PAGE 8 - BUSINE RECOMMENDATION \ Building maintenance service is one of the fastest growing industries in the United States today. The growth of the service sector of the economy, the increasing urban concentration, nnH nn fivor.0rnurina ton^onnir fnr u?iv> vua i fcVIIVtVIIVJ 1W4 : office building owners to ^contract out" their office building cleaning needs combine to support a current industry ? growth rate of 15 percent. The _J_2l attractiveness of titts tiuirket and its relative easg_yf_entrx. ? caused a mgn? competition among building maintenance contractors. Firms obtain business largely on the basis of price competition in bidding, though an established reputation for reliability is also important. These industry characteristics, along with the labor intensive nature of building maintenance, services, underscore the importance of managerial skills to success. The building maintenance ? industry employs a large number , of minority workers, and lUeie exists a growing number of such persons with experience in ? supervisory positions.. An experienced maintenance crew supervisor, who acquires independently or through franchiser training practical skill in cost estimating, bidding, and employee management, can earna moderate return on his time and invested capital in the building maintenance service business. DESCRIPTION OF THE INDUSTRY A. Identification ' V ' Building maintenance services are included in Standard industrial Ctesstficatrorr^SICy 7349, Miscellaneous Services to Dwellings and other Buildings, described as: Establishments primarily engaged in furnishing, to . dwellings and other buildings, specialized services not elsewhere classified, such as janitorial services, floor waxing, office cleaning. Building maintenance contracting is a service-oriented activity providing janitorial and related services to homes, small businesses, commercial office buildings, hospitals, apartment houses, government offices, factories, hotels, motels, schools, etc. Services provided include such things as: -Dusting, dustmopping of floor areas. -Other floor cleaning, including vacuuming, floor waxing and buffing, wet mopping, and stripping and machine scrubbing. -Toilet room cleaning. -Cleaning of sta irways ^ and landings, as necessary. -Cleaning of walls, woodwork v and partitions. -Cleaning of building exterior. --Window . washing, as necessary. -j. ? ? Sample building maintenance specification^ detailing the required services, are attarhpH. as appendix A of this report. * 1 In addition to those services listed above, a building maintenance contractor may provide what is known as the "total maintenance concept." This includes the provision of heating, air conditioning, and electrical engineers, painters, carpenters, yardmen, and parage personnel. Other operations handled under such a contract might include elevator operators and dispatchers, guards and lobby dispatchers, and specialized personnel who might be required by the particular building or institution. There is a decided trend toward this total concept form of building maintenance. If a building servjees contractor is n<5t himself | A ^ <""i vi rv V IV ? V' ' 1 WV * * * * ' * * mm ** *" ' *****'* ' * 4 SS PROFILI equipped to handle all the abovementioned services, he may contract with the building owner to provide them, then subcontract those services which he himself is not equipped to perform. This tends to make the building maintenance contractor more attractive to his ?prospective client. _ A building owner or manager is interested in receiving the best maintenance at the lowest possible cost with the least visibility. This is best provided by the one contractor who rcnderc iH AA ? uuiiumg iiiaiiiLciuuiue luiiuuuns and the assurance that those functions will* in fact, be performed. Building maintenance services are usually provided to building owners and managers on a contract^tjasis. Contracts are generallyufor 1 year, with either party entitled to terminate upon :*0 days' notice. Since building ?maintenance and?janitorial services are performed on a continuing basis, the contractual system is the most efficient manner to insure the provision of these services. A sample Professional Building Maintenance Agreement is attached as appendix B. 2. Nature of the Customer The customer of a building services contractor is the building owner or manager. As discussed above, the client must have the services provided by the building contractor - that is, he must have a clean, serviceable building. However, in order to achieve this goal, he may, have the option of: (1) doing his own janitorial and other maintenance work; or (2) contracting such jMcCi 432 N. Liberty St. I S Our s ADOI EXTRA i Pantv I M j Our Reg. $147 ! In Irregulars Fits Hips 40" To 46 | ! McCrory's V. W JHWJWVJWWW WINSTON-SALEM CHRONICLE S ? MAINTE work to the building services. Which of these options will be chosen depends upon the size and complexity of the building to be maintained and the costs of performing the maintenance work with in-house staff compared to contracting out the work.' Building owners are finding - to a greater and greater degree that it is more economical? for them to contract out their janitorial and building maintenance functions. A firm - afford to use the equipment being developed and can rely more heavily on specialization of labor. The result is that the contracting firm can usually do a better job for less money. Thus, a building owner will generally include the cost of a building maintenance contractor when computing the overall cost of the building. On an average, if a commercial office building rents space at $6.50 per square foot, it will assume that "maintenance costs will be $.50 per square foot per year. ?' The cuatomcr will choose a building services contractor on , the following basis: . a) the contractor's ability ta _ provide