Value Customers $000’s Customers $000’s 25 20.0 12 9.6 5 25.0 17 102.0 30 45.0 29 111.6

Segment Residential Commercial Total

A business decision that could flow from this analysis would be for Team Two to specialize by doing all the commercial work and transferring its 12 residential customers to Team One and picking up all of Team One‟s commercial customers. Conversely if the business strategy was to withdraw from residential work then Team One might both pick up some of Team Two‟s commercial customers and gradually reduce the number of residential customers. This would free up Team Two to chase more commercial work.

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Residential, Commercial under $15,000 and Commercial $15,000 and above This segmentation is similar to the one above but the organization has chosen to subdivide the commercial sector on the basis of turnover. This involves segmenting the customer base by the total annual sales turnover in the case of the commercial clients.

Profitable and Unprofitable Customers One Business Service carries out this exercise whenever it has an increase in its cost structure. All the work is re-costed based on the new cost factors and the unprofitable customers segmented from the profitable customers. Management can then focus its attention on negotiating price increases or deleting the unprofitable customers from its customer base.

Government and Non Government Contracts How much of the turnover is coming from the Government sector? A variation of this theme could be to segment on the basis of related or „in-house‟ sales. For example a Business Service that is say part of a church organization may wish to reduce its reliance on the parent organization and thus needs to understand the volume of related or business, based on say the church properties.

Sales by Suburb Geographically where is the business coming from? Does this need to be changed? This segmentation starts with a geographic look by suburbs.

Sales within 1km, between 1 and 2 km, between 2km and 5km and sales greater than 5km away. A variation on the „sales by suburb‟ analysis, which would possibly be used to help reduce the travelling time of the lawn and garden crew(s). A series of concentric circles are drawn at different radii and the location of the customers are then determined.

Job Segmentation Sales can be segmented by the nature of the task or the job. The following list is probably too extensive but jobs could be grouped depending on their level of skill or even OH&S risk. The following list might be rearranged into say four or five groups. Rubbish removal Lawn and garden maintenance

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Pruning Supply and spreading of bark chip, mulch, sand, gravel etc Earthworks Retaining wall construction Landscaping Landscape design Installing irrigation systems Weed spraying Paving Fence repair/painting Water blasting of paths Window cleaning Pool care Tree removal

Visual Mapping This technique is not easily categorized but it can be argued that it is a form of segmentation. It provide a visual or geographic interpretation of where the existing business is coming from and helps to raise questions about areas of business activity. Process Take a large map of the area currently serviced by the Business Service and mount it on soft board. There are a number of possible options. Take a series of coloured pins and decide on their „value‟. Various options could include any one of the following: 1. Red pins are residential customers and blue pins are commercial customers or 2. Yellow pins are for sales per job of less than $100 and blue pins are for jobs with a value greater than $100 or 3. Red pins are for customers that have not used your Service in the last twelve months and green pins are for current customers. or 4. You have two teams. Team One‟s customers have black pins and Team Two‟s customers have red pins. A visual inspection of whatever visual analysis is selected will then enable management to start asking questions. For example: Why are we not winning any residential work from suburbs X and Y?

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Why are we not receiving any commercial work from the two new industrial subdivisions? Why have we lost so many customers in suburbs/post codes X and Y? The visual maps may also help with other marketing tasks such as: Where would be the best location for our new premises to minimize the amount of travel time? When we „drop‟ promotional leaflets we need to cover these suburbs where we are not receiving much work. Let‟s door knock in these two commercial areas because we are not receiving much work from them. The visual maps can be conveniently digitally photographed and the information stored, ready to be compared with a repeat of the exercise in say 12 months to measure the effectiveness of a particular marketing programme.

The Existing Business Service A useful start point is to examine the existing business that is carried out by a Business Service. There is usually a wealth of data that can be extracted to help understand the present position of a business in its particular market. Usually the numbers of active customers are not large. Say less than 200. Initially it is easier to carry out a manual exercise which can later be coded on say an „Excel‟ spreadsheet once management has decided on what segments it wishes to use for analysis purposes. The supervisors or the manager can quickly go through the customer list and manually code each customer depending on the segmentation. For example place the letters „r‟ or „c‟ beside the customer‟s name depending on whether or not they are a residential or a commercial customer. The analysis can then proceed. One Business Service has asked its supervisors to record the time taken to do each job. This data was then used to cross check, which jobs were profitable and which were unprofitable. Some of the segmentations outlined above can be used or others devised to help management to better understand the business.

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SWOT ANALYSIS ON THE BUSINESS SERVICE

Each individual Business Service has its own particular strengths and weaknesses. They will reflect past decisions by management, the nature of the market in which they operate and the effectiveness of management. A strengths, weaknesses, opportunities and threats [SWOT] analysis will uncover them.

An Observation on Business Services The consultant responsible for working with the Lawn & Garden Group has also carried out a number of business planning projects for numerous Business Services. Generally lawn and garden operations lose money. Frequently in the past lawn and garden operations have evolved within Business Services and many have their origins in carrying out residential work for people associated in some way with the Business Service. The activity was generally just that! An activity. It was not necessarily set up to show a surplus. They usually/often lose money. One of the main reasons is that a lawn and garden crew takes a certain amount of time to unload their trailer, prepare for work including putting on the necessary safety equipment and clothing, carry out the work and then reload the trailer before leaving for the next job. Compare this to an independent contractor or franchise operator who will charge a homeowner about $40 to $50 for the garden work around a typical three bedroom home and complete the task in about half an hour. A work crew from a Business Service can do the same physical work in about half an hour but it takes closer to an hour from arrival to departure mainly because of the time taken to prepare for the job and to load after the job. An example was carried out for a work crew in Paper#6, „Job Costing‟, which calculated that the cost per hour of a work crew was around $100 to $110 per hour. Other Business Services operating their own work crews will of course have different hourly rates depending on the equipment, the size of the crews and the skill levels of the teams. Depending on the market situation there will be exceptions to the above general statement. For example if there are a number of houses close enough together to allow the crews to walk from one job to the next [for example with a Department of Housing contract] then the Business Service can compete very effectively.

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Larger jobs tend to suit lawn and garden operations run by Business Services much better. This invariably tends to point them in the general direction of commercial work.

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COMPETITIVE MARKETING STRATEGY

Once a Business Service has completed a SWOT analysis on itself, studied the market in which it operates and undertaken an appropriate market segmentation exercise it is ready to begin the process of devising a competitive marketing strategy. It starts with a detailed consideration of the business plan or the company/organization wide strategy plan to ensure that the sales and marketing goals align with those of the organization overall. For example the senior management/Board may have decided that they wish to increase the number of supported employees working in the lawn and garden area over say the next three years. They may have also agreed in principle to spend some capital to support the proposed increase in employment numbers. With the overall company goals in mind the management team can now study the information they have collected about the market and where it is likely to head. The finance and administration team is likely to be involved in at least a supportive role to help by estimating the likely outcomes of different courses of action. The finance people for example may have prepared an estimate of the performance of the lawn and garden business based on some agreed assumptions. This could include the likely outcome assuming business continues as at present.

The Present Position From the above exercise management can broadly determine the „present position‟ of the business. This will be the output from the SWOT analysis, the segmentation analysis and a realistic statement from the current management team. It may be helpful to have an outside person, perhaps from another part of the organization, to review the information to ensure that a realistic view has been taken of the present operation. This may or may not make for „grim‟ reading from a profit point of view but it nevertheless should be an accurate statement of where this part of the organization sits today.

The Future or Intended Position Based on the organizations objectives the future position can be identified. It is likely to include some key numbers such as the numbers to be employed, the target level of profit or loss, the available capital expenditure, the structure of the business including the number of support staff and so on.

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The Competitive Marketing Strategy Expressed very simply the competitive strategy will aim to move the business from the „present position‟ to the „future or intended position‟. It will also endeavour to build in some actions which will help to „protect the business from its competitors. Typical examples of competitive strategies might contain: The selection of equipment. In a particular area there may be no operator with equipment such as gang mowers or ride on mowers. Assuming there is a demand, the purchase of such equipment may give a Business Service a competitive advantage. Focus on a particular segment. Concentrate on say retirement homes and villages. This may involve finding some particular product or service that a Business Service could offer to make it different from its competitors. For example window boxes with flowering plants, which the Business Service could grow at its premises for supply to the retirement home at certain times of the year. A variation could be pot plants for the interior of the retirement home. Focus on a particular activity. A supervisor with the appropriate training could carry out spraying of noxious weeds using dangerous chemicals. The ability to spray weeds could then lead on to other work or weed spraying may be a small part of a much larger contract but in order to win the contract, it is necessary to be able to spray the weeds. The „sprat to catch a mackerel‟ argument. A strategic alliance. A Business Service may work with a tree felling organization. After a tree(s) has been felled and the chain sawing has been completed the Business Service employees move in and tidy up all the cut material.

Marketing Insanity This is a situation when management takes no action but expects the present trends to alter to achieve the desired outcomes. A situation to be avoided.

