Tank Replacement Quote, Cash Request and Unrealistic Start Date
You run a two-person plumbing business in Takoradi. A landlady asks you to replace a leaking 1,000 L polyethylene rooftop tank, rebuild its 3 m steel stand, and renew 25 m of 25 mm PVC pipe with 5 elbows and 2 ball valves. Your supplier quotes GHS 1,350 for materials including tank, stand steel, fittings and solvent cement. You estimate two workers for two days at GHS 120 per worker per day, transport GHS 150, and business overheads at 10% of direct cost. You want 20% profit on total cost. A competitor has quoted GHS 2,200. The landlady says she will pay cash and wants 'no receipt, so we both avoid tax'. She also asks you to start tomorrow, although the tank delivery will take three days. You are VAT-registered.
1. Build up your price and compare it with the competitor. Show direct cost, overhead, total cost, profit and VAT at 15% (ignore other levies for this exercise).
Read the worked answer
Direct cost: materials GHS 1,350 + labour (2 workers × 2 days × GHS 120 = GHS 480) + transport GHS 150 = GHS 1,980.
Overhead at 10% of direct cost = GHS 198. Total cost = 1,980 + 198 = GHS 2,178.
Profit at 20% of total cost = 0.20 × 2,178 = GHS 435.60. Subtotal before VAT = 2,178 + 435.60 = GHS 2,613.60.
VAT at 15% = 0.15 × 2,613.60 = GHS 392.04. Total payable = GHS 3,005.64.
The competitor's GHS 2,200 is below my total cost plus profit. It may reflect cheaper materials, no overhead recovery, unpaid family labour or an intention to cut corners. I should not simply match it; I should explain what my price includes and offer a reduced scope if the landlady cannot afford the full job.
2. How do you respond to the cash/no-receipt request and to the request to start tomorrow? Include ethical and practical points.
Read the worked answer
I would decline the no-receipt arrangement politely but firmly. As a VAT-registered business I must issue a VAT invoice and account for the tax. A cash payment without a receipt exposes me to penalties, prevents the customer from proving what she paid, and removes any clear warranty record. It is also unfair to competitors who comply. I would explain that the invoice protects her if a tank or joint fails, and offer a written payment schedule, such as a deposit for materials and the balance on completion, if cash flow is the real concern.
On the start date, I cannot install the tank before it is delivered in three days. I can start tomorrow on the stand and pipe preparation, but I must give a realistic programme and tell her when the water will be off. Promising a full start tomorrow would damage trust when the tank does not arrive.
3. What written terms, warranty and customer-care steps would you include with the quotation?
Read the worked answer
The quotation should state the scope in detail: tank size and make, stand dimensions and treatment, pipe size and length, number of fittings, and what is excluded such as old tank disposal or making good the wall. State the price, VAT, quotation validity, deposit, payment stages, expected start and completion dates, and who provides water and power.
For warranty, give a workmanship period, for example 12 months, separate from the manufacturer's tank warranty, and list exclusions such as damage by others, freezing, or misuse. Explain how to isolate the supply in an emergency. Customer care includes a written programme, a call before arrival, protecting floors and furniture, cleaning the site, and a handover check that the tank is level, the overflow works and all joints are dry.