Why is Profit such a ‘Dirty Word’ in Contract Security

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Tuesday, 19 February 2019

Why is Profit such a ‘Dirty Word’ in Contract Security

Lynda Moore

Lynda Moore

Lynda Moore, a Partner in the Consultancy, FM Contract Watch writes for Infologue.com about improving the perception of security services. Lynda writes: “There are very few industries that are as transparent with their charges as the Security Industry.  What other goods do you purchase where there is a breakdown of the service charge to the last penny?

“It is quite acceptable for almost every other industry to make a reasonable profit, but for some reason it is frowned upon in contract security.  With the heightened terror threats, clients are demanding more and more from their contractors without considering the financial burden placed upon them to provide this.

“Some 30 years ago the average net profit on a security contract was 20% and often more, but today companies are obliged to display a full break down of their charge out rate and profit is expected to be shown as just a few pence.  It is not healthy for any organisations to continue to work to such low profits and combined with the poor payment terms of some of the larger clients, this has resulted in the demise of several contract security companies.

“The low margins which are currently in operation leave many companies with no alternative than to cut back in other areas, training and management support, being the two most obvious ones which can sometimes be hidden until such time a major incident and investigation takes place.

“Unfortunately, security services are, more often than not, negotiated by the procurement department and not the individual who is responsible for managing the service.  Therefore they have no real concern as to how the service is going to be provided as long as they have the required number of ‘bodies’ on the ground.

“Is it not now time that their needs to be leadership from both the Trade Associations and the major security companies in the industry to bring the profit levels up to an acceptable and workable level?  The only way it is ever going to be achieved is if everyone in the industry works together.

“With a change in government on the horizon, the industry is in “no man’s land ” concerning Business Licensing, the cry to outlaw zero hours contracts coupled with support for companies to adopt the “living wage” will erode margins further in what is currently a dire situation, failure to change must mean commercial suicide for some.  Does the Industry want to be continually tarred as one of poor conditions, excessive hours, low pay and low margins, employees still working 12 hour shifts and 60 hour weeks to earn a paltry wage to live on, this is how our industry is viewed today, is it any wonder that we are where we are financially.

“If companies expect a quality service, then they should expect to pay a reasonable price and allow the contractor to enjoy reasonable profit margin.  Profit is not a ‘dirty word’ in any other industry, so why is it in contract security?”
Lynda Moore is a Partner in the Consultancy, FM Contract Watch and was formerly Managing Director at Risk Management Security Services. She has more than 30 years experience in the industry.

FM Contract Watch Website

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