The contract cleaning insider
29 January 2018
In this new column, a contract cleaner will offer an insight into the challenges facing the sector. First up is Iain Fraser-Jones, MD of Greenzest Sustainable Cleaning, on the demise of Carillion and why ‘buying’ the business will always ends in tears
A lot has been said in the wake of the Carillion collapse, but of the many factors believed to have contributed to its demise, the bidding of service contracts at zero net margin, or even worse zero gross margin, is the one that will resonate most in contract cleaning. The practice has gradually become more prevalent in our industry. Whatever the reasons for doing it – as a contribution to overheads, to bolster cashflow, to stop a competitor winning the business or to act as a ‘sprat to catch a mackerel’ – it’s a strategy that will always run financial risks, as well as causing disruption for the client and reputational problems for contractors at large.
I’d like to think that in cleaning it’s just the public sector where it happens, but the reality is it’s the private sector too. Why? For two reasons. Firstly, service providers believe they can make money by not doing what they promise and secondly, clients continue to view cleaning as ‘just cleaning’. It’s a low risk service – what can really go wrong by accepting the lowest bid?
Well maybe it’s the risk aspect that is the problem. Are we talking about low risk to the client organisation as a whole, on the basis that poor cleaning will not disrupt its day to day operation or affect its reputation? Try floating that idea in the shiny offices of a city finance house.
Or is it low risk to procurement, in that if the contractor fails they will easily be able to bring in a replacement? Do procurement teams really want that aggravation?
Or are we talking about low risk to facilities management because sub-standard performance can easily be picked up and managed through penalties and default notices? Not great for the long-term relationship, surely?
On balance, I think it’s the third of these risk assumptions that creates the inviting loophole for contractors – the knowledge that penalties will rarely be enforced, giving them the courage to bid low. They do so, knowing that they can recoup their margin by under-delivering against the specification.
The answer is surely to create sustainable contracts. By treating the contract as a win-win partnership, where there is a shared objective of delivering a service the client wants at a profit that is sustainable to the contractor, both parties will benefit and time will never be wasted unpicking the mess of contract failure.