New Contract Pricing

[Joarif]

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[HotelSecurity]

I really really wish you luck! I've worked in-house since 1977 so I can't help you on you main request. But something you wrote wants me to warn you straight out. 'i'll get weekends off'. This warning comes from an Assistant Director for 3 hotels. DON'T COUNT ON IT! When (note I said when, not if) one of the weekend people can't cover a shift, guess who will probably have to? Good luck anyway!

[Mr. Security]

I live in southern California, I'm 25 years old and have been doing security since I was 18. I have never been able to get a regular 1st shift because they are always given to the highest seniority. So, I got my manager license and I just got my Private Patrol Operator license as well. I've got two interested parties in giving me a chance and I don't know how to price or writeup a security contract. One is a manufacturing facility that wants a swing shift guard and a graveyard guard monday-friday, and they want 2 guards pulling a 12 hour shift on saturday and sunday. The only request they have is that the guards do hourly patrols and check in/out deliveries mostly mon-fri. The other is a private school that wants a guard 7 days a week from 1700-2200 to open up and close classrooms for several events/classes throughout the shift. How should I price each one of these contracts, and for how long should the contract be knowing that I am starting out? Also, from what I have heard most security companies charge a deposit, for what reason? I will be offering unarmed services, but I will allow graveyard guards to carry mase. I know this doesnt solve my 1 shift issues but at least I will be working for my own and can work one shift which is most convenient for me, including weekends off!

This sounds like a job for Superman....I mean N.A. Corbier. Seriously though, this is right up N.A.'s alley.

[Michael Ledgerwood]

Never done contract pricing but might be able to give you some advice that might help. 1st, look at your expenses. You got employees, insurance, fuel, vehicles, etc. not to mention rent or lease fees and utility fees etc. Take these fees and add them up on a weekly and monthly level. You will then have to add in your profit. So for the school, thats one guard at say $10.00/hr + insurance, taxes etc (well say 250.00/mo for those). $10.00 x 5 = 50.00 a day x 5 days equals 250 a week or roughly $1000 a month. You will want to make a profit so lets say $500.00 for that. That leaves us with a rough total of $1,500/mo. $1,500 a month would actually be a great deal. Like I said I have never done this but hope some of it might be useful to you. As mentioned N.A. Crobrier is probably the best one to give you advice.

[N. A. Corbier]

First question: You have corporate counsel, right? I.e. a lawyer. Your insurance company also didn't request a sample contract before issuing you a policy?

Your contract is going to cover more than who gets paid and who works when. In fact, all your contract should cover is that you will provide a set of services, that you will provide a set number of man hours per billing cycle, and the days and times that the coverage will be. The shifts and the rest are your responsibility, you could have rotating three four hour shifts, two eight hour shifts, or one twelve hour shift cover the alotted man hours you promise in the contract to work.

Your permitting your graveyard shift to carry an intermediate chemical weapon, but not your other shifts? Differing standard of care is established right there, as one shift provides a greater level of physical security (being armed with intermediate weapons) than another (not being armed with any weapon at all.)

Edit: I need to address differing standard of care. If the guard during the day is attacked, he can sue you and the client for failure to negligent standard of care. You allow one shift a weapon for protection, so obviously the site is dangerous. If the client or an invitee is attacked during the day, they can sue you and the client for negligent standard of care, because you did not equip your day guard with the same tools to protect people as your night guard.

The person you need to be asking about this is your lawyer, and your insurance company. Your insurance company will tell you what services your covered to perform. Do you have a liabliity policy for intentional acts of violence? If not, then the guard using his or her mace will NOT be covered by your general liability insurance.

Are you protecting people or property? Do you have a contractual duty to enforce California Law, or simply a contractual duty to protect the property from loss?

These are all things that are addressed in the contract.

As far as billing, did you quote a price during your proposal, or do you simply know these people and they're willing to hear a proposal from you?

You need to develop a man hour billing rate for an unarmed, fully equipped, security guard. You then need to itemize what expenses you will be paying for internally, and what expenses you pass onto the client.

Example: You will buy log books or laptops or whatever they write logs on yourself, you will store them yourself once they are filled and completed for two years, and you will furnish whatever incident reporting forms your client requires. This will be an internal expense, as this is part of the "fully equipped guard."

You will purchase a cell phone and cell phone plan for each site, and charge the client $__.__ dollars per billing period for issuing communications to the guard for the purposes of the client contacting him/her, the guard calling the police/fire/EMS, and the guard calling the client contact for non-public emergencies such as water leaks, etc. This is a external expense that the client pays for, as the client wastes (I mean utilizes) money on calls to and from the guard.

If you haven't gotten past the proposal part, don't worry about the contract.

As far as owning your own company, forget about weekends off or anything else. If something happens, its your company, you better be there to cover it. Especially in the first few months.

