KNOWLEDGE SHARE

How to procure and manage cleaning contracts

Mark Coates

Cleaning contracts can be sometimes be viewed by clients as ‘whoever we work with we will have the same challenges’. However, this category of spend can have a wholly different outcome if procured and managed successfully.

Understand the challenge

For a moment put yourself in the position of the account manager at the cleaning supplier. They have an incredibly difficult and challenging role to fulfill. Clients expectations are rightfully high and they may have been promised significant service benefits and savings which may be unlikely to be delivered for a variety of reasons and the delivery of these ‘promises’ now rests with the account manager. The cleaning supplier has so many responsibilities when you think about it……..

They need to recruit the team, train the team, manage the team, equip the team with everything they need to fulfill their role and hopefully retain the team. As with any management role, no doubt comes to the challenges of absence and performance management and whilst all this is going on in the background the client is rightfully demanding increased service standards and reduced costs. There is nothing wrong at all with this from a clients perspective as ‘value for money’ is everything they should demand, but it is useful sometimes to appreciate the challenges of the supplier.

BE ATTRACTIVE TO THE CLEANING SUPPLIER

If you take the view that you should have a transactional relationship with the cleaning supplier and invest little time and energy supporting them with their challenge, often service standards will suffer and this will result in a failure of the contract.

Our experience shows us that many contracts are driven to the point where there is little margin to provide the required resources to deliver the high level of service standards for a client and with this in mind it is essential that when procuring the cleaning contract that you understand the impact of any negotiations and how the balance of risk and reward should work for a supplier.

Where we have seen successful contracts best deployed is where the client is very clear on their requirements and service standards from the outset. The client needs to ask themselves honestly what level of output in the building are they looking for as a company and are they prepared to pay for this. Think of this as platinum, gold, silver, and bronze. Whilst the Facilities Manager may personally want a platinum service if the company itself is never going to pay for this standard there is a clear mismatch in terms of what is expected Vs what will be delivered and unless this is discussed openly up front, the relationship may be strained from the outset.

I am a great believer that you get what you pay for generally and this is no different in cleaning contracts. If you can develop a real mutual understanding of what the standards are with the supplier and the supplier believes they can deliver to those standards at the costs agreed this should create a great platform for both the client and supplier to work together for mutual benefits.

THE PROCUREMENT PROCESS

DATA GATHER

Ahead of any tender, it is vital to have a clear understanding of the ‘baseline’. This would include a clear understanding from the client of the service standards in their own words, a detailed review of the contract to understand the contractual and service obligations of the supplier and a ‘deep dive’ into the cost of the contract to provide total transparency of the staff pay rates, the associated costs of employment, the delivery of the service and ultimately the margin which the supplier is working to. At this stage, I feel it is also important to have an open discussion about the supplier directly to understand this from their viewpoint – what is working well, what are the challenges, what could be improved, how could it be improved and do you need anything from the client to make these improvements.

PRE-TENDER MEETINGS

Our experience of working with cleaning suppliers on tenders is that they will become more motivated and committed to a tender process if a potential client engages pre-tender and has open and honest conversations with them ahead of any tender being issued. Indeed, this is the case with any category of spend being reviewed. In addition, we also believe that a high-quality supplier and highly experienced individual can offer great advice and insights pre-tender which could prove to be invaluable in any tender process. This could be insights in terms of cost models, how to overcome the challenges the client has, how the marketplace is made up and recent case studies that are relevant to the client about how a successful contract has been delivered and managed.

TENDER PROCESS

For the tender process is to be a success there are some vital ingredients. Firstly, the right suppliers must have been engaged and engaged professionally to ensure that they are committed to the tender review. The supplier must understand ‘the why’ in terms of why you are tendering to fully commit to the process.

Once the suppliers have been engaged it is crucial that a very well written tender document is produced which allows the suppliers to develop their best response. We always encourage clients to request a like-for-like (‘TUPE’) bid and a commercial/Non-TUPE bid at this stage to allow the suppliers to demonstrate how they would evolve the account from day 1 and bring any innovations to the account. As part of an excellent tender document will, of course, be a clear specification of requirements. This specification should be as clear and concise as possible and should clearly articulate the tasks and the frequency to be performed.

