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,
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: 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
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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 <! imwu.
c building. In the
totaTconcept plan, the contractor
in effect serves as the "middle
man," .presenting the' building
.owiier with a completed product
w _ ? I .
a , ciean^ana gtuciently run
building.^; . ? L
Characteristics
1. Nature of the Product
The building maintenance
contractor serves building.
owners and-or managers. He
prnvirfes these clients with a
continuing service - a ciearl and
well run building. The reliability
of the building service contractor
~ is~being purchased as well as his
cleaning ability - the assurance
that the work will, in fact, be
performed. Thus, the product can
actually be broken down into two
components: quantity and
quality of cleaning and other
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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
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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
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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
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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,
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VICES
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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
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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,
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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
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Vinston-Salem, N. C.I
724-5531
91
3il Heaters I
?s Available I
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