Pricing and Making Bid Estimates
For Contracts
We
are finally at the part I know you have been waiting for. When pricing a job,
it’s best to physically stop by and see the job site or building that you are
offering cleaning service to later perform. However, I will show you how to bid
on jobs without seeing them or leaving your office until it is time to go out
and do the building cleaning or a little construction work. In the Construction
Data Company (CDC) newspaper, you will find that, before the project even
starts, the owner or architect has usually posted estimates for the projects
that you are interested in bidding on. The pre-amounts they plan to spend on
each of these projects are listed there to help things get started even before
you do your own research or review blue prints and specifications. This is a
big help for you. For example, as I take a quick glance at just one of these
semiweekly construction newspapers full of information, I see about five
hundred different projects that are coming up for bid very soon, are already
accepting bids, or will be accepting bids in the near future. A sample entry
might read, Project: “Penn Valley Office Building, Location: 1200 North Lincoln
Road, Vacaville, California, Estimated Value: $20,000,000 to $25,000,000, Bid
Type: Owner/Architect Subcontract to General Contractor, Update: All General
Building Subcontractors Bids Due July 2009 to select, Architect: Johnsons
Associates & Architects Inc., Structure Engineer: Allen Engineering LTD,
Size: 90,000 Square Feet, Details: 1 story technical office building. Owner:
Christopher & Brooks Inc., Contact: Bob Davis, Owner Reprehensive for
General information, [with his phone and fax number].” You will also find past
bid results in the CDC publications with up dates of who the successful bidders
are. This information will let you know in detail of who the low bidders are
and, for example, who also is the general contractor for the control of the
construction phase of this above new building project. Also, their names, phone
numbers, fax numbers, and addresses can be a big help to you. Send your bids
and flyers in to this successful bidding general contractor who is the low in
charge bidder, if you want to be a subcontract for your services such as a
building cleaning, painting, electrical, dry wall, roofing, flooring, plumbing,
carpet insulation, windows, doors, carpentry, and lumber, or any other type of
specialty contractor. You should always send in all of your bids as soon as you
can, before or after the first bidding dates (July 2009, in the example above).
The general contractor will be paid most of the money because he has been
contracted to do the job and he will hire or subcontract parts of the job to
other, often smaller, specialty businesses contractors. For example, if the
general contractor wins the bid to build the building for $ 20,000,000 to $
25,000,000, his company will build the new building from the start plans to
finish. As an owner/architect of the building project, the general contractor
will be hired by the architect, who will approve the general contractor’s work
as by plans, and make sure that the project is finished on time and on budget.
The architect will put all the money in escrow accounts for the general contractor
as well as to pay himself and to spend as he see fit each month, dispersing and
controlling the owners millions until the project is finished. Again, most of
the money will go to the general contractor, who will hire subcontractors like
us to do the building cleaning, carpentry, plumbing, and so on, if we are the
low bidders for him or if we present the most attractive trade bid proposal. No
matter what your trade, you should mail or fax your bids to the one successful
construction companies or general
contractors, developers, construction managers, builder, who may use any of
these different titles but they are all still general contractor just the same,
who will soon be putting up this new building. Remember that there are thousands
of these types of bids that are ready for you to work with or look over each
month in CDC publications.
You
can also become the big general contractor, owner, or developer if you decide
to buy some property, contact an architect and let him put a set of plans
together for you, so you can put up a building you are interested in owning.
Get the plans approved by the city planning commission, and then take them to
all different types of financial institutions in your area to find the funding
you need to put up your new building. Often you will hear about people getting
rich in real estate. In this book, you will learn just how some of these real
estate millionaires got so rich and are getting even richer by researching how
to put up, own buildings and providing good service, will make you rich as
well. If you do your homework, stay creative, work hard, and most of all take
action, you can do the same thing. Please note that you will always have to do
a little more research to do this, but that’s why I’m trying to give you some
new ideas about how things work, to make more of the dirty millions you desire,
the clean building contractor’s way. I will talk about many of these ideas in
more detail in my next book.
