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    Planning For Long-term Growth

    July 14, 2008
    Mechanical contractors are typically too busy to sit back and analyze ways to minimize risk and increase productivity and profitability. Yet, to ensure future business growth, it’s important for contractors to set aside time to plan how to maximize bottom-line results for the long-term.

    Mechanical contractors are typically too busy to sit back and analyze ways to minimize risk and increase productivity and profitability. Yet, to ensure future business growth, it’s important for contractors to set aside time to plan how to maximize bottom-line results for the long-term.

    Mike Dillard: long-term relationships lead to more business.

    “Productivity improvement is a key operational strategic objective and perhaps the most important differentiator for the contractors that will thrive in the developing economic environment,” says Mike Dillard, vice president of Mechanical Services of Central Florida, Inc. (MSI).

    Build a Competitive Team
    In the day to day rush, contractors are usually concerned about getting enough manpower out to complete current jobs. There is often a scramble to assign whatever staff is available and hire the least expensive subcontractors.

    This is a sure way to diminish quality of work. A better approach is to switch focus from just winning bids to developing trusted partnerships with customers that will bring in profitable business today and in the future.

    Recruiting and retaining highly qualified people strengthens your position to make more profitable bids.

    “Employee retention is paramount to having a competitive edge that translates into higher profits, strong, stable sales volume, and better then average margins in a very competitive bid market,” says George Fenwick, chief operating officer and vice president of operations, Grant’s Mechanical, Inc., Fargo, ND.

    Today, contractors face hiring challenges as fewer qualified professionals enter the HVAC industry. The U.S. Department of Labor predicts the number of engineering jobs will increase 20% by 2008 and it’s estimated that by 2010, the U.S. will be 700,000 engineers and technicians short. This makes it even more critical to attract the right talent and hold onto them.

    In-House Training
    Conducting in-house training and taking advantage of training programs offered by your HVAC supplier is one important method for building a stronger workforce. To this end, Mechanical Services of Central Florida has developed an extensive in-house and external training program called MSI University.

    Bill Dillard: training helps keep work in-house.

    “MSI University has been part of our culture since the beginning,” according to Bill Dillard, MSI’s CEO and Director of MSI University. “Such education and training has been an invaluable part of our business as it allows us to keep most of our work in-house, as opposed to sub-contracting work out.”

    The program involves training tracks to create specialists in such areas as sheet metal fabrication, piping, controls and building automation, insulation, testing and balancing, mechanical insulation, project management, software, and more.

    “Our business has benefited from this program as it provides single-source accountability to our customers and an assurance that jobs will get done quickly, Mike Dillard says. “It also gives us more control over quality, productivity, and the schedule,” he adds.

    Continuing Employee Education
    Contractors can also take advantage of training programs that are offered by various associations to build a stronger workforce. ASHRAE, MCAA and SMACNA, the Design-Build Institute of America, and the U.S. Green Building Council all offer training programs that will keep your staff up to date on the latest skills and certifications.

    “Investing in the knowledge, expertise, and skills of all employees, from the general laborer to key executives, has been key to our growth,” said George Fenwick of Grant’s Mechanical. “It is important to keep all employees abreast of the latest trends related to the green building, HVAC, plumbing, controls, and pipefitting industries.”

    Grant’s Mechanical encourages all employees to broaden their job knowledge throughout their career. They are currently working with 2 year and 4 year colleges, along with the Department of Labor, to provide degrees to current and future employees.

    George Fenwick: employee advancement leads to company growth.

    George Fenwick states that “the cradle to grave philosophy allows the skilled trade workers to share information and challenges with the project management/ engineering staff which forms an indispensable bond between all levels of the organization.”

    Other ways to build a stronger workforce include recruiting efforts at trade schools and colleges in your area. Participate in trade fairs and promote your business as an attractive place to work. The ACE Mentor Program of America, Inc. —www.acementor.org — exists to make high school students aware of career opportunities in architecture, construction, and engineering.

    Carefully select subcontractors, check references and be certain they have a strong history of quality work and meeting deadlines. They also should be properly insured and have a proven safety record.

    Develop a system to share and exchange knowledge. This could include peer groups that meet regularly or web forums. Conduct regular feedback sessions with your staff to measure satisfaction and learn how you can improve work conditions. This is also an opportunity to discuss skills development.

    Run your Business Proactively
    It might seem that winning new business is always a good thing. But the truth is that many businesses fail because they cannot handle their growth.

    When things get busy, contractors run the risk of getting into constant firefighting mode, rushing from job to job just to get things done. The key to smart growth is to plan each project to meet the customer’s deadlines with quality work.

    Ways to stay proactive include:

    • write a business plan that sets forth your goals and strategies for the next year, five years, and if possible, 10 years
    • select construction and project planning tools to fit your business size and style
    • make sure your entire team follows the project planning system
    • move jobs that can be done off-site to your shop. MSI has found this strategy is extremely effective in reducing field labor and improving quality
    • work with your HVAC supplier to schedule deliveries according to the job completion schedule
    • consider Lean Construction methods. Visit www.leanconstruction.org for additional information.

    Build Vertical Market Expertise
    The demands in markets such as schools, healthcare, government buildings, industrial plants, and retail continually grow more complex. By gaining experience and knowledge in one or two of these markets you increase the demand for your services.

    Green building and LEED certification have certainly been at the forefront lately for commercial building projects. MSI has responded to this new wave in construction by including a professional engineer who is LEED certified on each design or general contracting team.

    “Energy-efficient design is becoming more and more the normal way to do business,” according to Bill Dillard. “Having LEED certified professionals in-house has allowed us to quickly react to a situation and has put us in more of a consulting role for our customers.”

    Tips on building vertical market expertise include:

    • consider recruits with vertical market expertise
    • obtain certifications related to various markets, such as the U.S. Green Building Council’s LEED certification or the American Society for Healthcare Engineering Healthcare Construction Certificate Program
    • join associations in the markets in which you are looking to do business (ASHE for healthcare, ISPE for pharmaceuticals, BOMA for commercial office buildings, etc.)
    • partner with a supplier/manufacturer with vertical market expertise.

    Foster Long-Term Customer Relationships
    The more expertise a contractor builds in to the customer’s business, the more likely they will be called on for future jobs. Contractors can ensure customer satisfaction after a job is complete by conducting follow-up interviews and satisfaction surveys. “Satisfaction surveys are an important part of our business,” according to Mike Dillard. “The constructive feedback we have received over the years on projects or service relationships has been vitally important to foster relationships with our customers.”

    “The most common feedback we receive from clients involves the importance of regular communication on the project,” Bill Dillard says. “Probably the biggest improvements we’ve implemented have been customer-service oriented. The bottom-line is that this is a customer service driven industry and contractors should strive to continually improve customer service.”

    A few additional suggestions for developing customer relationships include:

    • take corrective actions to avoid making the same mistakes, and let your cutomer know what actions were taken
    • build as many relationships as possible within the customer organization
    • consider ways to conduct joint marketing with your HVAC supplier
    • train your staff in relationship management.

    In the midst of daily challenges to complete projects on deadline, take the time to position your business to grow for many years to come.

    This article was provided by Heather Pedersen, mechanical contractor segment leader, Trane Commercial Systems.