Components of the Competitive Marketing Strategy Assuming that there will be a call for an increase in sales this should be identified in detail by segment, together with simple straightforward action plans. For example: Retirement Home Segment

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Increase the sales from the retirement village/home segment from $20,000 to $60,000 per annum. [Responsibility Alison-one new account every four months] [List of all the retirement homes within the target market including an estimate of the amount they spend on lawn and garden activities.] The key assumptions should be stated. “The market not currently serviced by our lawn and garden team is estimated at around $150,000 across the seven prospective customers. To gain another $40,000 of sales we will need to be successful with about one third of these customers. Our selling proposal will include: First month all work will be done free of charge Free fertilizer for the first six months Discounted offer on all bedding plants” [all these offers have been included in our budget]

Petrol Station Segment Add two more petrol stations to our list [from the nine we don‟t already service] by offering the forecourt scrub service arranged on favourable terms from ABC Ltd. Estimated sales increase $9,000 each. [Responsibility Bill by 4/5/0X] The plan will include information on capital expenditure, if required and the probable dates when the purchases are likely to be made. There will also be information on employee/client numbers together with any implications for support staff. Can you achieve a good match between the skills of the crews and the type of work? In other words can you change the sales mix to maximize the productivity of the two crews? This may require restructuring the composition of the crews. Could the most appropriate supervisor be teamed with the correct clients to do a particular type of work? This might be a large mowing contract using only ride on mowers. The other crew might be „tailored‟ to do smaller commercial work requiring lower skills. This could include training new clients for possible later moves to the other crew. The sales effort is then directed to the two different types of work to ensure there is a good „fit‟ between the job and the crew, which will ensure the highest productivity levels for each crew. That is, changing the sales mix.

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A variation on this approach is to segment the work by the nature of the activity and „tailor‟ the skills of the crews according to the nature of the work. Yet another aspect of sales mix is to gradually drop those contracts that entail a lot of unrecoverable drive time and focus on work, which is closer to the base and thus avoids a lot of unproductive time. In other words by changing the sales mix.

Traps to Avoid It is important that the plan be logical. For example there is little point in chasing the local power board and national parks work if it requires tractors and slashers but the Service only has push lawn mowers and no capacity to invest in new equipment.

Scale or Size of the Work A Business Service may have a wide range of skills in its work crews and finding work suitable for those with lower skills may be a problem. A large job carefully selected may have a range of different tasks. It might be a contract with a Council to maintain a park area which has a combination of lawns, flower beds, public barbecues etc. The collecting of rubbish, cleaning of barbecues are possible examples of this type of work. It provides work for people with a range of skills.

Chargeable Hours In Paper#1, „Productivity and Profitability‟ two key control factors were identified when managing a lawn and garden business-chargeable hours and accurate costing. The choice of work has a major impact on chargeable hours. Reference has been made above to the difficulty that Business Services have had in achieving a profitable levels of sales when servicing the residential sector. Essentially this relates to chargeable hours. Too much time is lost when moving from one small job to another. The selection of work can have a major impact on the chargeable hours. Consider a large cemetery. They are usually fairly level and thus a supervisor can manage the crew even if they are spread out, as they are usually in line of sight. The work can be divided up to suit a range of skills and thus employ some of those with lower skills. The work is likely to take some hours thus reducing the ratio of drive time to work time. Generally this type of work is attractive to a Business Service. These remarks often also apply to Department of Housing Contracts where the crew can walk from one part of the job to the next.

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Time and Effort to Secure New Customers Compare the management time required to win one large contract versus the time to win a number of smaller contracts of equivalent total value. Assume a large contract with a value of $100,000 has been secured. The management team is then free to seek other work. Compare this to say domestic residential work. Assume each residential job yields sales of say $50 and there are four jobs per annum per customer. It requires 500 customers to achieve sales of $100,000 in a year. Or if there were eight visits a year with each visit yielding $50 it would still require 250 new customers to equate to sales of $100,000.

Withdrawal from the Sector One outcome of a careful study could be to withdraw from the sector completely. If the work available cannot be carried out profitably it is better to phase out the lawn and garden activities and develop new profitable areas of activity for the Business Service. Work in the ‘Slow Months’ [Paper#3, „Work in the Slow Months‟ covers this topic in more detail.] In many Business Services involved in lawn and garden operations one of the reoccurring themes is the decline in work in the colder months when the demand for the service declines. There are some actions that can be taken. The starting point of course is to eliminate the problem altogether. Some Services have deliberately set out to secure work that is less susceptible to variation. For example where the contract calls for a mix of work including sweeping, removal of rubbish and general „clean up‟ which is necessary even during the height of the summer or during the colder months then the variations in the volume of work can be reduced. For example: Contracts involving maintenance of factory exteriors Car parks around say supermarkets Areas which members of the public use and thus litter accumulates

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A facility where appearance is important to the customer and thus it is necessary to maintain high standards even if it only involves the removal of a few weeds etc. Examples could include some aged care facilities, head offices and State and Federal Government Offices. [One Business Service that has adopted this approach has managed to reduce the variation in sales between the busiest months, November to the slowest month, July to 14%. In the slower months the staff and employees are encouraged to take their annual leave. Thus the „slow months‟ problem has been minimized.] The NSW Department of Housing tenders often call for a regular visits to the various locations to ensure that all common areas are kept clean etc. These tenders provide regular work schedules with the understanding that at some times of the year, say after periods of rainfall, there will be more time required to maintain the green areas. However where it is not possible to adjust to the downturn with the current customer base it is possible to become involved in other activities.

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SALES & MARKETING TOOLS

Market Research Many if not all managers are intuitively conducting market research every day in their businesses by simply being aware of what is happening in their local market. Market research is the formalisation of this process. By adopting a consistent logical approach to the task of collecting information the manager has a better understanding of the market in which a business operates. Another way of describing market research is that it is the process by which a business avoids the problem of „being run over by a train which no one saw coming.‟ It enables a manager to identify emerging trends, the position of the business in relation to its competitors and where the likely opportunities are going to appear. It is designed to help managers anticipate the changes in those factors that impact on a business. It is not difficult. These are some of the more common practical approaches, which can be carried out at little or no cost: The Scrap Book A scrapbook should be used to retain all the printed material produced by the competitors. These would include press releases and/or articles in the local press. Examples of any newspaper advertising or other publicity material such as leaflets. This document would usually only be referred to when a business is reviewing its competitor‟s activities or devising some material for itself. The Yellow Pages The Yellow Paged for any area will provide a convenient listing of the competitors. Note that some may not necessarily be listed under say Lawn and Garden Contractors but might be found under say Property Services. The Competitors The competitors will probably be meet whilst out on the job. Opportunities should be taken to meet them if only to see the type of equipment and the number of employees. The number of employees is generally the best straightforward guide to their market share. By estimating the turnover per employee and multiplying by their number it is possible to establish their market share. Equipment suppliers In any given areas there are usually only a small number of lawn and garden equipment retail outlets that service the professional end of the lawn and garden market. They will often be prepared to talk about the bigger operators.

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Sales Representatives for Equipment Suppliers Another source is the local sales representative for equipment suppliers. They often have contact with the larger operators and assist with identifying the correct specifications for machinery. Note however that the sales representatives and the lawn and garden outlets can of course talk to your competitors about your business.

Advertising and Promotion The start point is to determine in which market segment a Business Service wishes to gain new customers. If the target is the residential homeowner then the media selected must reach the target market. Generally advertisements fall into one of two types. Examples of the first type are found in the back pages of the free press or in the Yellow Pages. This „passive‟ advertisement lists the name and telephone number for possible contact by a prospective customer. An extension of this activity is pay for a display advertisement in the Yellow Pages but these are expensive, especially in the capital cities. The second type of advertisements are those that aim to persuade a person to take action. Ideally the advertisement should have a deadline or expiry date for when the offer expires. The offer might be say “any quotes issued this month will be subject to a 10% reduction‟ or “all quotes issued this month include free fertiliser. ["Conditions apply"]. It is reasonable to ask if advertising likes this works when considering work such as lawn and garden contracts. One Business Service placed 20,000 leaflets in post boxes and letterboxes and secured 22 jobs of which 10 became permanent for a cost of around $2,000. Say $200 to secure a permanent job. If the target market is the commercial sector then the media must be selected which targets this particular sector. Often it is difficult to find media that specifically aims for the correct target without considerable cost. Some of the other options below may be more cost effective. Press releases and advertorials can be used to support formal advertising programmes. Generally local newspapers are very supportive of disability services and are a useful means of maintaining pubic awareness of a Business Service. Sign writing of vehicles and signage on buildings is generally a low cost method of promoting the lawn and garden operation. Magnetic signs can be made at relatively low cost and are readily moved when vehicles are changed over.

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Referrals In both the residential and commercial sectors a referral can be very effective. Assume you have a satisfied customer. You simply ask your customer if he/she knows of anyone who could be interested in using your services? Ideally when your customer nominates some potential customers you would then ask if they would be prepared to phone the prospect on your behalf and just advise that you will call in connection with quoting on their work. Thus a potential customer is alerted to your call and has hopefully received some first hand information about the quality of your work. There is every chance that when you telephone or call that you will receive a good hearing.

