Carrying fees and procurement charges

[mudman]

What sort of fees do you guys charge/get charged for this stuff? I'm doing a design/consult job for a church and they are interested in having me get materials for them through my connections (aggregates, landscape goods and irrigation supplies). In the past I've charged 10% plus T+E but I'm not sure if this is appropriate here. I plan on submitting the prop before the end of the day...

[M.D. Holloway]

If it wasn;t a church I would tag on all sorts of stuff but a house of Gawd? I hate doing biz with folks that have a direct line...

[Don Plumley]

I would just place the orders on behalf of the church, and have the vendors bill directly. Don't get involved guaranteeing the credit or timely bill paying of any organization.

Our vineyard manager either has vendors bill us direct, of if he passes the bill through to us, it is at zero markup. We pay well for his services and it is just a convenience for him not to wait for us to place an order for supplies.

[mudman]

I wanna be nice, but you know how they are with their committees and cranky old ladies. I've been reminded a few thousand times already about how broke they are...

I don't want to milk 'em, just make sure I cover myself for the hassle it is sure to be.

[mudman]

Originally Posted by Don Plumley

I would just place the orders on behalf of the church, and have the vendors bill directly. Don't get involved guaranteeing the credit or timely bill paying of any organization.

Our vineyard manager either has vendors bill us direct, of if he passes the bill through to us, it is at zero markup. We pay well for his services and it is just a convenience for him not to wait for us to place an order for supplies.

Can't do that. The attractive pricing is available to me only. I must me the sole contact with vendors or there is no sale. In fact a couple of my wholesalers will not sell to anyone out of my trade, you must apply to buy from them.

[Hugh R]

You're a consultant, they are a client. Charge them what you charge other clients. If you feel bad/guilty give them a fee break, say 1-2% instead of say 10%, but make them pay immediately. You shouldn't be carrying them. Also, remember they get their money and property tax free, you don't.

[Don Plumley]

Originally Posted by mudman

Can't do that. The attractive pricing is available to me only. I must me the sole contact with vendors or there is no sale. In fact a couple of my wholesalers will not sell to anyone out of my trade, you must apply to buy from them.

So he does buy from vendors and I pay the bill within 15 days.

I'd say to the church that if they'd like you to purchase materials, then it is COD but Zero markup. They get the benefit of your pricing.

[jackobleep32]

Charge cost + time and expensese, whatever they may be, at a reasonable hourly rate. Ditto on the COD or payment up-front part too, if they want the cost pass-thru.

[mudman]

This is my first time writing a proposal for consulting services. I've done plenty of consulting type work but always just charged my 'labor' day rate or a set fee to solve a problem.

I'm trying to get more design and consulting work versus design/build but I'm having trouble figuring out how the other guys bill out their services. Is it usually all hourly? Charge for drive time/mileage? Do rates change based on scope of work?

My industry is filled with morons so I'm not too concerned with the status quo in my field, more with how other trades do it (Int. design, architectural, construction, etc.).

[Don Plumley]

For my consulting practice, I charge a fair hourly rate or a set project fee + upside. I don't bill for trivial stuff like mileage (local), telephone, etc. - those are expenses of my business. If I travel on behalf of a client, I have set daily travel rate based on distance, less than my hourly rate as I assume they are not getting the benefit of my expertise when I'm waiting in a TSA queue. But my time is my inventory.

As you said, you should look to architects and consulting engineers to see how it is done in a more construction related field.

[Porsche-O-Phile]

Design fees are sort of case-by-case. For custom architectural commercial design work, fees on the order of 6%-7% are normal - sometimes a little more, sometimes a little less (depends on the project complexity, schedule, etc.) If it's a huge multi-million dollar job sometimes a lesser % can be justified since the raw numbers are large enough where you know it will cover your staff & consultant fees, etc. over the course of the project and net you a reasonable profit at the end. If it's a demanding client who wants you to work a miracle for them that's going to take a lot of extra hours/overtime, that should be reflected in the fee. Keep in mind not all jobs are done on a % basis - a lot are done on flat-fee, sliding scale or other arrangements too. You have to decide whether you're going to break the design portion out as a separate line-item (and then if so, what method you're most comfortable with) or not.

For actual construction work it also has a lot of variability but I typically see G.C. billing for estimated L&M costs plus normally anywhere between 8%-12% for overhead & profit.

Don't feel guilty about billing and charging for your services. You can be negotiable, but don't be a pushover. They're hiring YOU because YOU are the expert. YOU can render a service that they can't, and that's worth something. They will expect to be charged. OTOH, if they start trying to lowball you or push you into a fee you think is unfairly low, don't hesitate to say "sorry but I just can't do it for that" and walk away. It hurts to do that, but if you don't, you'll "mark" yourself with a reputation of being a cheap resource who gives stuff out for free. Your phone will ring off the hook, but you'll find yourself running ragged and losing money (or at best not making any) for twice the effort of everyone else out there. Yes, turning down work sucks, but there has to be a reality check and the client needs to know you're not going to let them jack you. Most won't though and are receptive/fair, but use a little bit of professional common sense.

Good luck.

EDIT: P.S. make damn sure you cover your reimbursibles & incidentals too in your contract!

[mudman]

Thanks Jeff and Don, that is what I'm looking for.

I'd love to pick the collective brain some more, but I'm taking a much needed weekend escape, packing up right now. I'll pick this up or start a new thread when I get back.

Thanks again guys!

-Jeremy