Estimation, training and planning put you in the black

What helps make your electrical contracting business profitable? Is it your estimating prowess? Is it your ability to buy your project equipment at the best price and sell it at a good profit? Is it your ability to find and keep good people? Is it because you maintain a high level of training, both for yourself and your employees? Is it because you maintain high ethical standards? Have you developed efficient methods to complete projects that better utilize all of your strengths as well as those of your employees? Or is it a combination of all of these attributes?

Its been said by many in the electrical field that a qualified and licensed electrician does not necessarily make a good businessperson. Those of you who, upon obtaining your Master’s license, opened your own business probably discovered early on that you lacked the day-to-day business knowledge necessary to actually make a profit. You also discovered that without profits, your business could not grow and indeed could fail if you strung enough bad years together. With any luck, you learned how to do it and today you have a thriving business.

One of the ways to become profitable is learning early on to differentiate yourself from the competition. Otherwise, you must continually lower your prices, making less profit just to get work.

Some electrical contractors find that the specialty electrical work that is added to new building specifications affords them the opportunity to make additional profits over and above their slim margins for standard electrical work. Fire alarm systems are one of those specialty items that always seemed to fit nicely into the book of profitable work for the project.

But lately, I hear contractors complain that fire alarm systems aren’t as profitable as they once were. Have these systems become too complicated to manage and install? Or has the profit margin for these systems eroded as their installation becomes more commonplace?

There is no question that fire alarm systems have become more complicated with new programmable technology. Most electricians grew up with conventional fire alarm technology (typically zoned, non-addressable, non-analog systems) that anyone with a good electrical background could understand, manage and install with relative ease. The new computer-driven fire alarm systems demand technicians with more knowledge than the basic electrician would normally possess. While this is true, it is not an insurmountable task to develop the necessary technical background to understand this technology. And once you know the “rules of engagement” (how these systems must be installed) these high-technology systems are every bit as easy (read: profitable) to install as the earlier conventional types.

Another important attribute you have learned as you grew your business is how to purchase the right equipment for a competitive price. You may also have learned that it is often easier to ensure your electricians’ understanding of how to install this equipment by standardizing on specific brands or common types of equipment necessary for the majority of your projects. Buying “right” has always been an axiom of the trade. But when it comes to such specialty equipment as new technology fire alarm systems, buying right takes on a whole new meaning.

When it comes to these new technology systems, how fast a problem can be found and corrected when attempting to commission the system for Certificate of Occupancy for the building will prove more important than the savings of a few hundred dollars at the purchasing stage. You also want to make sure the distributor, or the manufacturer, offers value added training to your electricians to help ensure their understanding of the care necessary to properly install the fire alarm system.

The reason training is so important should be obvious. Your electricians install basic electrical equipment every day. They do not install fire alarm systems every day. Therefore, their expertise with fire alarm system installations will constantly need reaffirmation. This can be accomplished in at least three ways. You can establish specialty crews within your company who only do fire alarm system and other specialty systems installations. You can take advantage of regular training provided by the better distributors and manufacturers. And you can use the same brand of equipment to ensure your electricians get a basic level of understanding of the equipment installation to ensure a more accurate labor estimate.

In any case, the same things you pay attention to when estimating your regular electrical work holds true for fire alarm systems: Estimate your projects correctly by knowing your true equipment and labor costs; train your electricians on the fire alarm system equipment you plan to use; understand the importance of the support you need with these high technology systems; and, develop a clear installation plan for the fire alarm system. If you follow these simple guidelines, you will put the profit back into your fire alarm system installations. EC

MOORE, a licensed fire protection engineer, frequent speaker and an expert in the life safety field, is a co-editor of the current National Fire Alarm Code Handbook. Moore is a principal with Hughes Associates Inc. at the Warwick, R.I., office.