BUS505- Assignment 4: Proposal Preparation Plan
Discuss and prepare a work breakdown structure (WBS) showing a condensed version of cost estimates, using the price to win (PTW) cost approach. Use the example shown in Chapter 14 of the textbook as a guide. Abstract In this paper we have prepared a work breakdown structure (WBS) showing a condensed version of cost estimates using the price to win” cost approach. We also describe the strategies that can be implemented to prevent unethical practices and promote compliance with federal guidelines in the selected contract type’s performance risk and profit incentive. Finally, we developed some ground rules and assumptions that are conditional to the cost estimate for our priced to win approach. Discuss and prepare a work breakdown structure (WBS) showing a condensed version of cost estimates, using the price to win (PTW) cost approach. Use the example shown in Chapter 14 of the textbook as a guide. The Warrior Cleaning Service Company provides a basic industry service that is quite standardized requiring no special technique or technology to accomplish. As such, the level of skill required to execute the functions listed in the WBS are considered to be low. Our strategy is to use a Price to Win (PTW) cost approach; therefore, we anticipate some flexibility on Direct Labor and Profit. Solicitation #AG-3604-S-17-0001 was selected from the FedBizOps website (FedBizOpps, 2016). The WBS for this proposal response is listed below in Figure 1: Figure 1. Work Breakdown Structures 1.0 CLEANING SERVICE 1.1 Janitorial Activities 1.1.1 Daily 220.127.116.11 Restrooms 18.104.22.168.1 Disinfect all fixtures/hardware/walls/floors 22.214.171.124.2 Service all paper toilet/soap dispensers 126.96.36.199.3 Empty waste receptacles/replace liners 188.8.131.52 Private Offices 184.108.40.206.1 Empty waste receptacles 220.127.116.11 Conference/Mail Computer rooms 18.104.22.168.1 Clean table & countertops 22.214.171.124.2 Process recycle bins 126.96.36.199.3 Vacuum/mop floor 188.8.131.52.4 Empty waste receptacles as needed 184.108.40.206 Laboratory 220.127.116.11.1 Clean/disinfect area as requested 18.104.22.168.2 Replenish hand soap and towels 22.214.171.124.3 Empty waste receptacles 126.96.36.199 Break Room/Kitchen/Shower 188.8.131.52.1 Process recycle bins 184.108.40.206.2 Clean/disinfect tabletops/fixtures 220.127.116.11.3 Mop/Vacuum floor 18.104.22.168.4 Empty waste receptacles 22.214.171.124 Drinking fountain 126.96.36.199.1 Clean/disinfect drinking fountain 188.8.131.52 Elevator 184.108.40.206 Clean/wipe down interior cab surfaces 220.127.116.11 Mop/Vacuum floor 18.104.22.168 Lobby/Hallways 22.214.171.124.1 Vacuum/sweep area 126.96.36.199 Exterior 188.8.131.52.2 Pick up Trash on Walkways/Parking lot 1.1.2 Weekly 184.108.40.206 Laboratories 220.127.116.11.1 Mop floors in Lobby/ Stairwells 18.104.22.168.2 Clean/disinfect door hardware/handles 22.214.171.124.3 Dust lobby surfaces, corners, spider webs 126.96.36.199.4 Clean any glass doors, panels - streak free 188.8.131.52.5 Sweep and pick up debris 184.108.40.206 Hallways 220.127.116.11.1 Mop floor 18.104.22.168 Private Offices 22.214.171.124.1 Vacuum floor/mop high traffic areas 126.96.36.199.2 Dust all flat surfaces except desks 188.8.131.52.3 Spot clean carpet as needed/requested 184.108.40.206 Main Building/Mechanical Room 220.127.116.11.1 Empty waste receptacles – replace liners 18.104.22.168 Exterior 22.214.171.124.1 Empty waste receptacles/cigarette cans 1.1.3 Monthly 126.96.36.199 Hallway and Laboratory Floors 188.8.131.52.1 Buff Hallway and Laboratory floors 1.1.4 Yearly 184.108.40.206 Floors 220.127.116.11.1 Strip/wax/buff all rooms and hallways 18.104.22.168 Blinds 22.214.171.124.1 Dust/Clean all interior blinds 126.96.36.199 Carpets 188.8.131.52.1 Steam or chemical clean all carpeted areas 184.108.40.206 Windows 220.127.116.11.1 Clean all glass windows – streak free 1.2 Plans/Reporting 1.2.1 Final Quality Control Plan 1.2.2 Inspection Reports 1.2.3 Deficiency Reports The information listed above came from Sections C-Statement of Work, F- Deliveries & Performance, and L-Instructions of the solicitation. Although this is a simple cleaning service contract we were able to separate the various requested activities into five (5) levels work breakdown structures as shown above. Assuming each activity takes roughly one (1) hour to perform, a condensed version of a cost estimate can be compiled with additional information from the solicitation such as the type of contract (i.e., Firm Fixed Price) which is listed in Section B.4 Supplies and Services of RFP #AG-3406-S-17-0001 on page 6 of 96. Also, the checklists and building schematics in the back of the proposal on pages 