[johnnyzooph]

Hi all,
Ok so I've walked into a nitemare of my own makinig... I took on a  contract that had been running for 2 years. I have a lot of work with this company doing their offices but this was for their head office. I took it on face value that the contract would be similar to my own. I admit that I read the contract but was more interested in what they expected in their boardrooms and conference centre so I missed a vital paragraph. It transpires that they expect me to provide;
"All cleaning materials and equipment necessary for general cleaning ie chemicals, sprays, mops, buckets, hoovers, cloths, dusters, bleach and black bags and in addition including but not limited to; all toilet rolls, hand towels, washing up liquid, dishwasher tablets, kitchen roll, air freshners necessary to maintain  a busy office ".

All this for an hourly rate if £11.95.
Obviously I'm going to have to renegociate  or walk but it is only this one building in a contract of 14 that has this clause and I don't really want to lose any work.

Has anyone else come across this type of contract? Is it something that goes on and how do you deal with it. Their usage is phenomenal and their latest request was for a box of tissues on each deak to help prevent the spread of colds. Their are 60 desks and more being added weekly. I know it's just the procurement manager trying it on as it only happens in this one building but any advice would be welcome.

Thanks in advance.

[Robert Parry]

Hi Johnny,

When dealing with any contract it is vital that both parties fully understand the scope of the contract between the two parties, you should have read and understood all the implications.

Of course, you now realise this and face a major problem!

You now have to find a solution!

My first thought would be to ascertain who won the battle of the forms, did you supply your client with a specification and a service contract, or did they supply them to you?

The last dated contract wins! (hope its you!!!!!!)

Whichever contract applies, is there no provision to raise prices due to material price increases?

Are you actually losing money? You probably are on the head office job, but taken together with the other sites, can you not absorb the extra costs, this will only work if you signed up for a year, struggle on with a little profit for the year, keep very good records of your costs, and punch them in at re-newal time.

Supply them with the cheapest consumables possible, haggle with your jan san supplier on trade discount taking into account your likely usage and buy in bulk if possible to pay as little as possible, thus helping to minimise the costs.

Be honest with the guy, explain your mistake and offer to supply whatever they need on a cost only basis, again haggle with your supplier and buy in bulk to minimise your clients increased costs.

If you have typed the relevant paragraph word for word, I would take the contract to a specialist commercial lawyer, as that paragraph seems to be extremely open ended, and may in fact be unlawful.

If you did indeed supply the spec and the contract, somewhere within that document, the magic E.O.E (errors and ommisions excepted) should be there.

Hope the above helps, but its now late, so excuse spelling 

Regards,

Rob

[martin19842]

hi there,

i have seen these before, but never entertain them, as usually the client will be paying a premium for that type of contract, where as if they actually paid for the consumables they used they would inevitably pay less.

tough one

good luck

regards

martin

[gordonswindows]

Hi Johnny

First you are not alone, there are a lot of these contracts out there and you can make money. The big guys like to do contracts like this because they use the "control" they have over the client.

We have two large deals same conditions as you, it takes around six months to break even then you start to profit and increase steadily each month. The second year is when you really start to make big money but and this is the difficult part you have to be able to sustain the drain of the cash-flow needed to get through the first months.it sounds like with the other sites you have that you will be able to carry it.

Roberts advice is spot on you have to begin to squeeze costs from every angle. First begin with the staffing what we do is move on the waste and increase the hourly rate of the good ones for this you get increased work for less staff costs. Then onto the supplies again Robert is correct find yourself a real supplier not the local guy you know and screw those prices way down with the payoff for him of being able to ,ove bulk. Reduce your handling costs by having your supplier deliver(free) direct to each site. Don't over order if you have large stocks your staff and your client will use more. Eg if there are only two sheets of loo roll when you use the loo you manage but if there is a fresh roll or rolls they will use loads. The ladies in the office will nick a loo roll for their desk they always do and of course you have to secure the stock so it doesn't disappear.
Payment terms for you to get paid MUST be 28 days and a late fee for any after we add on £75 late fee ,they always pay on time, and your terms with your supplier needs to be at least 60days but preferably 90 days.

There are many other ways too but to recap reduce overall staff hours by correct scheduling of tasks increase hourly rate to the good staff squeeze every last drop out of your supplier and make sure you get paid on time but are allowed at least two months to settle your costs this allows you the cash-flow to get to the profitable months.

It is hard and it doesn't suit everybody but once you get into the profit producing months it is money for nothing.

Take a wee bit time out to think it through before you do anything and first decide if it is for you, if it's not tell the client upfront you overlooked the investment required to make the contract work and ask if you can renegotiate some of the terms but if it is for you go for it full on, it's not easy and there are many hard decisions that people won't like but you will be successful and before you know it you will be chasing this style of contract with the best of us

Chill out it is not a mistake it is learning through experience

Good luck and think of the money

Gordon

If you decide to go ahead email me and we can have a chat