By Daniel Cozza
While every commercial property is different, all facility management professionals share a common responsibility: procuring vendors for building services, from general contractors to painters for that new lobby look. But many management teams don’t realize that this common Request for Proposal (RFP) process could be costing you money, time, and threatening occupant satisfaction. What are the hidden risks?
Risk 1: Subject Matter Gaps
Facility managers are great at managing the day-to-day operations of the buildings they oversee, including responding to work orders, tenant communications, fire and life safety, and other property operations responsibilities. They’re not experts at everything — how could they be?
When it comes time to collect bids for building services, facility managers often find themselves unfamiliar with the subject matter of the bid. For example, if a property is asphalting a parking lot, how does the facility manager know what criteria to look for in a provider? Do they know enough about asphalting to know what to ask, or how to have a conversation about the topic? The answer is likely no — they are a facility manager, after all, not a paving expert.
Asking the wrong questions or leaving out important factors from RFP criteria leaves gaps in the proposals. This opens the property up to the danger of what the team didn’t know to ask, such as a lack of insurance coverage or expertise in a particular aspect of the job.
Tip: Use standardized templates for RFPs. Talk to an expert in the subject matter to develop your list of questions and criteria.
Risk 2: Wasting $1.3B Annually
Many facility management teams may loathe one particular part of the RFP process — the time spent and wasted collecting bids. On average, an RFP can take anywhere from 6-14 hours per project. Paid at an average rate of $35/hr, facility and property managers waste $1.3B PER YEAR simply collecting, reviewing and managing providers for their buildings.
That’s time that should be allocated to providing a building’s occupants with great service!
The biggest time-suck in RFPs happen due to the lack of a formal process or standardization. Responses to your RFP come in all formats — pages and pages of Word documents attached to an e-mail, PDF files shared via Dropbox, or difficult to manipulate Excel documents or file sharing services.
Each document often includes everything the vendor wants you to know about them in order to win the deal, but there’s no way a decision-maker has time to adequately comb through a long document.
Facility managers need a quick and easy summary of vendors to make an informed decision. They may spend hours on each RFP to consolidate all bids into a grid (e.g. in Excel) to compare vendors side by side.
Because all the responses look different, this is often like comparing apples to orange, bananas and pears. Vendors don’t respond in a uniform way, leaving the facility manager to make their own assumptions while interpreting the responses, spending hours on the process and missing key details (see Risk 1).
Tip: Ask the same questions up front that really matter and ask all vendors to answer the same questions. Get every facility manager throughout your property to adopt the same practice. As your organization grows, standardization allows you to scale and increase efficiency, all while reducing risk (even if your managers leave the organization).
Risk 3: No Transparency
Managers have a fiscal responsibility to ownership to make the best decisions for their properties. But, often, the choice of vendor goes to the lowest cost or whoever the facility manager has worked with in the past. This opens the organization up to the risk of choosing the wrong vendor for the job.
In fact, among users of my company’s building operations software platform we have found that even when trusted vendors compete for a project, 60% of RFPs are awarded to new vendors that turn out to be a better fit.
The lowest-priced provider is not always the best option. That means cost itself is not the only factor that matters. Perhaps it’s warranty, code requirements, license, or service levels that serve to minimize risk down the line. There is real damage possible from a provider without proper insurance or training — the money you save up front is rarely worth the money you’ll potentially expose yourself to after an incident that isn’t covered.
Tip: Conduct a transparent RFP decision process. Be clear as to why you choose each vendor beyond their cost. Black out pricing when you review responses, and look for vendors who provide excellent service, have verified reviews online on sites such as Yelp, Google, the BBB, and more. Some RFP automation technology will do this for you.
Every property manages vendors — from general contractors to electricians. But, what many management teams don’t know can be costing them money, time and tenant satisfaction. Be aware of the hidden risks in finding, and managing, vendors, especially the dreaded RFP process — and use the steps above to avoid them.
Cozza is chief product officer for Building Engines, a premier operations platform powering modern CRE. Building Engines helps operators deliver an exceptional experience for building occupants, while maximizing profitability for owners. With over 20 years of experience building product and teams in B2B software businesses, Cozza has worked at both startups and larger, global companies. He also serves as an advisor for several early-stage technology companies in the retail and medical spaces. Cozza has experience in a variety of industries, including payment processing, CRM, data protection and most recently, AEC.
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