80 through 96 were quite helpful in developing the cost estimates for this paper. The government is also furnishing a significant amount of supplies and equipment, so there is not much left to strategize for getting much of an edge on the competition. As noted in Section G.7 Government Furnished Property, the government-furnished property shall consist of storage space in Government-owned buildings for storage of supplies and equipment to be used in the performance of the work, if needed; electrical power at existing power outlets for the contractor’s use to operate such equipment as is necessary in the conduct of his work; hand soap for rest rooms and kitchen, restroom tissue, paper towels and trash can liners; and all cleaning supplies, warm and cold water at existing faucets. In additional the government furnished equipment listed above which also includes mops, vacuums, buckets, carts, etc., there is also a full list of supplies including soap, tissue, towels, and much more as shown in Section C.4. The only equipment/supplies the contractor is responsible for is to have their own ladders and scaffolding to get into high places. Because of all the equipment, supplies and facilities being provided the government, it is highly likely that the competition is also going to employ the same “Price to Win” approach leaving them with the same flexibility of adjusting direct labor costs and\or profit. Given this situation, the Warrior Cleaning Service Company Staff decided to reduce both direct labor and profit margin as much as possible while remaining within the “quick-look cost estimate” that was
8 completed earlier in the proposal bid process. The Staff Organization Chart is listed in Figure 2: 9 The Basis of Estimate (BOE) for this proposal was kept simple and with plenty of historical data available from recently completed contracts of a similar type, we can provide the condensed cost estimate listed below. Using the Appendix in the back of the solicitation pages 84 through 88, we can derive the number of restrooms, offices, hallways, windows, and square feet of floor space needed to calculate our cost estimates. For example, if we conduct a cost estimate for WBS 18.104.22.168. Restrooms we have three (3) taskings times one (1) hour each times ten (30) Restrooms comes to thirty (90) hours times $10 per hour equals $1,238 as shown in Table 1: Table 1. Cost Element for Restrooms Taskings Time (1 hour Area (rooms, Total Time Rate per Total Cost ($ per tasking) halls, floors) (tasking-hours) Hour ($/hr) per element) 3 3.0 30 90 13.76 1,238 This is a daily activity, so it would be done for 5 times per week for 52 weeks per year excluding 10 holidays (per Section C.2 Statement of Work, page 7 of 96) which comes to 42 times $1,238 equals $259, 980 per year. The actual tasking times for the different cleaning activities varied; however, to keep the math simplified for this exercise, each tasking was averaged out or estimated to be equal to one (1) hour. The same costing method was also used to calculate the cost for cleaning the Main Building, Private Offices, Laboratories, Conference Rooms, Mail Room, Lobby, Hallways, Kitchen, Break Room, Mechanical Room Elevator, Showers, Fountains, Floors, Blinds, Carpets, Windows and Exterior. On Reporting Deliverables listed under Other Direct costs, it was determined that the most experienced Senior Cleaner would take ten (10) hours to compile the QA Plan times a contract labor rate of $13.76 equaling a cost of $137. The same was calculated for Weekly Inspections (less Holidays) which only take one hour to complete times 42 reports times equals $577. Only two deficiency reports were estimated as the company plans to maintain 99%or higher rating. 11 The remaining cost estimates have been grouped together below in Table 2 for convenience:
The Table 3 below is a Proposal Cost Summary for all costs including a total price for the proposal to provide janitorial services for USDOA:
The WBS’s listed in Table 2 allows all key functions on the proposal to view this effort in the same manner, to speak a common project language for the first time (Youngsoo & Sungkwon, 2014). The Total Direct Costs from Table 2 of $856,974 includes the Direct Labor cost of $856,298 plus the Reporting & Planning activity of $741. The Reporting & Planning activity has been separated out as Other Direct Costs in Table 3 above and the Total Cost proposed for this solicitation is $3,957,803. There was no travel quoted or Other Direct Costs because this facility is close to the main office for the Warrior Cleaning Service Company, so no additional costs were deemed necessary to conduct site inspections, visit to resolve issues or handle any requests.
