Shifting towards Outcome Based Contracts (OBC)
Having spent the last 36 years in the cleaning industry, gone through 2 recessions and an economic downturn, the evolution of the cleaning industry continues to impress that this industry will continue to grow despite all the challenges it faces.
One thing for sure is that the stakeholders must take this opportune time of the COVID-19 pandemic situation to reset and start driving the cleaning industry in a different direction. As the saying goes, “You cannot expect a different outcome when you keep doing things the same way.”
During the last one year, the demand for enhanced cleaning and disinfection services skyrocketed as a result of the pandemic. Cleaning services became essential services overnight and the frontlines became instant heroes (although many a time unsung) for braving the pandemic and still coming to work to ensure that all operational premises are cleaned and sanitised.
Service buyers have also reacted positively by encouraging our frontlines with thank you cards and messages, meal and beverage treats and many other forms of motivation and encouragements to spur them on.
The effects of the pandemic have also aroused the emotions of the general public and many of whom have expressed that cleaners are generally unappreciated and undervalued. This has led to a survey commissioned by The Straits Times on 14 June 2020, where 8 in10 Singaporeans expressed that they are willing to pay up to 10 to 20% more for essential services, provided the extra amount goes to the workers.
While it is common knowledge that the enhanced Progressive Wage Model (PWM) has already seen a 3% increase in cleaner’s wages year on year from 1 July 2021 to 30 June 2023. The impending increase from 1 July 2023 and beyond is the current talking point as the Tripartite Cluster for Cleaners (TCC) is already engaging the stakeholders and will be recommending the next phase of the PWM soon to allow all service buyers sufficient time to adapt to the increase.
With the PWM expected to rise steeply to reflect the real value of cleaners and professionalise the industry, service buyers should quickly look into the possibility to procure cleaning services differently. The current cleaning contracts are predominantly headcount-based contracts, whereby service buyers are dictating the number of headcount required and evaluating the procurement process and service providers on their capability to provide the headcount instead of the quality of the work performed.
Since about 80% of the cost of cleaning contracts sum is the labour cost, cleaning expenditure will definitely increase year on year as the PWM dictates.
Hence, the way forward would be for all service buyers to adopt an Outcome Based Contract (OBC), where the reliance of labour doing menial work is reduced and by implementing the following to circumvent the leaner workforce:
- Better cleaning tools and materials to replace traditional way of cleaning.
- Technology adoptions to improve work processes and productivity.
- Digitalisation of work process for better accountability and efficiency.
- Up-skilling of the human resource to embrace the new technologies and digitalisation of the work proesses.
- Job redesign (JR) to ensure the trained human resources are assigned to their new roles and job description in order to achieve the positive effects of productivity and efficiency growth.
The success of an OBC will only be possible if the stakeholders can holistically agree to roll out all of the above concurrently. Hence, the first step is still the services buyers buying into the concept to better control their ever increasing cleaning expenditure.
At Anergy Building Services, we will be most willing to partner our current clientele as well as prospectives ones to embrace OBC to better manage their cleaning cost, professionalise the cleaning industry by attracting new workforce to join the industry with the continuous up-skilling of the human capital, adoption of technology to improve productivity and work efficiency, leading to the uplifting of the image of the industry.
Together, we can achieve.