quality service; b) the contractor's reliability to At i * assure mat sucn services will, in fact, be provided: and ? c) the cost which will be required for these services. On the other hand, how does the building services contractor decide^ for whose work he will bid? In undertaking market analysis of potential customers, the building services contractor will take into account such things as: the number of commercial, government, or other serviceable * buildings or businesses in his market area: the amount, types, and degree of completion of new construction; the amount of potential business already accounted for; the possibility of providing services to those buildings already accounted for' at a less expensive rate (due to the new contractor's lower overhead, lower salary .requirement, or greater efficiency), etc. The number and types of customers of a building services contractor will also depend upon certain characteristics of his own operation. These might include: number of employees on the navroll at a given timp- numher V ? O" ? "" of potential employees in the market areas; amount of equipment on hand t>r available; capital required for expansion and possibility of obtaining it. Major locational determinants "ory'sj Formerly H. L. Green | I Own I RABLE LARGE S . I_l i nose s 97\: I " and To 47" To 54" I ??? | Downtown I 9:30 To 5:30 Daily J \ *?e NANCE SER include the location of potential customers in relation to the dwellings of the contractor's employees and the location of the customer ' with respect to the contractor's place of business and storage supply. The contractor must decide if a building is, for example; so distant from the location of the cleaning equipment and the employees needed to do the cleaning that it is impractical for him to service it. All of these factors are included A % A ? * " mi TP** contractors estimating GalctH^iions.-Cost cstimatm** -?s? one ofthe major skills required of the building services entrepreneur. He must accurately measure the abovelisted factors, decide what weight to give each, and translate these decisions into a price which will be competitive and which will at the same time provide him with an acceptable profit level. These estimating procedures are discussed in greater detail below. An * example . of one possible estimating procedure is attached as appendix C of this report. 3. Technology Building services contracting' has traditionally- been a labor intensive business. The main expense item of any contractor is his payroll.?In?a?sense, the contractor is merely a "labor broker" who handles personnel The new or .prospective entrepreneur is likely to need a wide range of skills, preferably gained by experience i as he develops an enterprise in the building maintenance' field. He will probably do much (if not all) of the actual cleaning work at first, as well as the estimating of new jobs and the selling of his services. When the operation expands, the entrepreneur, while" still cleaning, estimating, and selling, will have to train his new employees. In addition, growth will bring problems of accounting, inventory control, purchasing procedures. He will have to have a relatively high degree of proficiency to operate a successful establishment. Once a business has become established, the entrepreneur of a building maintenance service can usually take out as profit 5 percent of the net receipts of the business, according to informed industry sources. The percentage wui vary, of course, depending on: a) the accuracy of entrepreneur's -estimating ^procedures. If the entrepreneur does not estimate properly, i I Winston Fu .1 "Fine Furniture Ri I 517 N. Liberty St.,V Office Ph: J *%? ' I I -8 Wkt Thursday, September 26, 1974 ? ' ' * ' < VICES m profits built into business -contracts will be consumed by costs overrun. b) the extent of the competition on the ~ contract. In some instances the entrepreneur will cut profit margins in an effort to win contracts. . c) the amount the entrepreneur wishes to reinvest in the establishment. This in turn will depend on the desired rate of growth. The employees of a building services contractor are, for the mrvQt narf nnoVill/wl . m m m WW V |#1M Vf IAI liJil 1 ^ JL HC? cleaners and any engineers provided.) Any training receiyed is usually on-the-job, although some^ larger contractors are beginning to use classes to supplement this training. Most employees used by the building services coiitractor are women, who are used for all but the heavy work. The majority of the employees in this , field, particularly in the larger urban areas,' are minority group ^ members. Since most of building i. A. ? -- ' contract worn is accomplished during the nighttime hours, it ? provides an excellent ~T "moonlighting" job and a source of income for those with little formal training or education. Wages rates for employees hover around the minimum wage rates applicable. In lafger urban areas, wages are usually somewhat higher. In Washington, ?"\ P fAr Avamnb UJith o \J v/ y rt/i v aUIII|/1 V| Witil d minimum wage of $1.65 per hour, . the wages of building service employees range from $1.75 to $2 per hour, with $1.90 per hour the . average rate. Window cleaners' wages are higher, often ranging from $4 to $4.50 per hour and up. In some locations, wage rates ana availability of labor may be somewhat affected by unionization. (The building services industry is covered by the Building Service Employee Union, as well as others for the more specialized employees.) This is mainly true in highly industrialized towns which are in any case predominantly union. Elsewhere, the moonlighting nature of the jobs and rapid turnover among the employees have prevented unionization from taking hold. Next Week: Problems -c rniture Co. I msonably Priced" I Vinston-Salem, N. C.I 724-5531 91 3il Heaters I ?s Available I v '*' * ? ?