Furthermore, the company’s competitive strategy of taking advantage of the largely available labor pools, adjusting direct labor costs by minimizing task times from using the most senior or experienced employees, reducing profit margins and focusing on “going green” will all provide a combined competitive edge strategy needed to win these contracts.
2. Describe the strategies that could be implemented to prevent unethical practices and promote compliance with federal guidelines in the selected contract type’s performance risk and profit incentive.
The Warrior Cleaning Service Company is a Small Veteran-Owned Disadvantaged company that is hoping to obtain government contracts for the purpose of expanding their business footprint in the cleaning service industry. Being a small company as opposed to being a large corporation has its advantages when it comes to ethical practices as most of the employees are familiar with one another and as such, they generally understand how each person operates. Rumors would past quickly through the chain of command if someone was to become aware of any potentially unethical behavior. But being small and familiar with each other is not enough to prevent unethical behaviors from occurring. There are some strategies that a company can implement to control unethical practices while promoting compliance with federal guidelines such as:
• Establish Desktop Procedures and Company Policies on operating ethically. This should be part of your business strategy and incorporated into operational guide. You should engage your Human Resource personnel and\or your legal folks to take the lead in this activity by putting together training programs and running them regularly at least on an annual basis and for all new employees. These programs should train employees to identify and report unethical behavior.
• Enforce the ethical rules and regulations in order to foster a positive culture. The upper management officials should set the best example possible for the rest of the employees. You establish an easy accessible system for folks to report unethical behavior while maintaining their anonymity (if requested) with no retributions. Be open and
transparent when meeting with employees during group meetings or company functions.
• Spend time with the interview process. Get to know how a person operates, what their value-system might be like or what are some of their interests or goals. I would recommend asking scenario-based questions to see how they would react to different
kinds unethical situations.
• Consult with a Security company to conduct background investigations. You need to hire the right people all the time. This cost is well worth the expense. Hiring the wrong person can not only hurt you financially through theft, or having to pay fines but the
damage to your reputation can be incalculable.
• Set a good example by frequently communicating with employees. Encourage good behavior by letting folks know that unethical behavior is not going to be tolerated and with be dealt with swiftly and effectively. For example, serious infractions such as taking bribes would be immediate grounds for dismissal. Cultivate a climate of mutual trust and respect while demanding the highest level of integrity from all employees regardless of their position in the company (Deloitte, (2014).
A company should also be alert to the potential signs or “red flags” that something could be wrong such as poor record keeping, activity occurring after hours, employees not taking their leave or conflicts of interest. The signs identifying fraud or unethical behavior are not always clear but if you remain vigilant it will certainly help prevent or minimize this detrimental activity. One recent study found that 60% of workplace misconduct that involved someone with managerial authority and of that group, 25% of observed misconduct involved senior managers (ASAE, 2015). Some ways you can promote compliance can be through the following actions:
• Have regular meetings. Take this opportunity to discuss ethical compliance rules and explain their importance to operating within not just company procedures but with operating within legal guidelines as well. Make sure employees understand the need to
comply ethics policies and the consequences for not being in compliance.
• Conduct Effective Ethics Training. It is good time during ethics training sessions to provide serval scenarios on examples of unethical behavior and the correct response to exhibit so that there is no doubt in the minds of the employees on how they need to act when confronted with these situations. The main thrust in ethical training is to establish a baseline of values and proper conduct.