Joint Promotions If your target was say the residential market then a Business Service could offer a raffle prize to the local Senior Citizens Club of free lawn and garden maintenance for say 6 months. The name of the Business Service gets „free‟ publicity for the cost of the lawn and garden work in the prize. A similar arrangement could be made with a local newspaper in return for the free advertising of the Business Service.

Printed Material Most printed material finishes up in the waste paper basket. An effective low cost source of printed material is to use letterhead paper. The assumption is made that the letterhead is printed in one or more colours [it looks attractive], that it has been printed in relatively long runs and is thus relatively inexpensive and that it has the correct address and telephone numbers for the lawn and garden operations. Any promotional offers are then made in one colour on the letterhead paper. It is assumed that they can be produced in-house on a printer linked to a computer. This is usually the most cost effective way of producing promotional material for less than say 500 leaflets. Above that level then a quote can be obtained from a commercial printer. Business cards are a useful low cost way of leaving contact details with a prospective customer. Every supervisor should carry some in their vehicles. [One Business Service has instructed their supervisors that when carrying out new commercial contracts they are to visit the businesses on either side and across the road from their new customer, introduce themselves and leave a business card.]

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Development of Sales Leads Once a Business Service has identified the growth path that it is likely to pursue over the next year or two then a detailed search should be made of the potential work within the working circle of the Business Service. The working circle might start with say a radius of around one hour‟s driving time from the Business Service. This working circle could be increased if there are insufficient potential customers found in the first search. A careful examination of the local street directory will show all the areas of open space. These are usually coloured in green and thus golf courses, school playing grounds, parks and reserves all are fairly easy to identify. Larger organizations such as schools, factory sites, TAFE‟s, hospitals etc are usually identified in a street directory. Each of these is a potential client. The Yellow Pages can be searched by postcode on the Internet to identify further customers. There is a very simple search facility in the Yellow Pages that will search by category, product, service or brand and will do this by postcode. A quick glance at the advertisers in the local newspaper may yield further leads. From this examination, a potential list of customers can be prepared ready for an approach. Other possibilities when seeking commercial work: Builder‟s Clean. Approach local builders with the offer to tidy up the block after the house/unit has been completed. Hopefully this will be ongoing even if it is irregular work. It could include landscaping the site if the Service can offer those skills. Real Estate Agents. Real estate companies often are responsible for letting properties. Some are also responsible to absentee landlords and have considerable latitude to employ people in various capacities to do work on properties. Develop a relationship with an agency to look after various types of properties. Local Government Many local government authorities have parks and other facilities for which they are responsible. Many also have their own „works departments‟ to look after these assets. However there are continual streams of one-off events, which require some additional labour input before or after the event. The annual Australia Day barbecue, the dragon boat races, the annual picnic rases, the once a year international food fair in the main street are all examples. Can your Business Services become the „fall back‟ option when there is additional labour work required? From this relationship can you gradually become „indispensable?

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Strategic Alliances/Joint Ventures/Partnerships Business Services can enter into more formal arrangements to secure business. For example, an alliance could be formed with say another Business Service for the purpose of submitting a tender that covered the geographic areas occupied by the two Services. This alliance need not be more than a verbal agreement to work together on this one contract but by doing so, both Services would be able to secure work that would not be possible on their own. A partnership with say a Council, as identified above, could involve a written agreement for the Business Service involved to provide a range of services to the Council. This might include rubbish collection and a general tidy up after any outdoor events that took place in the parks and gardens under the control of the Council. A joint venture could involve the formation of a company to provide bedding plants to local Councils. One partner would provide the land and equipment and the other would provide the labour.

Pricing Pricing work is a key part of the sales and marketing task. As a generalisation it is apparent that many Business Services have operated with selling prices too low relative to the market prices. Relationship between Costs and Prices There is no direct relationship between costs and prices. An organization can set a price without any reference to the cost of providing the product or service. Frequently organizations „work backwards‟ by first finding out what is the selling price in the market place and then working out [costing] whether or not they can supply at a profit. Clearly costs influence prices. An organization cannot continually sell at prices that do not recover its fixed and variable operating costs. They simply run out of money and cease operations. Paper#6 „Job Costing‟ covers this topic in some detail.

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What Price to Charge? There are five general pricing strategies: Penetration Pricing The prices are set, as the name suggests, too penetrate or win market share. They are lower than prevailing prices and designed to take market share from competitors. Generally this is a short term pricing strategy, say one to two years before prices are moved up to fully reflect the costs of providing the product or service. The strategy depends on the prospective customer knowing the general price levels and being very price sensitive. For example this strategy might be used where commodities with tightly defined specifications are the accepted norm. Businesses can thus easily substitute one product for another. Fertilizer and the common grades of steel are examples where this could apply. A service such as lawn and garden maintenance is unlikely to have these characteristics. Marginal costing or Pricing This has similar characteristics to penetration pricing where the supplier does not recover the full costs of providing the product or service. Typically the variable costs, such as labour and fuel would be covered by the selling price but possibly some or all of the fixed costs would not be recovered. Prices could be held at this level for some time provided the prices received by other work could cover the losses sustained by the marginal costing or pricing. Organizations who do not have a good understanding of their costs are often marginally costing or pricing without being aware of it. Full costing or pricing This occurs when a say a Business Service has calculated its costs accurately and determined a profit margin that it wishes to achieve. The following example is taken from Paper#6, „Job Costing‟. “It is possible to include a component to achieve a certain profit. For example all the labour and other hourly rates could be increased by 10%. Provided all the assumptions were correct the organization should gain a 10% profit margin on variable costs. There are a variety of ways in which a business could aim to achieve a profit. For example based on knowledge of your local market and the pricing practices of your competitors your pricing strategy might be:

Domestic/residential work Small commercial work Large commercial work

Cost only/no margin Cost plus 15% Cost plus 10%”

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Competitive Pricing Find out what the competitors are charging and do the same. The key assumptions are that the competitors are charging prices that will maximize their profits and that the customers are unwilling to accept higher prices. One of the traps when following the competitor‟s prices is the possibility that they may not have a similar cost structure to your own business. If their cost structure is lower than your business, they might for example have two or three very large contracts, which enables them to achieve more chargeable hours then you could and by electing to operate at those price levels this may result in on going losses for your Service. Charge what the market will support or bear Keep increasing your prices until the Business Service begins to lose customers due to the higher prices. Some businesses set a pricing strategy that results in about 30% of all quoted work being lost on price. They see this pricing strategy as one that will achieve an optimum price.

Pricing Strategy for a Lawn and Garden Operator. It is likely that residential customers will have some idea of the current prices for general lawn and garden maintenance. They will talk to neighbours and friends and have a figure in mind for the likely price. Thus a Business Service is likely to need to price similar to the going market price. Note however the comments below about „Bundling‟. In the case of commercial contracts there is likely to be much less consistency between jobs and thus the potential customer may not know what is a „reasonable‟ price. In these cases it is suggested that the pricing strategy should be to charge what the market will bear. Keep the prices as high as possible or at least fully recover all your costs plus achieve a target profit figure, as suggested above under „Full Costing or Pricing‟. Bundling This occurs where a supplier bundles together a number of services and provides one price for the complete job. It prevents „cherry picking‟ where a potential customer will only use a supplier for part of the work and another supplier for another part of the work and so on. This is only possible if the potential customer knows the cost breakdown of the service.

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Examples of bundling could be: The charges for dumping fees are not individually specified but covered by say a general statement „this quote includes the cost of removal of 2 trailer loads of cuttings plus associated dump fees‟. This quote includes 2 applications of free fertiliser per annum on all lawns. This quote includes an annual application of bark chip on all garden areas as required. Some suppliers may have significant cost advantages and they could use these advantages to win work. For example they may have a supply of free bark chips or a low cost source of fertilizers. By bundling all the additional benefits into one price it becomes quite difficult for the potential customer to make comparisons between different quotes.

Increasing the Selling Prices This is a key management activity. Frequently a lawn & garden business must increase its prices to cover increases in costs. If a price increase is not implemented then the size of the next increase must be even greater in order to catch up. Often opportunities present themselves to negotiate a price increase. If a customer asks for some additional work to be done then the offer can be made to do this work at the existing price levels but advise the customer of a forth-coming price increase for all the work including the additional work.

Preparation of a Quotation After identifying a prospective customer and gaining the opportunity to submit a quotation for the work it is necessary to prepare a „work sheet‟. This simply records all the details necessary to complete the quote. It is important to capture all the details to ensure the quote is accurate. Some Business Services ensure that the supervisor responsible for doing the work is also responsible for preparing the quotation. This may not be possible in all cases. [See Appendix I or refer Paper #6, Job Costing.] The following points should be covered in all quotations: Name of the Customer including the location of the proposed work Date. This is important as many of the terms and conditions include statements such as “the prices in this quotation will be held for three months from the date of this quotation”.

