Price and manage delivery risks — Facilities & maintenance

By the end of this lesson, you will be able to calculate a price, test its return and address a delivery risk.

Common to all countries

Build the cost before choosing the price

Start with quantities, paid time, third-party costs and delivery assumptions. Include mobilisation, supervision, compliance, warranty or support, overhead and the end of the contract where relevant. Separate fixed costs from costs that vary with usage. Forecast volumes are not minimum orders unless the contract makes that commitment.

In this exercise, target margin means profit divided by selling price. A 20% margin therefore requires price = cost ÷ 0.80. Adding 20% to cost is a markup and produces a lower margin. Taxes, discounting and financing are excluded from these teaching sums; add the applicable items to a real bid. Test one credible adverse scenario and decide who controls its cause and how the contract allocates it.

Worked example — Clean four municipal buildings

This is a fictional teaching case. Quantities, prices and contractual conditions below are assumptions for the exercise, not legal requirements or market benchmarks.

The rota covers planned work but contains no absence cover. Add a costed replacement arrangement and travel time. A low hourly selling price cannot repair an impossible staffing schedule.

Item	Cost (currency units)
Paid staff time	48,000
Materials and equipment	6,000
Supervision and travel	6,000
Total	60,000

Total cost is 60,000. To retain 20% of the selling price as profit, price is 60,000 ÷ 0.80 = 75,000. If “Replacement staff provision” adds 6,000 to cost without a price increase, profit becomes 9,000, or 12% of price. Preserving 20% would require 82,500, only where the procurement permits that price. A cost increase does not automatically entitle the supplier to a contract price increase.

Country specific — what to verify

Check applicable wages, working-time rules and any staff-transfer obligations for this contract. Verify chemical handling, waste disposal and site access requirements. EU green procurement criteria are a reference; the actual tender determines the requested environmental evidence, alongside applicable law.

Collective agreements, wage rules and insurance. Use the destination-country module and the actual tender pack. The sources below are references with their own scope; they do not form a single worldwide regime. For the general method, revisit the foundations.

Put it into practice

Calculate the price for 20% of selling price as profit, then add 6,000 to cost. Calculate profit at the unchanged price and write one risk-control action.

Model answer

Total cost is 60,000. To retain 20% of the selling price as profit, price is 60,000 ÷ 0.80 = 75,000. If “Replacement staff provision” adds 6,000 to cost without a price increase, profit becomes 9,000, or 12% of price. Preserving 20% would require 82,500, only where the procurement permits that price. A cost increase does not automatically entitle the supplier to a contract price increase. The rota covers planned work but contains no absence cover. Add a costed replacement arrangement and travel time. A low hourly selling price cannot repair an impossible staffing schedule.

Keep this worksheet in your working file. The quiz below checks the lesson’s decisions; passing it is neither a professional qualification nor a guarantee of an award.