OK,
with that said, let’s get back to work, starting with this important subject of
pricing a building cleaning job so you can make a bid that works to your
benefit. When you are starting out in your business, you may need to undercut
your bigger competition just a little by keeping your bid price low, so you can
get your foot in the door of some other businesses. By keeping your price lower
than most of the other, established cleaning companies, you will be able to
land some beginners’ contracts for you and your new cleaning company. You will
still be making a lot more money from these low bids than you were making at
your old, nine-to-five job. Sometimes you just need to bid low to get your foot
in the door and show the customer how dedicated you are to providing excellent
service.
I
suggest that your pricing should start at fifteen to twenty cents per square
foot for a “one-time” building cleaning. Today, bids from most cleaning
services in my area are priced at between ten cents and thirty cents per square
foot for a one-time clean up. Use the following example to come up with your
bids. Take the total square footage of the building times fifteen cents per
square foot. For example, to price a 300,000 square foot one-time cleaning
project at fifteen cents per square foot, you multiply 300,000 (total square
feet of the building) by $ .15 (.15 cents) to get your bidding price of
$45,000. Generally, a project of this size will take you thirty to thirty-five
days to finish. If you work thirty days on this one-time final construction
clean up, you will gross $1,500 a day ($45,000 divided by 30 days). You will
gross less money per day if you go over thirty days. It should take about
thirty to thirty -five days to complete any new, one -time construction final
building cleaning job of this size no matter the location. Remember, this is on
the low -to-middle end of the bidding range, but it gives you an idea of how to
set a price for bids on new construction, final building cleaning projects and
other one time cleaning jobs. I will give you a little more details on bidding
as we move forward.
Always put a little
note on your construction and other types of building cleaning bids that you
will charge more for cleaning all outside windows that do not open from the
inside of the building that are above three stories. This will give you some
room to work in an additional charge to rent a high-reach lift or to
subcontract the outside window cleaning out to a professional high-window
cleaning contractor that is if they want you to clean the high outside windows.
Since you excluded the high windows from your bid, you are not locked in to do
this high work, or even locked into this as part of your original bid price if
you do not clean the outside windows. So, to get the high windows cleaned, the
general contractor you are subcontracting for will have to hire a window
cleaner himself, or he will have to negotiate with you to set a price for you
to do the windows. Just to be clear, you usually do not have to lock yourself
into cleaning the high outside windows to bid the full interior cleaning of a
project. It will help if you can do these windows and everything else. If not,
it is something you could offer as an additional service if you find
the proper high outside window cleaning subcontractor to work with you. At the
same time, I must say that some general construction contractors will make
these outside windows a mandatory part of all bid/contracts, if you do the
building cleaning job for them. If so you need to be sure to include extra
money in your bid to hire a safe, trustworthy high window cleaner,
sub-contractor or you can rent a high reach boom lift and do the windows
yourself.
The
300,000 square foot job described above should take five to six building
cleaning workers, cleaning about 10,000 square feet per day, to complete in
thirty days, with you working as the working supervisor, or as one of the
cleaning crew members in the beginning. If you fall a little behind on the last
few days, you can always bring in a seventh person. At the end of the job, your
company has grossed $45,000, on the low-to-middle end for this type of job. To
find out how much you will put in the bank, you first have to subtract your
expenses (about $ 3,000 for thirty days or $1,000 every 10 days of work). Then
you have to subtract your payroll costs at about ten dollars per hour for
non-union workers (making $80 per day, per worker), times five men (making $400
payroll costs per week - per man), times 30 days. This comes to $12,000 in
payroll for thirty, eight-hour days for five workers. Add in your companies
share of paid taxes at 20% will come out to about $2,400. You should still net
(or take home) about $27,400 (starting from: $45,000 -$2,600, -$3,000 -$12,000
= about $ 27,400 in profit) for this thirty days of final construction
cleaning. I’m sure that’s better money than you made working for your old
employer for thirty days. Here’s an interesting bit of information: most
nine-to-five employees do not make $27,400 in six months. You, however, can
make this type of money and a lot more if you do more then one job at a time in
this same thirty day period.
