How to quote for commercial work

What changes when the client is a business

A homeowner reads your quote and decides, but a business client rarely decides alone. The facilities manager compares your quote with two others, the strata manager forwards it to the committee, and an accounts team you'll never meet decides when you get paid. Your quote has to make sense to all of them without you in the room, and once it's accepted it becomes the basis of the job. Our guide to your first meeting with a business client covers what a quote should contain, so this one is about the decisions behind the numbers.

The site visit

Don't price a commercial job from photos and a phone call. Walk the site, ideally at the time you'd be working, because a car park that's empty at 7am might be full at 10. Measure and photograph everything you're pricing, so you can show later what was there before you started. Find out how you get in, where you park, whether there's a site induction, which hours you're allowed to work and whether anyone has to be told you're coming, such as the residents of a strata building. Each of those becomes a cost or an assumption in your quote.

Ask whether there's an existing specification or the previous contractor's scope. Larger clients often have one, and quoting against it makes your price easy to compare. Ask too what went wrong last time, because the answer usually tells you what the client will be watching.

Writing the scope

The scope is the part of the quote that settles arguments, so write it for someone who wasn't at the site visit. Each line should say what you'll do, where, how much and to what standard. "Paint common areas" can be read two ways. "Prepare and paint walls and ceilings of stairwells A and B on levels 1 to 4, two coats of low sheen acrylic in the existing colour, doors and handrails excluded" can't.

After the inclusions, list what's excluded and what you've assumed. A commercial cleaner in Ipswich quoting a warehouse office might exclude high windows above the ground floor and assume after-hours access with a key from the site manager. A landscaper quoting grounds maintenance for a body corporate might assume green waste goes in the on-site bin and exclude tree work above a set height. Number the lines so a manager can approve some and not others, and so a variation later can point to the line it changes.

Fixed price or schedule of rates

A fixed price covers a defined job for a set amount, and the risk of it taking longer sits with you. A schedule of rates lists what you charge per hour, per visit or per unit, and the client pays for what it uses. Facilities managers and strata managers who need someone on call often ask for a schedule of rates, because they can't predict the work but want to know what it will cost.

A schedule of rates should say how long it's good for and when it will be reviewed, usually once a year. If you employ staff your labour cost moves every 1 July when award rates rise, and our page for commercial cleaners shows how to build that into a contract price.

GST: say which

Clients registered for GST claim it back, so many think in prices before GST, while a small community group that isn't registered only cares about the total. The answer is the same for both: show the price before GST, the GST and the total on every quote, and label each one. A bare figure with no note about GST is where disputes start.

Think about the invoice while you're quoting too. The ATO says that if you're registered for GST, a tax invoice for a sale of $1,000 or more has to show the buyer's identity or ABN as well as your own details, and that you have to provide a tax invoice within 28 days if a customer asks for one. Ask who the invoice should be addressed to, whether a purchase order number has to appear on it and where it should be sent, because an accounts team can sit on an invoice that doesn't quote the right PO.

Payment terms, and what big clients pay on

Put your payment terms on the quote, then ask the client for theirs, because if you sign a large client's supplier agreement its terms are usually the ones that apply. Before you agree, look the business up. Under the Payment Times Reporting Scheme, large businesses with annual revenue of $100 million or more report every six months on their standard payment terms and how long they actually take to pay small business suppliers. The reports are on the Payment Times Reports Register, which is free and needs no login. If a client's reports show it takes 45 days on average, price the wait into your quote or ask for shorter terms.

Construction work in Queensland

If what you're quoting is construction work, the law gives you more protection than an ordinary supply contract. Queensland's Building Industry Fairness (Security of Payment) Act 2017 defines construction work widely. Along with building and repairs it takes in installing lighting, air conditioning, drainage and security systems, painting and decorating, landscaping as part of a project, and cleaning carried out in the course of construction, repair or maintenance. It doesn't apply to a domestic building contract with a resident owner for their own home.

Under that Act you can claim at the end of each month unless the contract sets other dates, and a document marked "invoice" counts as a payment claim's request for payment. If the client plans to pay less than you claimed, it has 15 business days to give you a payment schedule saying why. If it doesn't give you one, it's liable for the full amount. Where the contract is silent on when payment is due, it's 10 business days after your claim. The Queensland Building and Construction Commission Act 1991 also voids any clause making payment later than 15 business days after a claim in a commercial building contract, or 25 business days in a subcontract, and for those limits the days from 22 December to 10 January don't count. A "pay when paid" clause, where you're paid only once the builder is, has no effect.

Construction work in NSW

The NSW Building and Construction Industry Security of Payment Act 1999 works in a similar way. Building Commission NSW says a head contractor must be paid within 15 business days of a claim and a subcontractor within 20 business days (10 for some exempt residential work), and a contract can set earlier dates but not later ones. If the client won't pay the whole claim it must give you a payment schedule within 10 business days or it becomes liable for the full amount. Unless the contract says otherwise you can claim once a month, only work from the past 12 months can be claimed, and "pay when paid" clauses are prohibited. If you aren't paid by the due date you can give written notice under the Act and suspend work two business days later.

Both Acts let you take a disputed claim to adjudication. Not every service job counts as construction work, though. In Queensland cleaning is only included when it's done in the course of construction, repair or maintenance work. Check the definitions before you rely on either Act, and get advice when a lot of money is at stake.

Variations

On commercial jobs the extra work is where money gets lost. The manager asks your worker to "just do the other stairwell while you're there", it gets done, and the invoice is queried because nobody approved it. Put a variation clause in every quote saying that no extra work goes ahead until the client approves its price in writing, and that an email is enough. Price each one from your schedule of rates where you can, and quote the line number it changes.

Know who can approve. A strata manager may need the committee's approval above a set amount, and a facilities manager may need a new purchase order. If the person on site can't approve it, stop and ask the person who can, because a day's delay is cheaper than an unpaid invoice.

How long your quote is good for

Every quote needs a validity date, because business decisions take time and your costs don't stand still. Thirty days suits most jobs. If materials make up a big share of the price, keep it shorter or say the price depends on supplier prices at the time of order. For a contract that runs a year or more, write in when and how the price will be reviewed, so the first rise isn't a negotiation from scratch.

Following up

Send the quote by the date you promised, and say in the email when you'll check back. Ask at the site visit when the decision will be made, because a strata committee might only meet every couple of months and there's no point chasing before then. A week after the quote, one short message asking whether they have any questions is enough, and our follow-up email template has wording. If you lose, ask what decided it. Sometimes it's price and sometimes it's something you can fix, like a missing certificate. That's why it helps to have your insurance and licences ready to attach to every quote.

If you'd rather spend your time quoting than finding businesses to quote for, Curlew writes to facilities managers and strata managers in your business name.