Confidential & Proprietary | 2023 CBRE, Inc.

JAN-011 - Ver 1.2 (Aug 24)

The Janitorial Services Cost Array Analysis is designed to show the breakdown of costs associated with the provision of Janitorial Services and the related expected increase in the supply chain sub-components based upon current market conditions.  Updates will occur at least semi-annually, but more frequent as market conditions change based upon market variability, supply chain disruption criticality of events, and velocity of market conditions.  The analysis will be updated once the cost of a barrel of oil drops to <$75.00, but semi-annual cadence of updates will continue thereafter or in the even the cost of oil increases.

Overview

Janitorial Services Distribution Expense Detail 

 0 %

Space Management

Management of Payroll - related factors

• Idle space
• Space under construction
• Under-utilised space

• Management of wage limits
• Management of Insurance Experience Ratings

 10%

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 40%

 50%

 60%

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 90%

 100%

Labour Expense 81%

Operating Profit 7%

Direct Expense 6%

G&A Expense 5%

Sales  Expense 1%

• Estimated Supplier 2025 Annual Increase = 1.4% to 2.0% (70% of CPI, or ECI)
• Fuel increase is 46% 
• Brent Crude Cost / Barrel (July 12, 2024) - $ 85.90
  
• Cost Reduction Marker -  (we should request supplier cost reduction when cost per barrel of oil hits ) -  $ 75.00
  

Opportunities

Link to Key Metrics

P & L Expense Factor          Sales Expense          Fuel Expense    G&A Expense    Direct Expense   Operating Profit    Labour Expense      TOTAL

                                                           1%                              2%                    5%                        8%                         7%                      81%                         100%     

Fuel  Expense 2%

Wage Dynamics

Procurement

Leveraging of Technology

Sustainability

• Management of external factors
• Living  / wage alignment

• Effective use of buying power
• Deployment of hi-efficiency equipment

• ERP efficiency 
• Effective industry-specific modules

Market Relevance

• Effective management of overhead and profit elements

Confidential & Proprietary | 2023 CBRE, Inc.

JAN-011 - Ver 1.2 (Aug 24)

Janitorial Cost Drivers can vary by business vertical (office, warehouse, retail, etc.), union / non-union labor, country / region. Determining the cleanable square footage of all useable areas is critical to determine the allocation of labour hours and selection of equipment. Local labour rates and benefits should be updated prior to initiating any new project. 

Cost Drivers - Non-Union

Janitorial  Services Distribution Expense Detail- Non-Union 

 0 %

Hiring due Diligence process

Safety a priority to reduce premiums

 10%

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 30%

 40%

 50%

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 70%

 80%

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 100%

Labour Expense 66%

Benefits 11%

Burden 8%

Overhead & Profits 12%

Supplies & Equipment 5%

Key Points

Includes:

• Occupancy Costs
• Technology
• Miscellaneous Costs
• Other Direct Costs

Proper work methods-reduce injury

Business / Process labour efficiency

Wage Rate Dynamics

Costs as a % of Revenue

• Effective staff retention programs
• Better insurance ratings, lower cost
• Use of technology
• High-efficiency equipment
• Trained supervision and employees
• Safety program / training
• Proactive, not reactive
• Share productivity gains
• Leverage scale of supply chain
• SQD - service delivery
• Resource utilization

Smart WO applications/ GEO fence

Demand Management

Preventive Maintenance Program

Deployment of High efficiency equipment

Buying Power Leverage

Inventory visibility through IT

Track and use OEM Warranties

Identify cost elements and drivers for the category to identify Total Cost Levers

Consider: Non-Union

• Labor - Regionally based
• Government - Minimum wage
• Change in benefits
• Chemical costs
• Equipment costs
• Communication
• Overhead & Profit
• Specification
• Internal cost of change

Janitorial Cost Drivers can vary by business vertical (office, warehouse, retail, etc.), union/ non-union labor, country/ region. Determining the cleanable square footage of all useable areas is critical to determine the allocation of labour hours and selection of equipment. Local labour rates and benefits should be updated prior to initiating any new project. 

Cost Drivers - Union

Janitorial  Services Distribution Expense Detail -Union 

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 0 %

 10%

 20%

 30%

 40%

 50%

 60%

 70%

 80%

 90%

 100%

Labour Expense 52% - 55%

Benefits 23%

Burden 16%

Overhead & Profits 8% - 11%

Supplies & Equipment 5%

Costs as a % of Revenue

Hiring due Diligence process

Safety a priority to reduce premiums

Key Points

Collective Bargaining Agreement / Government Decree  abstract

Business / Process labour efficiency

Wage Rate Dynamics

Smart WO applications/ GEO fence

Demand Management

Preventive Maintenance Program

Deployment of High efficiency equipment

Buying Power Leverage

Inventory visibility through IT

Track and use OEM Warranties

Includes:

• Occupancy Costs
• Technology
• Miscellaneous Costs
• Other Direct Costs

• Effective union relations / compliance reporting
• Better insurance ratings, lower cost
• Use of technology
• High-efficiency equipment
• Trained supervision and employees
• Safety program / training
• Proactive, not reactive
• Share productivity gains
• Leverage scale of supply chain
• SQD - service delivery
• Resource utilization

Identify cost elements and drivers for the category to identify Total Cost Levers

Consider: Non-Union

• Labor - Regionally based
• Government - Minimum wage
• Change in benefits
• Collective Bargaining Agreement / Government Decree abstract 
• Chemical costs
• Equipment costs
• Communication
• Overhead & Profit
• Specification
• Internal cost of change

Confidential & Proprietary | 2023 CBRE, Inc.

JAN-011 - Ver 1.2 (Aug 24)