2019 Public Bid Results

[fluffer]

If it's assumed that the overall weighted awarded bid last year was 34c v 45.3c this year, is this increase being trickled down to planters pricing? I would be interested to hear what kind of price increases planters are seeing.

From what I saw the previous norm was something like an average of 40-45%, or up to 55% in some better companies, of the bid paid out in tree prices.

Using 45% payout in tree price on a 34c/tree average (I think this is very generous tree pricing assumption):
-15.3c/tree price
-18.7c/tree operations/contractor

Using 45% payout on 45.3c/tree average:
-20.4c/tree price
-23.9c/tree operations/contractor

There are a few things known:
-Contractors were still making money on last year's pricing, after operation costs. Nobody would do this work if they were not.
-Consumer pricing has not risen 33% in the last year. Maybe 3%.
-Tree prices for planters have not risen 33% this year. Maybe a cent or cent and a half at most companies, being 10%~ increase.
-Some contractors are deliberating cutting camp costs, possibly saving planters 16-20$/day (since they will be subject to income taxes, and not deductible, it won't be worth 25$).

So let's assume 12% tree price increases are what the planters see, and that the money spent on operations is 10% higher than the previous year, allowing for more breathing room on food, some better safety equipment, increased pay for staff. Assume cheaper fuel offsets inflation costs for operations, just to bring fuel price decreases into the discussion.

This year might break down something like this, with the above assumptions:
45.3c/tree avg:
-17.1c/tree planter price (15.3 + 12%)
-20.6c/tree operation costs/contractor (18.7 + 10%)

That is 37.7c/tree total. There are 7.6c on the table in that scenario. Keep in mind the contractor's cut from the previous year has already seen a 10% uptick.

On 5 mil trees that 7.6c still on the table translates to 380,000$ leftover.

Q: Do these numbers in any way parallel how all the extra cash will be distributed through companies? What's the general sense of how the windfall is used?
-To make up for past losses? Can planting contractors even work at losses? Why would they do that?
-Invest into camp upgrades?
-Keep money in a pot to increase planter prices next year (assuming avg contract prices fall back down)?

Obviously if contractors are not reinvesting the money or paying to planters the increased pricing is a pretty huge sum that will attract a ton of new contractors in the coming years, driving prices back down or stagnating them another 10 years.

Any insights into how companies are dealing with the windfalls??

[Sunwatersoil]

Thanks for taking tree prices and running it through the math mill to represent what planter earnings might look like. I only have a single comment to make. You used the figure of five million trees to represent a camp's total season production earned through publicly tendered trees.

The public tenders represent a minority of the total trees planted in BC. Scooter gives a figure of 53,827,000 in his most recent weekly review of bidding totals. Using an assumption of 270 million of total trees planted in BC this year this means that approx 20% of the province's seasons trees are publicly tendered. Im not aware of any companies that plant exclusively public trees but please enlighten me otherwise. My understanding is that some companies have renegotiated/or are renegotiating with mills that own their direct award contracts in order to raise prices, but the extent to which is not publicly known.

Some companies may be using the increased profits to distribute and raise prices across all of the seasons trees rather than just those bid trees. Although I am making the assumption that the bid trees are going at a higher cent-age than the direct award trees. Just some food for thought.

Edit; Canada has provinces not divine providence.

[jdtesluk]

Sunwatersoil - bullseye!

[Scooter]

I'll try to answer all of this in lots of detail; it's been on my list to do a "Where Do We Go From Here" post for the past month and a half. But I'm absolutely overwhelmed with other commitments for the next two weeks, so it'll be a while before I get to it.

[Scooter]

Here are the results for a contract for Planting in Fort St John

Contract: PL20TDF001
Client: BCTS Fort St John
Season: Summer 2019
Opened: February 5th, 2019
# of Trees: 854,346
Left on the Table: 16.4%

This one seems a bit more reasonable.