[N. A. Corbier]

Things I can screw up in a contract...

1. Stipulating that a specific employee will provide a specific shift, instead of billable man-hours and times that an employee will provide coverage.

Why? Bob gets sick, and is replaced by someone else. Client throws a fit because their corporate counsel senses a way to default on the contract, stating the you are in material default of your contract because the same guard who started the watch did not work it fully.

Solution: Billable Man-Hours. Company shall provide services to the client from the period of 1700 hours to 2200 hours, consecutively, from Monday to Friday, consecutively. Company will provide services to the client from the period of 0000 to 2359 hours, consecutively, from Saturday to Sunday, consecutively.

2. Creating a weak or illegal standard of care through services statement.

Why? If you note that the company will "provide security services to the client," that can be taken to mean just about anything the CLIENT wants it to mean. That means that if something happens, they'll say that you were expected to provide protection against threats to life by illegal activity, by direct intervention. Why can they say this? Because that's "providing security services."

Solution: Determine with legal counsel and insurance provider exactly what services you will be providing. This will establish the contractual duty the employee has, as well as the company, to the client. Good examples of duties are very specific, such as, "to provide protection of property through on-site observation and reporting of detected hazards and situations as required."

3. Training Material and Post Orders are part of the contract!

Why? What you train your employees in, and order them to do in post orders, establishes part of the standard of care. Take the above contractual duty. Now, add a training doctrine that states the night-shift guard will challenge all trespassers and either call the police or arrest them. This is entered into the post orders. The day shift guard's duties towards trespassers are not enumerated, and it is assumed that the guard will tell the client.

You have just negated your contractual duty to provide observation and reporting only, as you both train your employees (even if just one shift) to arrest (intervene), and your post orders direct at least one guard to intervene instead of report.

Solution: Ensure training materals are consistant with every contract, and that post orders are based in reality of the contract, not the client's "new" expectations. If the client wants to amend the contract, they can submit an ammendment and you can sign it.

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As to a deposit, I've never heard of this. I've seen clauses that if a client is in material breach of contract, they agree that the contract shall be null and void, and that they shall immediately be liable for the balance of the contract due.

Your not in a position to demand money from your clients as collateral, your new. I'm surprised that the client isn't demanding a security deposit against negligence from you, in the form of a surety bond.

As to the length of a contract, the standard is one calendar year from date of signing, with the ability for a client or company to terminate the contract at 3, 6, 9, and 12 month intervals, and renegotiate the contract at 6 month intervals.

[ff000525]

Ok, N.A., here's one for you. Could a company have armed (lethal and non-lethal) guards and use guards who only carry non-lethal protection at the same site? Would thier jobs descriptions have to differ ie, the armed officer responds to intrusion alarms, trespassers ect. while the the unarmed officer is basically an observer/reporter?

[N. A. Corbier]

Ok, N.A., here's one for you. Could a company have armed (lethal and non-lethal) guards and use guards who only carry non-lethal protection at the same site? Would thier jobs descriptions have to differ ie, the armed officer responds to intrusion alarms, trespassers ect. while the the unarmed officer is basically an observer/reporter?

It can happen, with a properly worded contract. The armed officers are part of a "response team," and the unarmed officers report incidents to them as opposed to someone else.

Remember, there is nothing in the law that says a security person must "observe and report" to the police. They can observe and report to whoever the contract specifies. There is a law in Wisconsin making it a crime to fail to report in a timely fashion any violation of the law to the police (WSS 940.34)

Kenosha County Courthouse is slated to have an armed guard, however, the guard is not to be armed in the building unless a "situation" occurs. The weapon is to be trunked in the POV of the guard. The armed guard would need a certificate in writing from Sheriff Beth stating that he is authorized to possess a firearm or dangerous device within the courthouse facility, as well.

Keep in mind that this armed guard is to have a firearm ONLY. No other weapons are authorized, and other weapons are against state law without the Sheriff's permission. You can see why I find this ridicilous, why specify that you need an armed employee if they are not permitted to carry their weapon on them?

[ff000525]

It can happen, with a properly worded contract. The armed officers are part of a "response team," and the unarmed officers report incidents to them as opposed to someone else.

Remember, there is nothing in the law that says a security person must "observe and report" to the police. They can observe and report to whoever the contract specifies. There is a law in Wisconsin making it a crime to fail to report in a timely fashion any violation of the law to the police (WSS 940.34)

Kenosha County Courthouse is slated to have an armed guard, however, the guard is not to be armed in the building unless a "situation" occurs. The weapon is to be trunked in the POV of the guard. The armed guard would need a certificate in writing from Sheriff Beth stating that he is authorized to possess a firearm or dangerous device within the courthouse facility, as well.