As part of the tender journey with the committed suppliers on-board, it is critical to allow the suppliers to attend mid-tender meetings from our experience. This would allow the suppliers to undertake site visits to see the building(s) first hand and then to allow the suppliers the opportunity of raising any questions or sharing any initial observations at this stage.

In terms of the tender responses themselves, the costing part should be on a document issued by the client in two parts (1) TUPE bid and (2) Commercial/Non-TUPE bid to ensure all bids are like-for-like. In terms of how the account is going to be serviced and managed I would encourage clients not to constrain the supplier here with closed questions and to allow them a free hand in terms of putting their best proposal forward.

TENDER AWARD PROCESS

Following the receipt of the tender responses, the next key stage is, of course, to validate these and get a clearer understanding of them through supplier presentations and further due diligence. Of importance at this stage is to get a deep understanding of how the client will evolve the account to resolve the issues that the client is currently facing (this may be cost and/or service).

Following the award, it is critical that a contract is drafted with a clear service specification supported by a relevant and measurable service level agreement with associated key performance indicators. This contract will contain everything that has been promised by the cleaning supplier through the tender process and moves the client away from trying to recall what was/wasn’t said in meetings, presentations, and e-mails.

SUPPLIER MANAGEMENT

The objective surely is to strike a win-win relationship to get the best out of the supplier in terms of performance and commitment. If the account is managed with this in mind there is a much greater chance of the award being successful especially considering the rigorous and robust tender review process.

To deliver a well-managed contract the client will have to commit time and energy in terms of managing and supporting the supplier which will no doubt be needed given the challenges which I mentioned earlier for the supplier earlier in this paper.

From our experience client’s expectations are greater than their budgets when it comes to cleaning. After all, we live in a world where organisations are expected to deliver more for less, but in reality, we all need to appreciate each other’s requirements and as part of this is an appreciation that everyone needs to make a profit.

Despite having a generally poor reputation, the cleaning industry is actually very good at innovation. There are constantly new machines being introduced that either improve productivity, ergonomics, reduce energy or even water usage. However, suppliers can only continue to invest in this equipment, as well as new IT solutions, when the contract length allows.

Whilst sustainability typically refers to environmental factors, you should understand that driving margins down to zero increases contract failure rates and is simply a false economy.

Most clients’ expectations are greater than their budgets. After all, we live in a world where organisations are expected to deliver more for less, but when all is said and done everyone needs to make a profit.

OUR TOP TIPS WHEN REVIEWING CLEANING

  1. Understand the challenge that the cleaning supplier faces and how you can best support them with this challenge to deliver mutual benefits and a win/win scenario.
  2. Make yourself attractive to suppliers.
  3. Ensure all data is gathered comprehensively to allow for a clear understanding.
  4. Engage with supplier’s pre-tender to ensure you are inviting capable and committed supplier into the process. In addition, this early engagement should allow for sharing for thoughts by the suppliers pre-tender which now shape the tender document.
  5. Ensure that a well written tender document is issued will a concise and comprehensive service specification.
  6. Allow suppliers the opportunity to develop alternative cost models rather than constraining them to a TUPE bid only.
  7. Following the tender award ensure that a well-written contract is agreed with a clearly articulated service specification supported by a clear service level agreement and associated KPI’s.
  8. Supplier management is a key ingredient to the success of any cleaning contract and to achieve this success it will require the commitment and support of both parties.

Hopefully, our article has helped you understand the area in more detail and will also help you create a successful procurement and supplier management process for cleaning services. In summary, there is no substitute for a well thought out and executed category sourcing and supplier management strategy.

Oculus Procurement works with clients on the procurement of all indirect spend areas and if you would like to have a no-obligation discussion in relation to any Procurement area of spend please do not hesitate to get in touch.

ABOUT THE Author:

Mark Coates

Mark Coates

Mark is a seasoned Head of Procurement who has significant experience of managing a number Procurement transformation programmes and an impressive track record of delivering significant and sustainable savings across a range of industries and spend categories including Facilities, HR, IT, Marketing and Professional Services.

Most recently for Oculus, Mark had led a strategic transformation and cost-saving review on behalf of a venture capitalist at one of the UK’s leading property and facilities management providers (see case study).

Before Oculus, Mark has worked for a variety of ‘blue chip’ organisations in terms of leading their procurement agenda and has spent a vast number of years advising a range of organisations on a consultancy basis.