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Multi Year Contract

Discussion in 'Bidding & Estimating' started by millsaps118, Jan 9, 2007.

  1. millsaps118

    millsaps118 Senior Member
    Messages: 694

    I have a commercial account who wants a multi year deal for lawn and snow starting April 07. Right now I have basic terms in my contracts that are based on one season deals, then I just send out renewals. I want to make sure I cover all my bases' before I send them the new contract that will go for the next five years into 2011-2012.

    For those of you who have experience in this kind of contract, what should I look out for besides factoring in inflation, and over-all operating cost increases? I want to make sure that the customer is 100% committed to the full length of the contract. I think that if I commit my company to provide a service to them for the next five years that in return they need to commit to us as well, under a contractual obligation. Should I add a clause for early termination or exceptions to termination? Should I lock them in on the monthly price for the next five years or add a percentage of inflation from year to year?

    My main objective is continue a relationship with the account but I want to be fair and keep them happy with the price, and make sure that I don't short my self in the end.

    Thanks in advance for any advice or feedback!
     
  2. BENJAMIN'S

    BENJAMIN'S Junior Member
    Messages: 3

    that's quite some time for a contract....though i don't have many posts on this site i do have many years in the industry. i do know that many things can go bad over a 5 yr. period, especially in this industry. you can figure, depending on your climate, an average of 64 visits per year to a commercial account. that's 8 months of mowing @ 1 time per week and 4 months of plowing at 2 times per week. obviously!!!!! these numbers can change drastically. i would quote that account on how many ever visits you believe u will make each year. and then, at the end of the year either credit them, or have them credit u for the following year. if we let's say, have 3 bad winters in a row of no snow, they are going to be very upset and less likely to renew your contract. or vise versa if we get a ton of snow that runs u into the ground, u are less likely to keep a positive attitude for 5 years. same with dry seasons, and very wet(growing!!) seasons. a simple crediting plan with a set price per visit that they will pay if you go over your number of visits is 1 way to go about this. at the same time if you come under your visits, you can simply credit those visits back to them for the next year, so that it costs nothing out of your pocket. most companies that do long term contracts should at least pay quarterly, no less. And yes, like everything else in this world, their must be a cancellation payment if they decide not to use u anymore. i would suggest 1 quarter of income. u may get sick of it as well , so be put in settlement amount if u leave. good luck!!! :jester:
     
  3. somm

    somm Senior Member
    Messages: 200

    find it all here:

    http://www.plowsite.com/showthread.php?t=30996

    Adjust FEATURED YEARS at top of form for duration.
    In "Notices" section cancellation timeframe should warrant at least 180 days advance written notice in a multiyear. Also adjust Contract Damage Forfeiture AMOUNT to be at least 3 times the amount you feel comfortable with on a one year contract, so they don't "whip-saw" you like some kid who lives at home up the street.

    Communication is key in multiyear agreements. You need to send them a newsletter, e-mail, fax, or mailing at least 4 times a year. You NEVER want them to EVER say "we haven't heard from you for a long time, so we thought you were overbooked in another county or moved out of the area !?!?"

    Always bid multiyear ICE & SNOW agreements a little higher than you would other agreements to allow for 5-7% increases at year number two's end and year number three's beginning. The manager is seeing consistent pricing which is their goal to hold down costs, but don't be suckered into "we need better price-break now to allow you the benefit of consistent work for the next multiple years" when your own costs will increase!!
    Keep respectfully repeating their benefit of consistent pricing, and stick to your guns about it - or zero deal!
     
    Last edited: Jan 16, 2007
  4. carl b

    carl b PlowSite.com Addict
    from Ohio
    Messages: 1,330

    make sure you can add a fuel Sir charge 3 years ago i had a 10 year with price increases every 2 but fuel was 1.00 a gal and 2.00 the next year