Keep in mind that this armed guard is to have a firearm ONLY. No other weapons are authorized, and other weapons are against state law without the Sheriff's permission. You can see why I find this ridicilous, why specify that you need an armed employee if they are not permitted to carry their weapon on them?

Sorry momentary amnesia, then I remembered that I live in a state where cops are the next best thing since sliced bread and all us other "civilians" are too dumb, wild, and crazy to tout weapons such as guns, baton, or tasers....**OK sarcasm off** Regardless of the fact that I've been shot at more times than all my CJ instructors put together and that while K-town cops and sheriffs requalify with thier firearm every 3-6 months, I still put more rounds through my gun per year than most of them......

[ff000525]

Keep in mind that this armed guard is to have a firearm ONLY. No other weapons are authorized, and other weapons are against state law without the Sheriff's permission. You can see why I find this ridicilous, why specify that you need an armed employee if they are not permitted to carry their weapon on them?

From what I heard, the under the table understanding was that the security company was going to get off duty sheriff deputies or cops to cover that one armed spot, which is what the justices wanted in the first place.

[N. A. Corbier]

From what I heard, the under the table understanding was that the security company was going to get off duty sheriff deputies or cops to cover that one armed spot, which is what the justices wanted in the first place.

Everyone there was "supposed" to be retired deputies. Of course, if the one armed spot is an off-duty sworn LEO, then that off-duty sworn LEO may carry a concealed weapon on his person, and be "armed" without being "armed."

Of course, that's completely silly to me.

If they wanted police officers, they should of had Sheriff Beth perform the service, and pay for on-duty law enforcement officers. This state has a very bad case of "I want a cop, but I don't want to pay for one." So, we'll just hire an off-duty cop, put him in a guard uniform, and he retains all his police powers in someone else's uniform!

[IB107]

not sure from where your from... but lets play a few actual numbers... while i was working in SF for a contract company, one of the accounts near gaints staduim, a small business type school sorta like a itt tech, but not itt tech, paid 36 hr to the company, the guards saw 10 hr of that, out of that 36 health insurance, union fees, overtime overhead, was taken out of that, so lets say the company gets 26 of that a hr, 6 hr for medical or so, 5 more dollars a hour gets put away for ot overhead/bonded insurance etc, thats 11hr ,union fees about 2 and hour, so the company its self gets 9hr.. or there abouts.. these figures are inacurate as i dont know exact amounts of what was charged, but i do know it is broken down to a formula simlar to that, at the time standard pay was 10.00 hr for us, it should be higher now in SF.

I was privy to this information as it was "posted" in a binder on that particular site. a binder that was left "unintentionally at the guards desk" by a supervisor :P

and a fellow officer got nosy on the swing shift and pointed it out to me on grave...

but yeah have fun!

[hrdickinson]

Joarif:

Relative to pricing, we just released our new contract security pricing software that is posted in the Vendor Forum.

What you need to do first, however, is prepare a business plan for the first year on a monthly basis. Your DIRECT expenses such as payroll, taxes, insurance, benefits, uniforms, recruiting, training, license, registration, equipment, etc. will be built into the bill rate for each new job you sell. Those expenses increase or decrease as you add or lose business. So, you first have to estimate your monthly FIXED expenses such as rent, communications, administrative and clerical salaries, indirect vehicle expenses, etc. because the sum of these expenses for a month or a year is your breakeven point. In other words, it is the amount you have to have leftover after you take your billings and subtract your DIRECT expenses. This is also called your gross profit. Your gross profit should equal or exceed your fixed expenses. Chances are it won't for the first few months. You also have to consider that it may take 30 - 40 days after you start a contract before your new client begins paying you. Therefore, you have to have enough cash resources to pay your payroll, taxes and the rest of your expenses until the cashflow begins. This is called your invested working capital. I have security company clients that get paid by their clients immediately but the only time I have seen "deposits" is for temporary jobs and then it's a must!

I hope this helps you a little. If you want to discuss this a little more, my contact info is on my website at www.hrdickinson.com

Good luck,
Richard

[N. A. Corbier]

I can say that a deposit for a temporary job is definately a must. I worked a contract "emergency call out" at a night club once. If we, as the security detail, had not purposefully tracked the client down - we would not of gotten paid. He tried to remove himself out the back door, with his own bouncer detail providing cover. It didn't work.

[scops8273]

Pricing and Contracts

I definitely can help you with pricing and contracts. I have been in security for 16 years and have been an operations manager for a large security company for 5 years. I would love to share some resources and knowledge with you. Please feel free to email me at [email protected]. I have some items that would help you price specific contracts. In your original posting there were examples that we deal with all the time at Securitas USA. I would love to talk to anyone that would need assistance or just talk shop. I have a resource network as well on yahoo, so please check it out as well. Especially the link and file sections. It can be found at http://finance.groups.yahoo.com/grou...guid=142118729. Thanks.

Jeff
[email protected]