How to price an FM manpower contract
Price an FM manpower contract by working out the posts and hours required, converting them to headcount with relief cover for leave and days off, costing each person fully, adding supervision, consumables, equipment, overheads and margin, then adding VAT. The method is stable; the numbers depend on the country, trade and contract.
Start with posts, not people
A post is a position that must be filled during defined hours. The client specifies posts: a technician from 7:00 to 19:00 seven days a week, a supervisor on weekdays, a cleaner for each floor. Price the posts first, then convert to headcount.
Step 1: Convert post hours to headcount
A person cannot work every hour a post is open. Compare the hours the post is open with the hours one employee works under the contract and the labour law.
Illustration only, using assumed inputs and not a market rate: a post open 24 hours for 7 days is 168 hours a week. If one employee works a 48-hour week, 168 divided by 48 is 3.5 people before any leave cover. Your hours per week come from the applicable labour law and your own contracts.
Step 2: Add relief cover
Employees take annual leave, public holidays, sickness and other authorised absence. The post still has to be covered. A relief factor raises headcount to allow for this. Compute it from your own policy: days a post must be filled in the year, divided by days one employee actually works in the year. Leave entitlements differ by country and contract, so use yours.
Step 3: Cost each person fully
| Cost line | Notes |
|---|---|
| Basic salary and allowances | As per the offer letter and contract grade |
| Overtime | If the post hours exceed the contractual week, price it at the rate the law or contract sets |
| End-of-service benefit | Accrues under local labour law. Provide for it monthly |
| Visa, work permit and government fees | Spread across the contract period |
| Medical insurance | Per employee, where required |
| Accommodation and transport | If provided by the employer |
| Air ticket and leave travel | If the contract provides it |
| Uniform, PPE and training | Issue and replacement cycle |
The sum is the monthly cost to company, often shortened to CTC, for one person. Multiply by headcount to get monthly manpower cost.
Step 4: Add the costs that are not a person
- Supervision and management, spread across the posts they oversee.
- Consumables and materials the contract requires you to supply.
- Tools and equipment, including depreciation and repair.
- Transport between sites, where applicable.
- Mobilisation costs at the start, such as recruitment, onboarding and visas.
- Insurance, performance guarantees and bank guarantee charges the contract demands.
Step 5: Overheads, margin and tax
Add your head-office overhead and the margin you need, each as a stated percentage of the cost base. Then apply VAT as the jurisdiction requires. Keep these as separate lines in your workings so a review can challenge each one.
Step 6: Test the price
- Divide the monthly price by the posts to get a price per post. Check it against previous contracts.
- Check that the headcount covers every hour the client specified.
- Re-run with a higher absence rate to see how much margin it takes.
- Check the payment terms against your cash cycle, since manpower is paid monthly regardless of when the client pays.
Where bids go wrong
- Pricing headcount equal to posts and forgetting relief cover.
- Omitting end-of-service accruals because they are not a monthly cash cost.
- Ignoring overtime when post hours exceed the contract week.
- Pricing the first year only on a multi-year contract with wage escalation.
Mobilisation and the first month
The first month usually costs more than later months. Recruitment, visas, medical checks, uniforms and training land before the first invoice can be issued. Decide whether to recover these through a separate mobilisation line, to spread them over the contract term or to absorb them. If the client may terminate early, an unrecovered mobilisation cost is a risk, so price it with that in mind.
How JobNext supports it
JobNext's published pages show a catering estimate that lists manpower by cadre with quantity and CTC per month, as part of a catering cost summary. They also describe a preconstruction module that builds estimates across labour, material, machine, subcontractor and overhead, and a Punch Manager that feeds attendance into payroll across sites. The pages do not describe a dedicated tool for pricing FM manpower contracts, so ask in a demo how your posts, relief factors and on-costs would be modelled.
See JobNext on your own operation.
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Frequently asked questions
What is a post in an FM manpower contract?
What is a relief factor?
What costs besides salary should I include?
Does the price include VAT?
How should I record absence and overtime assumptions?
Does JobNext have a tool for pricing manpower contracts?
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