I am in the processing of preparing specifcations for a T&M Painting Services contract. Which is the best way to request hourly rates or Unit Price rates?

What advantage does unit price rates have over hourly rates, maybe I should ask explain unit price rates.

Thank you

By Vern Edwards on Saturday, February 16, 2002 - 10:56 am:

I'm interpreting your question as meaning: Which is the best way to price a contract for painting services--hourly rates or fixed-unit-prices?

You say that you are preparing specs for a T&M contract. Well, T&M rates are always hourly labor rates, see FAR 52.232-7, and a T&M contract for painting would be very different from a fixed-unit-price contract for painting.

Under a T&M contract, payment is based upon hours performed and is not a function of output or contingent upon the successful completion of the job. If you use a T&M contract, you can't be sure how many square feet of painted surface you'll get in an hour's work. You can't be sure in advance how much you'll have to pay for a given result in terms of quantity of painted surface. You will pay the same hourly rate for different painters despite the fact that one paints more surface than the other.

But under a fixed-unit-price contract (e.g., $X for every square foot of painted surface), you pay for output in terms of painted surface. The contract may provide for the fixed-unit-prices to be used as either (1) the basis for firm-fixed job pricing or (2) the rate of payment for each unit of painted surface delivered in a period of time. You thus can know in advance exactly how much you must pay for a job of any given size.

In buying painting services, I would prefer the fixed-unit-price approach over the T&M (hourly labor rate) approach. However, if you are planning a task order contract for such services and if your requirements will encompass more than one type of surface or surfaces in various conditions such that surface preparation and paint specifications will vary significantly from job to job, then you will need more than one hourly rate.

By Anonymous on Wednesday, February 27, 2002 - 01:33 pm:

Vern

Do you have a copy or do you know how I can retrieve a copy of a T&M Contract for Painting Services with fixed-unit-prices to be used.

By Anonymous on Thursday, February 28, 2002 - 02:43 pm:

Vern

We are a large commercial vendor that has always bid on Firm Fixed Price efforts. What would we need to do to bid in a T&M environment? We currently do not have a timekeeping system that flows into a general ledger. Would we have to do that or could we track that off line in an Excel spreadsheet.

By RonGCPA on Thursday, February 28, 2002 - 08:55 pm:

Anonymous - While you wait for Vern -- stand-alone time collection systems which meet DCAA requirements for any type of contract are often used. I've seen paper cards being recorded into Excel, Access, Dbase, and just about any mainframe dms you can think of. Several of the mid-range government oriented tc systems don't even require the underlying general ledger system and can be configured to work with most enterprise level systems or outside payroll services. There is a lot of info on labor at:

http://www.dcaa.mil/

I hope you have someone in accounting with a lot of free time.

By Vern Edwards on Friday, March 01, 2002 - 10:37 am:

Anonymous of Feb 28 at 1:33pm:

I don't have an example, but you can search for one at the FedBizOps site.

Anonymous of Feb 28 at 2:43p.m.:

I think that RonGCPA has given you a good answer.