Guides / Sectors / Losing contracts

Facilities

The contract that loses money slowly is the one you never re-read.


Facilities maintenance providers frequently suffer from multi-year contracts where unforeseen scope creep, fixed pricing without inflation indexation, and aggressive SLA penalty regimes systematically erode operational margins. Qualifying out of loss-making contracts protects long-term company health. Part of our playbook on facilities and maintenance; see also thin-margin management and evaluating unwinnable refreshes.

Published: 2 September 2026 · By Andre · Reviewed by Bill · selrob

Takeaways

  • If you cannot say whether last year made money on this deed, you already have a problem.
  • Abatement that surprises you in month six was on page one of the schedule.
  • Refreshing a losing contract because you are on it is a zombie with a longer tail.
  • Walk away in week one of the refresh, not in year three of the next term.

What are the warning signs on a live deed?

Labour running over the rate you bid. Abatement hitting every quarter. Response times you staff with overtime. A rise-and-fall that did not rise. A client who added scope without adding money. If you need a forensic accountant to know whether the job is profitable, the bid/no-bid on the refresh is already late.

Keep a one-page record per deed: rate, abatement paid, hours over, indexation received. The next gate should open that page, not a feeling that “we have always done them.” Habit is a fake criterion.

When is the refresh a no-bid?

When last year lost money and the new schedule is not better. When the KPI regime tightened and the rate did not. When the only argument is that dropping the site looks like failure. Dropping a site that loses money is the gate working. Winning it again is a four-year no you failed to make.

Score the refresh as a new inbound. The incumbent advantage on FM is real and is not always a gift: you know the hours, and so does the buyer. They will price that knowledge into the rate. See wired for the incumbent when the pack describes last year’s operation in order.

What if we are mid-term and bleeding?

That is a delivery problem, not a bid/no-bid. This page will not recover year two. It will stop year five. Put the loss on the gate record so the next estimator cannot pretend it did not happen. A firm that cannot show a losing contract does not have a memory. It has a writing habit.

Do not use the next tender to “make it back.” Making it back is how thin margins get thinner. The next inbound gets the three axes, including question 12: bad month or bad year.

How does this sit with volume?

High volume is how losing deeds hide. Twenty live sites, one of them quietly bad, and the bid team is on the next council pack. The gate has to name the bad one when its refresh arrives. Twenty minutes. The schedule, last year’s abatement, the roster. Then no, or a named condition.

The sector page is profitable at the rate, or not. This spoke is the rate you already have, telling the truth about the next one.

Keep reading

Elsewhere in this guide.

Questions

Worth answering before you close the tab.

How do you know an FM contract is losing money?

If you cannot say whether last year made money, you already have a problem. Abatement, overtime, and indexation that did not arrive are the usual tells.

Should we refresh a contract that is losing?

Score it as a new inbound. Last year’s loss is a fact on the risk axis. Habit is not.

Is dropping a site a failure?

Dropping a site that loses money is the gate working. Winning it again is a four-year no you failed to make.

Book a call

Bring the last tender you regretted.

In 30 minutes we’ll show you the call selrob would have made, and the working behind it.