How to
bid and make a even larger profit, will become clearer to you and your staff
after you work on one or two projects and take notes on what works and what
doesn’t at each job site. In other words, you should work as the crew
supervisor in the beginning so you can learn about your business and apply what
you learn to your pricing and bidding process. Try out ideas of your own to see
if they save you time and money. Use your experience to see how well my ideas
work in your area of expertise.
Again,
you’ll be able to make great money when you have two or more of these jobs up
and running at the same time. To do several jobs at the same time, you may need
to use more than one cleaning crew and supervisor, or subcontract a job to
another small cleaning company while you run or work the other job. You can
find a subcontractor by going to your local phone book, Blue Book for
construction, searching online, or asking around. Finding a good cleaning
subcontractor will help you triple your gross income in a thirty, sixty, or
ninety day period if you clean, for example, three or more projects at the same
time. As you develop your own business skills, you will start to see other ways
to make a lot of money in the building service industry. Remember that all
types of building contractors can use most of the same advice to make their
building contracting businesses get off the ground.
Next
let’s look at what would happen if you were to bid on a steady, daily year
round cleaning contract. In this case you would clean a building five
times/days per week for a monthly fee. Let’s say it’s a four-story building
that is 300,000 square feet, or 75,000 square feet per floor. You will be
cleaning this area five times a week rather than once, so your bid price should
be (.75) seventy-five to ninety-nine (.90) cents per square foot for this one
year contract. Again, this example is on the low-to-middle range for bids of
this type. Using the higher amount to calculate the monthly bid, you would
multiply 300,000 square feet by $.99 (.99 cents) per square foot. This would
come to a total of $297,000 for the year. Divide that yearly total by 12 months
to get your bid price of $24,750 per month. This is the price you will put on
the bid form you send to the property manager or owner for your monthly charge
for, twenty days (no weekends) of building cleaning service. Again, this is for
the five-times-a-week cleaning service you and your staff will give this new
customer each month.
The cost per square foot for a bid may change
depending upon where you live. For example, bids in New York may be higher than
for buildings of the same size in Florida due to the bad
weather and location or how the cost of living affects hourly pay and the cost
of supplies. Feel free to experiment with your bid pricing as you go. You can
follow this example, give or take a few cents, on your other bids for different
building sizes or square footage totals to be successful with your building
cleaning bids.
Each
of the daily cleaning property managers or the construction project managers
who receive your bids will look or glance at your price first, before reading
the details about what you say you will do each month. This is why it is so
important that you do your research before placing your bids. Note that it is
not always the low bidder who receives the contract; but a low bid certainly
helps. However, if a property manager or owner thinks your price is too low,
you will not get the contract, due to the “you get what you pay for” belief.
Building managers do not want a low bid from a cleaning service if they think
it will result in a poor cleaning job, and you do not want to do a poor
cleaning job just because you do not have the money in your budget to do the
good job you know you can do. Most experienced property managers have learned
to avoid bids that are too low the hard way. Maybe their tenants complained
constantly because they were not happy with the work of the very low bidder
hired by the property manager to save money. This cleaning service may have
given tenants poor cleaning performance, and no one was happy. Starting with
too-low bids is not a way to start conducting your cleaning business. Bidding
too low makes it hard for you, your staff, and all other cleaning contractors
in your area. The word will get out fast if you are doing poor work because of
your overly low bids. Other property managers and owners will know about this
soon as well, and then it will be hard for you to get jobs. So, work hard and
learn how to bid low, but not so low that you can’t do a quality job.
