Staring Down Project Travel Expenses
Expenses on a project, any project, can add up quickly. Is it reasonable to include them in your proposal?
When we were actively involved in the sport of dockdiving with our Barbet, it was very costly to participate. We traveled all over Canada and the Northeast US to find the venues. The cost of gas and lodging could add up quickly. But there was no avenue to recoup these costs. However, with our own service businesses, we do have some options not available in dog sports or other voluntary activities.
As geography expands for your business, your expenses with bringing your services there also increase. For those small businesses responding to RFPs (Request for Proposal) the ability to absorb these expenses may not be there. An evaluation needs to be completed prior to submission of your proposal.
First, analyze what this particular project will bring you. Is it a way in to a new market that could yield many new projects? Is it a prestigious project that will help garner much needed positive publicity for your firm? Does the client open up a new source of future income? Answering yes to any of these questions likely means you should proceed on the proposal, likely without including expenses in your presentation.
Another important characteristic to consider in your proposal analysis is the impact of competition, particularly locally based firms. The reality of expanding into new markets is that you are looking to displace others already headquartered there. Hopefully, your team’s expertise or profile speaks for itself against any competition, locally or otherwise. Assembling a team credentialed with the expertise necessary for the particular project can help you soar above the competition. Take extra time to determine the best team members you can assemble to impress the client.
Often, if you are competing for a project that has any amount of government funding included, the client will be assessing the proposals for number of certified firms. This includes women, minority, veteran owned. By including as many of these firms in your team, you really can stand out among the many submissions. Understanding the unique capital challenges of these small firms may be an advantage to including payment of expenses associated with your team’s travel to the project site.
Privately funded projects normally have more flexibility to include reimbursement of travel expenses. Government projects may not. Keep this in mind as you choose which RFPs to respond to as a team. If the RFP does not allow for expense reimbursement, look at your hourly rates or categories and assess whether or not you can include some extra fees to cover the expenses. Even a small percentage of expenses that can be included will help improve your upfront cash requirement to begin the project, once awarded.
Lastly, another way to capture upfront fees for traveling to a project site, is to ask for an upfront payment to start the project. We have seen 5% and even up to 10% agreed to here. And that includes a few government funded project. This is an ideal way to have any upfront costs covered so you do not find yourself staring down a $1000 airline ticket, $1000 hotel fee, and more right at the start. The start of a new project should be a time of celebration and excitement not worry over how to get to the site.
Approach your cost estimates with the confidence of what your team offers. Seek reimbursement for any travel fees directly or indirectly. After all, you are here to make a profit, give yourself the opportunity to do that!
Be well.
