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Management And Training

The Janitorial Pricing Limbo Contest

September 19, 2010
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Have you ever found yourself in a bid situation where you cut your prices as low as possible to get desperately needed work, only to see the project awarded to a company that grossly underbid you?

If so, it''s likely you''ve inadvertently become a contestant in a customer''s "janitorial pricing limbo contest."

Be assured, you''re not alone.

Most cleaning service contractors have taken a turn or two trying to squeeze under the lowest level of the limbo pricing bar.

But, can there truly be a legitimate winner in this game?

The answer to that question principally depends on how you define winning.

Answers will also vary depending on who you are asking.

How Much Does It Cost To Play?

The customer''s obvious intention in hosting the limbo contest is to direct the building service contractor as low under the pricing bar as possible.

Buyers should be careful because there are some hidden — and potentially costly — fees and penalties that could be involved in this game, wiping away any anticipated savings.

Wouldn''t it be wise to know exactly how the game is played and to assess the risks involved before investing your resources?

In order to qualify any deductions to our findings, let''s first determine why this game got started and the domino effect it has on all participants.

Then we can each decide for ourselves if the game is worth playing.

Why A Limbo Contest?

Over the past 20 years, the average inflationary rate arguably comes out to be around 74-80 percent.

During the same period of time, the federal minimum wage rose from $3.35 per hour in 1989, to $7.25 per hour in 2009.

That represents a 116 percent increase in the cost of labor in 20 years.

Around 1989, janitorial companies were paid about 32¢ per square foot to "strip and wax" regular vinyl composite tile (VCT) floors and only had to apply four coats of finish.

Presently, contractors get around 10¢ to 12¢ per foot for performing a "strip and wax" and are required to lay down seven to eight coats of finish.

Using the rate of inflation to calculate what the price of a "strip and wax" with only four coats of finish would cost today, you will come up with a price of 58¢ per square foot.

That being the case, how is it possible this same work that was done in 1989 can be accomplished for less in 2009?

Moving The Bar

Twenty years ago, published cleaning production rates used to bid projects were between 1,200 and 2,500 square feet per hour.

Presently, the participants in these pricing limbo contests are using cleaning production rates as high as 6,000 to 9,000 square feet per hour — and higher.

Is it possible that cleaners are that much faster today than they were in 1989?

Could the significant technological advances we''ve all witnessed in the cleaning industry over the past two decades be credited for these huge increases in production rates?

Short of janitors wearing jet packs and roller skates while cleaning, do you really think these new production rates are realistic?

Limbo experts use those impossible production rates like a sleight of hand.

Contractors manipulate the math, attempting to conceal grossly underbidding a project.

In the case of the customer, using such rates would enable them to grossly underpay the cleaning service provider.

Either way, these ridiculous rates lower the pricing bar to a level where no intelligent contractor will even try to get under it.

Often, these low bidders bite off too much and can''t back up what they promised.

Sound Advice

When a customer — in a desperate attempt to reduce the cost of operations — ignores sound business practices, they ingenuously open the company''s wallet to the plight of a con man.

Misguided contractors and customers allow themselves to be enticed into a contractual relationship based predominantly on pricing with unscrupulous limbo experts.

My parents advised me not to use singular criteria when pursuing relationships.

Their words of wisdom went something like, "If a person''s appearance is all you''re interested in, that''s all you''re going to get, and that just isn''t enough to make a relationship work."

Try as we all have, there''s simply no getting around the adage, "You get what you pay for."

With that being said, it is possible to predict what a customer will get and what a limbo expert will "win" in this game of smoke and mirrors.

Getting Creative And Risky Business

There simply isn''t enough money in the contract to make this game work for the limbo contest winner.

Consequently, the contractor must deploy creative money saving schemes to realize a profit.

These schemes are risky at best.

At worst, they can lead to serious legal and financial consequences for everyone involved.

Even without realizing the legal and financial risks, these shortcuts will certainly have a negative effect on the contractor''s and customer''s operations.

Labor represents the largest and most costly resource expended in fulfilling contractual cleaning services obligations.

This compels the limbo experts to look the other way when job applicants start showing up with fake social security cards.

In order for this scheme to work, the host and contestants in this game must be willing to dismiss the risks and difficulties created by janitors that don''t speak English or are uneducated.

Who''s going to know the difference?

Eventually, the inconvenient truths of this game will be exposed and players held accountable.

If you''re not convinced yet, consider the ICE (Immigration and Customs Enforcement) raids that occurred in Pennsylvania around 2003.

A major retailer narrowly escaped criminal prosecution.

Those raids netted 245 arrests of undocumented cleaning workers.

In the end, it cost that retailer around $11 million in fines.

Watch The Ball

There''s another widely used deceptive practice employed in this game that bamboozles customers into believing they''re getting the services they''re paying for.

This sleight of hand takes place when the contractor reduces the frequency, level and/or quality of their field supervision to ensure profitability.

Of course, this isn''t the only trick they have up their sleeves.

With janitors constantly leaving their jobs — for one reason or another — the contractor takes their sweet time replacing these missing workers.

While the contractor is "working on it" and "trying to find someone" to replace the missing workers, they''re realizing a higher profit from being paid for work not being performed.

When things go wrong, the customer always has options available to them.

They could engage the contractor in productive dialog with the intent of resolving the challenges that were created in the bidding process.

In the world of games, this is referred to as a "do-over."

Of course, this would necessitate re-negotiating the terms of the contract to reflect more realistic numbers and expectations.

In the end, the cost of services would have to go up.

For that reason alone, those kinds of sound business practices are almost never considered, much less employed.

There''s no getting around the fact that you only get what you pay for.

If you pay in peanuts, don''t act surprised when monkeys show up.

Breaking Up Is Hard To Do

Make no mistake about it, both the cleaning service contractor and the customer share responsibility for the negative outcome of underbid contracts.

However, as difficult and painful as a breakup is, remaining in a bad contract is worse.

These unmanageable relationships are preventable.

Contractors and customers alike would be better served if they examined their bidding processes and educated themselves to the repercussions of these limbo contests.

When a company''s reputation or a facility''s image and appearance are on the line, it''s time to put aside the harmful practices of limbo contests.

Games are for children, not contractors and customers in the cleaning service industry.

If your company is presently playing in or hosting a limbo contest, it is time to end the game.

When bidding a project or contracting cleaning services for your company, do the math and check references.

Most importantly, use commonsense along with sound business practices. You won''t regret it.


James Madison is a janitorial management expert with over 20 years in the industry.

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