I totally agree that there are certain additional costs; but I’ve got to disagree with your valuation of them.
All the costs you describe are operating costs for the company. They cannot legitimately be passed on to the customer.
Even if one considers operating costs being shared across every job that company undertakes in the year there is absolutely no way in hell that £550 for a job to swap two fluorescent tubes is justified.
“Sure, I’ll come and install a couple of double sockets for you… But you’ll have to pay for my insurance, certification, company car, I want two weeks of holiday pay, my test gear is due for calibration…”
It wouldn’t fly in the private sector… It wouldn’t fly with the tax man either.
But it works in other industries as well
Your Car Dealer maintenance charges over £100 per hour labour - jobs are charged by 1/2 hour regardless of how long they take
My builder charged my fixed price per sockets etc
And it is a basic rule of business Profit=Revenue-Cost
They won’t appear on your bill, but a proportion of what you pay will go towards covering them.
A self employed electrician may charge £100 PH + parts, but how does he pay for his tools?
Does he:
a) Take the costs of his tools for a year out of his gross takings, being sure to make sure his labour rate covers his other work costs, as well as pay them a reasonable wage, ands then claim the VAT back for them.
Or
b) Some other way that doesn’t involve spending a penny from his gross takings?
Costs like that are always factored into the bill, even if they don’t appear as an itemised amount.
Yes but not £550 to change 2 light bulbs, it would be a percentage of the value of each job not add £300 onto tat one as I need some work done on the van.
I bet those contractors wouldn’t charge the same to a proper customer.
They look at the going rate of their competitors to ensure that they’re not pricing themself out of the market and then they charge a fair rate for each job.
The customer has to pay a fair price and the company pays the costs.
They know that their income for the year is going to be influenced by how many jobs they can take on, multiplied by that fair price.
They shop around to ensure that they don’t spend more than they can afford to on supplies, tools, &c.
The costs of tools, professional registration, &c are paid and if at the end of the year those costs have exceeded the income, they file a loss for the year.
This is normal. Many new business file a loss for the first few years. Consider also that they will offset those costs, and any losses, against their tax.
It’s important also to consider that tools, a van, &c are not ‘costs’ in the same sense as say, buying lunch or paying for insurance… They are purchase of assets. At the time of purchase your business equity hasn’t changed. You’ve spent £500 cash, but you’ve gained £500 worth of asset.
Those tools might be expected to last for 10 years so you can’t decide “Its an expensive month… I’d better stick £500 on these next two jobs”.
Say I make a £500 loss this year because my costs were higher than expected, or because I didn’t get as many clients as I hoped… That’s £500 less tax liability next year.
No self-employed electrician (or any sensible private business for that matter) can pass all their costs onto their customers if that means that their bill is going to be 5-10 times higher than it should be. They won’t stay in business.
Only in these little havens where crooks get public contracts does that behaviour fly.
let’s say that the contractor did have to travel, and it ended up being a half day job. That’d mean the contractor charges £1100 per day. Assuming they take 6 weeks holiday, + 2 weeks for Bank Holidays + other closures:
550 * 2 * 5 * 44 = £242000
I have no idea about electrical contracting. Is this a reasonable estimate for running a business? (I’ve ignored the parts cost, because they’re such a negligible amount of the total cost of the job)
Fact of the matter is if you quoted for the task and they came back with that as a cost you would laugh at them. Not pay it and then invite them back again.
As far as I’m aware, for RFCA jobs it’s a fixed cost per job. The contracts are put to tender, the company bids, is awarded, and the work is carried out. The profit on the quick and easy jobs like changing 2 light tubes helps offset the cost of when you get there, and the two fittings + wiring need to be replaced as well.
Look, I get that. But they will cover their costs at some point from the money they charge the customer, won’t they? And those costs will be factored into the bill that the customer had to pay. The whole point of going into business to to make a profit, and to do that, income needs to exceed outgoings.
Companies contracted to RFCA have additional hoops to jump through before they can bid for jobs, and once that is achieved, they can then add a premium to their bid.
Of course you wouldn’t put in a quote. But if these outgoings don’t need to be covered by the customer, where exactly is the money coming from? And if making a profit is so distasteful, Why are all tradespeople not £Min Wage + Parts?
My mate is a corporate lawyer. His firm charge over £500 per hour for his time. And yet, he doesn’t get paid anything like £500 per hour. Where do you think that “missing” money goes?
Yes. But not to the extent that is allowed to happen in some of these RFCA contracts.
You can’t claim that £550 on a job to swap out 2 light tubes is fair because it also covers “costs” and expect to be taken seriously.
How high are their outgoings if they need to add several hundred pounds to every tiny job?
Take the £500 set of tools as an example… Over a 10 year life expectancy that’s £50 per year.
If I have 100 customers per year that’s 50p per customer I have to clear to pay for my tools.
I don’t know whether I’m going to have 100 customers, or 50, so I just have to make an estimate of what I can reasonably expect. Then I have to make a judgement call on what my labour charge will be.
If I get it wrong I make a loss… That’s how running a business works.
This is why it’s not such great value for money… Because instead of a fair bidding process for a fair price there are obstacles placed in the way of perfectly capable companies and those that are granted the golden handshake are allowed to charge outrageous amounts.
What’s worse is the regularity with which contracts are given to incompetent, fraudulent, even criminally negligent companies despite the vast number of complaints against them.
It’s not just RFCA of course, you see it with local authority too.