Now,
a bid estimate proposal form is needed when you submit your bid to a customer.
In the bid estimate proposal, you provide or list all the details about what
you are willing to do for a lump-sum monthly price, or a one-time bid price.
List each service that you are willing to provide for this price. For example,
on a one-time final construction building cleaning bid form, you should give a
list of items that you will complete for that price if you are hired to clean
this new building: A. Clean all rest rooms, B. Sweep floors/Clean all
floors/wax extra, C. Clean all glass and mirrors, D. Clean each room space, E.
Damp wipe and polish drinking water fountains, F. High and low dusting, G.
Vacuum carpet, H. Clean all windows (outside windows extra if 3+ stories) I.
Clean doors, J. Spot clean floor baseboards, K. Clean all tops and hard
surfaces, including inside and outside of cabinet draws, L. Collect all small
trash and debris, take it to the trash dumpster, and so on. (The more you add
the better, if it works with you bid price). The word “terms”, which is on most
bid forms, refers to when you will get paid based on your bid and the wording of
your contract. Usually in a fifteen- to thirty-day period after the customer
receives your company’s bill or invoice. Here is a little secret for one time
cleaning jobs, the first day that you start the job, fax or mail in half or all
of your invoice to get it processed and your cash flow moving. In thirty days
when you are finished all of the cleaning hopefully, your check will be on the
job site or ready for you to pick it up from the general contractor’s office.
You can go to any office supply store and buy a book
or a package of bid forms, or you can create your own on your computer.
Remember that if you buy forms, you may look just like the other two or more
companies bidding on this same job. Creating your own bid proposal form will
set you apart from the competition. You may also want to create a company
letterhead so you can write a memo or a short cover letter to send in with your
bid estimate proposal form. Sample cover letter: Enclosed you will find a bid
for the final construction cleaning of the, Penn Valley Office Building
Project. Add the address and any other details that you think will be related
to this project. Remember these are very busy people, and they do not have much
time to read all of the information that comes cross there desk each day, so
keep it simple, short and to the point.
Always
try to have your bid faxed or mailed in as soon as you can. A good goal is to
have your bid in one to three business days after you get the cleaning
specifications or after the first phone call from your new customer. The first
bid in for a private job will be the one all later bids will be
compared to. Public or government jobs are all judged together at the deadline
date and are always accepted by the lower bid price as its final determining
factor.
Here
is an example of what might happen in your small, new business. A project
manager calls you with a one time construction cleaning job and he/she needs a
bid price right now, over the phone. Your business is moving very slowly, and
you really need the work. In this situation you must bid low because he needs
someone to start this job tomorrow, and you need the job today. The project
manager will give you a brief description of the project cleaning needs. Then
he says he will stay on the phone and wait for your price. All this happens in
about five minutes. When he gives you the total square footage of the building
and how many story’s the building has, let’s say a 100,000 square feet, one
story project, ask if he would mind waiting a couple of minutes while you
collect your pen and materials. Take out your calculator and choose a slightly
lower price this time, because you are hungry and your business is moving
slowly. Calculate your price using .10 cents ($.10) a square foot. Here is how
you will calculate your charge: $ .10 x 100,000 square feet gives you a total
final construction cleaning price of $ 10,000. Take the project manager off
hold, and tell him you will do the job for $ 10,000. Do not tell him it is only
costing him only .10 cents per square foot. Also let the project manager know
that you will have the project cleaned or finished in ten to fifteen days if he
lets you start tomorrow. The sooner you finish the job, the sooner you will get
paid. Again, you can deliver your invoice/bill on the first day you start
cleaning so it can be processed by the end of the job, only if you are
desperate and in need for money. No this is not the way invoice are usually
processed, but sometimes you have to do what you have to do, to stay in
business and make payroll.
Always try to take a
look at the building before putting in your bid. I know that, at times, you
just cannot do this, for example if you and your staff are bidding twenty-five
jobs or more a day, or if someone calls you with a last minute opportunity like
the one in the example above.