• Solicit feedback to reinforce and make adjustments. After a company meeting or ethics training class, obtain feedback from your employee audience on what they thought after seeing the different ethical scenarios and let them comment on the positive behavioral responses. This type of positive reinforcement will go a long way in promoting good behavior and it wil provide some insight into the effectiveness of the
• Sign ethics statements of understanding. Finally, having the ethics rules and regulations written out for employees to read and sign might be among the best deterrents to unethical behavior. The written agreement should not only describe in detail any unacceptable behavior but also the consequences for violating the rules that they are agreeing to uphold during the execution of the contract.
Another way to promote compliance with federal guidelines in the selected contract type performance risk and profit incentive is to explain to the employees that this solicitation involves a firm-fixed price contract in which case the performance risk is entirely on the contractor, not the government. Therefore, the need for to everyone involved in this contract to comply with all requirements is critical to the success of the company and its future business dealings. Because the only room for potential maneuvering lies in minimizing direct costs (task times) or reducing profit margins, it seems that the best approach would be to see if the customer would agree to a Firm Fixed Price contract with an Incentive or Award Fee or an Economic Price Adjustment (Feldman & Keyes, 2011, p. 291). Also, by building a value relationship with the customer earlier in the decision-making process, you can win more exclusive business or establish a competitive advantage as a preferred provider (Potter, 2003).
3. Develop three (3) ground rules and three (3) assumptions that are conditional to the cost estimate.
While Ground rules are the basic parameters you used to prepare cost estimates, assumptions serve as insurance against those cases, after contract award, where your cost estimates are no longer valid because the assumptions on which they were based have not proven true (Osborne,
2011, p. 289). The three ground rules conditional to cost estimate developed for this proposal are:
1. The Cost estimate is Reliable. In this particular solicitation #AG-3406-S-17-0001, the labor rate is fixed at $13.76 per hour as noted in Part II, Section I on page 39 of 96. The Direct Labor position is designated as a Janitorial Custodial Worker (WG2) in accordance with FAR 52.222-42- Statement of Equivalent Rates for Federal Hires (May 2014) and 29 CFR part 4 (FAR, 2016). Each task was given an average time of 1 hour to complete and spreadsheets were used to show calculations and costs associated with each activity. This
method lends credibility to the cost estimate as it can be easily verified.
2. The cost estimate is reasonable. This solicitation is for a basic cleaning service with a provided labor rate listed above. All materials and supplies are being furnished by the government customer. Therefore, there is no room for any other allowable, direct or indirect costs in support of this work. The Cost calculations are simple, straight forward
and stand on their own.
3. The cost estimate may vary year-to-year. There are four (4) Option years that can be exercised as listed in this RFP. With each year comes some form of monetary adjustment, cost of living increase, etc. As such, the labor rate and associated costs will need to be renegotiated and verified with the customer before exercising each option year.
It’s possible that the original costs estimates could no longer be valid after the contract is awarded due to economic reasons r changes in solicitation requirements. As such, the three (3) assumptions that are conditional to the cost estimate are:
1. Direct Labor rates. The Direct Labor rate has been provided in the Solicitation at $13.76 per hour or (WG2) There is no room for negotiation on this element until the option years are exercised. With no unions or bargaining agreements in place, there is agood chance
that this rate will remain stable for a considerable length of time.
2. Back-up Planning. There is no real need for a back-up or contingency plan of action as this is a firm fixed price contract for basic cleaning services. As such, the risk management effort is also minimal as this rate is not expected to vary over the next few years. Furthermore, with the government providing all the material there is also no need to have suppliers or even alternate suppliers to ensure that you can still operate should
one supplier fail.
3. Conduct a sensitivity analysis. This would involve testing the sensitivity of cost estimates to changes in input values such as the Direct Labor Rate or task times (GAO, 2016). With the labor rate already established in the solicitation and the government supplying all the supplies and materials there are few variables left other than the economy that could influence the simple cost estimates provided in this assignment.
There are no unions involved or bargaining agreements to deal with at this time. Therefore, no changes are expected in the cost estimates being provided in response to this solicitation.
If needed the Warrior Cleaning Service company could always seek assistance from ServiceDisabled Veterans Owned Small Business program listed on the Small Business Administration’s (SBA) website (Compton, 2010, p. 90). With federal law requiring that 23% of all government buys to go to small businesses and the SBA helping a Veteran-owned company overcome any barriers to bidding on government contracts, the Warrior Cleaning Service Company is positioned well for potentially winning this competitive bid (SBA, 2016).
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