NCMA 25th Annual Government Contract Management Conference

1
Industry BriefingA National Study of Cleaning
Procurement Best Practices
Presented by Vince Elliott, President - Elliott
Affiliates, Ltd.
2
Presentation Outline

• I. Case Study Portfolio
• Summary of Results
• II. Market-Driven Strategies
• Negotiation vs. Re-Bid
• Performance vs. Traditional Contract
• Market Dominate vs. Competitive
• National vs. Regional/Local
• III. Best Practice Procurement Checklist

3
I. Case Study Portfolio
4
Inclusion Criteria

• Mature Cleaning Program
• Available for On-Site Audit
• Will Provide Requested Access and Data
• Identity Protected (NDA Signed)
• Clear Example of Cleaning Model
• Geography Distributed Locations
• Office-oriented Properties
• Large Pod or Large Property

5
Study Methodology

• Assembled a Master List of Properties
• Secured commitment
• Conducted On-Site Inspections
• Conducted On-Site Interviews
• Conducted On-Site Data Collection
• Collected Participant Provided Data

6
Portfolio Study Sites

• Where were the properties included in the study?

7
Profile Total
Number of Properties 96
Number of Buildings 703
Total Square Feet 27,529,374
No. Inspections 27,964
No. Interviews 460
8
Portfolio-Wide Evaluation

• Cleanliness Quality
• Customer Satisfaction
• Operational Performance
• Financial
• What We Found

9
Case Study Portfolio
Not Clean - Unhappy
Clean - Unhappy
Not Clean - Happy
Clean - Happy
10
Case Study Results
Metric Before After Difference
Cleanliness 60.5 81.5 21.0
Satisfaction 77.2 79.6 2.4
Operations Operations Operations Operations
Night Productivity 5,316 SFPPPH 5,766 SFPPPH 450 SFPPPH
Day Productivity 24,249Per Hour 26,696 Per Hour 2,447 Per Hour
Service Level 2 Days per Week 5 Days per Week 3 days per Week
Type of Contract Traditional Performance
Financial Financial Financial Financial
Building 690,051 554,908 - 135,143
/SF 1. 37 1.18 - .19
/Hr. 5,684 5,589 - 95.00
Annual Budget 20,177,439 16,986,349 -3,191,090 (15.8)
11
II. Market-Driven Procurement Strategies
12
Market-Driven Strategies

• Negotiation vs. Re-Bid Contracts
• Performance vs. Traditional Contracts
• Market Dominate vs. Open Competition
• National vs. Regional/Local Contractors

13
Negotiation vs. Re-Bid
What is a Negotiation vs. Re-Bid Outsourcing
event?Which strategy delivers the greatest
savings?Which strategy delivers the greatest
occupant satisfaction?
14
Negotiation vs. Re-Bid Contract
15
Traditional vs. Performance Contracts
What is a Performance vs. Traditional
Contract?Buying tasks or buying results?Which
strategy delivers the greatest savings?Which
strategy delivers the greatest occupant
satisfaction?
16
Traditional vs. Performance-Based Relationship

• Performance-Based
• WIN-WIN, or
• Win-Win, or
• Lose-Lose
• W W
• W w
• L L

• Traditional
• Win-Lose

Win
Lose
17
Traditional vs. Performance
18
Market Dominate vs. Open Competition
What is a Market-Dominate vs. Competitive
market?Which strategy delivers the greatest
savings?Which strategy delivers the greatest
occupant satisfaction?
19
Market Dominate vs. Open Competition
20
National vs. Regional/Local Contractors
What is a National Vendor?Do National vendors
deliver National Performance? Quality Satisfac
tion Productivity Pricing
21
National vs. Regional/Local Contractors
22
Summary Comparison of Common Outsourcing
Strategies
Quality Sat. Price /sf Prod. ppph Value Index
Negotiation vs. 58.6 85.5 2.01 4431 25
Re-Bid (after negotiation) 82.6 87.0 1.71 4742 42
Traditional vs. 63.9 75.0 1.05 5313 46
Performance Contracts 83.1 78.4 1.01 5834 65
Market Dominate vs. 63.6 78.3 1.60 4848 31
Open Competition 71.5 76.3 1.00 5623 55
National vs. 71.7 76.6 1.10 5480 50
Regional/Local Contractors 70.1 75.6 .90 5597 59
National Benchmark Study (Average) 71.2 76.3 1.04 5516 52
Your Company gt
Normalized Function of Quality, Satisfaction
and Price.
23
Case Study Outsourcing Strategies
24
What works

• Four Outsourcing Strategies to think about
• Re-Bid when possible
• Use Performance-Based Contracts
• Open the local market to competition
• Consider regional contractors

