Business Insights

Bidding and Estimating: Putting It All Together

Have you ever been ghosted during a request for proposal (RFP) process? It might look something like this:

  • Pre-bid meeting: Check. 
  • Follow-up questions: Check
  • Bid submittal: Check
  • Short list presentation: Check
  • Interminable waiting period for a decision: Check
  • Decision: Silence

No one likes to be left on the sidelines. While we can’t promise solving for every RFP you’re ghosted on, as your coaches for all things bidding and estimating, Steve Shuchat, David Murphy, and I can give you a final look at how to put together the whole process.

Today’s article is a final piece in our series, meant to be a brief synopsis of the articles that came before it (all of which are linked at the end of this piece). 

Acquiring new customers is an extremely important function for any contract cleaning or janitorial organization to grow the top and bottom lines of their business. After all, we’re not only going to play defense (customer retention) — we’re also going to put our offense on the field to score (acquiring new customers). 

For the offense to be successful, we’ve been practicing the plays we’re going to run through in this series of articles.

Understanding Basics and Establishing the Run

First, we establish the run. In “An Introduction to Bidding and Estimating,” Steve gives us a look at what we can expect when beginning the bidding and estimating process, a critical part of acquiring new customers. If this is your first go or you simply need a refresh, this article is a great place to start.

As Steve notes, bidding and estimating is not only good for your business, but for your team’s morale as well. “If you are a growth-oriented building service contractor, then adding new business will invigorate your team and have a positive effect on the morale of your leadership,” he says. “As you grow and improve your skills for bidding new janitorial accounts, additional opportunities will provide themselves which will further motivate your team.”

Analyzing RFP Qualifications

In the second article of the series, “Do You Qualify for This Janitorial RFP?” I outline the importance of the process of qualifying bid opportunities. Primarily, two questions are highlighted: 

  1. Does the RFP qualify for our company?  Consider size and revenue, vertical market segment, terms and conditions, and risk tolerance.
  2. Do we as an organization qualify for the RFP? Consider cash flow, risk profile, operational bandwidth and terms and conditions.

In the world of contract cleaning, as our companies grow, so do our opportunities for several reasons: We cover a larger geographic area opening different markets. Our experience and tenure qualify us as a known commodity in potential customers’ qualification process. Because of these reasons, more opportunities come our way. Having a system in place to triage those opportunities can have a profound and positive effect on our sales closing percentage. In other words, less work, more wins! 

A Closer Look at Production Rates

To move the ball down the field, David educates us on commercial cleaning production rates. A production rate refers to the amount of time required to complete cleaning tasks. David describes how a production rate can be developed by using a task specific rate (production rates based on individual tasks) or a comprehensive rate (production rate based on the entirety of tasks to be performed combined into one single rate). 

He further describes influencing factors on determining production rates and how they affect staffing, pricing, and meeting client expectations. As a contract cleaning professional, having a clear understanding of how to generate the necessary budget for labor hours to properly clean different types and sizes of facilities is imperative. Labor is any contract cleaning company’s largest expense — hence, it will always be the key to our success. 

You’ve Won The Contract! Now What?

Steve then penned the next article, summarizing the age-old question in contract cleaning: What happens if they actually award me the contract? Or in Steve’s words, how do I organize a clear service plan during work loading?

“When you are bidding a job, if you do not know how you are going to staff it — how many people, time constraints on the shift, who is going to do what and how often — then, how will you know how to budget for equipment, uniforms, drug screens, safety training, supervision, etc.?” Steve asks.  

Furthermore, if the facility will require more than just routine janitorial tasks, such as hard surface floor care or carpet cleaning, will those tasks be accomplished by the daily janitorial staff members or will it require special teams to take the field? Don’t forget, most of the special teams folks are truly special — especially their pay rates. Which, if it’s in our game plan to use them, then those pay rates need to be accounted for in our bid proposals. Essentially, it’s wise for your team to know their blocking and tackling assignments (the play) before they take the field.

Getting Strategic With Job Costing

David Murphy takes the field to push the ball across the goal line by describing job costing for profitable bids. As he draws up the play in the dirt (a little industry humor right there), he emphasizes if all the true job costs are not accounted for, then, in reality, you are simply “throwing a number at it.” The seasoned contract cleaning professional will know the down and distance, thereby having the ability to calculate an accurate cost analysis of the job.

The previous articles in the series cover labor costs, hours, and pay rates. However, David’s article highlights several other costs that shouldn’t be overlooked. Payroll burden, (FICA, FUTA, SUTA, Worker’s Comp, General Liability, and Umbrella), equipment and supplies (useable and consumable) should be part of the game plan. Then, other direct costs that are invariably part of almost every proposal — background checks, uniforms, vehicles, bonds, recruitment, and training expenses — should be addressed. 

Finally, we earn the spoils of victory, the champagne and caviar: overhead and profit. Overhead is the ongoing expenses of operating the business not related directly to the account. This includes administrative expenses, (payroll, accounting, accounts payable, and receivable), sales expenses and salaries, HR expenses (advertising for employment, background checks, etc.), and your BSCAI dues. These vital support functions allow the business to carry out its profit-making activities. If underapplied in your bid calculations, the business might close the sale — yet close the business as well!

Setting Yourself Up for Success

If you’ve read the entire series of articles, you are now steeped in the knowledge of bidding and estimating. The mysteries of qualifying, production rates, work loading, and job costing have been fully investigated and solved.

Now, you have plans to make. First, what day will you arrive at the BSCAI Contracting Success Conference in Las Vegas this November — and second, what time are you going to spend prospecting for your next RFP?

 

This article is one of several in a series on bidding and estimating. Read more here: