As a result, anything that is outside of the contracted scope of work can become greatly overpriced.
Arlington said that of great concern to contractors is price and performance. He said that often quality contractors cannot perform at the price point required by the aggregator, and sometimes the price does not equal the level of performance required in the specs.
He said that in some cases a lower price is often accompanied by additional paperwork on the part of the contractor, resulting in a higher operating cost.
Another problem of working is the push by the aggregator to put all liability on the contractor. When working with aggregators, contractors can also encounter unsatisfied customers as well as technology driven systems they might or might not be able to run under the system. The contracts, scope of work, and relationships can seem to be very one sided, Arlington said.
Over Promising, Under Delivering
He said clients and contractors can face many difficulties when working with aggregators, inhibiting the success of their business. One area that appears to be positive but can have poor end results for clients are reverse auctions in which contractors bid against one another for who will do the job cheapest.
"Reverse auctions drive pricing below the specification thresholds," Arlington said. "It creates a big cost savings for the client, but it is offset by a huge disappoint. There is a high turnover of contractors on the site…there is a high site level of frustration from the client."
Also, clients can experience a lot of "over promising" and "under delivering," Arlington said, because it is the aggregator doing the promising but the local contractor doing the delivering. Add to that the fact that communication is often difficult between the client and the aggregators because the client must go through three or more tiers before getting to the contractor that is performing the work, and the result is frustration - often among all parties.
"Once the client gets to a certain price level it is very hard for them to change back strictly due to the amount of cost savings that was built into the process," Arlington said. "When they have to go back to their board of directors or CEO and talk about 'We need to add 30 percent to our budget for this' it becomes hard to change back."
Arlington said that in many situations, when working with poor aggregators, it will seem to contractors that they are getting pushed around and not getting paid. "In any way, shape or form they can hold up your money," Arlington said. "There are a lot of unethical management teams. There is a high frustration on the contractor side due to the fact that there is a lack of information."
Contractors can also face very high reporting requirements and low overall pricing. They might also encounter cash flow problems due to long, drawn-out pay cycles, Arlington said. As a result, many contractors can no longer afford to operate.
Arlington said it is important for contractors to be aware of specific situations. For example, some aggregators have developed the reputation where they use the contractors' performance against the contractor, Arlington said. "Contractors want to do a good job, and we truly do want to do a good job," Arlington said. "When you get into those ugly relationships or those bad relationships they will use that against you because they know it is your name, your truck, your equipment that's on site and that's being looked at. They will try to use your ego or your reputation to work it against you."
Tips to Ease Working with National Service Providers
Before choosing a National Service Provider there are several things contractors should be aware of in order to ensure a positive working relationship. Richard Arlington, president of Arlington Lawn Care and Rich Arlington & Associates, discussed several tips contractors should follow in a recent tele-seminar on WorldSweeper.com. By following these easy tips, contractors will have greater potential at achieving success.