Labor Savings
Oct 1, 2010 12:00 PM, By Terry Thetford
Outsourcing custodial services: common steps to success.
With most school districts all over the country scrambling to cover educational funding shortfalls and increasing class sizes, at least one state governor is publicly questioning why all school districts don’t contract custodial services. School district administrators are facing the increasing budget cuts pressure to consider (or reconsider) contracting of those support services that are not related directly to curriculum delivery.
However, a district’s consideration of outsourcing custodial (and other support) services often is cut short because of a lack of available staff, accurate cost data, past failures, avoiding the disruption of change, community/staff cultural resistance, union pressure, fearing loss of management control and quality, or even some states contracting regulations. But, as many districts face significant budget shortfalls and the potential savings so real and significant, those districts are being forced to take a fresh look, even if it means making some uncomfortable “cultural” change decisions.
Outsourcing custodial or other support services may not be the silver "budget cut" bullet for all education institutions. But experience has shown that successful school districts with in-house programs of moderate size or larger—10 to 15 buildings, 950,000+ square feet, and with generally concise geographic boundaries—have realized a savings of 25 to 40 percent when eliminating in-house services (costs) and outsourcing custodial services.
For example, if a district in the 1 million-square-foot range can save just $.50/square foot on custodial costs, it has saved $500,000, which could mean five to seven teaching positions or meet other facility needs. Other districts have found a smaller savings, but a higher level of quality and service delivery.
Unless the majority of district staff and patrons are involved in, or at least informed about the process and can understand that custodial services can be purchased as a standards based “commodity” service, the outcome of the effort will be less than optimal. The shift in overall perspective does take time—it may actually take a year or two to walk the stakeholders through the transition and have acceptance of the new way of doing business. It is a “bottom line/business model" perspective that many districts resist culturally and politically.
Those districts that have completed the comprehensive cost review and standards establishment have, at a minimum, validated whether their current delivery model is or can be made more cost-effective; established current performance and desired standards for in-house custodial staff; quantified what savings may be possible; determined whether pursuing contracted services makes sense; and determined what cleaning standards to specify in a request for quotations (RFQ).
Note: There are a number of trade and industry-generic service standards guidelines for reference, including APPA (APPA.org). Pricing ranges many successful districts are realizing:
Level A: Pristine service…almost never any complaints: $1.55 to $2.00 range
Level B: Generally neat and orderly…few complaints: $1.35 to $1.55 range
Level C: Routine daily service… a few more complaints: $1.15 to 1.35 range
Level D: Reduced frequency of service… Complaints common: $.95 to 1.15 range
Level E: Minimal cleaning, debris evident, frequent complaints: $.95 and less range
Keys to success
Education institutions that have outsourced custodial services successfully have several things in common—they "front-loaded" their contracting and service delivery process following some common steps with:
1. Accurate and current accounting data of pure custodial services costs. With 85 percent of overall (fully burdened) custodial costs being labor, it will be important to identify those current positions that are hybrid (not 100 percent) custodial and determine the portion of the costs that are "pure" custodial.
Smaller, more dispersed districts often have combination day custodial positions that perform some maintenance tasks without any clear definition of assigned custodial duties or cleaning standards to be met or followed.
Without taking staff and patrons through the internal process of establishing the current and acceptable service standards options, there is no clear definition to the standards vendors would quote, and generally, there is a wide range of interpretation of what "cleaning" means.
Too many districts that skip the “setting standards” step and incorporation of those standards into the RFP/Contract, and generally find out after the contract is signed that the service level provided does not meet staff and patron expectations. Promised savings and/or quality improvements do not result—either from failure to adjust the overall service model (staff reductions) or to monitoring contractor performance.
There also is ongoing contract compliance and accountability value in having “in-house” staff be part of the original evaluation and setting standards. When those staff are not available, outside and independent facilities consultants can facilitate the review process, audit a vendor review, as well as an unbiased formulation of bidding, and ongoing evaluation criteria. It may also be possible to purchase the service directly from another successful district with staff consulting time available.
2. Establishing the cultural/philosophical will to make necessary budget reductions and change the fundamental way they do business. Outsourcing services that historically have been in-house functions with long-time employees is a major shift in institutional culture that many districts are not equipped to manage—despite the cost savings that could be realized.
Unless the decision process is gradual, inclusionary (staff and patrons), and the standards basis is well-documented, the emotions of change can derail the process. Once you can get stakeholders to view custodial services as a standardized "commodity," the teachers and classrooms will prevail, overcoming community loyalties and union objections.
As administrative, business and facilities staff begin to investigate the possibility and potential savings of contracted services, it will be important to start a concurrent staff and public “cats-on-the-roof” discussion of the pros and cons of contracted services and possible transition options. Most often the discussion comes down to a couple of factors: quality of the service an outside service provider will provide vs. in-house custodians (what the buildings may need to give up) and the affect the outsourcing of services will have on existing staff positions and lay-offs—both very emotional and subjective discussions.
Generally, the loyalty to existing custodial/maintenance staff is difficult to overcome and will be resisted vigorously by any union representation without a well-thought-out, inclusionary transition plan and sound (verified) financial basis.
Many of the successful outsourcing of services happen incrementally/over time with the discussion and alignment of expectations happening up-front and then letting the projected savings drive the decision. In many cases the transition can start with a management contract to manage in-house staff to perform to industry and internally developed standards/efficiencies, then consolidate staff as attrition takes place, and transition to contracted staff a building (or group of buildings at a time over time the softer approach. New facilities are often the best testing grounds for the outside services and can prove that quality is maintainable (cleaning standards) and other perceived down sides to contracted services are manageable. The incremental approach can prevent the fear of an “all in” methodology and make the transition more comfortable for everyone. But again, the key is to establish the service standards and evaluate the service provider’s performance on those documented and contracted service standards. Additionally, the standards can provide a means to monitor in-house staff performance and efficiency as well as time to realign and further define the overall support services model.
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