6 Ways to Cut Service Contract Costs

06/01/2015 | By Janelle Penny

Find savings opportunities while keeping operations green

Faced with budget cuts, the last thing most FMs want to do is slash their provided service levels. Unfortunately, as material costs continue to rise, sometimes that may become necessary. If you’re outsourcing any building services, enlist those providers to help cut costs when it’s time to renegotiate contracts – they may be able to help you secure savings without sacrificing sustainability.

“The best thing to do is just ask,” says Ken Bartell, vice president of enterprise solutions for ServiceMaster, a janitorial provider. “That’s happened with many customers. They say ‘We’ve got to cut costs, so how can we do it?’ Providing that your current vendor is doing a good job, they know the building’s idiosyncrasies and its tenants or employees, so they can help you decide what the resistance might be on changing certain aspects of service.”

Try these six cost-saving ideas to find contract savings while preserving your green operational goals.

1) Clarify the Scope of WorkThe services in your contract should be based on the risks of your particular facility, explains Michele Vance, vice president of commercial sales for Terminix, a pest control provider. With pest control, for example, providers can consider your geographic location, the type of building you have, and any sanitary or structural issues that could contribute to pest problems and tailor a program to your building.

“Break the building into high-risk and low-risk areas. Restrooms, anywhere that has food, and areas involved in shipping and receiving should be serviced more often than lower-risk spots like individual offices or equipment areas,” says Vance. “Pests tend to be more present on the lower levels of buildings, so the higher up you go, you could in theory reduce the frequency of services to help lower the overall price without increasing risk.”

Work with your provider to create a scope of work that addresses the real risks instead of going with a boilerplate version that addresses every possible occurrence, Vance adds. Err on the side of detail so that no questions are left unanswered.

“Be very clear on what pests are covered and what is outside the scope,” says Vance. “That way the provider isn’t trying to build in additional money in case of extra pests that they might have to cover, even if they may never show up in a certain client’s geography – instead, those extra billable charges are only added when a rare pest is present. Sometimes, in their enthusiasm to be all-inclusive, a company will include every pest under the sun in their scope of work. When providers see it, they say ‘What allowances will I have to make in case I have to treat for a gopher, skunk, or feral cat?’ Realistically narrowing the covered pest list makes more sense for both sides.”

2) Reduce Daily TasksSmall savings on daily requirements frequently add up faster than cutting out one higher-priced item, Bartell explains: “If you have expensive quarterly or semiannual projects, such as floor refinishing, cutting out one of those could save $1,000. However, if you reduce the daily cost by just $10 over 260 days, you can save more than two and a half times what you would have saved by eliminating the major cost. The real savings is in daily tasks.”

Services such as cleaning involve scores of small tasks that can be customized, Bartell adds. Request a detailed list of tasks and their frequency to give you a good starting point for renegotiation.

Bartell also recommends enlisting the help of building occupants to determine where cuts can be made – for example, employees can dust their own desks and computer screens instead of relying on the janitorial staff to do it. This also helps cleaners use smaller quantities of cleaning supplies, leading to fewer containers and wipes heading to the landfill.

“The one I always point to is the trash can. Is the can in your office full to the brim every night? The answer is almost always no. So why are we emptying it every day and throwing away usable liners when we could empty it twice a week instead?” explains Bartell. “Another task that takes a long time is vacuuming. Could we vacuum the reception area and the conference room where you have meetings every day, but only vacuum general staff areas once or twice a week?”

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