Published In:
CFO Date Published:
15th August 2002 Author:
Simon Segal
With a highly competitive industry where barriers to entry are little more than a "bucket and water", there is little scope for corporations to save on their cleaning bills. The trend is increasingly towards better management of cleaning services.
Fraser Allen, national business development manager at Berkeley Challenge, part of the Spotless Group, says labor and labor related costs (such as superannuation, payroll tax, leave provision, insurances etc) are 85 to 90 per cent of a client's bill. "The cleaning industry is notorious for being highly competitive. The best client outcome is not often achieved through tendering on price. Tendering may deliver a short-term cost saving, but a longer-term approach can have more sustainable cost benefits over the life of a contract."
He refers to modern techniques and systems being developed among the larger cleaners, such as linking contracts to performance; encouraging cleaners to move beyond "just cleaning" and become the "eyes and ears" of the premises they are cleaning (such as reporting malfunctions and even fixing small problems such as light globe replacements); involving the cleaning service in the broader management of their premises; and encouraging companies with shared premises to pool their cleaning services and thus avoid duplication in areas such as administration costs.
On the latter point, Allen feels that "tenants should see themselves as citizens of a building or premise and co-operate as such to better manage their cleaning and environmental services." Allen adds that longer-term contracts have the added benefit of reducing tendering costs. "It is far more expensive for clients to tender annually than over long-term contracts. Also, the focus shifts to service and relationships rather than price."
Jani-King general manager, Andrew Barker, points out that this could be more costly for clients. "By being independent, we are free to buy and contract from who we like. This is more competitive and hence cheaper than using a large cleaning service that makes profits at each stage of its service. Small companies are more competitive in the market than larger companies on the basis of reduced senior management costs. More independent companies can use their global buying power to select partners that offer the same competitive edge given by larger corporates. Large asset managers have many divisions to provide service to their clients to package the essential services together. Each part of the structure must return a profit to its shareholders, therefore, with better corporate buying, more independent firms are able to show a true reflection of real costs for all services provided."
Expense Reduction Analysts (ERA) consultant, Pam Walker, finds "perception is everything for the cleaning overhead. The key to a good cleaning service is for everything to be cleaned properly and left as it was found."
She believes savings can be found within this framework in efficiencies, scale and time: "Small cleaners get paid more, provide better services. The larger the cleaning operation the cheaper the cleaning service, but it is common for standards to drop. By contracting the larger cleaning services, companies can save up to 35 per cent on their cleaning bill. It is unlikely that the standards will drop by as much. The critical issue is thus managing the client's expectations and that standards meet this."
Greg Nicholls, who left Australian Maintenance and Cleaning earlier this year to pursue a different path, identifies different opportunities in saving on cleaning costs - companies with multiple sites can reduce the number of cleaners they use into one or two contracts; negotiate with cleaners at a senior level, as it is often left to junior employees to negotiate and monitor the cleaning service; set clear guidelines and make procedural arrangements among their employees as to what they should clean and what should be left to the cleaners (for instance, the kitchen); give clear guidelines (do they clean desks, dust and such).
Walker finds that when companies want to review their contract, "it can create a divide between management and staff. Management are looking for the best price to cover the services needed while staff prefer a status quo because they're comfortable with the cleaner".
So, to achieve successful recommendations for this overhead, companies should review the situation by talking to staff to get their input, acknowledge concerns and explain the difficulties and costs associated with multiple suppliers. "In most instances there are no specifications listed, so these need to be prepared, tailored and agreed upon by the staff at each site - from such considerations as frequency and times to specific specialty tasks and contact details for a key staff member. Once a company has a full picture of the requirements, it can put out a brief to the market and choose a supplier. The most effective implementation has been for management to take the cleaners chosen around each site to introduce them to the staff."
She adds that companies should not end the process there: "Contact with the new cleaners must be maintained, the evaluation reports reviewed and staff consulted to gauge that service levels have remained consistent and staff are happy."
Then there are indirect cleaning costs that Nicholls points to. These include sick leave costs (a cleaner environment reduces the likelihood of getting sick or injured); capital maintenance (assets, especially carpets, last longer if well-maintained); and liability around safety issues (for instance, slippery floors). Next month: Overheads NO job too small The level of cleaning service provided by large cleaning firms ranges from small, stand-alone cleaning contracts to major long-term contracts for large-scale facilities.
Most large cleaning services are able to tailor their services to the specific requirements of each client. A total service can be provided, including day and night cleaning; cleaning of all interior and exterior buildings and facilities, roads and pathways; waste management; graffiti removal and paper recycling. Specialised skills can also be provided, such as high-access cleaning in industries such as food manufacturing and processing and cleaning in hospital environments. Cleaning services provided by the larger groups typically include:
General cleaning
Regular treatment of all surfaces, incorporating processes such as dusting, waste pick-up, vacuuming and toilet room servicing.
Specialist cleaning
Carpet cleaning, graffiti removal, window cleaning and high-pressure water cleaning.
Grounds maintenance
Gardens maintenance and enhancement, grounds cleaning, landscaping.
Waste disposal and recycling
Removal and appropriate recycling of waste systems.
Washroom maintenance and supplies
Cleaning and washroom consumables, as well as full hygiene services including sanitary bin supply and service.
Mechanical road sweeping
Industrial-grade machinery for cleaning public roads, driveways and large paved areas.
Carpark maintenance
Stripping and sealing of concrete car park floors, mechanical scrubbing and sweeping.
Waterways maintenance
Collection and removal of refuse from the waterways.
Food court management
Efficient management of food court areas including table bussing, hygienic cleaning of food serving areas and table setting.
Hospitality maintenance
General housekeeping, including cleaning, changing linen and curtains.
