Zero-Based Golf Course Budgeting:A Model for Increased Effectiveness

Michael Vogt, CGCS, CGIAMichael Vogt, CGCS, CGIABill McMahon, Sr., AIA, OAABill McMahon, Sr., AIA, OAA

May 15, 2009May 15, 2009

April Golf Survey Review

Course distances:Course distances: Range - 6,001 to 7,200 yards.Range - 6,001 to 7,200 yards.

Annual maintenance budgets Annual maintenance budgets for 2009:for 2009: Range - $550,000 to $1,669,000Range - $550,000 to $1,669,000 Average - $1,081,000Average - $1,081,000

Annual rounds played:Annual rounds played: Range – 15,750 to 41,000Range – 15,750 to 41,000 Average – 24,800Average – 24,800

Survey Review

3 clubs report no change 3 clubs report no change in golf rounds played over in golf rounds played over last 2 yearslast 2 years 2 clubs reported rounds 2 clubs reported rounds

down about 12%.down about 12%. Five courses rated Five courses rated

condition – “Best ever condition – “Best ever been”been” 3 courses rated condition – 3 courses rated condition –

“Good”“Good”

Survey Review Biggest challenges being faced:Biggest challenges being faced:

Fuel pricesFuel prices Irrigation costsIrrigation costs WeatherWeather Timing of expenditures for cash flowTiming of expenditures for cash flow Trying to establish maintenance on a national quality Trying to establish maintenance on a national quality

levellevel Selling members/justifying $1 million budgetSelling members/justifying $1 million budget Increasing labor costsIncreasing labor costs

Average percent of labor cost in maintenance Average percent of labor cost in maintenance budget is 41% to 51%.budget is 41% to 51%.

The Golf Course Budget

A golf course budget should A golf course budget should be the numerical expression be the numerical expression of the way the of the way the superintendent manages superintendent manages and accomplishes the goals and accomplishes the goals of the club.of the club. Club goals of quality, Club goals of quality,

environmental impact, amount environmental impact, amount of play, tournament impact, of play, tournament impact, etc.etc.

Dramatically Different Way to Budget

Set of established, consensus-based golf Set of established, consensus-based golf course standards.course standards.

Discover the value of “cycle-times.”Discover the value of “cycle-times.” Base labor on hours needed to accomplish Base labor on hours needed to accomplish

job tasks.job tasks. Plan all routine maintenance activities.Plan all routine maintenance activities.

Benefits of Zero-Based Budgets

1.1. Provides sufficient resources based on standards and Provides sufficient resources based on standards and current needs.current needs.

2.2. Identifies new processes and procedures to accomplish Identifies new processes and procedures to accomplish goals.goals.

3.3. Challenges superintendents to find cost-effective ways to Challenges superintendents to find cost-effective ways to improve operations.improve operations.

4.4. Improves communication between superintendent, Improves communication between superintendent, manager, committees, Board and key staff.manager, committees, Board and key staff.

5.5. Measures key metrics involved in course maintenance.Measures key metrics involved in course maintenance.6.6. Eliminates overinflated budgets.Eliminates overinflated budgets.

Golf Maintenance Standards

A detailed set of course maintenance A detailed set of course maintenance standards must be defined with input from standards must be defined with input from superintendent, committee, general superintendent, committee, general manager and board of directors.manager and board of directors.

Golf Course Standards – Example: Sand Bunkers Sand depth 4 inches minimum, Sand depth 4 inches minimum,

6 inches maximum6 inches maximum Edge cleanly defines hazardEdge cleanly defines hazard Maximum 4 inch, minimum 2 Maximum 4 inch, minimum 2

inch lip in direction of playinch lip in direction of play No edge lip in direction of tee or No edge lip in direction of tee or

perpendicular to direction of perpendicular to direction of playplay

Weed FreeWeed Free

Free of debris (sticks, leaves, Free of debris (sticks, leaves, stones, grass clippings)stones, grass clippings)

Rakes positioned, at minimum, Rakes positioned, at minimum, every 40 feetevery 40 feet

Sand raked every day play is Sand raked every day play is scheduledscheduled

Chemical edging with Primo, Chemical edging with Primo, growth regulator growth regulator

No standing water No standing water

Accomplishing a concise set of standards takes the guess-work out of golf course conditioning and the need for unanticipated resources.

