[Les]

Hi all,

Had another sleepless night as I try to come up with the right way forward with our largest contract.....so I thought I would ask the advice of others

We've had a contract for 12 years without incident or complaint.
For the first time the company have had to get a competitors quote. It relates to work within the NHS and although its not big bucks as a small local cleaning company it has been very important to us.

My issue is simple....having done the maths...checked the result and then double and triple checked the result...it suggests that to include the cost of staff salary and associated costs, provision of all equipment, chemicals and consumables required and the fact that the work is very specialised, they are charging £9:20 per hour....AND include a weekend visit plus quarterly and annual deep cleaning within the price 

Now given a local Gardner here charges £12.50 an hour to cut your grass and a window cleaner works on £15 to bring along themselves, a ladder, some scrim and liquid (not demeaning the job lads) that cannot be possible.

My thoughts are that the manager at the company may be misunderstanding the quote which they said provides 2 hours daytime 1 cleaner and 3 hours evening 2 cleaners....they believe this to mean 6 hours per night hence the £9.20 figure whereas if it was 3 hours the hourly rate jumps to £15.33.
I've suggested the mistake but they are adamant that its 6 hours.

So now I am faced with supplying a quote that will show us adding 45p an hour to our already reduced hourly rate, ( they are charged less than any other contract due to the volume of work and traditionally they have provided consumable cleaning products and equipment) and absorb free additional cleaning and supply products......

Advice very welcome

[Robert Parry]

Hi Les,

How many hours do you currently bill the client for?

Regards,

Rob

[Les]

It would be approx 8 hours a day....but remember the figures also include deep cleaning FOC....on 20 rooms and are before al the usual overheads that we all face....that's without that nice little add on....called Profit...

[Robert Parry]

Les,


So, at first reading, your competitor has matched the specification, just killed you on the costs.

There are a number of ways of them doing this.

1. Employ young cleaners/students to minimise wage bill, lower rate of NMW.

2. Employ other staff  who are not aware of the NMW.

3. They plan to cut the cleaning specification without telling the client.

4. The competition is a small company and they are just taking a wage for this work.

5. The premises is primarily made up of hard flooring, and they are putting in machinery to cut labour costs.

6. The new contractor is a management company.

There are of course, many others!!!!!!!!

Is the site fully staffed by your own employee's at the minute?

Or do you undertake some or all of the cleaning on site yourself?

If the site is currently serviced by staff, TUPE will apply, so you may well lose your staff as well, the upside of this is that the contractor taking over will have to maintain current wages etc, if the figures are wrong as you suspect, it will not be long before the phone rings asking you to sort it out.

If you do some of this work yourself, the situation becomes a little more complex!

Anyone can quote a lower price, and in these financially stretched times clients must find ways of doing more for less especially within the NHS.

I assume that the total hours for this site are 40 hrs per week, so for the sake of arguement lets say that you pay £247.60 in wages (NMW) to this you obviously have to add on your costs, NI, Holiday Pay, Insurance & Equipment etc.

Some things to remmeber!

After 12 yrs onsite, especially without recieving any complaints etc, the site must be running pretty smoothly, so perhaps you may well be guilty of over engineering the site, and you could cut 10 minutes a day of actual cleaning time on this site, which you could utlise to either use on the periodic cleaning or cut your price to the client.

If the site is well setup, correctly managed and the staff are reliable, your profit should be in the region of 5% - 10%, perhaps this is a lot less than you currently recieve? Now, dont get me wrong, this must be sickening for you, but this is where looking at the long term picture may well be benificial.

If you know the other company that has given them a quote, do some research on them, nearly all firms have a reputation of one sort or another, this may well allow you to understand how they have submitted this price.


Regards,

Rob

[Les]

Hi Rob

Thanks for your in depth reply

I take on board all that you say.
The premises is of various floor types depending on the age of that particular part of the building...grown considerably over the years.

The other company are medium sized with approx 70 staff. From my own past experience I know that having lots of staff does always guarantee the best service but it looks impressive.

The issue is really that hourly rate which just can't be right....however I do the maths or cut the cake there is no profit to be had.
Even at the rate we have gone in at leaves virtually no margin for error and at the lower price I may as well give them money not to turn up.....

A funny old World we live in these days.

[Robert Parry]

Hi Les,

Like I said in my earleir post, there are ways of lowering the costs within this contract, but the client may well see only the bottom line!

At the price they have gone in at, they must be confident that they can ensure a smooth running site, with virtually zero chance of problems, so will be able to make it pay with 5-10% profit.

Again how contractors set out their quotes is not standardised, so you may well be correct in your belief that service hours may well be cut, as most cleaning contracts/specifications  are in actual fact poorly written, often leaving out vital information which enables the contractor to either intentionally or accidently to mislead the end user of the cleaning service.

As for the hourly rate on a 40 hour a week contract, im afraid if you elect to pay min wage that is about where its at, what you are relying on at this level is tight controls,procedures, small turnover of staff and an ability to match the cleaning performed to the clients expectations, no more and no less. It is possible, and many people within the industry work this way, mainly the bigger players it is true, but even at the price they have quoted, there is still profit in there.

Best of luck!

Regards,

Rob

[Andrew Heald]

Hi Guys

In my experience, stay well clear of it

Let the big boys take the hassle for so little money!

It is truly not worth it, and thats from a friend of mine, and he turns over nearly £7million.

He says he regrets getting into large tenders ay very low rates.

[clarkson]

Hi
I lost 60 k a year this year to a national offering, wait for it £7.12 per hour contract rate.

I have yet not worked out how it can be done? Even taking Roberts points it doesn't add up.

My current feeling is its a lost leader and they plan to hit for a big rise at the next review.

I was told match it or walk after 12 years service .

I walked.

John

[handyal]

If the figures do not stack up you did the only thing possible by walking away unless you have enough funds to finance your business for the length of the contract.

Is there any guarantee this business will have its contract renewed when the time comes?

[Neil Jones]

How did you get on Les?

[Green Clean Direct]

New on here but with a few decades in business.

The first thing to know is whether the contract will be awarded on price only. After 12 years onsite, you should have an inside edge to judge which way the wind is blowing. The opposing element is that after so long in contract, they may simply be looking for a change to show their superiors that they are flexing their muscles !

If you need to cut your throat to make this work, then drop the idea. Hard though it is, trying to keep it going when there is no crumb of profit to soak up the tea will eat you up and you'll have created a rod for your own back when renewal comes round again.

As someone suggested, look at where you could cut out any waste, improve efficiency and eliminate any complacency.

Best of luck.

[John Kelly]

Unfortunately a lot of multi faceted companies are soaking up contracts as loss leaders with the hope of once in the door they can get the other contracts such as security etc. If they dont they just pull out of the cleaning once the contract ends.. dont know if this is the situation in this instance. When it does happen there is very little you can do to combat it.

[Office Cleaning Company]

Sounds like they could be buying the work as the previous poster mentioned maybe to get in the building with view to get other work, facilities etc.