Basics of the Snow & Ice Bid

Bidding on work in the snow and ice industry can be a time-intensive and challenging part of the business. In order to sustain a successful, growing snow business, it can also be the most important aspect of your snow strategy.

One of the first struggles is determining how to price the work, and there are many models, including seasonal bidding, per push, per inch or even per hour. Determining this, however, should be secondary to your overall bidding process. The ultimate goal is to develop a method that allows you to price in any structure you need to, either because of the market you are in or at the request of an important client.

Over the last year, the Snow and Ice Management Association (SIMA) has worked with a group of members to develop a build-a-bid workshop specific to snow and ice contractors. To date, the association has conducted two workshops and plans more in 2010. As part of the program, the basic bidding process was broken down into four core concepts:

• Know your financials
• Production numbers and measuring
• Event history
• Customers are key

We Know Your Financials

As in any other business, understanding how your company generates revenue, controls expense and grows equity is paramount. If you don’t have a solid foundation and a set plan for analyzing financial statements, controlled and strategized growth of your snow business will be extremely difficult. In terms of bidding, a contractor should grasp a number of items:

• Basic Financial Statements: Being able to create, read and understand a balance sheet and profit and loss statement are important in bidding for snow removal work. A company with a strong process for bidding is able to pull all the needed financial information from previous years into the bidding process for the current year. Planning for the future, including planning for growth, cannot be accomplished without a solid foundation and understanding of the financial position of the company.
• Job-Costing and Overhead: In order to bid on work, you must understand the basic costs your company incurs while clearing snow and ice. For example, bidding on work with one plow truck and one spreader entails understanding all of the costs it takes to run that equipment, which could include the cost of the truck for one snow season (this involves itemizing the cost of the truck over an estimated number of years), cost of the plow/spreader for the season (again itemized over an estimated number of years), maintenance for the season, insurance for the season and loan interest over the season.

Production Numbers and Measuring

SIMA defines a production number as the number of units produced in a given period of time or the time required to produce a single article. Another way to describe it is the average amount of time it takes a piece of equipment, a person or a material to finish a measurable job. While there are many similarities, these production rates need to be built over time for each company, specific to the weather in the region, the equipment being used and the employees operating the equipment. Production numbers at their best are an accumulation of recorded data history, tracking lows and highs with the use of averages. What do you need in order to begin tracking your own production numbers?

1. A duration of time
2. The man hours involved (crew size)
3. An amount of work produced
4. The equipment that is being used
5. Any materials that are being used
6. A measurement of an area

Measuring is a basic element that is essential to an accurate estimate. There are many devices and methods that can be used to measure a property, including a measuring wheel and range finder. Other ways to measure include a tape measure, counting parking spaces, using satellite images of the lot on the Internet or pacing the lot. SIMA recommends the use of a measuring wheel or range finder as the most accurate methods for measuring. After measuring, developing a system that allows you to assign a level of difficulty for each property will be a highly useful tool in estimating a bid.

Event History

Event history, in this context, relates to the type, duration and strength of snow and ice events each year in a region. Snow contractors must manage the risk that comes along with the unpredictability of weather, as it is challenging to predict the amount of winter events a given region will experience each year. A good bidding process should include steps to help manage and minimize the risk a company is financially exposed to during either a very low winter or a very high snowfall winter. In order to bring event history into play in your bids, you must once again use averages to help manage risk and create a solid bidding foundation. Here is a simplified example. Let’s say that for the past three years the averages have been:

• 15 events at 2 in. — Normal
• 7 events at 4 to 5 in. — Medium
• 3 events at 6 in. or higher — Heavy

Once these numbers are reviewed, and once production numbers for the company have been established, a contractor can then put them together to determine a more accurate understanding of how many hours or minutes a season/property/area will take to plow. For example: 15 Normal Events x 45 minutes for 30,000 sq ft (size of property) = 675 minutes to plow this property over a season during Normal events. This is based on a 45-minute production time estimate for a Normal property at 30,000 sq ft. (This is an example to illustrate the process and not based in real-time production.)

Doing the same process for Medium and Heavy events and then adding the Normal, Medium and Heavy event estimates together can yield a good foundation for the amount of time it will take to clear a property for a season.

Trying It All Together

The next step is calculating a burden or break-even rate for the site, defined as: The estimated amount of money it will cost a company to do a job over a period of time after taking equipment, labor, materials, the site, the weather history and overhead into account. Once the burden rate is calculated, it can be used to determine pricing in a number of different pricing structures. Don’t forget to add in profit before you present the bid to the customer.

Customers Are Key

The final, and perhaps the most important, aspect of bidding in snow and ice, can have a profound affect on the snow and ice business. Forming a consistent bidding process is null and void if the process goes out the window when you are selling a contract to a customer. Understanding your costs, but not analyzing your profit margins by customer or by zone or overall, will not alone grow the company. It’s the combination of the first three bidding concepts, pulled into the customer framework, that allow us to meet the customer’s needs, while not overextending and sacrificing service in the process. This includes:

Qualifying the Customer: Before you bid, it is very important to determine whether a customer or potential client is a good fit for your snow removal service. Qualifying them with a series of direct questions, as well as internal questions, will provide the information that can help you make the decision whether or not to bid on the property. Areas to consider include:

• Logistics: Fits with existing routes, size of property, unique challenges and special needs, high priority areas, building hours, etc.
• Customer Expectations: Desired level of service, past experiences, communication with client, contract negotiations (signing their contract or yours?), decision-making process, etc.
• Strategy: Support goals of growth vs. just taking on more work, fit your company’s niche/target market, etc.
• Delivering the Bid: So you have a price, just e-mail it on over, right? Wrong. There are a number of things you can try and do to ensure that you are at the front of the line when being considered:
• Meet in person with the client to deliver the bid, if possible.
• During the conversation, establish your vision of where you would like the meeting to end.
• Plan the meeting and understand what your strategy is, as well as who will be involved in the meeting.
• Work to establish rapport and trust with the client.
• Do your best to show them that you understand their special needs.
• Know beforehand what you will agree to and what line you won’t cross.
• Ask for the sale.  

