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Output-based contract disputes on the rise

16 July 2015

Independent benchmarking specialist i-Clean Systems warns of a rise in client-contractor disputes for output based cleaning contracts in healthcare

i-Clean highlight that an increasing number of organisations are suffering from the underfunding of contracts resulting in understaffing, lack of suitable equipment, low staff moral and failing standards.

Mike Boxall, MD of i-Clean Systems warns of a rise in disputes for output based cleaning contracts in healthcare.

Over the years, there have been notable shifts and trends towards the insourcing and outsourcing of cleaning in healthcare. The latest towards outsourcing, followed the scrapping of the ‘two tier’ code in 2010, in favour of non-statutory ‘Principles of Good Employment Practice’. This permitted contractors to develop pay and conditions outside of Agenda for Change and has sparked signs of a two tier workforce returning.

Why outsource?
Arguably though, there are many good reasons to outsource. Contractors can negate the risks of employing staff directly and can consolidate many FM services. Typically, contractors are better able to manage large numbers of staff, have back-up staff to cover holiday or sickness and access to specialist technologies, methods and equipment. Multiple task and purchasing from one provider also brings about economies of scale and single-point accountability.

More recently, there has been an increase in output based contracts which are undoubtedly more efficient than traditional input style contracts. Rather than stipulating in detail, the method and frequency of cleaning, output based contracts focus on what is required and the target standard (the output), regardless of how it is achieved.

Output based contracts remove unnecessary constraints, positioning the contractor as the expert. They allow the contractor to draw on their expertise to find the most efficient, cost effective way to meet the required standard.

The client benefits from cost savings as the contractor finds innovative ways to deliver cleaning at a lower cost, and the risk associated with creating the right schedule is passed to the contractor. However, there are an increasing number of client-contractor disputes around the levels of cleanliness achieved.
 
Where is it going wrong?
Typically, contractors self-audit delivery and report to the client but in a rising number of cases, client completed audit results fall far below those reported by the contractor. This marked disparity in performance undoubtedly leads to frustration, mistrust and dispute over actual performance standards.

Equally, in cases, vague output specifications are resulting in low contractor bids and the underfunding of contracts. Underfunding of contracts often leads to understaffing, a lack of suitable or usable equipment, low staff morale, client-contractor conflict and falling standards until they reach an unacceptable and untenable level.

Responsibly falls on both parties!
Output contracts can be rewarding, but they require sufficient planning, negotiation, partnership working and careful contract management from the very start.

By their nature, measuring output based contracts can be subjective, therefore mutual agreement must be reached. Drafting the right contract terms and SLAs whilst keeping restraints to a minimum requires a thorough understanding of output based contracts, as after all, these will drive performance delivery.

That said, independent auditing and best practice benchmarking is the only way to be certain that you are really receiving a best value cleaning service, and is arguably the best way to manage long-term contracts. It not only provides the ability to continually compare against other best in class providers to drive on-going service improvements and value for the client, but also manages the expectation for the contractor.
 
To illustrate this further, according to our benchmark data, those that use on-going i-Clean independent auditing and best practice benchmarking reviews are on average 52% more efficient than those that
don’t.
 
For case studies or more information about independent auditing and best practice benchmarking visit www.i-Clean.info or call us on 01684 580 680


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