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The details or scope of work. It should include a clear description of the work and state in some detail the nature of this work. If there are any disputes these are likely to be resolved by reference to the quotation. The frequency of carrying out the tasks and any other details will be included at this point. Price. This should include details on whether the price is GST inclusive or exclusive. WorkCover. All Business Services have cover and this should be stated on every quote. Insurances. Public liability and any other relevant cover should also be specified together with the name of their insurance company. OH&S issues worry many companies. They have concerns of accidents occurring on their sites. This is potentially one area where Business Services could be vulnerable. Explaining in some detail what steps have been taken and give verbal details of any incidents is suggested as the best way to handle these concerns. Training Details of the training that the employees undergo before and during work with a work crew would be of interest to some prospective customers. Terms and Conditions. Details about payment terms can be included at this point. References References from current customers of the Business Service helps to reassure potential customers that the work proposed is likely to be carried out as stated. Guarantees In the event that the work carried out is unsatisfactory a statement saying for example “where it is agreed, that any work undertaken was not of an acceptable standard it will be redone at no cost to the customer”. Acceptance of the quote. There should be space for a signature by the customer accepting the terms and conditions of the quotation. This will cover an expiry date on the prices in the quotation. For example “The prices in this quotation are valid for a period of six months from the date of this quotation”.

The Offer When a prospective customer is approached they are probably going to ask themselves the question-„why should I change supplier? The offer that is made to the prospective customer ideally must make a „connection‟ with the customer, sufficient to make them want to change or at least entertain the thought of a change. Usually the best way to achieve this is by carefully studying the needs of the client/customer and then making an offer to satisfy those needs. It is accepted that this is something of a „motherhood‟ statement. However if a specific need can be

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identified and that need satisfied it is likely to make the offer much stronger. It signals to the prospective customer that the needs of the customer have been carefully considered and a solution of those needs offered. One of the strong offers a Business Service could make would be to do the work for Free! Consider the cost. It is assumed that the Service is seeking additional work and thus has spare capacity or employees who could fit in additional work at no extra labour cost. Thus to do the work for the first time for free would only cost the Service the variable costs of using vehicles and equipment. The offer to say the owner/manager of the factory is “we will sweep your yard/car park cut the lawns and collect the rubbish just to show you what we can do. If we do a good job and you are happy with the work here is the proposed annual contract. If you are not happy with the work then that will be the end of it and you will incur no costs for the work we have already done!” The use of the word ‘Disability’ in the sales process. Should a Business Service „use‟ the fact that it employs people with disabilities as a selling point? Previous studies and informal enquiries have shown that the views of the managers of Business Services are fairly evenly divided on this point. The Lawn & Garden Group concluded that the first requirement was that the „business case‟ or the sales proposition should be sufficiently compelling to support the sale but that it was acceptable and even advisable to let the prospective customer know that the service would be provided through the employment of people with disabilities. This was a positive factor and should be used to support the sale.

The Add-On Sale After winning the work there are often opportunities to expand the volume of sales by adopting a similar approach as McDonalds. McDonalds increase their worldwide sales each year by millions of dollars just by asking the simple question-„do you want fries with that?‟ A lawn and garden operator can also ask questions which may also result in additional sales: Would you like us to paint your fence? We will have time in July/August. Next week we will be hiring a dump truck. We could come by and pick up that old fallen down shed and take it to the dump for you? I would estimate it will only cost $xxx. We have a business connection with a tree felling organization that offers good prices. Would you like us to ask them for a quote to remove that tree? We will help to remove the debris after they cut it down. Would you like us to water blast your paths to remove the moss? It is quite dangerous and you could easily slip.

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Contracts and Tenders A separate paper has been prepared on this topic. Paper#2, Tendering and Regional Contracts. References have been made to tenders and contracts in a number of the Papers. From a strategic point of view they can offer a Business Service a number of advantages. Evaluation Criteria All tenderers are expected to be familiar with and comply with the „Code of Practice”. The evaluation criteria are to be clearly stated in the conditions of tendering and should be consistent with the proposed contract requirements with the aim of identifying the best value for money. The criteria will be weighted depending of the nature of the tender. Some of the factors, which could be included, are: Whole of life costs including disposal Ability to meet code requirements Innovation offered Delivery times offered Quality offered Previous performance of tenderer Experience of tenderer and personnel proposed Capability of tenderer including technical, management, human resource, organizational and financial capability and capacity Tenderer‟s occupational health and safety management practices and performance Tenderer‟s workplace and industrial relations management practices and performance Tenderer‟s environmental management practices and performance Tenderer‟s community relations practices and performance Value adding components such as economic social and environmental development initiatives, if appropriate and relevant to the procurement Conformity to tender with requirements

Advantages and Disadvantages of Contracts Advantages Some contracts require the crew to visit the sites a minimum number of times during the year. During periods of slower growth or during a very dry period this provides regular employment for some of the crews.

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The purchase of equipment can be justified after securing a contract. This equipment may then enable the Service to tender or seek other work not previously possible due to the lack of this type of equipment. Reference has already been made above to the amount of management time required to find a number of smaller jobs equal to the sales value of one larger contract. In a similar vein the administration time required to invoice and process the payments for a number of smaller jobs versus one large contract has overhead cost considerations. Efficient work practices are often easier to establish with large contracts as the work can be allocated to suit the skills and efficiencies of the crews involved. There are disadvantages with contracts. The preparation of tender documents can be lengthy and require a lot of management time. The consequences of under quoting could be very serious for the long-term viability of the Service. A Business Service could be very dependent on one or two large contracts and the loss of one or more of these contracts could create major problems for the Service. However a portion of the work secured by long-term contracts is often a feature of financially successful lawn and garden operations run by Business Services.

How to Keep the Customer-Management of the Relationship As a rule of thumb four contacts a year is considered the minimum necessary to maintain a business relationship. Ideally at least some of these contacts should be in a form where the customer can give the Business Service feedback on the level of service and the quality of the work. In addition, frequent contact may open up other opportunities for the Business Service. If you are in frequent contact and there is a small packaging job or some other work there is a good chance that your Service will be the one that the customer thinks about first. When there is a problem the ability to pick up the phone or get relatively easy access to the decision makers will help to overcome the problem. Possible contacts could include: As part of the contract or included in the quote include a proposal that there should be a formal review every six months

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Once a year, possibly on the anniversary of receiving the work, send a letter of thanks signed by the CEO addressed to the person responsible for awarding the work or contract. Send a similar letter to the customer‟s Board. This has the added value of further building the relationship beyond just the one individual within an organization. A Christmas card is a traditional but nevertheless a useful reminder. Other initiatives could include the occasional washing of the vehicles used by management at no cost, provided this was feasible. This helps to build goodwill and is yet another opportunity to have positive contact with the management team.

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CONCLUSIONS

The starting point in developing a sound sales and marketing programme was identified as the business plan of the organization. This document will either explicitly or implicitly contain the objectives for the lawn and garden operations. Sales targets, number of employees, profit, return on investment and so on. The national market for lawn and garden services was confirmed as large, growing and potentially profitable. A market segmentation analysis will enable the managers of Business Services responsible for lawn and garden operations to gain a better understanding of their business. After completing a SWOT analysis on their business, a manger will begin the process of developing a competitive marketing strategy for their lawn and garden activities. The observation was made, based on a number of observations that few Business Services could make money in their lawn and garden operations if their target market was only the residential sector. It was difficult to compete with the independent operators who usually operated on their own. Small jobs did not usually suit the work crews usually associated with Business Services. Therefore it was important to find the best possible match between the different types of work and the Business Service. This is likely to involve commercial or nonresidential work. The key sales and marketing tools were discussed with an emphasis on those that were likely to be of particular relevance to Business Services. The importance of careful quoting practices, which include all the key pieces of information, have been covered. References have been made to the other Papers that have been produced as part of this programme and how they support one another. It is possible for a lawn and garden operation run by a Business Service to be profitable and in some cases very profitable. Finding the right work at the right price levels is a major step towards this goal. This Paper covers those points.

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APPENDIX I The Prospective Customer You have been keeping your eye on a factory site that has had a „For Sale‟ on it for a number of months. One day the sign has disappeared so you contact the agent to find out who is going to move in. The new owners [MNQ Corporation] are contacted and you are asked to prepare a quote to clean up the area outside all the buildings and if the work is satisfactory you will have the opportunity to provide an annual contract to maintain the premises. To prepare the above quotation a „Work Sheet‟ or Job Sheet‟ will be required. This simply records all details and estimates of time about the work and the assumptions you have made in preparing the quotation. This begins with an accurate statement of the work to be done. It often helps to state this in some detail, especially if it is a new customer, as this is likely to prevent later disputes about the scale of the work included. It also helps in dealing with competitors as many competitors will not be prepared to present a „professional looking‟ quotation. In lawn and garden work it needs to be broken down into its essential components. The usual starting point is to have some working papers that record the calculations and the estimates for various costs. The „Quotation Work Sheet‟ or whatever name is used, which lists all the possible costs that could be incurred on a typical job is used.