Brian Birch is the assistant executive director of the  Snow and Ice Management Association (SIMA), based in Milwaukee, Wis. This article was also made possible by SIMA member volunteers: Rich Arlington, CSP, Phil Harwood, CSP, Bob Smart, CSP, and Mike Mason, CSP.  For more information related to bidding in snow and ice, contact SIMA at Brian@sima.org or visit www.sima.org.

Snow Your Business

What Can SIMA Do for Your Snow & Ice Removal Business?

The snow is falling and it’s time to work. Are you prepared, trained and ready to go or are you stuck sitting out in the cold? A SIMA membership will get you out of the cold and into a place with the tools and resources you need to become a true snow professional. SIMA is composed of hundreds of members who take pride in maintaining businesses and residences in some of the worst weather Mother Nature can throw at us.

If you are a contractor, SIMA can help you: Learn to secure better contracts, bid and price more accurately, create a safety and training program, lead effectively during the worst snow and ice events and take pride in your profession. The benefits of SIMA membership include:

1. Download contracts, production and equipment rates and other supporting material as a member online at the SIMA Learning Center.
2. SIMA Savings program — Go online to view discounts available to SIMA members !
3. Discounts on all SIMA events, merchandise, training videos and marketing tools.
4. Discounts on SIMA’s Certified Snow Professional program.
5. Access to members-only portion of the SIMA Web site, including template contracts, forms and more.
6. Stay up to date with SIMA’s e-newsletter, The Update, with a tip of the month.
7. SIMA buddy and mentoring programs help you get in touch with other contractors who can answer questions, talk about ideas, etc.
8. Snow Business magazine, the official publication of SIMA.
9. A listing in the SIMA Member Directory online.

For more information, visit SIMA online at www.sima.org.

Road Proven

2011 Ford Super Duty Tackles Some Tough Texas Test Runs Before Spring Release

Compiled by CE Staff

“Built Ford tough” is the slogan of all Ford F-Series trucks and the 2011 Ford Super Duty is no exception. To supplement the rigorous durability testing performed by its own engineers, Ford has asked selected commercial customers with severe-duty applications to test pre-production models of the all-new Super Duty for six months before the truck goes on sale.

Two of these companies — Reynolds Asphalt & Construction and TexOp Construction — are Texas-based and recently accepted delivery of pre-production customized units as part of Ford’s new Fleet Testing Program. During the six-month testing period, Reynolds and TexOp will feed performance data back to Ford engineers for further analysis.

“The 2011 Ford Super Duty has been designed, engineered and manufactured by Ford to the highest standards,” said Doug Scott, Ford Truck Group marketing manager. “We have complete confidence that this ‘best tool in the box’ will deliver beyond customer expectations. It’s why we’re willing to share pre-production units with companies that do the toughest jobs.”

Reynolds Asphalt received a 2011 Super Duty F-550 4×2 dual rear wheel chassis cab upfitted with a mechanic’s “bed” to use as a service truck for the company’s heavy-duty equipment. The F-550 will carry welding equipment, compressors and a crane body to jobsites for repairs on Reynolds’ heavy equipment, including pavers, rollers and graders. The total weight of added equipment approaches the maximum payload limits of the class-leading 19,500-lb gross vehicle weight rating (GVWR) F-550 truck, which maintains leadership in towing and payload, making the 2011 Super Duty the ideal choice. The F-550 will be expected to perform in areas with rough roads or possibly off-road, potentially using the added crane to pull an engine out of or drop a transmission into heavy equipment.

“This F-550 chassis cab basically will always be on the road, heading out to the vehicles that need service at our various jobsites,” said Gary Reynolds, company president. “The F-550 will be an important component in keeping our jobs on time and on budget.”

TexOp took delivery of a Super Duty F-350 4×4 Crew Cab XL outfitted with toolboxes to assist with maintenance. It also will tow skid steers and other equipment on a double-axle tandem gooseneck trailer to jobsites. The F-350 is expected to be used constantly in this role — the truck doing the job now has racked up 40,000 miles in just eight months.

“We’re a business, not a laboratory. We don’t have time for that,” said Danny Simpson, managing partner of TexOp Construction LP. “Anything we use has to help us get the job done right for our customers. Based on everything we’ve seen, the new 2011 Ford Super Duty with the new 6.7-liter Power Stroke diesel will do just that.”

The 2011 Ford Super Duty goes on sale in spring 2010.

Reynolds Asphalt & Construction Co.

Owner: Gary E. Reynolds; (817) 267-3131; greynolds@reynoldsasphalt.com

In business: 28 years

Employees: 134

Core business: Providing asphalt materials and service throughout Dallas, Denton, Collin and Tarrant counties in north Texas.

Recent major projects: Asphalt work on new Cowboys Stadium, including work on Interstate 30 that feeds into new stadium; various major highway projects.

Number of vehicles in fleet: 60, including 37 Ford vehicles.

TexOp Construction

Owner: Danny Simpson; dsimpson@texop.com

In business: Five years

Employees: 50

Core business: Removing asphalt and concrete for road, highway construction and repair in the Southwest, including Texas, Louisiana, Arkansas, Oklahoma and New Mexico.

Recent major projects: Milled out concrete at new Cowboys Stadium; asphalt removal on Interstate 30 northeast of Dallas.

Number of vehicles in fleet: 30, including 25 Ford vehicles.