Get the Best Service Contract in 4 Steps

March 23, 2009
Get great service for your dollar with these tips on contracting out maintenance

If you outsource some aspects of operation and maintenance of your buildings, getting the best possible contracts from service providers is paramount - especially in a tough economy where money is tight, but quality still matters. Though each organization has unique needs and requirements, tried-and-true best practices prove that you don't have to sacrifice quality service to satisfy your budget when it comes to securing commercial maintenance contracts.

If you were waiting for the right time to contract out maintenance, this is it. "The contractor market is relaxing," says Joel D. Levitt, president at Lafayette Hill, PA-based Springfield Resources. "In parts of the country where it was tough to find good contractor personnel, it has now eased up. This would be a great time to take care of some nagging concerns in your buildings if your company has the wherewithal to spend now. Many contractors are having trouble because of slowed payments or lack of work, so agreement for quick payment will get a good deal of cooperation."

There are a number of reasons for outsourcing your buildings' maintenance, and it isn't always just about cost. It's true that lower costs are associated with contracting out maintenance - essentially because the contractor usually provides the same service to many companies and can save on materials costs, and you don't have to pay the salary, benefits, and workers' compensation associated with having maintenance personnel on staff - but there are other important reasons to consider contracting in today's economy.

A Good Contract Includes:

Flexibility for the program to grow and change.

  • Realistic expectations and clear specifications.
  • Protection for the client and vendor.
  • Reflection of market pricing and conditions.
  • A clear method for conflict resolution.


Companies that specialize in maintenance services generally have access to better training and up-to-date technology. "With a variety of accounts and locations, [contractors] can be cross-trained and gather experience in different working environments," says David Giamichael, vice president and general manager of operations at UGL Unicco, Newton, MA. "You're going to have access to that expertise and get the correct subject-matter expert on the job."

Similarly, John Barrett, CEO at Harwood Heights, IL-based Kimco Corp., encourages tapping into the "best practices and efficiencies in the vendor's area of expertise," and also mentions the benefit of having a buffer from dealing with labor unions. The headache of labor relations could be mostly avoided with outsourcing, and the shared insurance liability is a perk that's too good not to mention. "With in-house staff, if something happens, it's all your responsibility, as opposed to having someone else's insurance program providing some coverage," adds Giamichael.

If you've made your decision to outsource, and you've compiled a detailed list of the objectives you want achieved by the vendor, follow these steps to get the best possible contract for your buildings' maintenance:

1: Know Your Vendor
Steven Spencer, facilities specialist at Bloomington, IL-based State Farm Insurance, has implemented a method for choosing the contractors at his facility. "We use a contractor-qualification process [where] we ask for information about the contractor's financial stability, training programs, hiring practices, insurance, bonding, and customer listings. We then research the contractors, including contacting customers and visiting the accounts. The major point: Know who you're hiring," says Spencer.

Talking to - or even meeting - current customers from situations similar to yours is a great idea. You can get a feel from peers about how the vendor performs and works to meet their needs. Giamichael also suggests going to the contractor's corporate or regional office. "You need to meet the people who are going to be on your property making a difference for you," he says. "Get into the corporate office and make sure there's more there than just a payroll function, and that they have enough resources to cover the workload they have," he continues, saying that the best way to determine a company's resources is to visit in person and get a customer list.

Low prices don't necessarily equal the best option when considering maintenance vendors. Peter Sheldon, vice president of operations at Coverall in Boca Raton, FL, uses custodial services as an example. "Today, you have a lot of janitor companies that are throwing around Pine-Sol® and dirty mops, and they just don't have the levels of education, training, and technology [necessary] to be a public-health service. ... The biggest challenge you're going to face is finding a reputable organization that really understands what you're after," says Sheldon.

Dan Wagner, director of facility service programs at Lincolnwood, IL-based ISSA-The Worldwide Cleaning Industry Association, agrees, adding that it's "crucial that facility managers and building owners do not simply rely on the lowest bid. Even though it's admittedly hard not to do so in these economic times, the long-term financial, resource, and public-relations costs associated with poor service are simply not worth it."