On Site Inspection of a Prospective Job A visit is made to the site where suitable notes about the work are made in preparation for completing the quotation:

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Quotation Work Sheet QUOTE NUMBER 123 Prepared by _AJW__ Date 1/7/06 Customer/Location Bill Smith MNQ Corp 27 XYZ Street Strathfield, NSW Site Visit/Notes on the work From the rear of the site [north]: Remove broken pallets and rubbish. Cut lawn [1 hour- ride on mower], spray rear fence line Roundup [0.5 litres 0.25 hours] Note 1 crew to remove metal parts [2.0 hours] West Clear area between fence and wall of factory and sweep [0.5 hours] East. Remove rubbish and sweep [1.5 hours] Trees above power lines. FGH Tree Doctor quote $2750 +GST. South [facing road] Trim shrubs [hedge trimmer, blower vac, broom], remove rubbish sweep car park [1 hour 2 push mowers] Nature Strip Cut lawns, trim shrubs [1 hour 1 push mower] Site easy access 30 minutes from base. Fertilize all lawn areas. Special comments-Easy site access-note old engineering site with nuts and bolts in grass on lawn at rear of factory 3 loads for tip Based on the above information the cost to do the work can now be calculated: Variable Costs Based on the Above Notes [Refer To Paper#6 Job Costing For More Details] Labour Supervisor spray roundup, fertilize and trim shrubs rear and front [1.5 hours]

Employees Rear West East South

ride on mower 1 hour 3 clients x 2 hours collect rubbish 6 hours Clean & sweep 0.5 hours Clean and sweep 1.5 hours Clean and sweep 1 hour

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Nature Strip Total Combined hours Supervisor Clients Equipment 16 hours total Travel Time 0.5 hours Fixed Costs 16 hours Profit 16 hours Total Extras Tip Fees Chemicals Fertilizer

Cut lawn push mower 2 hours Cut lawn push mower 1 hour 13 hours 14.5 [say 4.0 crew hours] 4.0 hours x $41 12 hours x$5.20 $164.00 $62.40

16.0 hours x $2.00

$32.00

0.5 hours x $33

$16.50

16 hours x $4

$64.00

16 hours x $7.00

$112.00 $450.90

3 x $50 no charge no charge

$150.00

Outside Sub contractors FGH Tree Doctor Total GST Total incl GST

$2750.00 $3350.90 $335.09 $3685.99

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QUOTATION

Quote Number 123 Date 7/07/06

Attention: Bill Smith MNQ Corporation Job Address: 27 XYZ Street Strathfield, NSW Description Remove all rubbish, trim trees including those near power lines. Remove broken pallets and rubbish from rear of site and cut lawns. Spray rear fence line with roundup. Clear area and sweep between fence and eastern wall of factory. Remove rubbish and sweep area to west of factory. Trim shrubs, remove rubbish sweep car park at front of factory. Cut lawns on nature strip and trim shrubs. Fertilize all lawn areas. [no charge] NOTE: Trees are growing through the power lines on the factory site-owners responsibility. Quote to trim trees and remove debris attached. Extras Tip Fees [3 trips] Tree lopping -Quote from FGH Tree Doctor attached. Quoted Price GST Total

$450.90

$150.00 $2,750.00 $3350.90 $335.09 $3685.99

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PAPER # 9 MANAGEMENT UNDER CASE BASED FUNDING

Purpose This Paper endeavours to address the challenges caused by the introduction of case based funding. It seeks to identify the different ways in which the management of Business Services can handle the challenges caused by the introduction of the new funding model.

Background Prior to the introduction of case based funding, Business Services were funded by block grants, which allowed them to fund different ratios of supervisors to clients, in various activities. This was particularly true in the case of work crews and enclaves. Case based funding saw the introduction of a standardised system of payments based on the number of workers and their assessed level of disability (DMI). It did not consider the current nature of the activities or the organizational structure of the particular Business Service. The funding levels in 2007/2008 were: Disability Maintenance Instrument (DMI) funding level 1 2 3 4 Assessed maintenance fee (Annual) $3,500 $6,000 $9,000 $12,000

The outcome in some cases could have resulted in a particular Business Service suffering a fall in grant income. Other Services saw their grant income increase. Various mechanisms were put in place to allow for the transition from the old system of block grants to the new system of case based funding. The other key impact of the new funding was the possibility of losing funding when a client leaves the Service or when key requirements of the new system are not maintained for each client.

Efficient Administration and Loss of Funding Under case based funding administration rules, clients are required to have their DMI‟s re-assessed at the end of the two year anniversary of when they were first completed. If this is not completed then: Payments will be suspended if a DMI assessment is not completed after three months of the DMI reassessment date.

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Cases are exited if a DMI reassessment is not completed within four months of the DMI reassessment date.

Participation and Integration Standard 5, which deals with integration and participation by people with a disability in their working lives, seeks to encourage and support management in their programs which encourage these goals. Work crews offer people with a disability the opportunity to work in multiple locations and thus the likelihood of meeting and mixing with their local communities. The clients themselves „vote with their feet‟ by seeking this type of work and when offered the chance to work in other activities such as factory environments show a strong preference for outdoors physical work with a work crew. Enclaves are also strongly supported by clients as they typically offer opportunities to mix with non-disabled people in the work place.

Outlet Capacity-Opportunities To Increase/Lose Funding Under case based funding when a client leaves a Service the level of funding declines. Prudent managers of Services are now keeping the number of clients above the Department of Families, Housing, Community Services and Indigenous Affairs approved outlet capacity. Thus the moment a client leaves a Service, one of the client‟s that are above the outlet capacity level, can be moved into the vacated position. The risk of losing funding is removed. Note that filling a vacant position could possibly take some months. When FaHCSIA allocates extra places for clients a Business Service is in a strong position if it can show that it has been carrying clients above outlet capacity at its own expense. Some Services recently have been able to substantially increase their funding by gaining funding for new places. To deal with these changes the Service must be able to rapidly adapt to the increased numbers by expanding the level of activity. Ideally as part of the planning process it must be ready to expand existing businesses or start new businesses at relatively short notice.

Economic Issues The number of clients that can be managed by a supervisor is often debated particularly in relation to case based funding. The argument advanced is that the reduction in the block grant prevented work crews and/or enclaves from being viable. In some cases this has happened. Examples are cited of one supervisor managing up to say twenty clients in a factory situation. A ratio of 1:20. This can be compared with a work crew. Typically the

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supervisor drives a utility with an extended cab that provides transport for a crew of say four. With the one supervisor and the crew of four this results in a ratio of 1:4. This argument misses the point. It is the economic return or revenue for a given activity that is the key point. For example one Business Service currently operates a work crew activity that employs one supervisor and one client in a work crew. A ratio of 1:1. Another Business Service operates a work crew with one supervisor and fifteen clients. A ratio of 1:15. Both were economically viable but involved in very different activities. The key issue is whether or not the activity can support a work crew comprised of a supervisor and a given number of clients. Business conditions change over time with all companies constantly adjusting their activities to ensure they remain profitable. Some organizations withdraw from activities when they are no longer viable. Lawn and garden activities are no different. A Business Service must identify the areas that are viable for its particular work crews. FaHCSIA conducted a pricing review, which investigated the above issue. It found no relationship between a worker‟s productivity, their support needs and the overheads of Services.

Marketing Issues Paper # 8, „Sales and Marketing‟ sets out in broad terms the necessary steps to identify opportunities in the lawn and garden area. To summarize very briefly the approach: It starts with a realistic assessment of the current organization with particular attention to its strengths and weaknesses. Programs to improve work practices are covered in Paper#1 and the desirability of finding work that suits a particular work crew is emphasized. There are a number of useful hints or ideas set out in various Papers such as Paper # 3, Work in the Slow Months, which will help. As a generalization, with the usual caveats about generalizations, small jobs including residential or domestic jobs are unsuitable/unprofitable for work crews operated by Business Services. This topic and others is discussed in Paper #8.

Management Issues Why do some Business Services make money when operating work crews in the lawn and garden sector and some don‟t? The answers inevitably come back to management. In both rural areas and large cities Business Services involved in lawn and garden activities loose money and in some cases make money. The only identifiable difference is in the management.

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CONCLUSIONS The key issues are economic. The suitability of the work and the interest of the clients in the work, are not in dispute. There are two general questions issues raised by case based funding:

How can a Business Service increase its funding or at least not lose any funding?

The answer outlined above is straightforward. Keep numbers above the outlet capacity. Thus when a client leaves the Service there is no possibility of the existing funding being reduced. When more places are allocated, your Service can argue strongly that it should receive some of the new places, thus increasing it‟s funding. Make sure that the rules are followed. Don‟t forget to complete the DMI reassessments.

How can a Business Service find suitable work at a price that will cover the costs of a supervisor, the work crew and the associated overheads?

The answers to this question are found in the Papers that have been written as part of this „Operations Manual‟. The logical sequence of events is:

Paper # 8. Sales & Marketing Identify markets for the business, which offer a reasonable opportunity to achieve sales that will support a work crew/enclave. Additional Papers that will assist in this area are Paper #2, Tendering and Contracts and Paper # 3, Work in the Slow Months.

Paper # 1. Productivity and Profitability This Paper identifies the key management controls to achieve profitability. Additional Papers that will assist in this area are Paper # 6, Job Costing, Paper # 5, Performance Indicators and Benchmarks and Paper # 10, Selection and Purchasing of Equipment.

