This week's article comes to us courtesy of Ron Segura, President of Segura Associates. Ron's expertise in helping clients evaluate and improve their FM services is well known in the industry. As you read his article think about your own RFP process and the expectations you have of your service providers. Are the two in alignment?
Once upon a time a janitorial company was a janitorial company. Firms in those days didn’t think to venture into integrated pest management or landscaping services. But today it’s a different story, and comprehensive facility management (FM) is the name of today’s game.
Clients now expect FM contractors to bundle services such as landscaping, integrated pest management, sustainability, HVAC services, general repair work, and more.
A cleaning company that does not want to grow continues offering a narrow scope of services. But FM service providers with an eye toward the future uncover ways to provide multiple services either in-house or through strategic alliances with other service providers. By partnering with a pest management company or an HVAC firm, FM contractors can offer multiple services and pass on cost savings and efficiencies to their customers.
While FM contractors are providing more services than ever before, RFPs from clients have yet to catch up. Often RFPs include specs cut and pasted from RFPs the client found on the Internet. Sometimes these specifications include outdated information or processes that are cost prohibitive to provide. These poorly thought out RFPs box the contractor in, making it difficult or even impossible to provide the services the customer really wants.
"Too many well-intended managers are pressed for time and put together RFP's based on what they believe to be a ‘universal’ standard -- the cut and paste approach,” says Richard M. Fineo, MCR, director of development at DTZ-a UGL Company.
He continues, “Often times an old bid, or even a neighbor/colleagues bid, will appear to save the responsible party time in the preparation of the RFP and seem sufficient. The problem with this is that the specifications, which should drive the costing become an ‘approximation’ of what is called for -- a sort of ‘wink and nod’ at what is really needed.”
There’s little continuity when RFPs are put together this way. There may even be contradictions within the specifications themselves. For instance, the RFP might specify monthly stripping and waxing, but the industry doesn’t strip and wax anymore, it strips and finishes (or coats) the floors. This is also no longer done on a monthly basis because it’s not cost effective and there’s no need to with today’s more effective products. Those issuing the RFP falsely believe that in order for floors to look good, they need to be stripped and refinished each month, but what they really require is a solid floor maintenance program.
If FM contractors try to adhere to these RFPs, their cost estimates may be higher than the client wants. Or they may cut corners to come in at a lower price, and then the client isn’t getting the services they really need.
“If there was EVER a good time to bring in a consultant, it is during the critical RFP preparation stage,” Fineo adds. “Adherence to the RFP will become the strongest evaluation tool, and if it does not truly reflect the needs, wants and expectations of the person issuing the RFP, and ultimately the award of service, then the entire process is flawed.”
There clearly is a need to change the entire RFP process and to reduce the window of time needed to move through to the end where a bid is awarded.
A few years ago Stanford University revamped its RFP process with extremely positive results.
The first step of their process was to pre-qualify service providers to narrow the field of qualified bidders to a list of ten. This list should include companies with solid reputations and weed out those with less than stellar ones. Once these companies have been identified, the bidding agency should send out correspondence stating their intent to go out to bid for these services and request FM contractors to supply company information or marketing materials that demonstrate their interest in the work and their capability of carrying it out.
Those FM providers that respond are then afforded an opportunity to give a half-hour presentation on predetermined topics. Stanford allowed potential bidders to talk on four things: sustainability and their company involvement in this initiative; communication processes in place; technologies and products used in the performance of duties; and the transition process used to set up new accounts.
These presentations are evaluated by an RFP team, which might include a representative from the facility management department, the site manager who directly receives complaints or concerns from occupants, a quality control person, an outside service provider, and possibly a contract administrator or financial representative.
After the presentations, the RFP team scores the results and narrows the field of potential bidders to three, with the incumbent as a fourth. Many times the scoring methods used in this process utilize complex matrixes that dilute the evaluation until it becomes labor intensive and mechanical and decisions are based solely on price. Stanford kept the process simple and scored presenters from one to five on their green program, transition plan, training program and communications process.
It is then and only then that these firms would have an opportunity to bid on the RFP. The advantage is that instead of having 10 companies submitting bids, there are only three and these companies are prequalified to do the work.
Before providing the narrowed field of FM providers with an RFP, the RFP team will have reviewed its specifications and adjusted them as needed. The specifications will provide adequate information on building statistics and cleaning frequencies and reflect whether or not there will be a need for green or sustainable services. Stanford’s team combed through its existing specifications and found their current provider was not addressing some areas. These areas had been an issue on an ongoing basis and a cause for complaints. They adjusted their RFP to address these issues to better reflect the services Stanford required.
RFPs must be specific. If there are sustainability concerns, for example, the specification should list the goals the agency wishes to reach. Do they want to be LEED certified? Do they hope to use greener chemicals and cleaning processes? Is recycling important? How much do they hope to divert from the waste stream? Is saving water or energy a goal?
"Any good RFP also allows for input on the part of the bidder, an opportunity for the responsible bidder to go beyond the RFP and advise as to new methodologies and efficiencies that could potentially save money and improve performance,” adds Fineo. “This is an opportunity for free advice. Why wouldn’t you ask for it? It can be an indicator of whether or not your RFP respondent will become a true 'partner' or just a contracted service provider.”
And herein is another advantage of working with fewer bidders in the RFP process. There is an opportunity to work with them more closely to ask for advice and pick the brains of these experts. A good service provider will seize this opportunity to point out concerns within the specs, such as the need to strip and wax floors monthly.
Ask tough questions of those applying for the job, adds Fineo. "I welcome RFPs that include questions about recent losses. What have YOU (the vendor) lost recently, what was the reason and what did you learn from the experience?” he says. “I've landed more than a few contracts by being able to articulate the lesson, albeit painful, of an account that ended with a cancellation and how our approach in the future would include the lesson learned.”
Price is important but not the only thing, Fineo stresses. "Very often the responses to an RFP will be reduced to a matrix of the financial piece -- and little else,” says Fineo. “If the one and only goal of the company providing the bid is saving money, an unfortunate position to be sure, this should be made clear from the onset. If instead, the bids are honestly going to be evaluated for value that includes experience, innovation, sustainability, and of course financial value, etc., you can see the special importance attached to an RFP that reflects these desires and concerns.”
If companies truly desire FM contractors to bundle services, their RFPs need to reflect that. Developing a bidding process similar to the one used by Stanford can help companies get the services they desire at a price they can afford.
Ron Segura –President of Segura & Associates is a Consultant who assists its client’s in analyzing outsourced and In House cleaning programs, and assisting in the development and leadership of the RFP Process.