The value of preventive maintenance to the commercial heating and air conditioning contractor continues to be a popular topic at industry events.
The most recent session I attended on this topic was during the recent Mechanical Service Contractors Association conference. About 200 attendees packed a room to hear from three of the industry’s best PM proponents: David Bavisotto, vice president, service with Illingworth-Kilgust Mechanical; Steve Smith, senior vice president, ACCO Engineered Systems; and Jon Finch, vice president, training and recruiting, Milwaukee Tools.
This power trio framed their presentation around the idea that times and technologies continue to change, but the need for preventive maintenance remains a constant opportunity.
We’ve gone from color-coded dispatch boards and a $30/hour service rate in the 1970s, to beepers, pagers, two-way radios, and up to today’s cell phones and tablets, with labor rates of well above $120/hour.
Service offerings have also expanded, with value-adds like thermal imaging, vibration analysis, energy services, and energy service agreements. GPS has helped to streamline pre-planning and improved vehicle tracking. R-22 is disappearing. Micro-channel coils need less refrigerant, and the popular building protocols Lon and BacNET provide unlimited access to control systems. Offices have became paperless or close to it, and the smartphone is king. And have you looked into drones yet?
These improvements have all contributed to the contractor's need to service existing (and aging) buildings.
“The service business is absolutely one of the key businesses to be in,” Bavisotto said, because, guess what? People need heating and cooling, in every economy.
The median building age is over 32 years, and half of all commercial buildings were built before 1980. Sixty-one percent of construction projects are retrofits.
“In 2012, the amount of commercial office space exceeded 87 billion square feet,” Bavisotto said. “As these buildings age, there are more opportunities for service providers.”
Why would you, as a commercial mechanical contractor avoid this sure thing?
Another key fact they shared is that 50 percent of all buildings in the U.S. are 5,000 sq. ft. or less. “For this vast amount of customers, we just see the service business doing nothing but increasing,” Bavisotto said.
The biggest line item in the lifecycle of a building is alteration, energy and operation, at a whopping 75 percent.
Steve Smith said ACCO Engineered Systems began to attack the service market in the 1990s, after participating in a peer group meeting, whose other members had all adopted a maintenance
“Their profitability was double ours,” he said, “so we decided to invest in maintenance. We made that a mission over time. If not, we would have continued to be victimized by the ups and downs of the retrofit market.”
Service contracts provide an inside track into the customer’s eventual retrofit work and pull-through work. Planned maintenance is the lowest risk method to grow your service, and the fastest way to build a service business, at low risk/high margin terms.
Finch took the room through a rough look at market concentration: are you most active in hospitality, institutional, commercial building or manufacturing? And is that comprised of new business or retrofits? Where do you spend most of your time?
Time for this presentation was limited, but the message was clear. “Take the time when you get home, to develop metrics to know what markets you’re in, what is your return, and where you want to go,” Smith said.
“With planned maintenance, you control the when, where and how. It’s the fastest way to grow a service business,” Bavisotto said. And, it positions your firm as the go-to source for additional work.
Good luck growing your Planned Maintenance business in 2018