Whether for a four-year university in a big city or a K12 school district covering a broad rural area, educational administrators are always looking for cost efficiency. But when it comes to facilities management providers, an enticingly low price up front can cost time and money in the long run if your facilities company can’t deliver what they’ve promised.
To help sort out the difference between facilities management providers that are cost-conscious and those that may be overpromising with a low price, we’ve put together some tips for choosing a great team, as well as some red flags to watch out for. Always remember, if the up-front bid for a custodial or maintenance program sounds too good to be true – well, you know the rest.
The attraction of low bids
Proposed savings from a low-price facilities program is very enticing, especially for schools with budget constraints that are contracting services in an effort to reduce operational expenses. All too often, when a facilities provider offers very low prices, it is because they’ve overlooked important aspects of the scope of work, by accident or on purpose. Over time, this low-price proposal cannot meet the minimum required level of service, leading to long-term dissatisfaction and increased costs to correct the deficiencies.
The importance of the proposal process
School administrators have extensive experience with the RFP process for projects or commodities yet may have limited experienced with the RFP process for recurring services. Forcing a service program into the same low-bid process as a commodity can lead to a “race to the bottom” that rewards cutting corners.
Conversely, utilizing the same proposal process used for a one-time project produces a program that is not sustainable over the typical five-year term of a service contract. In both cases, the result is an unsatisfying experience for students, staff, administrators, and even the onsite service team.
Low price versus low cost: what can a low bid cost your school?
There is a big difference between price and cost. Here are some of the issues that can arise from choosing a facilities management provider based on low price alone.
1. Lower quality equipment
If your school’s RFP isn’t explicit about necessary equipment, it’s an obvious place for some facilities providers to cut corners to reduce price. Floor scrubbers and backpack vacuums, for example, endure a lot of wear and tear. Low price brands will not hold up to the daily rigors of use and lead to costly repairs and early replacement costs, surpassing any upfront savings.
To avoid equipment issues, ask potential providers to be specific about the brands of equipment they intend to use, whether that equipment will be new or second-hand, and whether providers intend to make a capital investment to replace any worn equipment your school already owns.
2. Not enough equipment or supplies
It’s most likely a case of inexperience, not deception, that leads a facilities company to give an unrealistically low bid – especially when it comes to equipment. As with the brands of equipment, if your RFP doesn’t ask for amounts of equipment needed, some bidders will come up short. The long-term problems here are clear: your facilities team either won’t have enough equipment to do the job to your standards, or they’ll come to you later with a request to buy more.
This is one situation where experience matters. School administrators should ask potential facilities providers to share a detailed assessment of equipment they think you’ll need. This is as easy as a one-page chart in their proposal, so don’t hesitate to ask for this information up front.
3. Fewer employees or lower wages
Staffing and pay are two of the easiest – and most costly – ways to reduce price. If a low bid is the result of significant staff cuts or much lower wages, beware. The pandemic has shown the vital importance of front-line custodial, grounds, and maintenance workers – and those workers who stuck it out throughout the pandemic know their value.
That means a low-bid proposal based on below-market wages or understaffed teams is going to create two major problems: first, recruiting enough employees and, second, keeping them. Experienced facilities providers know you can’t hire your way out of a turnover problem – and a turnover problem can be incredibly expensive over time. Great workers seek out facilities teams that value their time and energy. That starts with paying market rate or above and ensuring a thoughtful, functional work environment with technical training and career advancement opportunities.
Are low prices always a problem?
Absolutely not. As a general rule, proposal prices can vary as much as 20%. Low prices are not an issue if you know why they’re lower. Here are a few factors that can create cost savings for schools and will be reflected in lower-cost proposals.
1. Experience
A facilities management team that knows the industry inside and out will create a proposal that is accurate, transparent, and fair. Even better, work with a facilities provider that specializes in educational institutions, and your school can benefit from their experience with similar institutions – apples to apples.
Lower costs often signal this experience. When a provider has direct experience with schools similar to yours, they can create a more complete, accurate “roadmap” to a successful facilities program. Staffing, equipment, and supplies are easier to estimate more accurately, and the right company will be happy to explain their proposal in detail. Ease of doing business may not have a dollar amount attached to it, but the value of experience cannot be overstated.
2. Supply chain economies
We’ve all heard about supply chain issues over the past year or two. It’s not an easy problem to solve, but the right facilities management team can anticipate and reduce supply issues. Seek out a provider with a robust network of suppliers and subcontractors, and one that’s large enough to bring economies of scale to your program.
Also, be sure to ask potential providers about their commitment to minority and women-owned business enterprises (MWOBE), an important and often under-utilized resource in local supply chains.
3. More functional teams
We mention turnover as a result of too-low bids above. Keep in mind, however, that lower personnel costs may be a good thing – depending on the source of those price reductions. Streamlined job scheduling, proper equipment, or improved workloading, for example, can create staffing efficiencies that may not have been possible before.
Plus, creating a more efficient, functional facilities program can increase worker satisfaction and reduce turnover. Educational institutions moving to contracted services should compare proposals to current in-house staffing and ask why any differences exist.
One important point about recruiting and hiring: One of the most common questions we hear from schools considering contracted services is what will happen to their in-house teams. We firmly believe in retaining current employees whenever possible. Their experience is a huge benefit, and their retention can enhance your school’s reputation within the community.
When combined with industry best-practices, that experience and institutional knowledge will improve the day-to-day job efficiency, resulting in fewer deficiencies. If better wages or career opportunities are part of the deal, that’s a win for your school, your in-house workers, and your facilities provider.
Work with the right facilities management team
Ultimately, the right facilities team will have clear, solid reasons for your program’s pricing. While that may mean they have the low bid, we still recommend caution with exceptionally low-price proposals. Dig in, ask questions, and expect transparency from a potential provider.
Experience matters, with on-the-ground teams keeping schools clean, safe and appealing, and company leadership building partnerships with expertise, integrity, and transparency. That’s the best way to avoid hidden costs or less-than-satisfactory results in your facilities program.
For more information on pricing for your tailored facilities program, contact our team anytime at info@hesfacilities.com.
Disclaimer
The illustrations, instructions, and principles contained in this website are general in scope and for marketing purposes. We assume no responsibility for: managing or controlling customer activities, implementing any recommended measures, or identifying all potential hazards.