Fixed price services are typically services where the details (scope and standard) and quantum (volume and frequency) of the requirement is known or predictable to the extent that it is reasonable to expect value for money to be achievable from a fixed price.

This pricing strategy is very well suited to the pricing of a wide range of Soft FM services such as cleaning, reception, security services, portering etc.  However, when it comes to fixed prices for maintenance, the approach can be a little more nuanced and this is covered in later sections.

For services defined as fixed price services in the contract, the financial and operational risk for delivery of the defined services and standards is transferred from the client to the supplier.  However the degree to which the financial risk is transferred is dependent on the approach to specifying the services as discussed earlier.

Below is a summary of the advantages, considerations, indications and contra-indications specific to this approach to fixed price services.

ADVANTAGES          

Price certainty for the client

Allows for more robust budgeting

Minimises contract management and administration for both client and supplier

CONSIDERATIONS

Potential risk transfer premiums

More time to review appropriate and robust pricing clauses in contract

Seek to avoid price risk transfer through caveats in your bids (resolve as much as you can during clarification stage in bids)

Review the definition of fixed price inclusions

Don’t under-price (or low bid) which in turn may impact on client-supplier relationships

Define clear mechanism for changing fixed prices on changes to scope or standards

Seek to share provisions to efficiency/innovation savings