Landscape Business and Contracts Flashcards

What is a 'retainage' clause in a landscape construction contract?

Answer: A percentage of each payment withheld by the client until project completion, ensuring the contractor finishes the work to specification

Retainage is a percentage (typically 5–10%) withheld from each progress payment until the project is substantially complete and any deficiencies are corrected, incentivizing contractors to complete and finish work properly.

What does 'bonded' mean when a landscape contractor states they are 'licensed, bonded, and insured'?

Answer: The contractor has purchased a surety bond that provides financial protection to clients if the contractor fails to complete the work or pay subcontractors

Being bonded means a contractor has purchased a surety bond — a form of insurance that compensates clients if the contractor abandons a project, fails to complete work, or doesn't pay subcontractors.

What is 'overhead' in landscape business cost accounting?

Answer: Indirect business expenses not tied to a specific job (insurance, office rent, vehicles, admin salaries) that must be covered by project revenue

Overhead consists of indirect operating costs — insurance, vehicles, office expenses, marketing, administrative staff — that support the business but aren't directly attributable to a specific project.

What is a 'maintenance contract' in the landscape industry and what does it typically include?

Answer: An ongoing service agreement specifying regular maintenance tasks (mowing, trimming, fertilizing, seasonal cleanups) performed on a scheduled basis for a recurring fee

A landscape maintenance contract is a recurring service agreement specifying the tasks, frequency, and cost for ongoing landscape care, providing predictable revenue for contractors and regular service for clients.

What is the purpose of a 'certificate of occupancy' (CO) in relation to large landscape projects?

Answer: A municipal document confirming a construction project meets all code requirements and is safe and legal to occupy or use

A Certificate of Occupancy is issued by the local building authority certifying that a structure or improvement meets all applicable building codes and is safe for its intended use, sometimes required for significant hardscape additions.

What does 'markup' versus 'margin' mean in landscape project pricing?

Answer: Markup is the percentage added to cost to determine selling price; margin is the percentage of selling price that is profit — they are calculated differently

Markup is calculated as a percentage of cost (Cost × 1.30 = 30% markup), while margin is the percentage of the selling price that represents profit (Profit ÷ Price = margin %), resulting in different values even for the same job.