[jlkt2005]

Hi

We are a small company expanding slowly, we are just about to quote for a primary school contract and wondered if anyone would be able to give any advice about this as its a new area for us.
Any advice on costings would be great.

Thanks

[Mike_Boxall]

Hi

The key thing you need to determine is how many staff and hours you need to provide to deliver the specification required. You should also be aware that there a a high chance that you will need to transfer the existing staff that already work there under TUPE (may be worth you searching the forum for more info on TUPE if you're not familiar with it) Once you know how many staff and how many hours then it's a case of building up the cost by working out all the other costs you'll have eg equipment, training, CRB checks, etc. The more staff that are involved, generally the larger the wage to charge ratio ie if there are, say, 3 cleaners working 2 and half hours per day, then the ratio of wages to overall charge is likely to be around 50 - 60% ie if you were paying your staff £6.50 per hour then the final charge to the client is likely to be between £10.83 and £13.00 There are lots of variables and some areas can be much more competitive than this but hopefully it's a start for you.

Regards

Mike

[TAP]

Hi

The key thing you need to determine is how many staff and hours you need to provide to deliver the specification required. You should also be aware that there a a high chance that you will need to transfer the existing staff that already work there under TUPE (may be worth you searching the forum for more info on TUPE if you're not familiar with it) Once you know how many staff and how many hours then it's a case of building up the cost by working out all the other costs you'll have eg equipment, training, CRB checks, etc. The more staff that are involved, generally the larger the wage to charge ratio ie if there are, say, 3 cleaners working 2 and half hours per day, then the ratio of wages to overall charge is likely to be around 50 - 60% ie if you were paying your staff £6.50 per hour then the final charge to the client is likely to be between £10.83 and £13.00 There are lots of variables and some areas can be much more competitive than this but hopefully it's a start for you.

Regards

Mike

Thank you Mike. I found your post very helpfull.

Pat

[jlkt2005]

Hi Mike

Thanks very much for your info. We have been to quote the job today and it seems like TUPE is likely to take place on this occasion which is fine as we have gone through this before.
There are 5 staff on this school covering 53.5 hours per week, all roughly doing the same hours each day.
The County Council currently employ these staff but the Head is looking to use a contractor as she is not happy with the way it is being managed.
Luckily the Head disclosed that they currently pay 30,000 pounds per annum inclusive of VAT and cleaning materials (not paper products) and she has calculated that wages to the cleaning staff comes in just below 20,000 pounds. I would say that the products aren't going to come in much over 2000 pounds per annum?
It still looks like the profit margins are likely to be way below 50-60% once you have taken VAT into the total, if we are to keep the price around 30,000 pounds per annum.

Any thoughts? as it seems to me that the council have done a good job of pricing Cleaning Contractors out of the market!

Thanks in advance 

[Phild]

You need to be realistic with your margin expectations!!!

If you pull the accounts for a cross section of different sizes of contract cleaning companies you will soon realise that the net (bottom line profit) margin averages 4 - 6% across the industry for daily cleaning.

You MUST request TUPE information before you quote. I would expect to see some of the staff with pensions which if they are in the local government scheme will equate to 34% of the individuals salary costs and probably holidays of up to 35 days for long standing operatives.

Don't let this put you off. The customer is already paying these costs. If pensions are involved and you find it a stumbling block to offer a comparable scheme, give me a shout.

Best of luck.

Phil D

[Jonny jones]

Hi the problem we get here in our county is that the council never put out the tenders for the cleaning contracts and the head teachers are too lazy or can't be arsed to put it out to tender, I know that several schools in the county have never been happy with the council cleaning their schools because I used to work for the council for 9yrs prior to setting up in 2007, I have contact the local assembly member last week asking why they never put it out nor inform the schools that they are allowed to go it alone, and eu rules state that all contracts over a certain amount must be put out to tender,

Anyway sorry for going out of your subject, but have you taken equated pay into account, if you haven't then it's when you pay the staff all year round but they get lower pay per hr .

