Grow Your HVAC Engineering Business Profits While Not Increasing Labor Demands
How can we grow our business both in revenue and profit while not simultaneously increasing our labor demands?
In my July 2019 column, I mentioned that this month I’d be talking about a technology that could help you to create a reoccurring line of revenue in your consulting and engineering business. Throughout my time in this field, I’ve found that there are plenty of articles and in-person sessions on design philosophies but very few exist on growing the profitability of your business.
You see, you can have the most efficient and effective designs in the business, but you will still be limited by your work capacity. It’s no secret that we are in the midst of a talent drought, which begs the question, “How can we grow our business both in revenue and profit while not simultaneously increasing our labor demands?”
The answer is to increase the overall profitability of the revenue that is booked and executed. But, in today’s hypercompetitive environment, there is only so much profitability that can be generated from consulting/design fees. Thus, a strategy based on consulting and design work will be tied to labor resources.
Therefore, we need to focus on technologies that can decouple us from the hypercompetitive, fee-based service model while still leveraging our in-house labor and existing skill set. To do this we need to look at complementary technologies that naturally attach to our services and carry us past the initial design event. Over the next few articles we are going to unpack three of these technologies. They are:
- Continuous validation;
- Continuous commissioning; and
- Remote operations.
I have ordered these technologies in a specific progression because they build upon themselves in both technical know-how and required technology.
Continuous validation is the act of validating operational conditions of a new building to ensure that parameters remain in place. Note the words I used. This service is different than continuous commissioning, which requires the validation of sequences and is more labor- and skill-intensive.
Validating operational parameters can be easily executed through an organized naming, tagging, and reporting strategy. Quite simply by building an organized approach to naming and tagging building automation data into your designs, you are able to execute automated reports that allow you to validate that the building is still within its design. This is a low labor task that can then be sold at high margins as a reoccurring service to the building owner post-contract.
Here is how you execute this approach:
Get organizational buy-in for having a reoccurring business service. This is the hardest part. You need to convince internal stakeholders of the importance of establishing a high-margin service that will facilitate a continuous relationship with customers post contract.
Make a list of all of the common systems that you design for BAS control. This will typically be everything from unitary systems to complex central utility plants. Next, create standardized naming, descriptions, data types, and tagging (yes, this will vary slightly based on owner preferences and the manufacturer of the BAS, but the goal is to use this for 80% of your projects).
Work with your operational team to create a business process document that explains how to validate the proper implementation of your naming structure as well as how to run the service. Train your low-cost employees to execute this task and utilize a system that will automate the reporting of the validating reports. This service is quite easy from a technical perspective as most of it is automated, so your focus should be on the execution of the service and the customer experience.
Engage new clients with this service offering. Position the naming and data tagging standard as a complementary service knowing that you will be using this standard to facilitate your post-contract service model. At around 80% completion, begin to dialogue with the end user around your service, and structure the offering to begin during the warranty phase as a way for the owner to “protect his investment.”
Now, obviously, this is a 30,000-foot view of this approach. This is something we regularly help our consulting client’s set up and execute. It’s an easy solution that generates positive cash flow and most importantly helps to connect the design firm with the end user post-contract so that they can engage with the end user for future design work.
In next month’s article I’ll look at how to effectively implement a continuous commissioning service … but with a twist.