Contracting Out Services 101

The March 2009 edition of Buildings magazine features an article by Jenna M. Aker titled "Get the Best Service Contract in 4 Steps." Outsourcing certain services for building operation and/or maintenance is a good option for not only for saving money, but to access better expertise in a specific area that a building owner might not have in-house.

In her article, Ms. Aker states that once decision has been made to outsource a specific service and a list of achievable objectives has been prepared, there are several steps a building owner can take to get the best possible contract for that service.

1. Know your vendor. Do your homework to determine that the contractors you are considering are qualified for the service you need. Not all companies are created equal, and you need to know who you're hiring. The lowest price is not always the best choice.

2. Ask questions. It may be the most burdensome part of the process but a thorough list of questions are worth their weight in gold. For sample screening documents, etc related to contracting out building maintenance and operations, click here.

3. Be Specific. The agreement with the service vendor should reflect a meeting of the minds between the building owner and vendor. It should be specific to the needs of both parties. A pre-printed form provided by the vendor will likely address the vendor's concerns, but not the building owner's. The more vague and ambiguous the terms are in the agreement, the more opportunity remains for misunderstandings and disputes.

4. Negotiate. Don't settle for the canned language in a contract if it does not meet your needs.

An agreement, besides needing to accurately represents the business deal that the parties agreed to, should provide a clear mechanism for measuring performance (not anything vague and subjective). The obligations of each party needs to be clearly spelled out, the vendor should be required to carry adequate insurance coverage, and there needs to be a dispute mechanism that is workable for both sides and sufficiently detailed as to how it will operate. There also needs to be clear 'outs' for a party to terminate the agreement when the other is not performing as agreed.