01. $552,398 - 64.7 cents/tree - Celtic
02. $643,161 - 75.3 cents/tree - Apex
03. $646,591 - 75.7 cents/tree - Seneca

[Scooter]

YTD Viewing/Bidding Season Stats, Week Ending February 9th, 2019


Running totals for this season, Fall of 2018 (and winter 2019):

Overall weighted average low bid: 44.4 cents/tree
Overall weighted average awarded bid: 45.7 cents/tree
Overall weighted average including all bids, all jobs: 53.4 cents/tree

Average increase in overall bid prices since last fall: 37.3%

Total Trees Known/Decided So Far: 54,293,839
Total Trees in Public Tenders to Date: 58,712,663

One Year Ago, Fall of 2017 (and winter 2018):

Overall weighted average low bid: 32.0 cents/tree
Overall weighted average awarded bid: not tracked in 2017
Overall weighted average including all bids, all jobs: 38.9 cents/tree

Total Trees in Public Tenders last year: 53,827,000

-----

There are several million trees that have been awarded for which I do not yet have full results. If anyone has the results from these contracts, please share:
Williams Lake MOF, DCC001
Vernon MOF, DOS001
BCTS Terrace (small, I should have these results shortly)
Castlergar MOF (small, needs to be re-tendered)

[Scooter]

Here is what appears to be a revision to an earlier bid. It's one of the contracts for BCTS in Williams Lake.

The original post is here: viewtopic.php?f=27&t=67246&start=100#p92214

In that post, it appeared that Apex was the low bidder. However, I just saw a copy of the unofficial opening record, and it has rankings attached. Those rankings are based upon repositioning of bids as per the BCTS Contractor Rating System. It appears that the CRS ranking that Coast Range currently has was enough to put them under the Apex bid. So it appears that Coast Range won the job. I couldn't find an actual Contract Award confirmation on the BC Bid website, but this appears to be supported by the hiring ads that I've seen for Coast Range.

When I release the next version of the bidding spreadsheet, I'll fix that entry under the "awarded" column. In many cases, when a company that was not the low bidder was awarded a contract, it's because the companies with lower bids subsequently passed on the job. In this case, it's a Contractor Rating System adjustment. I usually mark the "awarded to" company with a number in parenthesis to show the absolute ranking of their bid (disregarding any changes due to CRS ranking). So in this case, it will be listed as "Coast Range (2)" to show that Coast Range had the second-lowest bid even though they were awarded the job.

[Scooter]

Here's another update, for the contract for BCTS Chilliwack, contract PL20TBB001.

This contract originally had Fieldstone as a low bidder: viewtopic.php?f=27&t=67246&start=100#p92320

According to BC Bid, the contract was ultimately awarded to Zanzibar, the second place bidder. My guess is that Clasby re-examined his bid and capacity and decided to give it a pass.

This update won't result in any revisions to my next posting of the summary spreadsheet, since that contract had significant non-planting components and I deliberately omitted it from the calculations.

[Scooter]

Here are the results for a contract for Planting in Terrace

Contract: PL20TII101
Client: BCTS Terrace
Season: Spring 2019
# of Trees: 94,980
Opened: January 31st, 2019
Left on the Table: 7.7%

Includes a bit of staking. I think the numbered company is Chris Howard's new company, Whanau Forestry.

01. $ 74,251 - 78.2 cents/tree - Little Trees
02. $ 80,004 - 84.2 cents/tree - Seneca
03. $187,833 - $1.98 per tree - 0690528 BC Ltd.

[Scooter]

I haven't seen results yet for the large contract for MOF in Williams Lake. That one was four million trees, and allegedly won by Coast Range. If anyone has a full copy of the results, feel free to send them to me at jonathan.scooter.clark@gmail.com and I'll share them here under my own name.

[Cyper]

I know there's lots of different ways to look at numbers. Scooter is looking at weighted averages for awarded bids - weighted by number of trees I'm guessing? What I see is:

40 government planting contracts awarded so far that we know about for spring & summer 2019 as opposed to 39 total spring & summer for 2018
43.9 cents per tree as the average awarded price in 2019
32.1 cents per tree as the average awarded price in 2018
That's a 36.7% increase in awarded prices from 2018 to 2019
The average increase is 11.8 cents per tree
If we assume that planters get 40% of the bid price, then should planters expect a 4.7 cent per tree increase in prices? Not likely. Here are some reasons why not.

Camp fees are being decreased or in some cases eliminated. If $25 is no longer charged out of a total bid based on $500 total cost per day, that's 5% of the bid price right there. 4% if total cost is $600, perhaps a more likely scenario these days.

There's a new tax in town called the BC Health Tax. It will cost contractors 1.95% on every dollar paid as wages. That's upwards of $5 per day per planter extra that contractors have to pay the government of BC - about 1% of the bid price. Both CPP & EI premiums are up which will cost contractors. Inflation in BC is projected to be about 3% for 2019. Bureaucracy continues to run amok in the corporate and safety worlds, requiring contractors to spend ever increasing amounts on safety & training.

