Pricing and Cash Flow on a School Mural
A freelance painter in Rourkela is asked to paint a 12 m × 3 m exterior wall of a private school with a science-and-sports theme. The school offers ₹85,000 all-inclusive. The painter estimates: exterior acrylic and primer ₹22,000; scaffolding rental ₹6,000; one assistant for 10 days at ₹700 per day; travel ₹2,000; masking tape, rollers, brushes, and sundries ₹3,000; a scissor lift is not available, so the wall will be painted from rented scaffolding. The painter's own labour is 10 days. The school wants a 20% advance, the balance 30 days after completion, and a written assurance that the mural will not fade for three years. Rain is likely in the second week. The painter has ₹10,000 in savings and one other small order worth ₹8,000 due in the same period.
1. Calculate the direct cost and realistic margin, and judge whether ₹85,000 is acceptable.
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Direct costs: paint and primer ₹22,000; scaffolding ₹6,000; assistant 10 × ₹700 = ₹7,000; travel ₹2,000; sundries ₹3,000. Total = ₹40,000. At ₹85,000 the gross margin is ₹45,000. That is not profit yet: the painter's own 10 days of labour and overhead such as phone, studio, insurance, and tool replacement must come out. If the painter values their time at ₹1,500 per day, that is ₹15,000, leaving about ₹30,000 before overhead and tax. A 10% contingency for weather, extra paint, and touch-up is ₹8,500, so the realistic margin is nearer ₹21,500. The price is workable but not generous, and a three-year no-fade assurance adds risk that is not priced in.
2. Evaluate the proposed payment terms against the painter's cash position and recommend a structure.
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The 20% advance is only ₹17,000, less than half the ₹40,000 direct cost. The painter has ₹10,000 in savings and another ₹8,000 order, so cash is tight. Ask for 40% on signing, which is ₹34,000, 30% at mid-point, and the balance within 15 days of completion-or at least a materials advance of ₹25,000. A 30-day credit period after completion means the painter finances the job. Put the schedule and payment dates in writing, with a late-payment clause. If the school insists on 20% and 30 days, reduce the scope or add a financing charge; do not start without enough to buy materials.
3. Recommend contract and risk measures for rain and for the three-year no-fade assurance.
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Rain in week 2 can ruin exterior acrylic and delay the job. Build a weather clause: work days lost to rain extend the completion date; no penalty for force majeure. Use a breathable exterior masonry primer and a UV-stable exterior acrylic; check the wall for damp and loose render before painting. Erect scaffolding with guardrails and use two people for high work. The three-year no-fade assurance should be limited to defects in the painter's workmanship and to the manufacturer's warranty; normal fading and chalking are not covered. Photograph the wall before, during, and after, keep material receipts, and get written sign-off at completion. A 10% retention released after 30 days is acceptable only if the painter can carry it.