Assembly of Golf Course Budget

Based on predetermined Based on predetermined course maintenance course maintenance standards, labor and standards, labor and purchases can be purchases can be forecasted.forecasted.

Labor, (>40% of total) being Labor, (>40% of total) being the largest portion of the the largest portion of the budget is the starting point budget is the starting point for the formulation of the for the formulation of the Zero – Based Budget.Zero – Based Budget.

Assembly of Budget

Roster of staff persons assembled into workforce Roster of staff persons assembled into workforce pay rate and available hours per day.pay rate and available hours per day.

Hours Available Per Day TOTAL

Sun Mon Tue Wed Thu Fri Sat HRS

Golf Course Supt. 115,000.00 5.00 8.00 8.00 8.00 8.00 8.00 5.00 50.00

Assistant Superintendent 40,000.00 - 8.00 8.00 8.00 4.00 8.00 5.00 41.00

Assistant Superintendent 40,000.00 5.00 8.00 6.00 8.00 4.00 8.00 - 39.00

Golf Course Mechanic 35,000.00 8.00 8.00 8.00 8.00 8.00 - 40.00Foreman 12.50 5.00 8.00 - 8.00 8.00 8.00 - 37.00

Employees Name Rate of Pay

Labor Allocation Example

Assembly of Budget

Cycle-Time tasks per dayCycle-Time tasks per day Full time equivalents per dayFull time equivalents per day Total hours available and needed with deficient or excess per day and Total hours available and needed with deficient or excess per day and

per weekper week

Task Man-Hour Allocation ExampleTask Schedule

Cycle Times

Available Hrs/Day SUN MON TUE WED THU FRI SAT Total FTE69 168 119 160 110.1 160 52 838.1 20.9525

Task SUN MON TUE WED THU FRI SAT TotalGreens Mowing / Rake Greenside Bunkers 12 12 12 12 12 12 72Cups Changed / Set-up / Ball Marks 8 8 8 8 8 8 6Tees Mowed 0 16 16 16 48Greens Approach / Collar Cut 6 6 6 18Fill Water Coolers 2 2 2 2 2 2 12

Managing the Labor Budget

Per week hourly goals managed on a Per week hourly goals managed on a timely basis by the superintendent.timely basis by the superintendent.

Goals ExampleSunrise: 6:34:00 AM

Sunset: 5:56:00 PM

$886.6181.25

84.00

Sun2/22

Full Time Equivalents→ 10

→

Hours Needed (Cycle Times) →

Scheduled Dollars (Hourly Only) →

Scheduled Hours (Hourly Only) →

Drink Coffee

Weekly Hourly Wage Goal

Hours of Daylight:

11:22

$12,567.00 Scheduled Hourly Wages

Schedule for Work Week Starting Sunday:

Sunday, February 22, 2009

Enter any events or significant events for the week here.

Managing the Labor Budget

Hourly scheduling helps to eliminate overtime.Hourly scheduling helps to eliminate overtime.

Hourly Scheduling Example

Managing the Labor Budget

Change schedule as needed to maximize Change schedule as needed to maximize efficiencies and keep overtime to a minimum.efficiencies and keep overtime to a minimum.

Avoiding Overtime Example

Building the Labor Budget

Assign full and part time positions based on ability, pay Assign full and part time positions based on ability, pay scale and hours.scale and hours.

Hourly PositionsFull Time Current Proposed New Hours BudgetedPart Time Rate $ Incrs. Rate Jan

0.00 0Chuck Landon Mechanic Full Time 15.00 0.20 15.20 165Ismael Mendoza Applicator Full Time 12.60 0.15 12.75 165Santiago Paniagua Irrigation Full Time 11.60 11.60 157Felipe Bastida Greens Full Time 10.25 10.25 157Alberto Villafana Greens Full Time 9.25 9.25 157

Employee Name Position

Assigning Staff Persons Example

Building the Labor Budget

Hours are assigned to each member of the staff based on Hours are assigned to each member of the staff based on job tasks needed to maintain club’s quality standards.job tasks needed to maintain club’s quality standards.

