In this episode, Sheldon reviews considerations for drawing up a service contract for a longer term project.
Keywords: Sheldon Primus, Primus, Sheldon, Safety Consultant, Safety FM, US, Government, Proposals, Referrals, Marketing, Promotion, PRCS, Permit Required Confined Space, Confined Space Entry, Confined Space Rescue, OSHA Compliance
[00:00:00] : This episode is powered by safety FM. Welcome to the safety consultant podcast. I am your host, Sheldon Promise this is to show where I teach you the business of being a safety consultant. Welcome everybody. Hopefully you're having a wonderful summer 2021. If you listen to this for the first time, Then it is actually July 12 And that means it is the day after I recorded this, July 11th, my sister's birthday, Happy birthday Jackie, I love you truly. I tried to give myself a little bit more time with my recording, but life has been live, so I am not going to forget you and committed to doing this show because it is fun for me. I have a good time. Hopefully you've got a good time and getting some information that you really need, that's going to help you with your safety consulting business. I have not asked in a while right up front. I may have mentioned it here we know and then, but definitely I want you guys to do one thing for me. This has really helped me out whatever service you're listening to me right now on, go ahead and hit that little subscribe button for me. So what that does is anytime I do a new episode, especially if I'm like fooling around with days or times, or if I do a special, like a short or something like that, then you will know through your service that you're listening to me that there's a new episode and therefore you can get on it. But the other side of this is when that service, Spotify, google, uh, google podcast, there's all kinds of itunes where you're listening uh when you do also hit that subscribe more of you that do, then it will make sure that the show gets too many, many, many people. So if you could do that for me and I'll be awesome. And then they too can hear what we're going to talk about today, which is going to be we are going to discuss the nuances of a service contract. Alright, So that is the plan today. We're going to really just discuss the nuances of a service contract. And I honestly think that there's a little bit more to it. Not everybody really knows how to do one. Well, I know for myself, I've also had a disconnect because the way that I've been doing things and I'm going to be honest with you guys. Yeah, of course. I'm gonna be honest with you. Right. No one else am I going to be, am I going to be dishonest with you? That's that's actually not the way you want to address life, you know? Let me be dishonest with you. No. Uh Yeah. When I do a service or a contract, my preference is, is that I would truly want to get in there and do a bang up job for the client and want to get to know them and their workers. I love being able to um call workers by names, you know, second year, third year as I go in and really start to get to know them because that helps stability. Yes, So I'm looking for that. But I'm also, I kind of have, have to be real conscious of my time because I'm a one man band. So therefore I don't always offer service contract because that means I'm coming back again and again in some interval to make sure that this job is getting follow through. So I'm more of the uh get you planned, get you started, check in from time to time and then we'll make sure that if there's any new needs help you had uh there's a big difference when you start thinking about um servicing a contract, meaning I am going to be the person who is responsible on the day to day basis to make sure that this program is implemented. I'm going to follow up with the workers, I'm going to be the person that's going to be there, that is going to guide this thing whenever there's issues or problems. Yeah. As a consultant generally, I like to be on the side of the um the site that is more advisory and then we work with the person who is implementing. So together we were a team but unfortunately I don't have the time for implementation in most cases, in some cases I definitely do what what I'm going to talk about today and that is going to be laughing, you know. Uh What are we going to do today is truly going to talk to you about, how are we going to structure those contracts when we do have to stay in a little bit longer and work whatever the project is from time to time. So this is going to be the considerations for what you would call a service contract. Next 1st consideration. Like everything is how much is this going to be worth for you? Yeah, I always say don't really break it down into time as far as your, how much time you're going to get for money back, but in some cases, in a service contract, you're going to need to give the client a specific amount of time that you're going to be there. So what I do suggest is this, I would start the project and let's give it, for instance, just so it's a little bit easier. So let's say that you, you go in and now you're going to have a primary job of teaching. Uh these workers permit required confined space. So those are the spaces that are so small that it takes special uh consideration when you're doing work in these spaces. And then on top of that it has some sort of hazard that could injure or hurt someone that you're now going to end up having to take even more consideration and planning and making sure you have rescue services and testing the atmosphere. So it's a tricky program. Right? So let's say you're initially going to train people on this or even developed the the permit required confined space entry program. Yeah, maybe this is a company that's really new at getting serious with safety and they don't have a safety officer yet, but they need someone who's going to be available and they're going to check out entries themselves as an entry super superintendent. You're probably not going to be the authorized attendant uh in this case but because it's going to just take too much time for you just to be at one side all the time and then at that point you're an employee. But you may