Janitorial Performance—When is it time to rebid?

December 2015 — Most janitorial work is contracted and the typical term is between three and five years. Since janitorial costs are mostly labor, usually 85%-90% of the costs, how do you know if the labor is competitive with the marketplace? Some other thoughts may also come to mind:

  • Do you have the right scope of work (or too much or too little)?
  • Have you been asked to make budget cuts? Janitorial services are one of the top three expense categories (along with maintenance and utilities).
  • Are you receiving complaints about the quality of the janitorial services?
  • What are your observations? Does the facility appear clean, moderately dingy or look dirty?
  • Has it been many years since the contract was rebid?

When managing janitorial services, it would be ideal to know how other facilities are managing their costs. Maybe some are operating just fine on less, or perhaps what is being requested of you will result in a janitorial cost that’s lower than anyone else’s, which is not always a place you want to be (as your service quality may be less than others). Wouldn’t it be really helpful to explain where you stand on janitorial costs to management in a focused, rational way?  Direct comparisons with a valid peer group would be very valuable and appropriate in making the correct decisions.

What’s needed is good janitorial benchmarking data to compare how your organization is managing its janitorial costs: a chart showing the janitorial cost comparisons with a good peer group. One Key Performance Indicator (KPI) for janitorial work is the is Cost Per Cleaned Area. This KPI will show how your janitorial contractor compares with others. But comparing your janitorial costs with everyone else’s may give you the wrong perspective on your performance unless the comparisons are made with a relevant peer group.

Let’s start with a chart showing the benchmarking comparison for office facilities (as we have an office facility). One thing that really stands out in Figure 1 is that the first few buildings on the very left of the chart are operating at a cost level that is not sustainable for any extended period of time—they clearly are an anomaly; perhaps their budgets had been cut and their service quality may lag. When budget funds are restored they will be spending a lot to restore their facilities to a clean and proper operating condition.

Figure 1 – Janitorial Cost per Cleanable Area Filter: Office Facilities Provided courtesy of FM BENCHMARKING

Figure 1 – Janitorial Cost per Cleanable Area
Filter: Office Facilities
Provided courtesy of FM BENCHMARKING

This chart allows you to see at a glance how well your facility is performing its janitorial functions. There are 337 buildings in this peer group with a median janitorial cost per GSF of $1.34 per Cleanable SF and a first quartile performance of 1.21 per Cleanable SF. Our facility is in the middle of the second quartile and shown in yellow. It is operating at $1.27 per Cleanable SF.

While this performance is decent (it is in the top half of all office facilities), it indicates an opportunity for improvement; excellent performance would be in the area of the first quartile. It has also been more than five years since the janitorial contract was bid. There are other possible best practices that could also be considered to reduce the costs. In next month’s article, we will have more information on best practices and how to take advantage of them through benchmarking.

As one starts to take advantage of benchmarking, one may want to get an even more accurate filter set for comparison. For example, your building may be open 24/7; looking at only office buildings open full time may enable your building’s janitorial costs to place in the first quartile instead of the second. There are many other possible filters that may “move” your building’s costs up or down a quartile. When benchmarking, try to apply as many meaningful filters as you can (not all filters will impact the costs).

As you can see, from this example, benchmarking can be a good tool to see where you stand in a very quick and easy manner. If your facility performance is in the third or fourth quartile you will need to investigate further and benchmark some more to determine the next steps to take.

Articles are based on data from FM BENCHMARKING, which until the pandemic had been the online benchmarking tool for facility managers and CREs. Data tracked by FM BENCHMARKING includes cost and labor data as well as best practices for more than 95% of typical facility costs. For questions about benchmarking, please contact Peter Kimmel on LinkedIn. Peter was one of the principals of FM BENCHMARKING and now is consulting in the industry.