Page 24
— Property Management Quarterly — August 2015
A
s you prepare to engage in a
winter mitigation agreement
for the upcoming season,
one of the most important
decisions you face is the
decision about your billing style.
It is important to choose a billing
style that complements your overall
objectives for your property. Your
billing style should complement
your brand, your budget needs, your
safety goals and your liability/risk
management needs. Typically there
are four contract styles a manager
can consider for his snow removal.
Hourly pricing.
This is by far the
most common billing style in use
today. With this style, a contractor
bills the property by the hour for
each component of his operation. A
property manager receives an item-
ized bill for time spent on snow
mitigation efforts at his property.
For some managers, the hourly
billing structure allows them a level
of control over the snow removal
budget throughout the season and
allows them to compare apples to
apples when choosing their contrac-
tor.
One of the hidden pitfalls is that
an apples-to-apples comparison only
works if each contractor is using the
same equipment and maintains the
equipment at the same level. Inef-
ficient or broken equipment leads to
slower service times and incomplete
service. As for maintaining control
over the snow removal expenditures,
this is true to some level. But since
we can’t control the weather, the
limited control that can be exercised
comes at the direct expense to prop-
erty safety and lia-
bility of increased
slip-and-fall expo-
sure.
If you are
involved in making
in-storm decisions
or you plan to
manage activation
triggers, this plan
will save some dol-
lars. It is important
to understand that
in this scenario
you are assuming
the liability associated with this role
and are relieving the contractor of
responsibility in a slip-and-fall case.
In an hourly billing situation, slight
environmental changes and even
the fatigue of an equipment opera-
tor can affect the efficiency of your
service, which can lead to big dif-
ferences in the way the same storm
might be billed.
For the contractor, hourly bill-
ing can be a nice way to fill out the
schedule for underused equipment.
However, the style does not reward
improvements in efficiency or equip-
ment upgrades so the incentive to
improve is undermined. Often this
style leads to protecting the status
quo.
Per-push pricing.
This structure
establishes a predetermined price
for each time a property is serviced.
This style allows property manag-
ers to pay only when the snow has
flown. The bill will fluctuate month
to month as the season progresses,
but the manager will be billed the
same each time the property is
serviced. With most reputable com-
panies that offer this contract style,
occasionally the manager will be
billed for a “partial push” when the
storm necessitates further service
but does not justify another full ser-
vice.
For many managers, knowing that
the efficiency of the operator or
equipment doesn’t affect the bottom
line is relieving. This is one less vari-
able in the budget.
The per-push pricing agreement
can be rewarding to contractors who
want to improve their operations
because they get paid a fair wage
for an agreed upon result. An invest-
ment in better equipment results in
greater stability – equipment is gen-
erally more dependable than people
– faster completion time, less liabil-
ity and happier clients.
Per-storm pricing.
This style is like
the lesser-known twin sister of the
per-push pricing style. Sometimes
called event pricing, per-storm pric-
ing sets a predetermined price for
the entire event. Once the contractor
engages, he remains engaged until
the storm clears. The contract gen-
erally has a time period (usually 24
to 48 hours) and all accumulation,
which falls within that time period,
is considered one storm or event.
Similar to per-push pricing, the
monthly expenditure can fluctuate a
great deal, but the property manager
has the peace of mind that the prop-
erty will be serviced to a certain site
condition and the manager consis-
tently will pay the same price for the
same result.
This can be a great fit if a property
manager’s site demands a very low
tolerance or zero tolerance. This
style generally requires a contrac-
tor to dedicate a certain amount of
personnel and equipment assets to
the site, and generally the site stays
in good condition throughout the
storm.
The agreement provides a certain
stability for the contractor given the
type of client who needs this level
of service. However, it can be a chal-
lenging style because there is a need
for dedicated resources without a
minimum revenue commitment.
Adding to the challenge is the fact
that a property that needs this style
requires a demanding level of ser-
vice that can be difficult to provide
in unpredictable weather conditions.
Annual pricing.
With an annual
contract, managers will pay a pre-
determined amount for the entire
season. Managers are billed in equal
monthly installments and will pay
the same each month, regardless of
whether there is no snow or a 4-foot
blizzard.
This style is one of the least
understood options. The most accu-
rate way to look at this agreement
is to understand, first, that like any-
thing else, there are certain seasons
that may be anomalies or outliers
– some years we get a statistically
high amount of snowfall and some
years a statistically low amount.
However, most years fall within a
predictable range of accumulation
and events. With this in mind, an
annual contract can be a powerful
Matthew Haas
Owner, Summit
Outdoor Solutions,
Fort Collins
Vendor Relations
