Hybrid contracts | Divisionsinc

Case Study

Hybrid Snow Contracts

How Divisions Reduces Risk

No one likes to work free of charge. No one likes to pay for services they don’t receive. No one likes financial surprises. While these three truths seem self-evident, when it comes to snow removal, traditional contracts make them very real hazards. Divisions offers a way for property owners and service providers to avoid the distress.

Historically, it’s seasonal (a flat fee is paid for a winter’s worth of snow removal) vs. per occurrence (only pay for time and materials) contracts. Sometimes the seasonal contract makes sense… until you get little or no snow and are paying for little or no service. So, a property owner may switch to a per occurrence plan, which works for a year or two until that 20-year blizzard hits. Now the budget is blown big time.

Of course service providers like the dependable income a seasonal contract provides… until that same blizzard appears. Now he’s not being paid for extra time and materials and risks his livelihood. Both sides suffer when snowfall is anything but typical.

Here’s where the Divisions Hybrid Risk Shared Contract shines. We determine the seasonal contract price using the 30 year snowfall history plus a standard deviation. This number covers 85% of all scenarios. Under the hybrid plan, when snowfall measures above the contracted amount, a clause kicks in to allow the provider to bill for time and materials, keeping him solvent and motivating him to clear your lot with a great deal more enthusiasm. When snowfall is unexpectedly light, a separate clause reconciles the difference for the customer. In other words, the risk is reduced for both parties and no one feels cheated, giving everyone peace of mind.

This approach is unusual in our industry, but not at Divisions, the third largest snow removal company in the nation (Snow Magazine). It’s our mission:  uninterrupted peace of mind, and we work hard to provide it every day for every customer we and our providers serve.