Still, looking at the building
first is a worthwhile practice. Many of us in the building cleaning and
contracting business are doing a lot of bidding from source like the CDC
construction news, and other business publications that are full of bid information.
If you are doing five hundred bids or more a month, you should train someone to
help you, rather than try to do it all alone. Then maybe you or someone will be
able to go out and look at some of the buildings before you put in your bids. I
hope that by using your own research and the systems in this book, you’ll be
inspired to launch a large bid campaign for your business, it is very important
for your success.
In
general, you will bid the same amount per square foot for similar contracts in similar
areas. For example, you might want to bid on two buildings in the same town,
both of which are 500,000 square feet, but one building is twenty stories high,
and the other is an office park or on a military base, with lots of small
one-story buildings. Each job is easy but in different ways, so you bid about
the same square foot amount for both the twenty-story 500,000 square foot
building and the multi-building 500,000 square foot job. You will, however, add
an extra amount for the annual outside window cleaning on the twenty story
building.
Just a
little tip, one way to get more information about what your competitors are
charging for jobs is (keeping the names and addresses of your job possibilities
to yourself) and just call a competitor and ask if they are interested in
bidding as a team on a project that is too big for you. As the two of you work
together to come up with a bid, you will learn how much they are charging per
square foot for this type of job if you win the contract or not. This will let
you know what your competitors are bidding to get this type of large job, and
will help you set your future bids in the right range for this location or area
of business.
I hope
this book, if it does nothing else, will help make a major change in our building
cleaning pricing and bidding process. We who are in the building cleaning
contractor business have one of the lowest cost or bid pricing systems in the
entire building trade, or contracting industry. Due to the low non-competitive
bidders (25%) who are, forcing the price down for the rest of us, that’s highly
competitive. This will always keep all building cleaning bids low. Time is
running out and the economy will get better each year. I’d like to challenge
all of my cleaning contractor’s
friends to become organized and work with each other to set higher bid pricing
for cleaning services. We are in a skilled profession and should get
compensated like other skilled professions for example, the electricians and
plumbers. It’s time to bring all of our bids up to the highest levels if we
want to get rich faster and stay rich like the general contractors and other
building trade contractors. The electrical and other trades will make dirty
millions their way a lot faster, because their bid prices are so much higher.
We all are getting dirty providing our services on some of the same jobs. We
who are in the building cleaning business must try to organize (Again research,
Building Service Contractors Association International) and work together to
bring our bid prices up so all of us can benefit and make lots of Dirty
Millions. If your bid price goes up and my bid price goes up and the next
building cleaning contractor’s bid price goes up, the cleaning industry will
change so we all win, and will make lots of money starting this in January
2009. It is very important that we do this for our staff, and increase their
income so they will be willing to do an even better job for our customers.
This, in turn, will help make us rich, in charge, and can change the entire
building cleaning industry. I want to see the building cleaning industry grow
and get more of its due respect as an industry whose trade is important. When
we clean everyone stays healthy, we the building cleaners take some risk in
rest rooms and a few other areas, which make us very valuable.
You
are going into your own business, so you must be creative; you cannot just let
me, or anyone else, tell you what to do or how to think when it comes to your
building service business. I need you to think building cleaning or contractor
business for yourself, on your own, as much as possible. You cannot do it all
my way and get rich; you must try it your way too, drawing on your life and its
business circumstances. Try hard to stay open to new business ideas as they
come to you and maybe they will spark your big business creativity, way of
thinking.
You may be asking yourself how you will know if you’re giving your customers a fair bid. Well, as I said before, you need to learn what your competitors are charging every chance you get. If you know what a competitive price is, there will be no doubt in your mind that you are offering a fair price if your bid falls in the same price range. When it comes to government work, there are plenty of resources on past and current bids available to help you set your bid. You should use any information you can on pricing and bidding to get an advantage.
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