Carillion, once the second largest construction company in the UK, collapsed in 2018. It had a devastating impact on its 43,000 employees and 30,000 suppliers.
While we followed the numerous news stories and industry expert’s views on the matter, we also took the opportunity to re-evaluate ourselves and how we approach every job we bid for. You see, in the past we’ve lost out to Carillion and other companies like them, where client’s will push and push on price to a point where we’ve had to take our hat out of the ring, because there was no way we would have been able to deliver a job, provide a service or even pay staff at such a low price, and let’s face it, make a profit!
For some reason, companies seem scared to admit they make any profit from their customers, but if we don’t make a profit how would the company continue to grow or even function? How would we take on the next project, train staff and invest in technology if we were undercutting our prices so much, we couldn’t even afford to pay for staff holiday pay?
So how do SME’s like RFM ensure we are at the top of our game and provide our customers with the best service?
Be Transparent in Your Pricing
When we bid for any job, we always provide a complete breakdown of costs. Customers deserve to know exactly how much it costs to provide the service they require and that means being totally transparent about how much everything costs.
Each schedule of service we provide for our customers is broken down to include every detail, including all costs for everything from labour and materials to hire equipment and supplies. We also include a standard management fee, and a description of what this fee covers, so our customers can see how much we charge for the management of the contract, as well as giving customers the visibility and assurance to know what they are paying for.
Don’t Agree to Provide a Service you Know you Won’t be Able to Offer
Often, what a customer believes it takes to provide the service they are looking for, is not the case. Whether that’s down to lack of experience, previous service providers or pressure from senior management, sometimes they can try to pressure providers into agreeing to service standards that aren’t achievable.
Take cleaning as one example. We were asked recently by a prospective client to look at a cleaning contract for their premises on 40 hours per week. After carrying out an assessment it was clear they wouldn’t be able to achieve the cleanliness standards they required for anything less than 50 hours per week. We were honest in our approach and openly discussed with them what it would require and that we couldn’t take the contract on for anything less. In this case, unfortunately the client didn’t take our advice and decided to go with the company who came in at the ‘right price’ even though we made it clear that the service standards could not be met at that price.* Unfortunately, this trend can be seen happening across the country, and now Carillion may not be the only casualties of the ‘cheapest price is best’ culture.
*That customer came back to us when the service they received from a competitor didn’t meet their expectations.
Manage your Own Supply Chain
Our services are provided directly from staff that we employ and not from numerous sub-contractors. Many large service providers rely on sub-contractors, resulting in the supply-chain, spreading so far and wide that staff have no affiliation to the client and often lack motivation and pride in their work.
We ensure all our staff are directly managed by us, so we can vigorously train every new employee and offer them a career path full of opportunities. Our staff are often trained on areas other than their specific roles too, which means they can think on their feet and be able to offer the client a first-class service without always having to call on another staff member. The commitment our staff show to their roles is fed back to us from various happy clients, including a night security guard who also taken on a morning cleaning role and a cleaner who brings in gifts for the staff in the office she looks after. It’s this personal touch that just can’t be replicated when large companies continue to dilute their service standards with multiple agencies and temporary sub-contractors. Clients will thank you for it.
Provide clients with a dedicated account manager
Building sustainable client relationships are more likely to award you with repeat business than being the cheapest on the market. Our account managers build positive rapport with the client’s they look after and gain their trust and loyalty. Meaning, more often than not, we’re first in line to hear about new projects.
Each of our clients is assigned a personal account manager who they can call on any time of the day. Because they work closely with them, they can quickly determine how best to help. Plus, if a client has one point of contact it makes invoicing and signing contracts much simpler. No pages of paper to wade through and no sitting on the phone trying to speak to people in different departments.
The full implications of Carillion’s collapse continue to be determined, but the sum of monies owed to sub-contractors alone meant an uncertain time for many SME’s. Now it seems, lessons must be learnt, and government action should be taken in order to protect those companies that are unwilling to compromise on service levels simply to win contracts at any cost. In fact, ECA director of business Paul Reeve said in an FM World article:
“These findings underline the need for concerted action from the government and banks to protect and support SMEs in the construction and services sector. The government should also introduce legal measures to ensure SMEs are not continually exposed to upstream insolvency.”
And we would agree…