All too often, sheet metal contractors and HVAC contractors pursue work as a subcontractor to a prime contractor and, all too often, these two types of mechanical contractors position themselves to be a “commodity” business – where a low price will be a major influencer to being awarded the job. This has been going on since design-bid-build (DBB), a.k.a. plans and specs and construction management (CM) project delivery evolved in the early 1900’s.
Sure, sheet metal and mechanical contractors can build relationships with a select few prime contractors, pricing will still influence the decision-making need for a mechanical contractor. However, there is a niche business out there that, for the most part, can be considered recession-proof. That business is meeting demands for mechanical infrastructure, and more specifically, meeting the demands of the owners of multiple buildings such as healthcare organizations, colleges and universities, and industry, e.g., pharmaceutical. So, when it comes to HVAC infrastructure, who is better qualified to facilitate a design and build proposal directly to a building owner or the facility manager?
This demand is an annual requirement because existing equipment gets old and eventually reaches an end-of-useful service life. Equipment also breaks down over time and usually at the most inconvenient time, e.g., water chiller failure during the air-conditioning season. If not annually identifying equipment, such as a chiller be replaced, then there often is a differed maintenance list and/or master planning list to schedule the replacement in sync with a building program expansion that will phase out the antiquated HVAC unit and replace with a larger unit(s) to accommodate the building addition and the existing cooling load.
To pursue this niche infrastructure business, a business plan is needed to establish the vision, mission strategic and tactical plans. Take an inventory of existing institutions that your company has worked with, and index and keep in contact with those building owners and facility managers. If the mechanical contracting company has a service department, then this can “jump start” the business plan process because these are clients the firm already has contracts with.
Identifying the potential client sources, the plan needs to be documented and then, at least one individual needs to be assigned the sales engineering position to go out, market and sell HVAC infrastructure opportunities. A job description should be defined with this sales engineer being qualified to not only be proficient in communication, but to have the practical experience to sell the numerous project opportunities. And what are those opportunities?
- Equipment Failure: Client should know this design-build firm can respond immediately.
- Troubleshooting, e.g., space comfort: Client should know this firm has the in-house engineering resources to visit the site, analysis the problem, offer solutions, and provide project estimate and timeline to resolve the problem.
- System or Equipment Problem, e.g., air-handling unit freeze-stat: Client should know this firm has the in-house engineering resources.
- Facility Assessment: In sync with items 5 through 15 listed below.
- Use an energy conservation measures to reduce utility costs.
- Address equipment reliability concerns.
- Evaluate an equipment or system expansion.
- Create a master plan.
- Investigate system operational improvements.
- Apply corrections for over-design.
- Look into available grants from utility companies and/or federal or state grants.
- Evaluate studies to satisfy community pressures/interests, e.g., global warming, carbon neutral, decarbonization, electrification, etc.
- Look into hydraulic modeling of central water system distribution.
- Retro-commissioning and tune-up of existing HVAC systems.
- Perform fire damper NFPA compliance inspections.
Note: Partnering with a local HVAC consulting firm, trained to maximize each of the design-build initiatives above while minimizing the labor effort to complete the first phase (scope and cost of the job) may be an option. The estimating department will also need to be trained to optimize the hard costs and soft costs while minimizing the time to estimate, a.k.a. the “automobile brochure approach” to repetitive infrastructure work, like a chiller replacement project.
In establishing this infrastructure business opportunity, the company will experience obstacles, such as some employees not buying into this new initiative, like project managers. How projects are estimated based on a more abbreviated set of documents will challenge some estimators proficient in DBB and CM estimating – with its 100 plus pages of specification and 25-35 HVAC contract drawings. To meet with a facility manager to discuss and to tour an equipment room looking for the 15-listed opportunities above will require a specific breed of sales professional.
Being the prime builder, for infrastructure work, instead of a subcontractor, allows the firm to pursue niche business opportunities while still pursuing DBB and CM bid opportunities. Being the “leader” rather than the “follower” will allow the mechanical contractor to have direct contact with the client and position the firm to be able to build off each job completed, establishing a repeat client scenario. If this firm has a service department, an experience sales engineer often can roll a 1, 2, or 3-year service contract into the proposal, in lieu of simply carrying a start-up for the job.
So, for sheet metal contractors and HVAC contractors, establishing a feasibility plan to create another profit center, that can be recession-proof, should be the first step in creating an infrastructure niche business.
Howard McKew is author of Integrated Project Delivery for Building Infrastructure Opportunities for HVAC consultants and mechanical contractors and can be reached at [email protected] or at www.buildingsmartsoftware.com.