Paper # 7. Management & Development of Staff & Clients This Paper identifies the key people issues that management will need to address. An additional Paper that will assist in this area is Paper # 4, OH&S.

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The financial results of the members of the Lawn & Garden Group at the time of writing these Papers were mixed. Some were achieving good financial returns but others were still making losses and being supported by other parts of their organizations. There are no simple answers. The common characteristic however of the successful lawn and garden businesses was the management focus on the business. Managers who were working on their businesses five days a week and concentrating on the basics were generally achieving good returns.

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PAPER # 10 SELECTION AND PURCHASE OF EQUIPMENT Introduction The purpose of this Paper is to provide management with basic guidelines on the process of selection and purchase of equipment. The essential starting point is for management to spend time on identifying the correct components or attributes of the machine and drawing up a specification for the equipment. Once this has been completed then the brands or makes of equipment that meet this specification can be sh ort-listed. The purchase of the equipment is a separate activity. Attached to this Paper at Appendix I are reports from eight members of the Lawn & Garden Group on their experiences with different types of equipment. Note that they were all completed in the May to June 2007 period and thus new manufacturers or models that have c ome on the market since that date will obviously not be included.

Selection Process Productivity and Profitability In Paper # 1, „Productivity and Profitability‟ the conclusions reached were that management needed to concentrate on chargeable hours and pricing. One of the ways to achieve high chargeable hours is to minimize downtime on the job. The selection of equipment is an important consideration when considering downtime. Consider the following: The purchase price for the Honda mower used by virtually all professional lawn and garden operators is around $1400 to $1600. The purchase price of a mower suitable for a residential homeowner that will do a similar job is around $400 to $600 a saving of say $1,000.

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Based on an hourly rate of around $120 for a crew of three or four plus a supervisor [See Paper # 6 „Job Costing‟] this saving of $1,000 represents about 8 hours of work over the life of the mower. In other words it only takes a few breakdowns before the apparent saving is eliminated. Note that the machine will then take up management time in delivery and collection from the repair centre, plus the cost of the repairs. The cheaper mower will last around 2,000 hours while the Honda mower will last for around 4,500 hours before replacement. Thus two of the cheaper machines will need to be purchased to last for the same length of time as the single Honda mower plus the additional costs of breakdowns. A low-cost ride on mower will cost around $2,500 compared to a ride on mower used by commercial operators and Business Services of around $9,000 to $10,000. The same economics apply as the example above. The cheaper mower is suitable for occasional domestic use but not for reliable continuous heavy-duty work. It is a false economy. Also impacting on productivity and profitability are the issues of maintenance and care of the equipment. An active programme of preventive maintenance will reduce the number of breakdowns and extend the life of the machine. Ensuring that the machinery is well looked will clearly have a significant impact on the life and performance of the equipment. One Business Service for example goes to the trouble of not only allocating specific pieces of equipment to each team but also writes the team name of each piece of equipment to help identify the teams who are looking after that equipment and to give them a sense of ownership.

Specifications Business strategy. Confirmation on the existing business direction or agreement on a new direction is the essential first step. In other words the „big picture‟ issues must be first decided. Is the Business Service going to head in a new direction that will require different equipment? For example, if the Service is going to reduce its dependence on residential work and concentrate on commercial work then it may well need to re-equip with different types of equipment in order to win the commercial contracts. A move from say push mowers to ride on mowers. After the business strategy has been confirmed or changed then the process of specifying the equipment can commence.

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Employee Requirements The employment of people with disabilities requires special attention. A team approach, which involves personnel with specialized knowledge, is recommended as they can assist in the identification of critical areas of employee performance. Training people and supervisors can help to list key areas for attention. For example: The weight of a brush cutter/whipper snipper is a key consideration. Is slightly more weight, which would allow the use of a machine with more power but reduce the amount of time the machine needs to be used, a „good‟ trade-off? Are there „hand arm vibration‟ considerations with the more powerful machine? [See Paper #, „OH&S‟ on the new requirements in this area.] The suitably of the guarding systems. A review of past events including accidents or near misses when using similar equipment.

Technical Performance Factors The four common categories of equipment each have their own technical factors to consider. Ride on mowers Push or self propelled mowers Blower/Vacs Brush cutters/Whipper snippers

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As most Services are already using this equipment it is relatively straightforward to read the manufacturer‟s specification sheets to obtain details about horsepower, cutting width, ease of adjustment etc.

Track Record or Performance with other Business Services If this equipment is of a type new to the Business Service, for example the first time it has purchased a ride on mower, ther e could be considerable benefit in discussing the proposed selection with another Business Service. The „BizAbility‟ web site lists Business Services by activity, thus it should be possible to find a Service geographically close. Short List Based on the above factors it is now possible to draw up a short list of possible brands and models. Purchase The purchase decision can be made once the management and supervisory team have accurately defined the specifications for the new or replacement piece of machinery. In the process of collecting information it is very likely that the preferred brand or make of equipment will have become obvious and that the process is too select the distributor or retail outlet that will offer the best terms and conditions for a given brand and model of machine. The list below can be used to select the preferred retail outlet. Should there be more than one brand and/or model to choose from, then the headings listed below can also be used to collect information on which to base the purchase decision. Monetary Considerations: The Capital Cost or Purchase Price. Note that some distributors may include some inducements in the form of say a free service or a set of spare cutting blades etc. These „free‟ offers can be costed at the price the retail outlet would normally charge the Business Service and deducted from the purchase price for the purposes of comparative pricing.

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Terms and Conditions of Purchase. Some retail outlets may offer so many months of free credit. This can again be calculated at either the interest on deposit the Business Service receives from its local bank or its overdraft rate and deducted from the purchase price. Note that an alternative approach is to ask by how much the price will be reduced if the purchase is made on a cash basis. Price of Spare Parts Based on previous experience the Business Service will be aware of the likely spare parts required and the price of these can be compared. Labour Cost of Servicing The cost of labour charged for services and repairs can be compared. Trade in Value Clearly the trade in value can be deducted from the price of the new piece of equipment. Note that the time of the year may be significant as the lawn and garden equipment supplier may be able to resell your older pieces of equipment at certain t imes of the year. [It is tempting to keep the older equipment as a „spare‟ or „backup‟. This is generally a mistake as the costs of maintenance overtime out weigh the advantages. It is generally better to aim for fewer pieces of equipment in better condition. Whole of Life Concept. The Australian Defence Forces use the „whole of life concept‟ to evaluate the total cost of a purchase. A Business Service can use the same approach. Based on previous experience the management can estimate the number of services over the life of the machine and a likely number of breakdowns. Based on the data above about the cost of spare parts and labour rates for servicing it is possible to calculate the cost of purchase and ownership in terms of servicing and repairs over the life of the machine. It is also possible to add the cost of fuel etc to include other operational costs. Cost per Hour of Operation If an estimate can be made of the number of hours the machine will be expected to operate, it is possible to express this as the „cost per hour of operation using the data collected above for the „whole of life‟ calculation. Different machines can now be compared and different retail outlets or distributors who supply the same machine can also be compared.

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Government Contract/Purchase Price Note that many items of equipment can be purchased under Government contract, often at a considerable price advantage.

Non-Monetary Considerations It can be argued that some of these „non-monetary‟ considerations can have a dollar value attached in which case they can be considered with the above factors. Guarantees If the guarantees from for one brand/model or from one retail outlet are better then this could be a financial consideration but the management needs to decide if this additional potential benefit will ever be required. Service Standards and Skills of the Distributor/Retail Outlet If the work is done faster and better then the machine is out of service for a shorter length of time and may cost less. Other Special Treatment For example if your equipment is always repaired first and thus your equipment is out of action for shorter periods of time t hen this again potentially has a value to the Business Service.

Local Business. If there is say only one distributor/retail outlet in the town, then to not purchase the new equipment from that business may raise other issues. In a broader context a Business Service needs to have regard to the local community who support it. This is a policy issue for the senior management team. However by going though the above process it is possible to put at least some monetary value on the cost of purchasing locally.

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Preferred Equipment/Brands Based on the information supplied by eight Business Services who form part of the Lawn & Garden Group, the equipment at Appendix I has been listed. It should be used with CAUTION. For example different models of the same brand were in some cases recommended and in others they were not recommended. Some Business Services operate more in the domestic market than the commercial market thus they could have quite different requirements and prefer different machines. Some Business Services have selected equipment, which appears to be a compromise, but it was selected because it enabled the Service to offer a wider range of gardening services. For example some brush cutters have attachments that allow tree pruning etc. Not withstanding the above caveats the following pieces of equipment received two or more favourable mentions: Ride on Mowers John Deere Toro Zero Turn Mowers Unusually, virtually every Business Service recommended Honda equipment. This equipment was easily the preferred choice for both push and self propelled mowers. Blower/Vacs Stihl and Echo were the two preferred brands. Whipper Snippers/Brush Cutters Stihl, Husqvarna and Kawasaki were the preferred brands. Edger The „ATOM‟ was the preferred edger.

