Determining the Cost of a Municipal Sweeping Program
A vast array of factors make every city bid unique.by Ranger Kidwell-Ross
We also have worksheets available online that are designed to assist in computing costs per curb mile and costs per hour.
In pricing municipal sweeping bids, even experienced contractors have been known to make mistakes. There are many factors to take into account, some of which change significantly from bid to bid even in areas which are near each other geographically. When the differences between one part of the country and another are factored in, it can seem like an entirely different industry.
No matter where you are located, it is important to both your company and the industry that you include all pertinent factors when computing your bids. An all-too-typical scenario occurs when new players get into the market, price their bids based upon what they see as the current market structure, and then win a bid or two. It's not until a few months into the contract that they realize their costs are exceeding their revenues. With no way to make up the difference, some reduce their sweeping, so they are no longer completing their contract, and instead are re-sweeping on a 'complaints lodged' basis.
This results in several obvious problems that have been seen in all sections of the country. Not only is the industry image tarnished, but an artificially low pricing structure is established. Then municipal agencies, when they compare notes, can't figure out the disparity. One is getting a quality product at a particular price, yet a neighboring city is paying 30% less for (theoretically) the same service. The behind-the-scenes answer may well be that those paying less are having continual problems with the contractor's, service, quality, etc.
Strong competition is fine, but companies who win a low-bid contract and then are unable to perform up to the contracted standards do nothing but tarnish the image - and profit picture - of the industry as a whole.
Pricing of municipal sweeping varies widely, depending upon where in the country you operate. Some important generalities can be drawn about municipal sweeping bids, however, no matter what the location. If they want to be successful, there are some important factors that everyone should consider when putting together a competitive bid proposal,
As an example of regional differences, in the northeast there is no such thing as a 12-month sweeping season. As a result, municipal sweepers sometimes find themselves faced with the daunting task of picking up 5 months worth of sand and debris. That kind of situation requires a heavy duty mechanical sweeper, and coverage of 2 or 3 miles a day at a price of $300 a road mile is in the ballpark.
In contrast, the scenario changes almost completely in areas where the sweeping can be done year round and there is no winter sand put down for traction on snow and ice. In areas like southern California, Florida, and Atlanta, vacuum machines are often the more cost-effective choice. A total of 35 to 40 miles can often be swept per day, and the price per mile can work its way as low as $12 to $16 per curb mile. Then there are all the places in between...
Regardless of your location, you will find that the officials in the city you'd like to do work for will be concerned about past performance and the composition of your sweeper fleet. They want to be comfortable that you can perform up to the standards they set, and that you can do so for the life of the contract. They will also want to know that you are insured, with requirements that typically range from $1 million on up. It's kind of a Catch 22 situation, but if you haven't done work for a major municipality, don't expect one to hire you.
Before you start bidding municipal contracts, establish a firm relationship with your bank and bonding company. A sweeping company that pro-actively establishes itself as financially secure and prepares itself with a bonding capacity sufficient to meet future contractual requirements, will be at a competitive advantage. Often an irrevocable line of credit issued to the municipal agency is acceptable in lieu of a performance bond. It is important to determine this in advance, since there can be a significant difference in the cost of these two bonding sources.
You should also have a firm handle on your production model costing, which is your machine cost for every model of sweeper you operate. Besides cost of the sweeper itself there will be other factors, such as fuel, as well as general maintenance and upkeep on both the sweeper and the chassis. Although your goal is to come up with a total cost per sweeper, you should be able to further categorize these costs into expenses which always apply (fixed costs such as payments and continuing labor), and costs associated with use (variable costs such as normal wear items, preventive maintenance, oil changes, fuel additives, gutter brooms, flaps, runners, hoses, fans, main brooms, elevator flights, sprockets, mechanic's labor). Don't forget that your sweeper is depreciating, and that repair costs will increase over time. This should bring you to a cost per hour or day of a non-operating sweeper, and an added variable amount for one which is in operation.
In addition to these are your amortized management costs; building expenses for both shop and office, any other types of insurance you carry, payroll, taxes, licensing for drivers (including physicals and expanded record-keeping for drivers of larger sweepers for which CDL's are required), training costs, uniforms and office supplies, vehicle and business licenses. Then add in any other costs that you have which aren't listed, and don't forget to include something as your return on investment (which is different from profit). By the way, whether or not you bid municipal jobs, you will find that having a firm understanding of all of your costs will help you to run a much more competitive, cost-effective operation.
In any kind of sweeping you must know your costs in order to establish a projected production rate based upon the contract specifications and the actual field conditions. If you think it would be helpful, drive every street. Also consider the frequency of sweeping called for. High frequency (weekly or more) can result in significantly more curb miles per shift compared to low frequency sweeping. Only if you know your costs per hour, and can make an accurate projection about your sweeping productivity (including your time for travel, dumping, filling your water tank, etc.), can you establish an accurate cost model.
When you work up any specific bid, there are other 'non-internal' points to keep in mind. To safeguard your profits, you will want either an escalation clause for your dumping costs, where you can increase your charges based upon landfill increases, or some other arrangement to cover yourself.