Wagner goes on to say that a service provider needs to have the necessary pieces in place to be able to deliver quality, customer-focused, and consistent service. "No facility manager/building owner wants to re-bid a contract or deal with hassles associated with poor service - a fact that renders a comprehensive analysis of a potential vendor's management an absolutely necessary first step."

2: Ask Questions
Screening potential service providers might be the most inconvenient part of starting the outsourcing process, but a thorough list of questions will really pay dividends in the end. Review this list of questions and add any questions that are relevant to your situation.

  • What are your hiring practices?
  • What are your training programs like?
  • Do you have a quality-control program? If so, how does it work?
  • Who do you currently provide services for?
  • What does your insurance cover?
  • How long has your company been in business?
  • Have you ever operated under a different company name?
  • What professional organizations does your company belong to?
  • Are there any outstanding lawsuits against your company?
  • What is your operational execution plan?
  • Do you have administrative capacity for billing, compliance, and documentation?
  • Are you third-party certified?
  • What are your environmental ethics?

A sample screening document, and a host of extremely helpful information on contracting out building maintenance and operations, can be found at www.energystar.gov/ia/business/servicecontracts.pdf.

3: Be Specific
After you've met each service provider on your list, and you've received proposals from each, the next step might be the hardest: making your decision. "Just trying to decide between two seemingly qualified companies - that's probably what people are going to obsess over most," says Giamichael.

"Every potential vendor pledges to be able to do the job," says Wagner. "Without some assurance that a company is managed as it claims to be, a facility manager is taking a chance and simply hoping that the service provider is what it says it is." If you've done your homework, visited each company, and checked out its current customers, you should feel good about your final decision.

One way to set your mind at ease is to make sure the contract you sign is exactly what you want. Specificity makes all the difference. "Sometimes, contract language is one-sided, favoring one party," says Barrett. Watch out for any biased language that could leave you unprotected, and make sure that both sides are reflected.

"A contract needs to be a true meeting of the minds, and both the customer and the service provider need to be involved in its terms," says Wagner. "Perhaps most importantly, an effective contract needs to be clear, specific, and up to date to avoid misunderstandings and unmet expectations. It should lay out service requirements in a specific manner, and nonspecific words like ‘regularly,' ‘as required,' and ‘frequently' need to be avoided at all costs."

Taking the ambiguity out of your contract and laying out your specific expectations in clear, forthright language will benefit both parties, and keep you from messy situations and lawsuits down the road. Check out the helpful advice in Tips for Avoiding Claims.

4: Negotiate
After specificity, the No. 1 rule is this: Don't settle. Giamichael advises looking for a company that has all the resources you need - not just most of them. "Make sure you're buying the strongest service and a company that can deliver those things. You don't have to settle," he says. Sheldon adds that you should "negotiate any terms and conditions of the contract, because the contractor wants to provide the service, and they want the business, but you want proof of credible management. [What you really want] is a results-oriented agreement."

In a market where there are lots of contractors looking for potential long-term jobs, you can pick the company that best suits your needs. Don't be afraid to negotiate the contract terms that aren't to your liking - you should be able to get a good deal. Barrett offers these tips for the best possible contract. Make sure:

  • Pricing is market rate and fair to both parties.
  • The vendor has proper insurance coverage and references.
  • The scope of work is customized to truly suit your needs and budget.
  • There is a fair protocol for any disputes.
  • There is a quantitative way to track results.

While you're picking and choosing, why not look for a company that has gone above and beyond to prove its effectiveness? Third-party certification might not make sense for some companies, but it's something to be mindful of. Cleaning and janitorial services can be certified under ISSA's Cleaning Industry Management Standard (CIMS), and maintenance companies can check out the Society for Maintenance and Reliability Professionals Certifying Organization (SMRPCO).

After you've finalized your contract and your vendor takes over your maintenance practices, don't make the mistake of stepping away from the responsibility. You still need to perform routine checks to see if everything is going the way it should be. Establish a process for feedback from building occupants and the vendor, and periodically review the entire contract. With proper diligence, you can reap the benefits of contracting out maintenance without worry.

Jenna M. Aker ([email protected]) is associate editor at Buildings magazine.

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