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Management And Training

Keys To A Successful Buyer-contractor Relationship

September 19, 2010
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In a recent survey of buyers, fewer than 6 percent said that they had a "good" contractor.

More than 94 percent of those participating said that the relationship with their contractor was problematic in some way, with more than a third saying they had an "awful" contractor.

This latter group said, "It just wasn''t what I expected" and felt that they just had to live with it until the next re-bid.

What''s wrong with these relationships? Can they be saved?

First, let''s be clear about who controls the buyer-contractor relationship: The buyer controls the relationship — always.

When buyers are reluctant to assert themselves in that role, things can go terribly wrong.

In an industry posting a performance shortfall of over one-third of all cleaning contracts, something isn''t working, and in the broader context of the industry, the buyer has the primary responsibility.

The good news is that it is also the buyer who can fix this problem.

I''d like to suggest that this complex relationship can be improved with a focus on the following issues:

  1. Re-bid/outsourcing preparation
  2. The contractor selection process
  3. The contract
  4. Ongoing measurement and management.

The following is a more detailed discussion of each of these issues.

Re-bid/Outsourcing Preparation

After creating, reviewing and/or modifying over 500 contracts, I''ve come to believe that difficult relationships begin in the project preparation phase — well before the contractor enters the conversation.

Perhaps the biggest mistake buyers make when re-bidding a contract is to take their last contract used — or copy someone else''s — and dust it off, change the dates and start the contracting process.

They give little, if any, consideration to changes in the property, its occupants, traffic and usage, changes in population levels, the local business environment or changes in the contractor market.

In short, they fail to adequately prepare.

For example, how many square feet of carpet versus ceramic tile exist in your building, and how many square feet are there of conference space, office space, mechanical space or corridor space?

It''s often about 30 percent of the total building.

Many portfolio managers begin with a weak understanding of the physical characteristics of their buildings and often have incomplete current cost information.

This can lead to a predictable frustration by all parties about what gains have really been achieved.

Too often, costs are reduced in one budget center while costs are increased in other budgets.

And, in some cases, painful quality losses are part of the bargain, leading to future cost increases "to fix the problem and stop the complaints."

The solution is an accurate and complete benchmark of the key performance indicators.

These should include at least quality, satisfaction, best practices — green, Leadership in Energy and Environmental Design (LEED), etc. — and detailed spending analysis.

These baseline metrics provide a clear starting line by which to objectively measure, manage and discuss the success of the relationship.

The Contractor Selection Process

Finding the best contractor is not about finding the best price.

There is a mistaken belief that if all bidders respond to the same set of requirements, the only important difference is price.

This is wishful thinking, at best.

Finding the best contractor is not about price — it''s about contractor management skills, exercising best practices and innovation.

The advent of LEED and green cleaning are examples of best practices and current innovation.

In short, the difference between contractors is their capability, not their price.

As capability varies, price varies.

Contractors who use tooth brushes to sweep floors will have a higher price than those who use riding sweepers.

Once you understand the process used, you understand the capability and will have a good indication about the validity of the price.

Nonetheless, selecting another contractor carries a cost for learning the intricacies of the property and establishing a working relationship with the buyer.

Further, a "cost of change" factor can also be included as part of the evaluation process, which provides a recognition of the value of the incumbent.

This topic will conclude in next month''s issue.


Vincent F. Elliott is the founder, president and CEO of Elliott Affiliates, Ltd. of Hunt Valley, MD, www.ealtd.com. He is widely recognized as the leading authority in the design and utilization of best practice performance-driven techniques for janitorial outsourcing and ongoing management.

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