High Gas Prices Pumping Money From BSCs
By Jim Peduto
Jim Peduto is the president of Matrix Integrated Facility Management and the co-founder of the American Institute for Cleaning Sciences, an independent third-party accreditation organization that establishes standards to improve the professional performance of the cleaning industry.
Just like the rest of the country, building service contractors have helplessly observed gas prices as they increased rapidly in recent months. Unfortunately, it sounds like it’s only going to get worse before it gets better — government sources estimate prices will go even higher this summer.
While BSCs are likely feeling the pinch, their employees — especially part-timers — are taking a bigger blow. For example, consider that a part-time worker gets paid approximately $8 an hour and works four hours a night. That’s $32 in gross pay. Now figure that this person drives approximately 15 to 20 minutes to the job location. According to online fuel cost calculators, it costs this person $4 to $5.34 to make the roundtrip with a fairly efficient vehicle (30 mpg). Ultimately, the cost of gas is guzzling up to 25 percent of their paycheck.
In a situation like this, BSCs either have to address this issue or prepare for employees to address it. This means increasing employees’ wages, providing fuel allowances or offering other incentives. However, these tactics pose another problem: Who pays for them — the BSCs or their customers?
For many BSCs with tight margins, absorbing the cost is not a feasible choice. The only actions they can take in the current market are:
- Cut costs: Costs can be cut in any area of the business to make up for increases in fuel and will vary by company. Regarding fuel- and travel-related costs, evaluate the efficiency of company vehicles and get rid of the high-maintenance, low-mpg ones. Also, eliminate unnecessary trips.
- Operate more efficiently: Know where and when employees and company vehicles are at any given time. Find out how long it takes for each trip, then map and consolidate routes. Schedule a meeting with employees to discuss the issue of gas costs and encourage them to car pool (if they drive to work or the job site) and make intelligent decisions with company vehicles such as taking alternative routes instead of sitting in traffic.
- Pass costs on to customers: If you have no choice but to turn to customers to help manage your cost increases, there are few ways you share cost increases. First, increase prices by charging more for your hourly rate or rate per square foot. Or, add on a fuel surcharge to cover the cost of each trip to their facility. Another option would be to add a service call fee or mileage fee on a case-by-case basis for additional trips or emergencies.
Your customers are already well aware of the increase in gas prices; however, they may not always be as understanding as you would like. Be honest and straightforward regarding any price increase or fee and make the charges as small as possible. Losing a customer is costly but continually losing employees and delivering inconsistent service may produce the same result.