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In a recent keynote address, Robert Catell, chairman of the New York State Smart Grid Consortium, characterized the state of the electric grid in a way that he knew his audience could understand. He imagined what would happen if two famous inventors came back to life to view the legacy of their original creations.
“If Alexander Graham Bell returned to earth today, the progress in telecommunications over the last 125 years would be mystifying; a cellphone would be as incomprehensible to him as a phaser from ‘Star Trek.’ But if Thomas Edison came back today, not only would he recognize our electric energy industry technologies, he could probably fix them.”
This sums up a current dilemma of our electrical grid and our industry; the same basic technology now extends nationwide.
Both born in 1847, Bell and Edison lived long enough into the 20th century to see many developmental changes for the industries their inventions began. They envisioned the curve of progress for new construction that would put electric power and telephones into most households. However, they were not able to fully grasp the effort to oversee and maintain today’s telecommunications and electric networks; decades after the initial build-out, these networks serve hundreds of millions of users. Neither would understand how to manage these systems’ vast customer base, which is the focus of this series.
Electrical contractors dream of construction projects that are 10 times the size of the last one. They put their heart and soul into constantly trying to build contract backlog instead of strategically managing to build customer base. Similar to the founders of their industry, most electrical contractors cannot see beyond the construction phase of facilities’ life-cycles to the longer term potential in service work. They continue to follow a business plan that is a century old.
This column aims to change the way the electrical contracting industry views service in its daily operations. Using a service-based business model, we think electrical contractors can awaken to the prospect of increasing their customer base tenfold. They can shift the center of gravity of their operations from being project-based to being service-centric.
We are going to explore ways of making such a conversion, drawing on subjects from “Reinvent Your Contracting Business with Sustainable Service,” by Fred Sargent, and pulling in ideas from successful contractors who have proven that service work holds the key to recurring revenues, predictable profits, reduced risk and increased intrinsic value for firms that concentrate on it.
In ELECTRICAL CONTRACTOR’s “2010 Profile of the Electrical Contractor” research study, responses indicated that readers’ firms had increased their participation in maintenance, service and repair work combined from 31 to 38 percent over the past two years. As this series goes on, we will propose the basis for an even more dramatic increase.
There are three essentials to success of an electrical contracting service operation that we will expand on.
First is the requirement to have the right organizational structure. An electrical service operation must be a separate entity within the overall enterprise, clearly set apart from the construction wing of the company.
“A service operation without a focused intensity cannot realize its full potential,” said Todd Mikec, president of Lighthouse Electric Co. Inc., Canonsburg, Pa.
Although Lighthouse is a leading player in large projects in its primary market areas, through determined effort and attention to detail, the company has developed a robust service-based business that provides a hedge against inevitable downturns in new construction activity. In otherwise dark economic times, Mikec noted, service work for the company has been “a bright spot.”
Second on the list is the importance of staffing, which broadly includes recruitment and selection, hiring and orientation, training and education, and evaluation and advancement of the people who will comprise this separate service-focused business unit.
Dave Wallace, senior vice president of Chapel Electric, Dayton, Ohio, stresses the need for providing ongoing instruction that will keep them on top of the latest technologies and newest products.
Third among the essentials to success is the critical need for systems that will enable service delivery to be “sustainable” in every meaning of the word.
Jay Albrecht, president of ContrAcct Systems, Naperville, Ill., said, “Most electrical contractors’ service departments are no more than 25 percent automated. They rely on a combination of paper work-order forms, wall-mounted whiteboard schedules, Excel workbooks, and Outlook calendars. Those who automate their service activities in 2011 will earn even greater benefits than they gained back in 1981 by automating job cost accounting for their construction operations.”
We will discuss these topics and more in future columns. With this preview of what lies ahead, we also want to invite your questions and comments through e-mail. Once we have covered the basics of conversion to service-based contracting, we want to make your feedback a part of the ongoing dialogue in future issues on this important topic. We look forward to hearing from you.
About The Author
MCCOY is Beliveau professor in the Dept. of Building Construction, associate director of the Myers-Lawson School of Construction and director of the Virginia Center for Housing Research at Virginia Tech. Contact him at [email protected].