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Pricing Bids for the Win

Pricing Bids for the Win

Cleaning contractors often believe that customers select janitorial services based on which contractor has the lowest charges. For all those that think this is true, guess what? You are both right and wrong.

Yes, there are building managers who always hire the low bidder or are required to hire the low bidder. But often they use the following logic as their guide: As long as the contractor’s charges fall within a reasonable range, based on the bids of the other contractors, they will take a serious look at the proposal.

What’s a Reasonable Range

This reasonable range can be fairly tight, often just plus or minus 3 to 5 percent. Just to show you how tight this can be, consider the following: If cleaning contractor A bids US$10,000 per month to clean a facility, but the others bid $9,700 or less, A is likely going to be out of the picture. It all came down to a $300 difference.

But let’s say one of our bidders, cleaning contractor D, says her company will clean the facility for $7,000 per month. This is a good $1,500 less than the reasonable charge the other contractors have presented.

Instead of accepting this low bid, based on my experience, building managers will believe the bid is too good to be true. And very often, it is too good to be true. Should D win the bid, the following is likely to happen:

  • 1.D goes back to the customer after a couple of months and asks to renegotiate the charges.
  • 2.D tries to make a profit by reducing work hours and delaying periodic work.
  • 3.D cuts corners, compromises quality, and eventually the customer terminates the service.

Because many building managers have been down this road before, they avoid repeating it. This is why the low bidder is frequently left out in the cold from the start.

What Managers Want

If astute managers rarely hire the high bidder, have learned to avoid the low bidder, and consider only those bids that fall into that reasonable range, how do they make their final selection? Here are some ways to avoid instant elimination:

  • Deliver the proposal by the due date. Some building managers view this as the first test when evaluating the RFPs.
  • Respond to all RFP requirements. Overlooking a requirement can take a contractor out of the running.
  • Address all customer requests. Be sure to include references, insurance documents, certifications, etc. in the bid package.
  • Show professionalism. Dress appropriately and come well-prepared if asked to make a presentation before building managers.

Finding the Justifier

A manager will typically narrow the field to about three finalists who can meet the previously mentioned requirements. She will then look for the justifier—the one cleaning contractor whose proposal makes a noteworthy difference compared to the rest.

Very often, the justifier will:

  • Make a suggestion that helps the customer operate more sustainably and efficiently
  • Propose new technologies that can help reduce cleaning costs
  • Recommend different cleaning strategies that may improve cleaning effectiveness
  • Offer ways to improve the health of the location.

In most cases, the manager must take her decision up the corporate ladder to review with senior management or building owners. She must justify her decision to these people. The manager realizes if the contractor works out well, this decision will be a feather in her cap. And if it doesn’t, well, let’s not go there.

           
Posted On May 10, 2018

Ron Segura

President of Segura Associates

Ron Segura is president of Segura Associates. His company works with all segments of the cleaning industry to help streamline their cleaning and building operations as well as promote sustainability and healthier cleaning strategies. He can be reached at www.seguraassociates.com.

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