Bidding On A Contract Opportunity
Following is a continuation of questions from a reader regarding bidding on a contract opportunity:
Question 3: “I’m bidding hourly rate of productivity at 5,500 square feet for office cleaning. Do you think this is too low?”
Response: In many cases, yes, since larger contracts are boasting productivity of 6,000 plus. Of course, productivity is based on the tasks and frequencies being performed. What are you doing each visit? What kind of results are expected? Are you having to compensate for special requirements from the customer? What equipment (back pack vs upright) are you allowed to use at this contract? Is it day cleaning or night cleaning without a lot of traffic to deal with? Note that some standards tend to be fat for 5 x week contracts.
Question 4: I have not been able to acquire any of the contract at the 13% markup he wants me to use. I need some advice.”
Response: You own comment should indicate that the current process/formula is not working. Remember: “Nothing is impossible for he or she who does not have to do it.” Each custodial contract is different enough to allow for a wide range of markup results but 13% in the commercial world (especially for a larger size contract – over 100,000 SF) is not realistic. Does your supervisor have real world examples of other similar companies achieving this 13% markup consistently? If so, how are they doing it? How are the specs written? If he/she cannot site any real world, verifiable examples then they are setting you up for failure since you are being directed to achieve an arbitrary goal. Some consider this” non data based” behavior.
I suggest you consider purchasing a commercial estimator and the manual that can guide you in the bidding process. I believe it will help you to think through some of the costs. Also, please keep clear records of each opportunity and ask why you did or did not get it. It is also very important that you revisit each opportunity every 3-6 months and sharpen your pencil to see if you can get a second chance. A final thought is to try bidding lower with lower margins, tighter pay and reduced benefits on one or two opportunities. You may find that once you get the contract started, they will be more profitable than you originally thought. If not, rebid or give 30 days’ notice since you cannot subsidize any opportunity for an extended period of time.
Welcome to the real world of bidding.
Your comments and questions are important. I hope to hear from you soon. Until then, keep it clean…
Mickey Crowe has been involved in the industry for over 35 years. He is a trainer, speaker and consultant. You can reach Mickey at 678.314.2171 or CTCG50@comcast.net.