Allocating Labor Hours ExampleHours Budgeted

Jan Feb Mar Apr May Jun Jul Aug Sep150 150 150 176 176 176 184 176 176150 150 150 176 176 176 184 176 176150 150 150 176 176 176 184 176 176

100 176 176 184 176 176100 176 176 184 176 176

150 150 150 176 176 176 184 176 17650 100 176 184 176 176

Building the Labor Budget

MonthPayroll Salaries

Payroll Hourly

Overtime Payroll Costs

Benefits Work Comp.

Employee Meals

Incentives & Bonus

401 K Match

Total Payroll

January 20,434$ 21,781$ -$ 5,699$ 3,200$ 870$ 980$ -$ 375$ 53,339$

February 20,434$ 20,261$ -$ 5,494$ 3,200$ 870$ 980$ -$ 375$ 51,614$

March 20,434$ 27,157$ 4,000$ 6,965$ 4,000$ 1,634$ 1,120$ -$ 375$ 65,685$

Allocating Labor Dollars Example

Overtime is assigned as a dollar figure not hours. Overtime is assigned as a dollar figure not hours. Overtime should never be though of as needed, Overtime should never be though of as needed,

expected, entitled or necessary.expected, entitled or necessary.

Other Budgeted Areas Identified

Equipment leasesEquipment leases Repair and Repair and

maintenancemaintenance Supplies and toolsSupplies and tools Uniform and laundryUniform and laundry Travel and Travel and

administrationadministration Special projectsSpecial projects

Budget Analysis

The above shows budget figures compared to The above shows budget figures compared to size of size of coursecourse and and cost per-holecost per-hole. The budget analyses are . The budget analyses are important metrics for comparison in subsequent year important metrics for comparison in subsequent year budgets.budgets.

136,320 56134,560 40

102

Total Water:Total Other Budgeted: Total Power: 35%

Total Budgeted: Total Lease:Total Variable Exp:

$ 936,164 Number of Holes:

Total Payroll Budgeted:

Total Course Acres:

401,625$ 2,364,036$

430,423$

1,810,711$ 2,794,459$

% Payroll / Budget:983,747$

Total Non-Variable:

Acres of Fairways:Acres of Rough:

Total Cost per Hole / Total Budget

Maintenance Cost per Acre / Total Budget

$ 27,338.08

Total Ft² - Greens:

Cost Per 18-Hole Round

114$

Total Full Members

42,500$

Maintenance Cost Per Full Member

4,293$ 77,624$

Total Ft² - Tees:

36651

Water, Power and Lease Expenses

Water, $897,123 , 68%

Power, $42,500 3%

Lease, $392,275 , 29%

Total Payroll and Other Expenses

Payroll Expenses,

$983,747 , 36%Other Expenses, $1,761,725 ,

64%

Zero-Based Budget

In the end a budget is In the end a budget is created based on created based on expectations, needs and expectations, needs and goals, not on history and goals, not on history and inflated line items over a inflated line items over a series of years. series of years.

A true budget / business plan A true budget / business plan is a reflection of the coming is a reflection of the coming years maintenance plan.years maintenance plan.

Managing the Labor Budget

Knowing “Cycle-Times” for routine Knowing “Cycle-Times” for routine tasks is important in formulating tasks is important in formulating labor requirements.labor requirements.

Example

Tasks Total Hours

per Day Sun

Mon Tue

Wed Thu

Fri

sat

Greens Mowing / Ball Mark Repair 24 TRUE ##### TRUE TRUE TRUE TRUE TRUE

Mow Approaches 8 ##### TRUE ##### TRUE ##### TRUE #####

Tees Mowed 5 ##### TRUE ##### TRUE ##### TRUE TRUE

Water Coolers Serviced 4 TRUE ##### TRUE TRUE TRUE TRUE TRUE

Bathrooms Cleaned and Serviced 1.5 TRUE ##### TRUE TRUE TRUE TRUE TRUE

Divots Repaired Par 3's 5 ##### TRUE TRUE TRUE TRUE TRUE #####

Green Valley Turf, Tennis & Golf Club

Task Cycle-Time

Zero-Based Golf Course Budgeting:A Model for Increased Effectiveness

Let Us Help You With Your Golf Course Let Us Help You With Your Golf Course Budgeting ChallengesBudgeting Challenges

Michael Vogt, CGCS, CGIAMichael Vogt, CGCS, CGIABill McMahon, Sr., AIA, OAABill McMahon, Sr., AIA, OAA