Alternatives to an escalation clause can include negotiating, in advance of the bid, for a firm cost arrangement with the landfill for the life of the contract (usually a difficult proposition). Alternatively, try to arrange to have dumping charges covered by the municipality, perhaps on a cost-plus arrangement. Municipal officials are becoming better at recognizing that it is not in their long-run best interest, either, to have a contractor lose money on sweeping because of unpredictable landfill cost increases. Best is to have a clause stating that you are transporting the debris for the municipality, because then you aren't actually taking possession of it. This could become more important down the road if some type of toxins are found to have been in the waste stream.
A small factor, with potentially huge consequences, is whether the job is being bid by the curb mile or by the road mile. The latter is going to take about twice as long as the former. Best for you is a contract that is by the hour; but because this is so open-ended, per hour contracts are usually reserved for the occasional 'as needed' services, or other special situations such as those below.
If you are located in an area with snow, know whether the city uses just salt for traction, a salt and sand combination, or something else entirely. A sand and salt combination is more difficult to sweep than straight salt, and the finer the sand the tougher it will be to get back up and into the hopper. Further, if liquid calcium chloride was added to a salt and sand mixture, the compound that results will harden to a consistency similar to that of cement.
If you are in an area where the amount of traction additive used is based upon varying weather severity, negotiate a factor for that into the contract. For example, you might get paid by the curb mile up to the point where the average, target amount of sand is used, but by the hour if more than that has been put down. If yours is an area where sand isn't ordinarily used, include a provision where the rates change or you go over to hourly if the roadway does get sanded. When you start sweeping where sand and other traction aiding material has been spread, also expect increases in your normal wear items across the board, especially brooms, flaps and fans.
In some areas, you may be able to interest the government agency in recycling the sand you remove. Some have found it to be good business to establish dump sites at varying intervals along a highway. Accumulated sand can be stockpiled in convenient piles, near where it will be needed in the coming winter. After sifting through a screen, the highway authority can re-use the material. They save money and you don't have to haul it some distance to a landfill. Everybody wins.
Watch out if you're asked to sign a contract without special provisions for 'Acts of God.' One story we heard about involved a contractor without such a contract provision who was faced with cleaning up after a flood. Much of the sweeping area had a foot of dirt and sand deposited onto it, and nothing in the contract addressed an exception for such an occurrence! It takes just one such mistake to make you long for your old low pay hourly job working for someone else!
Make a thorough analysis of the condition and makeup of the roads you will be sweeping. Are they crowned? If so, brooms will wear out significantly faster. Oil and chip roads will also be harder to sweep, which means you will have to go slower to do a thorough job. Roads that are rough and have lots of potholes will take longer to sweep.
What kind of curbing does the road have? Are there depressed or raised spots next to the curb which will hinder the ability of vacuum unit sweeping curtains to seal, or mechanical brushes to reach? Some cement freeway medians have a raised curbing that extends out several feet to each side, several inches higher than the surrounding roadway. If they are narrower than your sweeping head, you won't be able to get a good seal. The result is that you may have to sweep it against the flow of traffic in order to get the intake side of the sweeping head onto the raised part. Some operators think such a situation requires hazard pay.
When bidding turnpikes, keep in mind that their entrance/exit gates can represent a real slowdown. Traffic control will be needed while you sweep them, and at only some times of the day can a lane be shut down so you can do the job. Coordination of safety vehicles will take some time, too, and who is supplying them, you or the traffic authority?
Speaking of safety vehicles, what does the job require? Many cities insist on at least one safety car, often equipped with an arrow board, to precede and/or follow sweepers while they are at work. Who supplies these, as well as the dump trucks into which debris is deposited? Will you need more than one dump truck per sweeper, due to the average transporting distance to the landfill?
In municipal sweeping, availability and cost of water is also an important factor. Will the customer supply it free of charge, and also allow access to convenient hydrants? In many situations you will need a water tank truck to go along with your sweepers. They will either fill the sweepers or be fitted with a spray bar so that they can be used to wet the roads down ahead of the sweeper.
All of these pertinent questions, as well as any others that you think might be important, need to be addressed to your satisfaction before you formulate and submit a bid. Above all, don't forget to include a realistic profit margin.
Municipalities which do their own sweeping have an advantage: If their budget is exceeded, a funding source can typically be found so that the sweeping program can stay operational through the next fiscal period. As a contractor, you have no such luxury. Be sure that you have a margin such that you can make some money even when a few unforeseen circumstances arise. There are, of course, worse things than going out shift after shift, in all kinds of weather, performing a job where you are losing money for every hour you're on the job. But not many worse things.
The preceding article was developed with the assistance of three experienced municipal contractors, each of whom is in a different geographic region of the country, but who each share a commitment to being willing to contribute ideas toward helping the professionalism of others in the industry. Their interest, like ours, is to improve the industry as a whole. Many thanks to John Dubbioso, 3D Sweeping, New York; Dean Davis, Dean's Sweeping, Oklahoma; and Bill Burr, Jr., Ven-Co Sweeping, California.
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