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Company Quotation Procedure
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Company Quotation Procedure:
1. A quotation is a legal document to undertake and fund a client project in return for an agreed price in an agreed duration with a defined quality.
2. Every quotation must contain adequate information regarding:
  (1). Price.
  (2). Duration.
  (3). Quality.
  (4). Outcome.
3. Every quotation must define the outcome of the project in terms that can be measured and managed by the client.
4. It would be illegal and a fraud to offer a quotation to undertake a project where that project cannot be funded in accordance with the payment terms and payment plan offered.

Glossary:
QMS means Quality Management Standard as ISO 9001 that is used to systematically make things happen.
Job means Work Package as a small mini-project within a larger project where the job has a price, duration and quality that can be measured and signed-off.
WBS means Work Breakdown Structure as a means of planning a large project as a set of mini-projects.

Steps:
1. Request for Quotation (RFQ) is the general start of the quotation procedure where the client expresses wishes for a project to be undertaken, a service to be provided and an investment to be made.
2. The quotation procedures has many steps that result in a legal quotation document being shared with the client with an expectation that the quotation will become a contract to undertaken the project.
3. The first step in the quotation procedure is called a Work Breakdown Structure (WBS) in ISO 9001 Quality Management Standard.   This simply means that a large project is decomposed into a set of mini-projects that are called Work Packages.
4. The next step is to document each work package in terms of:
  (1). Price to the client and cost to the business.
  (2). Duration with an estimated start and end date.
  (3). Quality that is fair and reasonable.
  (4). Outcome that can be measured and managed.
5. The financial step is to defined the cost to the business according to payment terms.   The quotation is to fund the clients project with an unsecured loan until the client chooses to make payment.   The business must be mindful that 16% of clients never pay for various reasons and so the business must consider the consequences.
6. Example: where 4 people are to work on the project for 4 weeks with invoicing at the end of the month with 30 day terms.   Operatives are paid weekly with an average cost to the business as 300 pounds per day to include expenses and insurance overheads.   Week 1 has a cost of equipment contract hire of say 1000 pounds.   Week 2 has a cost of hire and 4 people of say 7000 pounds.   Week 3 has a cost of hire and 4 people of say 7000 pounds.   Week 4 has a cost of hire and 4 people of say 7000 pounds.   Week 4 completes the project, contract hire is returned and the invoice is raised with the project 22,000 in debt.   Week 5, 6, 7 are waiting for the normal payment terms of 30 days - VAT may be zero, reduced or standard rate.   Week 8 the client may make a payment according to the quotation price, less 20% CIS.   Week 8 the client may make a payment according to the quotation price, less 20% CIS.   The project value must be 26,400 to break even if the cost of the unsecured commercial loan for 8 weeks is ignored.
7. If the business does not have 22,000 in cash to be invested in the clients project, then it would be a fraud to offer a quotation to do the project with such payment terms.   If the project is completed at the begining of the month, then the invoice may be delayed by a further 3 weeks, causing a 11 week wait for invested funds.   The business must be mindful that 16% of clients cannot pay for their projects to be completed and suppliers must plan that one in six projects will not be paid.

Paid by the Job:
1. Job means a work package that can be identified in the quotation or contract.
2. Risk must be minimised and an effective way to reduce risk is to undertake a large number of small jobs, rather than a small number of large jobs.
3. Duration must be minimised and an effective way to minimise project duration is to pay people by the job or work package.   People have the right to be paid by the job so they may earn more by doing more jobs or take more time off while earning less.
4. When a work package is complete and correct, it will be dated and signed off as:
  (1). Checked By the person doing the job.
  (2). Verified By the persons supervisor or site manager.
  (3). Approved By the client representative.
5. When a work package is approved, it may be invoiced. When a work package is invoice, it may be paid.

Paid by the Month:
1. UK Government has introduced universal tax credits and benefits that are paid by the month.   Each person has a legal responsibility to be able to look after themselves for a month.
2. After a month, benefits will be paid on a monthly basis based on monthly earnings.
3. Sub-contractors that were paid weekly must have their payment service improved to conform with monthly UK Government regulations.   It would be illogical to have weekly pay and monthly benefits - in fact the monthly benefit system would not work where people are paid weekly.
4. All employees are monthly paid - they work a month and are paid for that month in the following month.
5. All contractors must be monthly paid - they work a month and are paid for that month in the following month.
6. All sub-contractors must be monthly paid - they work a month and are paid for that month in the following month.
7. PAYE is reported monthly. CIS is paid monthly. All legal returns are based on monthly income, rather than weekly pay.

Unsecured Commercial Loan:
1. Most projects involve the supplier investing in the clients project for many weeks.   The scope of each investment must be managed and priced into the quotation.
2. The cost of a 10,000 pound unsecured loan for 10 weeks is in the order of 2,000 pounds.   Each quotation must factor in an extra 20% to cover the cost of the unsecured commercial loan.
3. Ownership of supplies must be formally documented as remaining the legal property of the supplier until payment is made in full.   The client has no right to use the supplies until payment has been made.
4. Where concrete has been laid, that concrete slab remains the property of the supplier until it is paid for.
5. Where an excavation or trench is made, it is hard to enforce the legal ownership of an excavation or trench.
6. The legal ownership of drains is retained by the supplier until the client pays for those drains and the client cannot use the drains until they are paid for.
7. A legal problem is that the supplier may have no legal right to access the clients property to retrieve the suppliers property.   A court order may be needed by the supplier to take posession of the suppliers property that may be of little commercial value when remved from the site.
8. The client has the right to reduce the price of their project by accepting a payment plan to minimise the unsecured commercial loan.   Payment in advance and stage payments by the work package can reduce the suppliers and clients costs by up to 20%.

Method Statement:
1. Each project is unique and as part of each quotation, a RAMS must be prepared.
2. The project RAMS must include a method statement as a set of mini-projects or work packages.
3. The project RAMS must include an equipment list, a supplies list and a consumables list.
3. The project RAMS must include a permit list.

Document Control.
1. Document Title: Company Quotation Procedure.
2. Description: Company Quotation Procedure.
3. Keywords: Company Quotation Procedure.
4. Privacy: Shared with approved people for the benefit of humanity.
5. Edition: 1.1.
6. Issued: 2 Jan 2018.