Budget Box: Inflation and Contract Negotiation

By Karl Stephens - karls@landings.org
General Manager/COO

The cost of living worldwide has seen a dramatic increase over the last several months. While the state of Georgia compares lower to other states, inflationary pressures are impacting the cost of operations for households as well as organizations.

Much like other service organizations, The Landings Association’s largest expense is our employees. Following expenses related to staffing, other categories that are a major use of funds include those that are managed through the Public Works Department. Examples include maintaining and landscaping the 715 acres of common property, repair and maintenance of the 91 miles of roads and 47 miles of storm drains, as well as adequately insuring assets and property owned by the Association.

The Public Works team are adapting to the current market environment and serving in multiple capacities to not only quality engineer but also value engineer repairs, replacements, and contract negotiations with outside vendors. Successful negotiations with our landscaping vendor, Brightview, occurred in 2018 and again in 2021, which resulted in keeping the contract pricing flat for TLA since 2018 and continuing through 2024.

Throughout 2022, the cost for asphalt has seen dramatic increases, and is another example of Public Works’ use of value engineering and savvy negotiation to save money. The Public Works team, led by Director Sean Burgess and Construction Manager Bill Campbell, were proactive and began negotiations with Bennett Paving early in 2022 to lock in rates for 

projects planned for 2023-2025. This resulted in an 11% increase, even though the price of asphalt has increased 50% this year. This also allows a savings of $160,330 below the current market for the work planned for 2023.

The Islands of Deer Creek Bridge is a current project that was planned and budgeted for 2022. The work was bid out to several contractors for the repair and replacement of the bridge that is 10 feet wide and spans 800 feet over the marsh. After receiving quotes in the upper $600,000 range, the Public Works team are completing the task, mainly in-house, for an estimated cost of $341,000.

Other inflation-related impacts the Association has experienced are increases in insurance premiums. To best position the rate increase, the Association changed general liability and employee health insurance providers in 2022 to save the Association more than $80,000.

While inflation and its impacts are real and being felt by all of us, your Association will continue to negotiate pricing to the very best of our ability to provide quality services and uphold the mission, vision, and objectives of the community.

This article was originally published by The Landings Association on their website.

Visit landings.org to read the original article.