Vetting Vendors: Top Tips for Evaluating Performance

As businesses come up with creative ways to coax employees back to the office, property management must be at peak performance. This is a time to revisit vendor relationships to make sure there are no weak links that might lead to a negative experience for tenants and their employees that would harm the chances for renewals. Pricing, efficiency and the quality of service require regular scrutiny.

Technological advancements create new opportunities to streamline operations through collaborations with trusted vendors.

Jake Smith, director of asset services, Transwestern

“This integration can help drive internal costs down and reduce the costs to our buildings,” noted Jake Smith, vice president & director of operations for asset services at Transwestern. But he warns that seamless integration of vendor technologies requires comprehensive cybersecurity measures to guard against breaches.

During the post-pandemic return to office, Transwestern’s vendor decisions have been informed by a hospitality approach to amenities and tenant engagement. Technology and data analytics provide an understanding of real-time occupancy and the amenities that are being used on a given day. “We are gaining critical insights into how tenants are interacting with the building—like reserving a training center or ordering food—so that we can better offer the services that are needed,” Smith noted.

Building management should have an open line of communication with vendors—and tenants. There is a basic expectation for vendors to be reliable and trustworthy. “If something is not right, and you find out early, a minor issue does not have to become a big issue later,” remarked Zair Cheema, clinical assistant professor at New York University’s Schack Institute of Real Estate. That’s also why it’s always a good idea to invite tenants to share their feedback.

Since COVID-19, office building occupants have become more aware of guidelines for indoor air quality, ideal temperatures and water management. Cheema points out that sensors can help vendors and property management collect data about performance in a specific part of a building or for the entire property. “Then you can use data points to do surveys or talk to occupants,” he added. Some office campuses have small devices that post the cleaning and maintenance schedule with a keypad for building occupants to give feedback about a vendor’s performance.

Integrating property management in the early stages of designing a new building or retrofitting a building or taking over a new asset and reclassifying it is a must, according to Cheema. “Whatever we’re doing in the market, having the operations team part of the initial stages as a stakeholder is very important. We are designing with energy efficiency, water conservation and indoor air quality in mind.” Vendors should also understand the building’s design and function, he added.

Is the price right?

Ryan Room, COO, JLL property management

Building strong vendor relationships over time can also impact pricing. JLL’s property management team is adding value by scaling with their preferred service providers to capture better pricing while simultaneously increasing accountability around service delivery and the supply chain, reported Ryan Room, COO, JLL Property Management.

To facilitate vendor selection and pricing, Colliers maintains an intranet page that enables collaboration across the company. “It has forms and processes and procedures—our best practices are all lined up so that all our teams are working through the same format to manage client buildings in a consistent manner,” reported Tim Allison, executive vice president for Colliers’ U.S. real estate management services.

Providing a highly detailed request for proposals and a scope of work with clear performance metrics helps ensure apples-to-apples pricing on bids. The going rates will vary by market and the lowest price may not always offer the best value. As Allison puts it, “You could be getting more services or a better-defined scope from some vendors than others.”

Another way to ensure good value is to hold pre-bid meetings with vendors, walk through the asset and present clear expectations upfront about goals and performance, Allison advises. “It allows you to get the best pricing and the best value for the work,” he said. “But being responsive and very thorough also goes a long way with our clients.” Typically Colliers has one-year contracts, but there’s always a 30-day out clause in case an insurmountable performance issue emerges early.

Looking ahead to the future of property management and vendor relationships, Allison commented, “Anything we can do to reduce operating expenses—that’s the driver.” Energy is a huge component of costs. Colliers partners with companies that can analyze power consumption by every piece of equipment in the building 24/7, even when it’s unoccupied, and notify management about unseen problems that need to be fixed.

Hearing tenant feedback

Heather Battaglia, office portfolio manager, Hiffman National

According to Heather Battaglia, office portfolio manager at Hiffman National, every job or service is an opportunity to review vendor performance. Hiffman National’s management operations platform provides a vendor performance survey to each member of the property management team. The survey allows them to relay feedback so leadership can update Hiffman’s vetted vendor list as necessary.

“We absolutely survey tenants as well to make sure that vendors are doing a great job,” she adds. Tenants may have observed something that the management team was unaware of or have interacted with the vendor. Another benefit of the survey is letting tenants know that their voices and opinions are important to the management team.

“Our tenants are also able to formally provide this feedback through Hiffman National’s annual tenant satisfaction survey,” said Battaglia. “However, we find this feedback is often received through routine proactive check-ins from our property managers.”

Quality workers are still in high demand, and vendors often struggle to hire and retain them. Additionally, many owners are restarting capital projects they put on hold during COVID-19, and meeting the pent-up demand is proving to be challenging for vendors.

“It’s been interesting to see how AI is starting to shape what innovations are possible for both vendors and managers,” Battaglia observes. Hiffman National expects that advancements in the tools will help increase productivity and reduce spending along with providing real-time analysis and predictive modeling of building systems. “Our management operations team is continuously vetting new technologies and processes that will enable us to work seamlessly with vendors that are able to embrace new technologies.”

Sustainable supply chain

CBRE has a competitive—and market-inclusive—process for selecting its property management vendors. Categories include janitorial, vertical transportation, security, landscaping, snow removal, fire safety, HVAC, disaster recovery and restoration, and pest control. “Our work even extends into services that are brought in by our host customer experience teams,” said Joanne Lupatkin, Head of Procurement​, Property Management Americas. “That could include fun food events, yoga instruction and more.”

In addition to supplier diversity, Lupatkin’s team looks to engage vendors that can do the work at properties in a sustainable manner and with knowledge of local initiatives. “We’re taking a look at carbon emissions, of course, and seeing how we can work with our partners to measure that going forward,” she said.

“Most major companies we work with have a plan and resources around this, but we also work with small to medium-sized local businesses. We want to help them accelerate their work around net-zero emissions and emissions reduction overall. We have a lot of smart building technology that we’re working with our clients to bring to their buildings to help make a more efficient ecosystem,” Lupatkin reported. CBRE suppliers are encouraged to become certified by EcoVadis, a global provider of business sustainability ratings.