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Management of the Equipment A well-prepared and implemented preventative maintenance programme has already been referred to and is commented on in other Papers. Some Business Services modify the equipment after purchase and before it is put into operation. For example „bull bars‟ are fitted to ride on mowers and plastic fuel tanks have a guard fitted around them.

CONCLUSION Careful selection of equipment is essential to achieve and maintain a viable lawn and garden business. The savings of a few dollars on the purchase price of a machine could be a very costly mistake if the equipment selected does not match the requirements of the Business Service. It only takes a few unscheduled breakdowns before the apparent savings disappear. In addition, the requirements of an environment where the equipment is expected to work continuously is quite different from the occasional use of the typical home owner. Generally the machine used by the residential home owner is unsuitable for a Business Service. Establishing the correct specification is the essential starting point. The purchase process can then follow. Fortunately there are a number of Business Services who have used a wide range of brands and models and reference to them will quickly establish which pieces of equipment are likely to meet the needs of most Business Services.

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APPENDIX I CHALLENGE TAMWORTH Name of manufacturer model number & yr of manufacture RIDE-ON-MOWERS Torro Zero Turn

Size-hp/cutting width etc 16hp, 42”

Business service [name and phone number]

Would you buy again? Yes/No Yes Very good for large areas and easy to operate. Cuts well No Not good for commercial work, only good for domestic e.g. small house blocks Yes Well built, easy to start, few problems Yes Easy to operate. Speed can be controlled, good for employees with mobility problems Yes Strong and reliable Do.

Challenge Contract Services 6762 0903

Torro Tractor

17hp, 38”

Do.

PUSH MOWERS Honda 4 Stroke HRU196 – several mowers purchased over several years Honda Self Propelled HRU216D December 06

Do.

Do.

VEHICLES Toyota HiAce dual cab Mitsubishi Dual cab ute

Challenge Contract Services 6762 0903 Do.

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BLOWER VACS Honda 4 stroke

Challenge Contract Services 6762 0903

Stihl 2 stroke

Do.

No Not enough blowing power, heavy to use Yes Easy to start, lightweight, good blowing power Yes Start first time, every time, not as much power as Stihl Yes Easy to start, lightweight. Only drawback is heads wear out quickly

WHIPPER SNIPPERS Honda 4 stroke

Do.

Stihl 2 stroke

Do.

GARDEN ACCESSORIES Honda Hedger 4 stroke

Challenge Contract Services

Yes Very good, start easily, a little heavy after a while, not a bad machine

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Valmar [Taskwrights] 02 6947 2178 Name of manufacturer model number & yr of manufacture RIDE-ON-MOWERS Husqvarna zero turn - 2007

Size-hp/cutting width etc 17 hp/ 42 inch- 3 blade cutting six months old

Business service [name and phone number]

Would you buy again? Yes/No No, But that is a personal decision, however this mower is suited to large open areas. Yes This mower covers large open areas. Yes, this mower is good for around trees and shrubs-well built. NO, this mower is only design for private use only- 500 hrs would pull this mower up, where it would not be viable to rebuild. Yes, there is no other mower out there (that I am aware of) comes close to this mower. However Honda does have another model (self propel) that is

Taskwrights 69472178

Husqvarna zero turn- 2000

Hustler zero turn -2004

20Hp/ 72 inch- 3 blade cutting 7 years old 3 years old

Taskwrights 69472178 Taskwrights 69472178 Taskwrights 69472178

Great Dane Z series (Australian)-1999 16 hp/42 inch -swing back blades 8 years old

PUSH MOWERS Honda self propels- 16 months

5hp 21 inch cut

Taskwrights

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commercial – but is too big and heavy. Honda self propels 12 months Honda self propels 8 months Honda self propels 3 months Victa 550 utility self propel 5years 5hp 21 inch cut 5hp 21 inch cut 5hp 21 inch cut Two stroke- 21 inch cut 69472178 Taskwrights 69472178 Taskwrights 69472178 Yes, a good old work horse, make sure you keep the final drive area clean. Yes- but a newer model No, this is very old Uteyou pay for what get; Toyota would be my pick in the future. Yes, we have tried other brands, but the Echo is far more reliable and lasts a long time (2 years) Yes, still possible the best edger out there, has the same motor as the 550 utility Yes, for small tree looping you can‟t beat

VEHICLES Mazda 3500 tipper 16 years old Mitsubishi Ute 15 years old

Rebuilt motor Rebuilt motor

Taskwrights 69472178 Taskwrights 69472178

BLOWER VACS Echo 16 months

Taskwrights 69472178

Tilt cutter: Victa edger 10 years old

Chan saw: Husqvarna 45cc

14 bar

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Hedger: Echo 12 years old Spray Tank 600 litres 12months old WHIPPER SNIPPERS Husqvarna straight shaft 12 months

18inch Spray edges pathway and fence line 25cc tap and go cutting head Taskwrights 69472178

it, a well known brand Yes Yes

Husqvarna straight shaft 6 months Husqvarna straight shaft new

25cc tap and go cutting head 25cc tap and go cutting head

Taskwrights 69472178 Taskwrights 69472178

Yes, as long you use good two stroke oil (50:1 or higher), real work horse! Yes Yes

GARDEN ACCESSORIES Shovels; rakes; barrows; pruning equipment etc…. Air compressor 10 years old Workshop tools High pressure cleaner Boogie trailer 14 years old WORK CLOTHES Boots and shirts and other PPE items i.e. glasses and ear protection

Yes

Yes, but must be a “heavy” duty built

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PSYCHRIATIC REHABILITATION ASSOCIATION [ENTERPRAISE/WESTWORKS] 02 4721 8187 Name of manufacturer model Size-hp/cutting Business Would you buy again? Yes/No number & yr of manufacture width etc service [name and phone number] RIDE-ON-MOWERS A.M.C. Mower 19/07/04 36” Mt Pritchard Mowers. No. This mower is domestic size and too high maintenance for commercial use. John Deere LX 277 2/5/00 17hp 38” Mt Pritchard Mowers Yes. Best commercial mower, reliable and manoeuvrable. John Deere X320 12/3/07 22hp 48” Macarthur Tractors, Narellan Yes. Best commercial mower, reliable and manoeuvrable, with wide cut. PUSH MOWERS Rover Quantum 50 2006 19” Mt Prichard Mowers No. Have B&S motors but would not buy again, more suited to domestic market Rover Quantum 50 2006 19” Mt Pritchard Mowers No. Honda M2 2004 19” Mt Pritchard Mowers Yes. A very strong mower. Has been replaced. Honda UTE9 2004 21” Mt Pritchard Mowers Yes. Good hard working machine Honda UTE 8 2004 21” Mt Pritchard Mowers Yes “ “ Rover 5 2004 19” Mt Pritchard Mowers No. See above Honda 2004 19” Mt Pritchard Mowers Yes. Good motor, regular service required for these mowers. Honda 2004 19” Mt Pritchard Mowers Yes “ “ VEHICLES Toytoa Dyna Twin Cab 1998 Twin cab large tray Hino/ Toyota Cabramatta Yes. This is an excellent truck with a good size deck. Very reliable Toyota Hilux 1998 Twin cab p/u Midas Liverpool Yes. This vehicle has done high kms but with not breakdowns.

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Toyota Hilux Holden Rodeo

1999 2006

Extra cab ute Twin cab p/u

Midas Liverpool McGrath Holden, Liverpool

No. Not enough cab space. We require room for 4 people. Yes. This goes well but is heavy on petrol. Tray is too small and it is hard to fit 3 people in the back seat Yes. This blower is reliable if well serviced. Light to use and carry. Yes ‟ No. Not reliable, suited to domestic use only. No “ Yes. Good quite blower, very reliable and strong. A bit heavier than 2/stroke models but worth it. Yes “ Yes. Very good machines, needing good servicing from new will pay dividends later. Tends to overheat when getting older Yes “ Yes “ Yes “ Yes. Good hard worker. Easy to handle and a good design. Yes. Is a bit heavier to use, but is quieter and will work all day without trouble. Remember to change the oil, and don‟t mix 2/stroke- petrol only.

BLOWER VACS Echo blower 2006 Echo blower Talon Talon Honda 2006 2005 2005 2007

2 stroke 2 stroke 2 stroke 2 stroke 4stroke

Mt Pritchard Mowers Mt Pritchard Mowers Bunnings Warehouse Bunnings Warehouse Mt Pritchard Mowers

Honda 2007 WHIPPER SNIPPERS Kawasaki 2005

4 stroke 2 stroke

Mt Pritchard Mowers Mt Pritchard Mowers

Kawasaki Kawasaki Kawasaki Kawasaki Honda

2006 2006 2007 2007 2007

2 stroke 2 stroke 2 stroke 2 stroke 4 Stroke

Mt Pritchard Mowers Mt Pritchard Mowers Mt Pritchard Mowers Mt Pritchard Mowers Mt Pritchard Mowers

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EDGERS Edger. Kawasaki

2001

Large model

????