Thanx Jonny

Good luck

[Approved]

You have to take in account its a 44 week term and you have calculate the costs  4 for periodic cleaning,when schools closed, any more info please email enquiries@bristolcontractcleaners.co.uk

[jlkt2005]

Thanks for all your advice!!

[Mike_Boxall]

There are lots of variables when you talk about a contract like this. Phil is quite right when he talks about a disclosed 'net margin' of 4-6% but the reality is many contractors make significant margins out of other elements of the charge (for example sickness and absence can increase this by another 10%) Again, as Phil says, public sector pensions can be a very significant risk because you may well end up having to fund any potential shortfall. This is where you need the TUPE information and some in-depth employment advice.

It may well be that the risks are low, and you submit a very transparent quote at a low profit margin just to get the business. The first contract is always the hardest to get and it's probably worth your while to get one like this, do as good a job as you possibly can and then use it as a reference site to get other more profitable contracts.

Be careful with the VAT - they won't be paying it on the in-house labour but if you charge it they will be able to reclaim it so it shouldn't make any difference.

Unfortunately, there are so many variables it's difficult to advise generally but in any case, good luck with it.

Regards

Mike

 

[Gilbert Sprous]

I can give you insight on what I ran into when I took over a school from the council.  I was doing about 50,000 a year when I bid on a school that was about 40,000 per year.  Just like your school there was a lot of problems to deal with.   To give you an idea, LGPS (if you have not heard of it take note), they were making well about any wage we would pay cleaners in the private sector, they were getting 32 days of holiday per year, Council was charging for 7 cleaners but only providing 6, the cleaners had been working 11.5 hours per week and getting paid for 15 for years, and the best part 4 of 7 were in a union. 

So the cost of LGPS can be significant if you dont watch it.  The law states you have to offer a comparable or better pension scheme.  LGPS is a final pay pension and is very expensive.  You can get in it if you cant offer the same but you will need to be evaluated by an actuary and it is the same cost regardless of the amount of employees transferring, around 1750 pounds.  After the actuary evaluation you will be required to carry a bond on your part.  They tried to say that I needed a 45,000 pound bond but I was able to prove the actuary and the LGPS to be in error on their thought process and they lowered my bond to 4,000 a lot cheaper.  You can get a company to put up the bond for a percentage fee.  After you getting the pleasure of that you get to pay around 17% of the cleaners pay to the scheme for them to be in it.  If they hit you for an unreasonable bond let me know and I will tell you what to look at to get them to lower it.

Not a whole lot you can do about the Holidays at first, but after you have the contract for a while you can ususally get away with adjusting that if you find a need to.  But the amount of holidays they get can be a laugh, our tax pounds at work. 

I was able to solve the 11.5 hours and the charging for 7 and providing 6 because of contracts but even that was a little tricky because the union was claiming "implied terms and conditions" but I was able to get my point across and won that battle too, if you are having the same problem let me know and I will tell you how I won that one too.

Now saying all of that, I was able to charge more per hour than the council and still prove a 4800 pound per annum saving for the school because I fixed the problems.  So they were happy and I was happy.  I have not raised the price in the 3 years that I have been there because I no longer have to be there every day and the headaches that came with changing every thing.  The school will sign for another two years next week and I net around 18% after everything is said and done labour, chemicals, equipment (I used all used equipment to start the contract, as a matter of fact the scrubber drier I bought from Phil of New Life thanks for the help Phil)(Also Phil sat down with me when I picked up the scrubber drier and had a heart to heart with me and gave me a lot of great insight, very good man he is). 

I know I have said in parts if you need more information on areas to get with me but this post is long enough and if I went into every aspect of what I encountered and how I handled it I could write a book lol.

Gilbert

[Phild]

I really appreciate your comment Gilbert. I will pass it onto the rest of the team. Phil D

[jlkt2005]

Thanks for your extremely helpful info, I didn't realize how good this forum could be!
I have delivered our quote and got a promising response from the Headteacher who seems quite approachable. We should get a decision after a goveners meeting on 13th March.
Thanks again.

[Jonny jones]

Good luck I hope you get a result