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CUT-THROAT CONTRACTING IS COSTING EVERYONE


BCC Deputy Chair Paul Thrupp highlights how the sector needs to clean up its procurement act for the good of both clients and suppliers.


At the time of writing, the full extent of how the collapse of Carillion will impact the hundreds of smaller firms, and thousands of workers in their extensive supply chain is still not clear.


One thing we can all be sure of is the impact of a company of that size ceasing to trade, having provided so many services either directly or through sub-contracting across the cleaning and FM sectors, will be felt widely throughout our industry.


And whilst the complexity of the Carillion issue means it will take time to really understand how a business of such a scale could go into compulsory liquidation, one thing is clear: the margins were so wafer thin that it had been hovering over a precipice for some time.


One analyst has pointed out that their construction division delivered profits of just £11m in the first six months of 2017, despite posting revenues of £675m. That’s a margin of just 1.6%, meaning a revenue shortfall of just 2% could trigger a £2.5m loss.


Clearly those of us in the cleaning sector who tender for contracts, both for public and private sector organisations, are acutely aware that a client’s need to ensure ‘best value’ in many cases still translates as the cheapest.


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This means to win work some firms are having to squeeze then shave, and then micro-plane their costs to the very bone – or make commitments to deliver services for a price which simply doesn’t add-up in the real world.


If followed correctly, procurement best practice should discount bids which are potentially unsustainable due to unfeasibly low offers. But in the highly competitive, cost-conscious times we find ourselves in, it is easy to see how a small price, combined with big, confident promises of committed delivery, can still win the day.


This is why the British Cleaning Council continues to urge all suppliers, specifiers and procurement managers to adopt the principles of the EFCI’s Selecting Best Value guide which was published last year.


It’s a 45-page handbook packed with common sense and practical advice in relation to understanding what best value really looks like, and how to go about ensuring that contracts and contractors are all on the same page regarding adopting a sustainable approach to either buying or bidding for cleaning services.


The BCC itself was consulted on – and contributed to – the EFCI guide, and we’ll be on hand at the forthcoming


http://britishcleaningcouncil.org/2017/06/06/bcc-chairman-praises-efci-best-value-guide/


Manchester Cleaning Show in April to tell you more about it. If you can’t make it to Manchester you can also download the Best Value guide for free via the BCC’s website here.


“A race to the bottom to win work continues


to be a false economy, no matter how big a company you are.”


Of course, that’s not the only reason to head to the Manchester show at Event City. Over two days (11-12 April) there will be a packed schedule of seminars, debates and demos about every facet of the cleaning industry, plus exhibition stands from the UK’s top cleaning suppliers.


I’m sure in April we’ll also still be feeling the shockwaves of the Carillion affair, and the Manchester event will give us as a sector the chance to come together and reflect on how a race to the bottom to win work continues to be a false economy, no matter how big a company you are.


www.britishcleaningcouncil.org twitter.com/TomoCleaning


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