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Developing a Commercial Janitorial Budget and Understanding Janitorial Production Costs

Let’s get this out there: commercial janitorial work is not complex. As such, it would stand to reason that purchasing commercial janitorial services would be very simple: call a few vendors, ask for “quotes”, and pick the least expensive. Simple, right? Well, maybe not. In this article, we discuss janitorial production rates and their impact on setting your janitorial budget.

The 800-Pound Gorilla: Labor Costs

As mentioned in previous posts, the cost of direct labor, or wages, accounts for 75-80% of most janitorial budgets. Furthermore, by adding in the cost of labor related items like payroll taxes, benefits, uniforms, and screenings, the total overall labor cost approaches 90% of most janitorial spends. As such, it is safe to say that the primary emphasis should be placed on estimating the cost of labor when developing a janitorial services budget.

 

Janitorial Labor Math

The direct labor calculation seems to be somewhat straight forward:

Hours required to complete the janitorial tasks )man-hours0 x Wage rates.

However, the “man-hours” portion of the equation requires a bit more consideration. More specifically, developing a good estimate of the total man-hours required to effectively complete all tasks requires experience and expertise. Miscalculating man-hours can have a significant impact on the quality of your janitorial work. An example will best illustrate this point:

Vendor A Quote:
Daily man-hours estimate to complete tasks = 40
Wage rate = $11.00
Estimated Daily Direct Labor Cost = $440
Estimated Annual Direct Labor Cost = $114,400 )$440 x 5 days per week x 52 weeks0

When work commences, Vendor A discovers they missed their calculation:
Actual daily man-hours estimate to complete tasks = 48
Wage Rate = $11.00
Actual Daily Direct Labor Cost = $528
Actual Annual Direct Labor Cost = $137,280

The annual difference between the quoted price and the actual cost is $22,880.

The vendor has 4 options:

  1. Review workflows and work plans to increase efficiencies to bring the actual man-hours more in line with the estimated man-hours.
  2. “Bite the bullet”. Hire the additional labor, and simply make less money or even lose money.
  3. Ask the customer for more money to cover the cost of the additional labor needed.
  4. “Cut corners”. Do not complete all the tasks in the scope of services in order to make the initial estimated man-hours.

Reputable vendors will try the first option, and if no efficiencies can be gained, will land on the second option.

 

Production Rates: The Key to Estimating Man-Hours

There are two methodologies for estimating total man-hours to complete the scope of services: Macro and Micro. Each method has its strengths, and most reputable vendors use a hybrid approach when estimating man-hours.

Micro Methodology: This methodology requires a vendor to have some building measurements and other building data. For example, in this methodology, a vendor might like to know the total square feet of each flooring type )e.g. carpet, hardwood, VCT, ceramic tile0, number of restrooms and fixtures in each, number of break areas, and total square feet of cleanable space. The vendor will use this information in combination with industry standard production rates to calculate estimated man-hours to perform each task. Here is an example of using production rates to calculate man-hours:

Total square feet of carpeted space = 35,000 sq. feet
Production Rate: Full Vacuuming, with standard backpack vacuum = 10,000 sq. ft/hr.
Estimated man-hours required to vacuum all carpets = 3.5 hours

The vendor will repeat this calculation for each task )e.g. dusting and wiping surfaces, dust mopping and damp mopping floors, emptying trash, cleaning restrooms and break areas0 to estimate the overall facility man-hours requirement.

Macro Methodology: This methodology requires a vendor to consider their experience working in similar facilities. For example, a vendor that serves several medical practices might indicate that the overall production rate for similar medical facilities is 2,600 sq. feet/hr. Here is an example of a macro calculation:

Total cleanable square feet = 80,000
Medical facility production rate = 2,600 sq. feet/hr.
Estimated total man-hours required to clean the entire facility = 31 hours.

As mentioned above, reputable vendors will typically take a hybrid approach when estimating total man-hours by using specific information from your facility in combination with estimates from facilities of similar size, scope, and complexity.

Suggested Budget Action Items

  1. When requesting pricing from vendors, ask for a “janitorial proposal” instead of a “janitorial quote”. In our industry, the word “quote” is code for “I want the lowest price”. A proposal, on the other hand, should describe how the vendor intends to meet your needs, anticipated staffing plan, implementation plan, and of course, pricing.
  2. Gather as much information as possible about your facility. This information could include: total square feet, total square feet of non-cleanable spaces like server rooms and storage areas, estimated amount of flooring types or percentages of each flooring type, number of restrooms and average fixtures in each, and number of break areas.
  3. When meeting with prospective vendors, ask how total man-hours were calculated. This question allows you and the vendor to clarify any items in the scope of services and discuss modifications to the scope of services. Reputable vendors are anxious to discuss this question as it helps to justify estimated costs.

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