actually have a contract to be the superintendent that's going to supervise the safety and health of different entries. So in those cases now you're going to need to do a service contract. So the primary contract which was the training branched off into a service contract. So that's the idea that you're gonna um I'd like to say four X. Meaning you're going to get the most out of your experience with your with your client and you want to get four times the actual interaction financially. Yes But then also you're you're building clientele that way too. So it helps you in both sides. So now you're going to do the second job for this person which is going to be administrating a long term and I would start with a term. So this is developing your service contract, start with the term. How long do you want this thing to happen? How long do you want this thing to go for it? So you set up your own terms working out with the client to so this is going to be after a good discussion on what they want. You really first and foremost need to be clear on what they're looking for. If their expectation is they're looking for someone to be at each and every entry from beginning to end and they do seven of these a day. Okay. They're looking for someone who is an employee. However, if they want to contract that out and they have several these sites you're going to now start looking at. Am I going to need to hire someone to help fill this contract? What happens when I have my weeklong classes? Who's going to take up this job? So that's another consideration that you're going to need to have when you're thinking of um the project as a whole. So first consideration. Yeah. What does the client really mean? And then from there go back and forth. Because there might be a case where you can say you don't need an entry supervisor for each one of these. You may need an entry supervisor to help plan but you have authorized attendant there. Or maybe you could have an in house superintendent. And I'm going to be the head superintendent where I get to go around to more places. Bye. I'm going to also lead your person and teach them what I know because that's generally the give and take your going to impart your knowledge to this client and therefore when they're getting that, that's that's the transfer of information, which is the consulting side that you get paid for. Yes. So the other thing that you're going to end up considerations is truly, how long is it going to be? So this is going to be straight our time factor in there. And then the other thing you're going to have to think of is if you're going to do a day rate or are you going to do a quarter rate a project rate? Are you going to do a rate that is based off hourly, which might be cumbersome. But if you're doing that, let's say you're going to give a weekly rate, you must also say our time for this week is We're going to work four days a week, that's our wickedly rate. However we only work four days a week and it's going to be six hour days because we get all our lunch and we do not count the drive time or something similar to that. However you want to structure the contract but you're going to need to think of that. If there's any tolls, you're going to have to factor in what the tolls will be from point A. To point B. If you're doing this yourself versus if you're going to hire somebody, I would always say count it as if you're going to hire someone for this because even though you may start doing it yourself eventually, if this is a going concern, you're going to end up having a switch with someone else and you can now do a 10 99 which is in the U. S. Is you hire somebody and uh the I. R. S. Document that they need to find in the I. R. S. Versus Internal Revenue Service there, the tax base of the U. S. Uh So uh the I. R. S. Has this form number that says You if you are a subcontractor and you're going to charge X. amount of dollars or more than now you have to be uh you have to pay taxes. And this is a tax form that you need to receive 1099 miscellaneous. So it means I am I'm not the employer or employee, I'm actually just an entity. So that is also part of the consideration. If you do need to hire someone W. two which is a tax form says you are my employee Or if you're going to get someone as a contract at 1099 and that's also a consideration for your proposal because if you are going to hire people for this, you're going to have to think of things that are outside of safety realm, the human resource side. So you're gonna have to do whatever you need to there that costs money, energy and time figure that part out. And then the other thing that's going to be towards any kind of contract that you may need, you may actually have to figure out as far as equipment. Do I need to hire out someone who is the industrial hygienist? Or do I need this piece of equipment that has to be calibrated every uh X amount of months? How much is that gonna cost? Uh where am I going to take it to? And then we got a lot of in their own right, so you can see where this is going gang, right? You can see that the information they're going to give you a key hard and fast. Actually I didn't write this down. I should have maybe, but I'm just pulling off of my, my own noggin here on some of the things that I've, I've had to do in the past and that's why I'm not giving you a list or an order. I'm only giving you considerations that you should think of when you're putting together an actual service contract length of time is one that you're going to need. So like the time can be again monthly, quarterly, weekly. It's going to be towards the client's needs and then also towards what you can do. So let's say you're planning on hiring somebody, you might actually need to set maybe the first quarter I am going to do this and myself. However, I'm going to phase out and by the second quarter we're going to have someone else in. So that means you're going to have to start looking to hire somebody or at least find someone to take over that contract. Like probably at the signing of the contract because you're going to take you three full months to find someone you trust and get them trained and integrated in. So