Certainly not the way it works down here. I’ve had them come and change fittings and the price was quoted for (I know because I had to go and open for them to do the quote as they refused to go to Wing to collect keys!).
They then proceeded to replace the wrong fittings and were then paid again over my protests to come and change the correct ones!
Sounds like my door handles bloke…
Invent work. Do it poorly. RFCA pay again to put it right… And the irony is that we’re told we can’t do self help because they won’t pay to put it right if we mess it up.
I recall opening up for an electrician once to swap one of the storage heaters onto a constant feed instead of timed.
Literally a 10 minute job moving a wire from one bar to another. First it took the lad about an hour to swap it only to discover that all he’d done was to move the neutral so naturally it was still on the timer.
Then he spent another 45 odd minutes “fault finding” (I tried to politely explain to him what he’d done wrong, but he didn’t get it). Then another hour to do the job properly.
Add in the lunch break and the fact that he was an hour and a half late arriving… and I’d lost the best part of my work day.
Then he announced that they’d need me to open up again on another day that week so that the boss could come in to inspect and sign the job off.
What I should have done is put an invoice in to RFCA for my time plus £500 ‘costs’
The great armoury swap over was a laugh, they couldn’t get the old one out so just bolted the new one next to it.
I pointed out that this was unacceptable as it had taken 1/4 of my stores out of play.
WeXO was giving it “but we can’t pay them to do the job twice” it took words of 1 syllable and coping in the ARC to get the message across that we shouldn’t have paid them at all yet as they hadn’t done the job once yet.
Worst part was that she had overseen the works being done!!!
I’d say that he can’t be criticized for taking a lunch break, but the system which required me to give up work for a day to open the building could be. …An additional hour whilst he has his lunch and I’m losing money doesn’t sit too happily with me.
I’ve only been asked once, I think, to attend the unit to let someone in, and that was because we’d just had the padlocks to the gate changed and WHQ hadn’t been given a key yet.
I’ve been down at the same time as contractors but that was mostly a coincidence!
I wouldn’t say it was totally an ATC problem though… RFCA own the building - It’s their property they’re repairing, not ours.
We did eventually get a new WExO and the process changed so that unpaid volunteers weren’t being expected to do someone else’s paid job. I don’t mind a little extra public money being spent for the guy to collect keys on the way to the unit instead of me losing a wage.
Of course then we ended up with a whole other set of problems because they wouldn’t tell us when people were turning up…
“I see they’ve been in to carry out the portable appliance testing sometime this week… It would have been useful to know they were coming so that I could have left all the portable appliances out for them. They were locked in the store, where they live, so the company will have to come back for a second visit please because I need these tested…” More needlessly wasted public money…
Same when at Lyneham - there were designated amounts for meals depending on where you where in the world. It used to be a “rates” cash allowance paid daily / accounted for by the imprest holder. Any surplus cash not wanted would be handed back the next day & used to offset the hotel accommodation bill) couldn’t take “local” dosh back to UK. You had plenty of time on the flights to do the paperwork.
This worked very well across the range of personal meal / drink requirements (steak, burger or whatever) & more importantly, whatever time you wanted to eat - or in the case of the MAMs / Police / engineers / pax / what time that you find to eat! You could partake in the hotel, choose room service, or go out to a local facilities - steakhouse or the nearby “Scottish restaurant,” your choice.
System was changed then to “actuals” - the imprest holder paid for what you ate / drank (a nominal amount of alcohol was acceptable for an evening meal, with starter, main course, dessert & cheese / biscuits). This also meant that the “non-crew” personnel had to eat in the hotel.
Naturally, this was a huge faff for timings, but more importantly, as there was no cost restriction, guess what, steak, lobster, rare local delicacies became the order of the day. I paid (or rather Aunty Betty’s AMEX paid!) for one meal in Oman, I think it was £2000 for 10 crew - previous dinner allowance was something like £50 per person. We didn’t actually rip the guts out of it too much either, although the 3rd bottle of Chateau Neuf du Pape did edge things up a bit.
Lo & behold, the accounting wallahs reverted back to “rates” within a month; their budget had used up about 4 month’s of planned costs in only a month.
The £550 price tag for two tube changing does seem excessive…
…is there not a “hourly rate” available for RFCA jobs?
based on a quick Google fluorescent tubes can be bought as cheap as Sub £10.
lets say, its £15 per tube, simply because its a Govt contract and a bit of mark up.
costs are £30.
the job would take less than 10 minutes, but in the real world anyone would charge half and hours work…and to be fair the time on site would be closer to 30 minutes once gates and building opened, collected ladder from the van and found the room, done the ten minute job and reverse the entry.
knowing these type of contractors are never local lets assume an hours drive each way, so 2.5hours of “time” to pay for.
£550 - £30 for the tubes = £520 (cost for time)
at 2.5hrs for the job = £208/hour
now that is silly money in anyone’s book as an hourly rate - i would be expecting time with someone with either Dr at the start of their name or used to wearing a curly wig at that price*
i don’t know how these invoices are priced up, but there must be an audit system somewhere that is failing if it is passing this kind of job off as “ok”
We know that a car mechanic charging £60/hr private garage or £100/hour for manufacturer pays for more than just the hourly rate. I do get the argument that the van, the insurance and tools and everything that comes with employment needs to be paid for…but £200/hour is excessive when compared to the competition…
(does it really cost that much to get, and then maintain a Govt contract with security clearances etc. to justify this high hourly rate?)
*£200/hr at 40 hours a week, 52 weeks of the year is a salary of £432k!