Are You Wasting Money on Waste Handling?
Waste handling is a necessary consideration for condo corporations to keep on top of. Oftentimes, though, it can just as easily become something that simply goes for years unnoticed or without a second thought – even as the associated costs continue to creep steadily upward.
That’s where our esteemed guest expert, Mickey Pendergast, comes in to save the day (or at least to save your condo a good chunk of change!). Pendergast is a Cost Reduction Expert at Schooley Mitchell – the largest independent cost reduction consulting firm in North America. We couldn’t be more excited to pick his brain on how best to tackle the issue of overpaying for waste management – so without further ado, let’s jump right in.
Waste Not, Want Not: A Look at Waste Handling Cost Savings
One Person’s Trash is Another’s Opportunity
Condo waste handling/recycling is a bit of an odd beast. Every condo corporation needs to address its waste management in some way, shape, or form, but once that initial strategy is put into place, it is one of those things that oftentimes is simply filed and forgotten about – literally.
“A condo’s waste service is one that really tends to just sort of fly under the radar,” Pendergast confirmed as he began unpacking the subject. “This is compounded by the fact that within the condo space, there’s a lot of inconsistency at play. Many condo board members only serve for a couple years before they move on, and even condo management companies don’t typically stick around forever.
“A lot of these waste management companies also have very well-written contracts that really protect their own interests,” Pendergast explained further. “Quite often it’s a five-year contract complete with auto-renewals and cost-escalation clauses that aren’t typically caught or noticed. At renewal time, you might be looking at a whole different condo management company running things and potentially even an entirely different group of board members at the helm too, allowing that waste management contract to simply auto-renew unnoticed in the midst of things – at which point condo corporations really start to get gouged.”
Strike While the Iron’s Hot
The key to avoiding overpaying for waste management? According to Pendergast, it’s knowledge – and timing.
“The first thing that condo corporations can do is dig up that contract and find the clause entitled ‘Terms’,” Pendergast detailed. “There’s usually language in there that says something along the lines of: ‘This contract will automatically renew unless we receive written notification within 90-120 days prior to the expiry of the contract.’ This means that 3-6 months before the contract expires, the vendor needs a written (and quite often, registered) letter sent to their head office and another copy sent to their rep letting them know you’re planning on cancelling the auto-renew clause and potentially cancelling the services. This gets their attention and gives us the opportunity to go about getting competitive quotes as well as a re-rate with the incumbent.”
“That window is crucial, though,” Pendergast cautioned, “and that’s deliberate. Let’s say someone is unhappy with their waste service and they don’t look in that Terms clause to learn those important details – and I’ve seen this happen more than once. A few months prior to the contract’s expiry they’ll get some new quotes on their own, find someone they like, and sign a contract with that new vendor. Then, a couple months before the initial contract expires – but after that window of opportunity has passed – they’ll phone the old company to cancel the service, only to be told, ‘Well, you missed the window, so now you’re auto-renewed for five years and we have a valid contract again.’ This means that the condo corporation now has a renewed binding contract with the old vendor, but also has a fresh contract with that new supplier, too. Not a great situation to be in.”
Best Savings Practices
The first thing to do in order to maximize your waste management cost savings, Pendergast reinforces, is getting that auto-renew clause removed from your current contract. “It’s really important to look into that Terms clause and see if you’ve got an auto-renew clause in there. If you do, red-flag that window of notification so that when it does come along – even if you choose to keep that same provider – you’re able to get that auto-renew clause out of the contract for the future. This will also cause that company to sit up and take notice of your business, which often means better pricing and maybe even better service as a result.”
There are far more clauses, surcharges, and fees to be negotiated out of your contract as well – and there’s no better time to do so than when your service agreement is coming up for renewal. “The base cost of having them come and pick up the bins is very negotiable,” Pendergast began telling us. “You can go over things like an inflation cap going forward; fuel surcharge can be negotiated to be capped as a percentage of bin pick-up; admin fees, maintenance fees, account fees, etc. can all be worked around; overage fees (i.e.: extra fees owing if your bins are overfull when the driver comes to pick them up) can be discussed; all of these pieces can and should be negotiated.”
The Savings Can Be Massive
If this all sounds like a lot of work, well, it sort of is – but the potential pay-off is typically well-worth the effort.
“Our optimal solution if you’re happy with your service is just to get better rates with the existing provider,” Pendergast detailed. “In these cases, we save our clients an average of 30-35% off their current billing costs – and in some instances, those savings climb to upwards of 60%.
“In about half the cases we deal with,” Pendergast continued, “we end up helping our clients change providers. While this can be a bit more complicated logistically, we again typically average savings of 30-35% – and helped them find much better service in the process! In some cases, though, we’ve even helped our clients save truly incredible amounts – even up to 80% of their current waste management expenditures. And because our only fee is a temporary share of the savings we find, there is no risk or cost to have us do an audit of an existing waste handling contract–if we don’t find savings, we don’t charge a penny.”
80%! That’s a pretty incredible feat, even if it’s not quite the norm. It might take a few emails or phone calls, but it’s clear that with a bit of perseverance (and some help from the folks at Schooley Mitchell!) there can be truly enormous opportunities to save on costs by simply taking the time to re-evaluate those services and have those conversations.
Thanks again for taking the time to chat with us today, Mickey Pendergast – your expertise couldn’t have been more appreciated! Looking to learn more about taking out the trash when it comes to excessive waste management costs? Give us a call at Catalyst Condo Management and we’ll be happy to chat further and ensure you’re pointed in the right direction!