that's also going to be time, energy and money that it takes to paste them on to get trained to take over that contract. So you have to add that as a consideration in your proposal, all the things that you're going to want to I think. And this is just details of the proposal itself. A detail such as what is included in this monthly services. It just going to be monitoring to confine spaces or you're going to help write programs. Are you going to help uh do evaluations. Are you going to do job safety analysis that goes with it? Are you going to train as well? So those are all the considerations and those are some of the benefits or parks or whatever you wanna call it for using you as a consultant. You want to put that in there so that they could, the client could visualize what they're paying for as a service contract. I usually put in my service contracts when I do have to do these some sort of time period and I'm training the replacement. I usually do service contracts contingent of I am teaching your, I'm coaching your worker that they're going to take my place when I get when I'm done with the contract. So that's the the idea that I usually have uh, when I, when I set that up. So I would also like to say that truly, if you're going to think of the service contract as you are doing this job temporary for the time being. But you want to make sure that the activities you're going to do, the things that are going to be written out in this contract is going to be something that will eventually be formalized in this client system and it's going to just take you out and plug in the new person that you're putting in the time to train. Yeah. So that means you might have to do some sort of uh, the service contractor may have some sort of um, document, let's say behind it, that will outline what you're going to do. It could be a service plan and sometimes I put that in the addendum of the contract, meaning the main contract is the structure. Here's what my goals are, here's what yours are, here's what I have to provide. Here's what you need to provide and all that stuff is in the proposal section. So if you have not seen or heard my um couple, I've done a couple over the years of proposals, how to do a proposal, then go back and listen to that one. It's going to help you. So then the next thing that we're going to do another thing, there's another one. There's always another big, great uh is putting this thing together. I like to make sure that this proposal is gonna look real good. Uh One of the things that is going to help aesthetically is when it comes to the payment portion, uh do a nice little grid and just an insert of a chart and the top line is going to be the heading category and then you're going to right underneath it. Uh you know, the heading with what the project is, how much time is going to take, estimated? And um, you might even say something to the effect of uh this is the proposed time that we're going to begin so that they can get a full idea as they're looking through this contract. Any contract that you do, any proposals that you do try to think ahead of two things. One, what is the client's needs? And am I addressing it in this proposal? And then secondly, is, and this is just honestly for yourself. And I do want you to be aware, he still have to think about what am I going to be liable for also meaning what am I promising? Am I going to over promise something that I don't have the capability of delivering and you know, that is going to be the key to uh, in service contracts. You're going to have a end in the beginning of the service. But there's other services, like, let's say you're going to do a video training and now you're delivering them some video. Are you going to update this in a certain time period? Are you doing a service of that? That's one of the things that is all right. If I'm doing an annual update and that you just gave these people 15 videos now, I have to put in that contract video production time annually and also time that it takes to go through the standard and update and all that stuff. That's considerations for service contracts. I gave you guys a whole bunch of things that I've thought of before. Things that I've used in other considerations. I am trying to make sure that I'm not forgetting anything because I want to make sure that you guys have all the information you need. But I would say when your pricing always do, even though you're gonna break things down into hours apart, does your pricing in the project pricing? So let's say some hours don't work out and you're like less hours, but you already finished the main objective. Why do you need to stick around for more hours? So, in the contract, some way you should have some some good leeway for, for time and not where you're matching direct hourly cost to labour? That's going to mess you up. Alright. Project price. A project price. So hopefully I helped you with this one. I really want to make sure that I am giving you guys some food for thoughts and considerations. That's going to help you. If you have any questions or comments, go ahead and send me an email at Sheldon at Sheldon Primus dot com. Sheldon at Sheldon Primus dot com. We've got some events coming here and there. So also check the Sheldon Sheldon promise dot com for any updates. All right. You know what to do. Go get them. This episode has been powered by safety. FMS. Mhm. The views and opinions expressed on this podcast or broadcast are those of the first to disgust and do not necessarily reflect the official policy or position of the company. Examples of analysis discussed within the past hour are only examples. They should not be utilized in the real world as the only solution available as they are based on very limited and dated. Open source information, assumptions made within this analysis are not reflected at the position of the company. No part of this podcast or broadcast may be reproduced stored within a retrieval system or transmitted in any form or by any means mechanical, electronic recording or otherwise, without prior written permission of the creator of the podcast or broadcast. Sheldon brightness. Yeah. Mm. Did you use an opinion? Mhm.