Not only planters deserve pay increases, so does everyone in supervision including foremen, supervisors, drivers, 1st aiders, tree runners, checkers, cooks, camp set up & support staff & safety committee members. I apologize if I've missed anyone. All of these raises will come out of increased tree bid prices.

Have contractors been running skimpy, shoestring operations with low to non existent profit margins? Quite likely. Will they want to take advantage of the current increases and build up war chests to salt away for the inevitable decline? Good bet. Is a lot of equipment getting old and in need of replacement? Is block access deteriorating across the province requiring more and more investments in quads, ATVs and helicopter evacuation systems? We've all seen it.

So there's little chance that planters will see 4.7 cents more per tree in 2019, perhaps half of that I'd guess. If you've been getting 18 cents per tree and the price goes up by 2.3 cents and you plant 1500, you'll earn an extra $34.50 per day. If you aren't paying camp fees, you could expect to make upwards of $50 per day more than you did in 2018.

[TripleS]

EI has actually gone down slightly to 1.62% x 1.4 from 1.66% x 1.4 last year, but not enough to cancel out the CPP increase. Looking around, it doesn't seem like prices are going up more than a couple cents at most companies. Some companies are dropping camp costs without increasing prices, while others are increasing prices without dropping camp costs. A few are doing both. So many trees are on the private market so it's difficult to know how those negotiations are going, and if companies have been able to negotiate comparable raises to what we've seen publicly. It will be an interesting year to say the least, but it should result in more money in planters' pockets, just not as much as they are probably hoping for.

[Scooter]

Many private companies have been quite flexible and understanding. Price increases of between 10% and 20% have been common among some of the negotiations that I'm familiar with (Interior). However, there is one main licensee which has been very unflexible, and their current position may come back to bite them in 2020. More on that at another time.

Prices on the coast have not been moving as much. Will the coast start to catch up in the fall of 2019? There's going to be an imbalance this year, with Interior daily earnings potential having what I think is a notable edge over the coast. That dichotomy, combined with what is starting to look like a miserable spring coastal season (due to the snow and frozen ground and corresponding startup delays), may paint coastal work in a fairly negative light for the spring of 2020.

[Scooter]

Here are partial results for a contract for Planting in Vernon

Contract: PL20DOS001
Client: MOF Vernon
# of Trees: 220,058
Opened: November 15th, 2018
OTR: Yes
Left on the Table: Unknown

Raven Ventures won this contract with a bid of $124,923. This works out to 56.8 cents per tree. It appears that Privateer, All Stars, and Seneca also bid on this contract, although we don't know the dollar amounts of their bids because the Ministry of Forests, etc., is hiding this information from the public.

[Scooter]

Here are the results for a contract for Planting in Fort St John

Contract: PL20TDF002
Client: BCTS Fort St John
# of Trees: 1,004,617
Season: Summer 2019
Opened: March 14th, 2019
Left on the Table: 2.1%

Here's some summer work that Dynamic won. The maps weren't available while I was viewing, so I didn't bother taking a look at this project.

01. $562,775 - 56.0 cents/tree - Dynamic
02. $574,646 - 57.2 cents/tree - Celtic
03. $689,380 - 68.6 cents/tree - Apex
04. $944,849 - 94.1 cents/tree - Seneca

[Scooter]

YTD Viewing/Bidding Season Stats, Week Ending March 16th, 2019


Running totals for this season, Fall of 2018 (and winter 2019):

Overall weighted average low bid: 45.2 cents/tree
Overall weighted average awarded bid: 46.0 cents/tree
Overall weighted average including all bids, all jobs: 53.7 cents/tree

Average increase in overall bid prices since last fall: 38.0%

Total Trees Known/Decided So Far: 55,613,494
Total Trees in Public Tenders to Date: 59,720,340

One Year Ago, Fall of 2017 (and winter 2018):

Overall weighted average low bid: 32.0 cents/tree
Overall weighted average awarded bid: not tracked in 2017
Overall weighted average including all bids, all jobs: 38.9 cents/tree

Total Trees in Public Tenders last year: 53,827,000

-----

That should be the end of contract awards for the upcoming spring/summer Interior planting season. There are four jobs for which I don't have complete results. There is only one large job (MOF Williams Lake, possibly awarded to Coast Range) where I don't have a confirmed winner or winning bid dollar amount.

Thanks to the several anonymous people who shared bid information with me, which helped make this data set much more complete than it would have been if I had been working on this alone.

