Do you do Design/Build work because you love it, and plan-and-spec work because you have to?
Like many mid-size commercial contracting firms, that's the situation we face here at Hyde-Stone Mechanical Contractors, Inc.
We have found that there are three keys to procuring the Design/Build work that we love in a market where plan-and-spec is king: quality, reputation, and relationships. The three, as you might imagine, are very much interconnected.
Hyde-Stone Mechanical is a 112-year-old, $5 million firm with 36 employees. We have three office in upstate New York: Plattsburgh, Potsdam, and our headquarters in Watertown. While the area may look somewhat remote on a map, we draw customers from a solid industrial base that includes Alcoa, General Motors, Kraft Foods, and Bombardier (a manufacturer of freight and luxury trains), as well as numerous universities and hospitals.
And, like many mechanical contractors, we have a thorn in our side called plan-and-spec.
Start With Your Plan-and-Spec Customers
In many cases, there's no way around plan-and-spec. Customers are obligated by a corporate or municipal entity to get bids, and the low number gets the job.
Fortunately, the plan-and-spec marketplace can serve as a source of Design/Build customers.
First of all, we have an excellent commercial/industrial service department. Since most plan-and-spec jobs, by their very nature, involve the contractor walking away at the end, we aggressively pursue the service contracts once the job is completed.
Along with those service contracts, we get plan-and-spec customers who are eventually going to do an addition, need a chiller or boiler replacement, are looking to add energy recovery ventilators, need more fresh air, etc.
Once we're working in their building, maintaining and servicing their current system, we become the natural choice for them to ask when they need such upgrades. That's the first place we go for Design/Build.
About $1.5 of our company's $5 million top line is service, and we always encourage our service techs to be aware of customers' needs. They don't have to sell. If they see equipment that's old and inefficient, all they have to do is inform the customer and then let us know in the office, and we'll follow up.
Our technicians understand it's in the customer's best interest to have reliable, efficient equipment. They're the eyes and ears for both the customer and our company. That's an important role and we en-courage and reward our techs for fulfilling it.
Even when we do bid on plan-and-spec work and lose the bid, our Design/Build background allows us to turn it into a positive. We're the company that the customer calls to come in and fix it.
It's a tremendous opportunity for us when a customer calls and says, "Do you remember bidding on our job last year? We'd like you to come over and take a look at it because it doesn't seem to be working right." We can then go in and fix the problem and, in the process, win that customer over. The best Design/Build customers are those who have had a bad plan-and-spec experience.
You can also find Design/Build work by doing better commissioning than anyone in your area. Commissioning is a tough job that's often under-appreciated by customers, but it will really set you apart from your competition — especially the plan-and-spec guys.
Several years ago we became certified by the National Balancing Institute. Now we use balancing not only for troubleshooting and solving comfort problems in our competitors' systems (thus winning new customers we can convert to Design/Build), but also when we commission our own systems. True to our Design/Build roots, we want to design, install, and maintain systems. The maintenance component becomes a whole lot easier when systems are properly balanced (and the controls are working properly) in the first place.
Quality and Reputation
Having been around for as long as we have has given us a great long-term reputation in our area. But you have to be willing to hire (and pay) the best people, and keep them trained so they're the best in the area. By selling Design/Build services, you're telling the customer that your firm is better than the plan-and-spec low bidders. You have to make sure that's truly the case.
You don't have to be a 112-year-old company to have a good reputation. Quality work and reputation are married. If you do quality work, your reputation will grow. Likewise, once you've established a good reputation, it becomes increasingly important to always provide quality work. This applies if you've been in business for 100 years or one year.
Reputation is the key to the next tactic in landing Design/Build jobs: knocking on doors.
Do the research. Go to local chambers of commerce, identify the companies you'd like to have as customers and keep after them. Send them e-mails, stop by and drop off your card, keep them informed about things in the HVAC market that may be important to them. Eventually, the time may come when — for whatever reason — they're dissatisfied with their current HVAC contractor. That's when you'll get your chance to impress them.
When it comes to knocking on doors, try to get to the person who's writing the checks. Start with the maintenance people, but get up as high as you can. Some companies have a procurement office. Talk to the people in there; they're the ones their facility management people will call when they need HVAC work.
You may get a lot of runaround, but it's worth it to get your name and face in front of the people who write the checks and the people who run the facility. Persistence pays off.
Create Winning Proposals
I try to convince every customer that Design/Build is the way to go, and they seem to believe me when we're talking about a $100,000 to $250,000 project. But when it comes time for a huge expansion, they suddenly seem more comfortable going to the local architect/engineers. Those guys do a fine job, but it's hard to convince customers that we can do all the things they can, and more.
How can you overcome this? Impress customers with your professionalism and credentials. For example, we show our customers how we use auto CAD to turn around their designs very quickly and accurately.
Also, take the time to go over your proposals with potential customers — don't just fax a proposal over and hope for the best.
We meet face-to-face with potential customers and give them a lot of information in a very professional format. We explain how we arrived at our design, and we educate them about Design/Build. Of course, you have to be careful here that people won't steal your design. Don't give customers so much information that they can simply take your proposal to a competitor and say, "Can you do this cheaper? Look, the loads are all done, and the pumps and ductwork are all sized." Don't give everything away upfront. But do give customers enough information that they'll know they want to take the next step with you and sign a contract.
Remember, even though the nature of the business is mechanical systems, it's still very much a people business. Do quality work to build your reputation, then use your reputation to get in the door and build relationships. Landing Design/Build work will follow naturally.
Don't Miss The 2005 Commercial Contracting Roundtable
For more information on Design/Build and commercial contracting, attend the Commercial Contracting Roundtable, cosponsored by the Air Conditioning Contractors of America and Contracting Business.
The event, which incorporates the Design/Build Seminar, takes place October 26-26 in Scottsdale, AZ. For more information, call 703/824-8856 or visit www.contractingroundtable.com
Christopher J. Stone is vice president of Hyde-Stone Mechanical Contractors, Inc., Watertown, NY. He can be reached at 315/265-6999, e-mail email@example.com
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