Seeking sugestions from those who have been doing this for longer than I have

[Furu]

I have been mulching forest property that I am responsible for and that I manage for some time with a Fecon mulcher.

I started offering my services to others at the encouragement of several foresters as there is a paucity of folks with the equipment and knowledge to do good forestry work (different from just land clearing).
I have been doing this work on a per hour/per day basis only.

I recently was contacted by a individual who would like to get me to do some work on some property that he is a consultant for the actual owner on.
He wants a "fixed quote" which I interpret as what the contracting world knows as a "firm fixed price bid."

The problem is I am not comfortable with going in with a firm fixed price bid as my experience has always been that something does not go as expected due to running into leftover logging equipment/cables or other unknowns. That is why I always run on a per hour/per day basis.

As a result I am debating on just walking away and saying no thanks but a part of me thinks that i should give it a try.

My question is how do those of you that do firm fixed price quotes figure in the risk of the unknowns with the known issues that you can observe from a site visit. i have been thinking about just adding 50% to my time estimate and letting them take it or leave it but I don't want to end up being in the hole or bidding too high either and insulting them.
As I stated I am used to working and billing on a per hour kind of operation.

 

[Ed of all trades]

Do what you feel comfortable about and if need be let it go. Ed

 

[tonyoz]

With fixed price jobs the problem is not always the quoted price but the client. While you are here can you do this or that and before long you have done yer ***. The best way is to price by area, sq metres or sq yds. On completion walk the job with the client with a handheld GPS so they can see for them selves what has been done. Just saves all the BS about dollars.

 

[EddieWalker]

While not in your industry, I have to give quotes all the time for remodel and home repair jobs. I've learned that it's better to be high on your bid and not get the job, then to be low and get the job. Estimate how long it will take and add 50%. If you pass on bidding it, you are not going to make anything anyway, so you might as well give them a number.

 

[CobyRupert]

It comes down to who takes the risk.
A fixed price you do. Reward ($) can be greater, but so can losses.

Dealing with unknowns, you have to give them a high priced quote that covers (reasonable) unforeseen issues.

If things go well and it takes a "normal" amount of time then you win. If there's a lot more unforeseen issues you lose. A problem is, a quote that covers "unknowns" may be so high they balk.

A compromise option is a: "Not to exceed quote". Basically a "worse case quote" that is high and includes time to cover these unknowns, but if things go good, then you just bill the time, expenses (and profit) that it took. They're less likely to balk and they take the gamble on what the total will be.

You have to explain "Look my quote is high because I don't know_____(this & that), but if it goes well it should only take me x- hours at this rate"
But you can still lose your shirt.

 

[topbuilder]

"My question is how do those of you that do firm fixed price quotes figure in the risk of the unknowns with the known issues that you can observe from a site visit. i have been thinking about just adding 50% to my time estimate and letting them take it or leave it but I don't want to end up being in the hole or bidding too high either and insulting them.
As I stated I am used to working and billing on a per hour kind of operation. "

I run into similar issues on large stump grinding jobs. Too many variables to accurately judge a 3 day job. Some people will not go with an hourly rate. Unfortunately, the trail before us has been paved by people who didn't do what they said they were going to do. Options:

Daily rate-
Well, a day is 8 operating hours... but for some reason they perceive it differently. This gives them the opportunity to see what can be done in a day. I tell them they don't have to call me for day 2 if they were not happy with day one.

Over bid and then discount-
Hard for most people to do I think, taking money out of your own hand... I sometimes overbid to cover unknowns, I do large blow-overs. I do lobs other grinders can't or won't do for one reason or another. I'll do the +50% of what I think it will take and if all goes well, discount the final price accordingly. I've never had a complaint, usually they end up recommend me to friends and neighbors when they can.

This is my proposal-
I've been doing what I do for several years. As the saying goes - I don't need the practice. Draw your line in the sand and be willing to walk away. Explain why it is better for you and him to go hourly (variable, fair for both of you) and that is the only way you are willing to proceed.

Good luck!

 

[bdog]

These people contacted you for some reason so they must have heard about the work you do and know you are reputable and not a hack.

Are they close by and would it be a lot of effort to go there? I would tell them you are not comfortable with a fixed price due to unknowns but that you would be happy to come work for 5 hours or one day or whatever at X per hour with no further obligation so that they can see what you accomplish per hour and if they are happy with your production per hour and work ethic then you can continue on and if not then at least you tried.

I would tell them you bill by machine hours on the machines clock and that you will give them daily reports of the starting and stopping hours. When I have contracted heavy equipment I liked it when the contractors did this. The customer has a fear of being gigged on the hours and you have a fear of not knowing what you are getting into. Both legitimate concerns. An hours rate is the best solution but you need to assure and convince them you we be honest and fair in the tallying of the hours.

 

[tonyoz]

Bdog, for some hourly rate is fine, contractor and client. I have done jobs on contract that worked out to 4x the hourly rate and still had very happy costumers. Not all jobs are like those but getting 2x the hourly rate is still pretty good going and happens quite regularly.