Managing the contract portfolio

These contracts are dangerous in that not only do they become extremely time consuming, but they affect companies’ performance on those contracts that really do matter and are well worth holding on to.

Why, then, do security companies continue to hold on to the ‘lesser’ contracts? Quite simply, it’s down to the pressure to grow the business, particularly if a spate of contracts have been lost in recent times. The managing director is under pressure to satisfy the shareholders, while the sales team is having to convince the Board that they are indeed an essential part of a developing organisation.

No security company will trumpet the fact that it hasn’t gained any new business in the past six months, or that it has just lost three contracts. Instead, they’ll say that they’ve won some excellent contracts – even if the stark truth is that all of those jobs shouldn’t be in the company’s portfolio in the first place. It’s all about ego – both corporate and personal.

Let’s make a fair assumption that every security company of any size has a proportion of these ‘not worth having’-type contracts in its portfolio. Let’s also imagine that a hypothetical company operates in Greater London and has a total of, let’s say, 150 contracts...

My guess is that the area is divided regionally into north, south, east and west such that each contract manager – or customer services manager – has his or her fair share of multi-manned assignments, some good contracts ( 168 hours or 336 hours) and of course some contracts that are of the ‘not worth having’ type.

It’s likely that each contract manager is bogged down in his or her sector by endlessly trying to satisfy the client(s) who awarded those bad contracts. As mentioned earlier, the danger is that in trying to resolve impossible issues with the bad contracts, eyes end up being diverted from the good ones...

A question of Class

How might contractors manage this portfolio of jobs more effectively, and in such a way that they immediately expose those bad contracts that have been awarded – and, in effect, keep a close eye on them throughout what is hopefully a short tenure?

Let’s turn back to those 150 contracts, and divide them into ‘classes’. 30 of the assignments are multi-manned contracts complete with on-site supervision, and act as the real lifeblood of the contractor. With this in mind, we’ll call these Class A contracts.

A further 90 are one or two-man assignments, negotiated on good terms with special regard to both wage rates and margins. These are Class B contracts. The remaining balance of 30 contracts are of the ‘not worth having’ type, and are classified as Class C.

In times past, to cover these 150 contracts there would have been five contract managers each handling 30 assignments. A team of mobile supervisors were in support, visiting as many sites as possible both by day and at night.

No security company will trumpet the fact that it hasn’t gained any new business in the past six months, or that it has just lost three contracts. Instead, they’ll say that they’ve won some excellent contracts – even if the stark truth is that all of thos

For Class A contracts, it’s important that the site supervisors play a significant management role on site. All-too-often management at every level pay a visit to such an assignment only to discover welfare problems – concerning pay or uniforms, for example – which should have been resolved by the site supervisor.

Conversely, we must train these supervisors to do the job. We cannot reasonably expect a good level of performance from them when they haven’t received any formal training. Notwithstanding that fact, only one contract manager should be allocated to look after the Class A portfolio.

Class B is an extremely important class, one from which multi-manned assignments might emanate. Here, the wage rates are good and the margins realistic. Security companies want to protect these contracts at all costs. Three contract managers should be allocated to this class (one being a senior contract manager).

Room for manoeuvre

Realistically, we don’t want any contracts in Class C, but many security companies have them so they have to be managed as well as possible. As soon as a contract comes into this class – and senior management will want to know why – we should be trying to improve it.

For example, a free survey – advising the client how overall security might be improved at a reduced cost through increased technology combined with a reduction in manpower – should be the starting point. The aim would be to manoeuvre the Class C contract into Class B as quickly as possible.

Ultimately, if the client doesn’t want to do anything other than merely pay lip service to security, then the contractor should be brave and surrender the contract.

Only one contract manager should be allocated to this class, and his or her performance judged on the number of contracts which have been moved into Class B and those that have been terminated within the year. Contractors must be ruthless with Class C-type assignments, and leave well alone.

The counter-argument to arranging the portfolio of contracts in such a manner is that there will be a considerable increase in travel time for each of the contract managers. Agreed, but the necessary visits can be planned and – most importantly – should be free from unforeseen emergencies.

The strength of this ‘class system’ is that security companies may isolate the bad contracts, in turn allowing management teams to look after the better ones in a proper fashion.