Edger ATOM 506AV

x2

Single wheel

Mt Pritchard Mowers

Yes. This model is for the long edges. We don‟t need this size but it works very reliably. Yes. This is a beauty, easy to manoeuvre and light to handle. Quiet 4 stroke.

GARDEN ACCESSORIES Pruners x 3 2007 Shovels x 4 2006 Hedge Trimmer 2007 Brooms x 4 WORK CLOTHES Fluro work shirts x 50 2005 Fluro Work shirts x 30 2007

Bunnings Warehouse Bunnings Warehouse Mt Pritchard Mowers Bunnings Warehouse Fluro longsleeve Fluro Longsleeve Action Sports and Corporate Wear, Milpera AC & C International, Lakemba.

yes yes yes yes Yes. Good fitting sizes for all to wear Yes. Good logo work and the employees like them. Keep their colour well.

TRAILER Trailer Trailer Trailer

2003 2005 2007

Small 8ft 9ft

Carasel, Moorebank. Carasel, Moorebank Carasel, Moorebank

Yes. Good solid little trailer, pity they don‟t make them any more. Yes. Okay but quite light construction and damage easily. Yes. Maybe. This trailer is light materials and taillights get damaged easily.

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TULGEEN [Bega Valley Workcrew] 02 6492 4151 Name of manufacturer model Size-hp/cutting number & yr of manufacture width etc RIDE-ON-MOWERS MTD Yardman 42” 18hp PUSH MOWERS Rover 4 stroke Self Propelled 18” Honda 4 stroke Self Propelled 18” Victa 2 stroke 160 18” BLOWER VACS Stihl SH55 WHIPPER SNIPPERS Stihl FS 120,180 & 250 GARDEN ACCESSORIES Atom Edger 205AV MTD Pro HT230D WORK CLOTHES Visitec – supplied by Stitches & Prints (Tulgeen Group)

Business service [name and phone number]

Would you buy again? Yes/No Yes No Yes Yes

Bega Valley Workcrew 02 6492 4151 Bega Valley Workcrew 02 6492 4151 Bega Valley Workcrew 02 6492 4151 Bega Valley Workcrew 02 6492 4151

Bega Valley Workcrew 02 6492 4151 Bega Valley Workcrew 02 6492 4151

Yes Yes

34cc

Bega Valley Workcrew 02 6492 4151 Bega Valley Workcrew 02 6492 4151 Bega Valley Workcrew 02 6492 4151

Yes Yes Yes

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CHALLENGE SOUTHERN HIGHLANDS 02 4872 6600 Name of manufacturer model Size-hp/cutting number & yr of manufacture width etc RIDE-ON-MOWERS Husquavarna Rider 55 44” Toro – Zero Turn PUSH MOWERS Rover Durable Masport President VEHICLES Ford Courier Crew Cab Toyota HiLux BLOWER VACS Zendah – Komatsu Stihl 85 WHIPPER SNIPPERS Zendah – Komatsu Exz2600dl GARDEN ACCESSORIES Zendah Komatsu EHT020 Hedge Trimmer Atom 506AV Lawn Edger Husqvanrna 85 15”

Business service [name and phone number]

Would you buy again? Yes/No No Too slow, poor quality cut Yes No No Yes Yes No New acquisition Yes

Challenge Southern Highlands

Challenge Southern Highlands 19” 19” 4 cyl Ute 4WD Diesel Challenge Southern Highlands Challenge Southern Highlands Challenge Southern Highlands Challenge Southern Highlands Challenge Southern Highlands Challenge Southern Highlands Challenge Southern Highlands

Challenge Southern Highlands Challenge Southern Highlands Challenge Southern Highlands

No Yes Yes

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DISABILITY TRUST [IVS] 02 4227 3800 Name of manufacturer model number Size-hp/cutting & yr of manufacture width etc RIDE-ON-MOWERS John Deere L120 John Deere LX289 PUSH MOWERS Honda Buffalo Classic self propelled HRU216DSU mulch and catch.

Business service [name and phone number] IVS 42273800 IVS 42273800

Would you buy again? Yes/No

23hp air cooled / 48” deck 17hp liquid cooled / 48” deck

Yes, however not as suited to heavy duty work. Yes. Excellent machine. Lot of power for heavier jobs.

IVS 42273800

Honda push mower HRU196 Buffalo Classic mulch and catch. Toro self propelled Victa Tornado mulch and catch

IVS 42273800 IVS 42273800 IVS 42273800

Great commercial grade self-propelled mower. Excellent for any job with sloping lawns. Reduces fatigue on mowing crew – especially in summer. Minimum service requirements. 4 stroke Great commercial grade push mower. 4 stroke. Would not buy these machines again in the current configuration. Good lead cheap mower but designed for domestic properties. Do require on going maintenance when put to commercial type applications. 2 stroke. Would you buy again? Yes/No

Name of manufacturer model number & yr of manufacture TRACTORS Kubota B7510 4WD compact tractor WHIPPER SNIPPERS Shindaiwa T260X

Size-hp/cutting width etc

Business service [name and phone number] IVS 42273800 IVS 42273800

24hp diesel

Hard working commercial grade line trimmer. Changed heads to heavy duty aluminium that can take several

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Shindaiwa Multi tool M2510 powerhead with Articulated Hedge trimmer attachment 65001; pole pruner attachment 65002; lawn edger attachment 65010 Atom professional edger BLOWER VACS Stihl BG85 WORK CLOTHES Safety Gear including: ear muffs and/or ear plugs, eye protection, steel capped boots, high visibility shirts, jumpers, spray jackets, hats, sunscreen, 20 litre water drum for each crew, heavy duty gardening gloves, extended „tongs‟ for picking up rubbish, GARDEN ACCESSORIES Stihl Chain Saw

IVS 42273800

different trimmer cord types and diameters (depending on the type of job) This machine has broadened the IVS product offering. Great versatile implement. Very strict operating procedures (supervisors only).

IVS 42273800

Good commercial grade blower.

50cm cutting bar

IVS 42273800

Very handy tool to broaden product offering. Ensure strict OH&S procedures are in place.

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UNITING TO CARE [CENTRAL COAST WORK SERVICES] 02 4384 8156 Name of manufacturer model Size-hp/cutting Business service [name and phone number] number & yr of manufacture width etc RIDE-ON-MOWERS Hustler 2 Track 44 inch Pride Mowers 02 43 53 1648 52 inch Pride mowers PUSH MOWERS Honda HRU 196D Tumbi Mowers 02 43 88 1274 BLOWER VACS Stihl Tumbi Mowers 02 43 88 1274 WHIPPER SNIPPERS Stihl FS 55 Tumbi Mowers 02 43 88 1274

Would you buy again? Yes/No yes yes yes yes yes

Atom professional edger

Honda MTR

Tumbi Mowers 02 43 88 1274

yes

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WESLEY DISABILITY EMPLOMENT SERVICES 02 8845 1300 Name of manufacturer model Size-hp/cutting Business service [name and phone number] number & yr of manufacture width etc RIDE-ON-MOWERS Simplicity - ZT1844 18 hp / 44 inch Wesley Gardening Service – 8845 1312 Husqvarna – Rider 15-V2 15 hp / 44 inch Wesley Gardening Service – 8845 1312 PUSH MOWERS Honda -HRU216- Self Propelled 5.5 hp / 21 inch Wesley Gardening Service – 8845 1312 Honda HRU196D push rotary 5.5 hp / 19 inch Wesley Gardening Service – 8845 1312 Toro TRACTORS VEHICLES Toyota Hilux SR 4X2 DUAL CAB 4.0L VVT- i / V6 Wesley Gardening Service – 8845 1312 Toyota Hilux SR 4X2 DUAL CAB Toyota Hilux WORK MATE 4X2 DUAL CAB BLOWER VACS Kawasaki - KAVKRB400A Backpack Echo 2455 Handheld Stihl BG 65 Handheld Stihl BB85 Handheld Echo PB650 Backpack Dolmar PB250 Handheld Shindaiwa EB240S Honda HHB25 Handheld WHIPPER SNIPPERS Kawasaki TH27 3.0L Turbo Diesel 2.7L VVT – i /V4 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312

Would you buy again? Yes/No No Yes Yes Yes

Yes Yes No

48cc 23.6cc 27.2cc 27.2cc 63cc 21cc 24cc 25cc 27cc

Yes Yes Yes Yes Yes No No No No

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Shindaiwa T260 / C260 Shindaiwa T270 / C270 Tanaka TBC270 Dolmar MS2500 / MS2501 Stihl FS80 R Honda UNK425 LNU GARDEN ACCESSORIES Tanaka - TATTHT210 - Hedge Trimmer Atom pro edger - 4 stroke OLEO MAC 952F – Chainsaw Dolmar HT2256D – Hedge Trimmer Husqvarna 350 Honda HHH25D – Hedge Trimmer

24.1cc 27.2cc 27cc 25cc 25.4cc 25cc

Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312 Wesley Gardening Service – 8845 1312

Yes Yes No Yes Yes No

22cc / 560mm bar 1.1 hp 50cc / 450mm bar 22cc / 560mm bar 50cc / 450mm bar 25cc / 720mm bar

Yes Yes Yes Yes Yes No

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