25
What works

• Why?
• Lower price (greater savings)
• Greater productivity
• Greater value
• Cleaner buildings
• Fosters Process Improvement
• More control (competitive environment)

26
III. Best Practice Procurement Checklist
27
Implementation Overview

• Focus Group
• Customer/Occupant-Driven SOW
• Solicit Broad participation in Bid process
• Bid Conference Set expectations, Site walk thru
• Receive RFP Proposals double blind Capability -
  Price
• RFQ select finalists
• Reference Site Visits, Project Manager Interviews
• Final ProposalPrice Agreement
• 90 day Transition Period
• 6-8 months to stabilize

28
The Contract Reflects the Relationship

• Linked buyer-seller goals - results
• Pay for performance
• Establish metrics
• Quality
• Customer Sat.
• Financial
• Best in Class Systems

• Not-to-exceed cost
• Incentive-goal linked
• 3rd Party measured
• Three-way CPI
• Contract-level data validity
• Score Card Report

29
Case Study Preparation Checklist

• 1) Identify Internal Champion
• 2) Structured Change Management
• 3) Benchmark of Pre-Project Performance
• 4) Customer-Driven Specification
• 5) Collect Validate Property Profile Data
• 6) Conduct Local Market Capability Analysis
• 7) Out-Tasking Support
• 8) Define STOP Goals
• 9) Use A Performance-Driven Contract
• 10) Define Performance Measurement System
• 11) Prepare RFP Documents
• 12) Build-In Governance Structures
• 13) Conduct Pre-Bid Conference
• 14) Conduct Site Tours
• 15) Manage Pre-Bid Questions Communications

30
Case Study Selection Checklist

• 1) Cross-Functional Evaluation Team
• 2) Review Clarify Proposals
• 3) Conduct Bidder Capability Evaluation
• 4) Conduct Process Capability Evaluation
• 5) Conduct Financial Analysis
• 6) Conduct Risk Assessment
• 7) Value Stream Mapping
• 8) Finalist Interviews
• 9) Firm Final Proposal Pricing
• 10) Business Case Recommendations
• 11) Create a Transition Compliance Checklist

Is there life after Best Practice Cleaning
Procurement? Oh yes theres Transition and
On-Going Management.
31
The Outsourcing Business Case It's not about
finding the best price It's about finding the
best people, with the best processes, from the
best partner, at the best price!
32
Was this Session helpful?

• Questions
• Comments
• Other Strategies

Vince Elliott Elliott Affiliates www.ealtd.com 41
0-584-8560
33
Your Presenter Vince Elliott, President Elliott
Affiliates, Ltd.

• Vince is the founder and current President and
  CEO of Elliott Affiliates, Ltd. of Hunt Valley,
  (Baltimore), Maryland. He is widely recognized
  as the leading authority in the design and
  utilization of performance-based management
  techniques to establish continuous improvement
  systems for cleaning and facilities outsourcing.
  As one of the first to apply the concepts of
  performance based contracting in the Real Estate
  industry over 34years ago, Vince has a broad
  experience and insight into - and understanding
  of - the buyer's view of what clean means, how
  it is used in performance-based measurement, and
  on-going management of cleaning.
• Vince has represented buyers across the country
  in writing, modifying or updating over 500
  performance-based building service contracts with
  an estimated market value of over a quarter of a
  billion dollars in contracted services.
• Drawing on the work of Dr. W. Edwards Deming,
  Joseph Juran, Phil Crosby, Yoji Akao and others,
  Vince has integrated the methodology of the
  Malcolm Baldrige National Quality Award process
  into a powerful strategy for cleaning system
  management. His work has been published in
  national magazines and he speaks frequently at
  national conventions. Vince has also been the
  recipient of a number of awards and
  commendations, including the prestigious Apgar
  Award for Excellence by the National Association
  of Corporate Real Estate Executives (NACORE) and
  Cleaning Management Magazines Outstanding
  Service Award". He was recently the host on a
  weekly radio program called Consulting Success
  Key Strategies in Business Management on which
  he interviewed leading business strategists,
  authors and experts. Vince is currently a
  regular contributing editor a national industry
  magazine.
• Vince is a member of the Association for Quality
  and Participation (AQP) the American Society for
  Quality (ASQ), where he is a past chairman of the
  Facilities Management Quality Control Committee
  and a Charter Member of the Cleaning Management
  Institute (CMI). He is also a member of the
  International Facilities Management Association
  (IFMA), the Building Owners Managers
  Association (BOMA), CoreNet Global, International
  Sanitary Supply Association (ISSA), and (NCMA)
  National Contract Management Association.
• Vincent Elliott has a bachelors degree in
  Economics from Towson University and a Master of
  Operation Research degree from Johns Hopkins
  University in Baltimore. Vince is also a past
  Associate Professor at a leading Maryland
  University teaching service management
  strategies.