[Scooter]

From today's WFCA "Rumour Mill Roundup" newsletter:

BC Timber Sales Contract Advisory Committee Delivers One Percent Rate Increase on Option to Renew Contracts — Other Objectives in the Works.

Effective April 1 of this year all new BCTS options to renew (OTR) contracts will allow for a one percent increase to unit prices per OTR term. The directive does not include the back-dating of rates in current OTR contracts or any renewals to current OTR contracts. The announcement follows work undertaken by the BC Timber Sales Contract Advisory Committee (BCAC). Other work under consideration includes expanding the continuous bid deposit (CBD) scheme to multi-phase contracts. A decision is expected later this spring.

Earlier this year BCAC announced the expansion of the CBD to all silviculture solicitations, but specified that financial performance securities will still be required on contracts. The exception to this is the BCTS planting contract where successful bidders don’t post a financial performance security. Instead they risk having their bidding eligibility suspended for failing to meet their contract obligations. BCAC is weighing the consequences of using a similar method with other silviculture contracts. But the practice may have unintended consequences considering that suspending a firm’s eligibility to bid on work in a region, or across the province, could put some small or regional operators out of business. BCTS intends to poll bidders on the scheme this spring and summer.

[swams]

Here are the results for a contract for Planting in Boundary

Contract: PL20TFF001
Client: BCTS Boundary
Season: Spring 2019
Opened: November 15, 2018
# of Trees: 1,198,832
Left on the Table: Can't divide by zero, Jack, unless you have a Riemann sphere

One bidder.

01. $589,174.19 - 49.1 cents/tree - Evergreen

Any thoughts on why exactly this contract only attracted one bidder?

This area has been fruitful for me in the past, so I was a bit surprised to see this. Would hugely appreciate any insights on this contract.

[Scooter]

There have actually been three bids awarded this year where there was only a single bidder. If I remember correctly, Evergreen got two, and Little Trees got one up in Terrace. I haven't posted the results for the Terrace contract yet, but I'll try to do that before lunch tomorrow.

As for your question why there wasn't more interest in Boundary, I can't shed any light on contract specifics, since I didn't view that particular contract. With an opening date of November 15th though, several companies were already quite full and wouldn't have dared seek more trees. My guess, therefore, is that the lack of interest was probably a combination of challenging contract conditions and a late opening date. I'll dig around and try to figure out more.

[JonCedarteeth]

I planted that contract at one point and I remember long drives and a very difficult forester, not sure if those points in them selves would lead to only one bidder on the contract, especially with other companies like Green Peaks working in the area.

[Scooter]

That makes sense with what I've researched in the past few days. The contract is very spread out. Suitable for a company like Evergreen that can fragment into small groups and work from multiple locations. Not suitable for a company that runs full camps.

[Angkorwat]

I don't know about this year..but the Boundry contract requires that you must submit a photo of each block...(every one..even missing a few can make you disqualified unless a good reason)..to prove you went to look at them...if one went to view this contract late..you would not get into them all because of snow...not as much the BCTS forester..but rather the contracted Checker is very hard to deal with...ive viewed that contract many a time and worked on it a few also...im surprised how low that bid is..with whats involved..there normally is a camp set up...about 30km up from rock creek...good owners...with a few cabins...good water,wi fi,a little store.other amenties ,lots of shitters, lots of tent space and set up for cook shack ,etc

[Scooter]

Here are the results for another contract for Planting in Terrace

Contract: PL20TII102
Client: BCTS Terrace
# of Trees: 91,920
Season: Spring 2019
Opened: January 31, 2019
Left on the Table: N/A (one bidder)

Little Trees was the only bidder on this contract.

01. $194,870 - $2.12 per tree - Little Trees

[jdtesluk]

Hmm, sounds like pretty technical terrain. Justin knows the area as well as anyone.

Scooter, I notice the language in the "information to bidders" about access, specifically: "The Province will only be addressing any substantial access changes that may arise (substantial access changes include circumstances such as bridge removals and road washouts that did not exist prior to the contract tender closing date)."

Is this a new item in these contracts, or has it always had this detail?

[Scooter]

I think it's fairly common for contracts where there are access problems. It's to let contractors know that existing issues are to be priced (by the contractor) into the bid price.

However, anything that happens after the contract is awarded (ie. a bad winter causes 1000 windthrown trees to wipe out an access road, or washes out a bridge) is usually something that the province takes care of (or they drop the block and look for something else).