The Building Assessment: Survey & Financial Analysis - IE3: Business Tools for HVAC & Plumbing Contractors  

The Building Assessment: Survey & Financial Analysis

Would you like to differentiate your commercial service business by being more thorough, collecting key financial information, and positioning your commercial offerings with cost justification? In the last several articles we discussed the early stages of the commercial service and service agreement sales process. Let’s now take a look at the stage of the sales process that is related to our survey, further qualification, and the collection of building ownership and operating costs.

Previously, we talked about the conclusion of a great First Structured Qualifying Meeting where we gain agreement to, and the scheduling of, future meetings. The physical survey of the HVACR equipment will need to be scheduled, some financial information will need to be collected, and we also schedule the Confirmation-Verification of Information Meeting (the opportunity to negotiate). Realizing this is very “dry” information, let’s dive in.

The physical survey combined with the collecting and reviewing of financial information can be described as the “Building Performance Assessment.” We are preparing for the most important future stage in the sales process, which is the meeting to discuss recommendations and explore options (the Confirmation-Verification Meeting)! At the conclusion of the First Structured Meeting, the Confirmation-Verification Meeting must be set up with a specific date and time, known as the “plan of action.” The collecting of several categories of financial information and the building survey should be set up as soon as possible after the First Structured Qualifying Meeting.

For now, let’s concentrate on the two critical components of the Building Assessment; (1) the physical survey, and (2) the collecting of financial information. The physical survey is performed as we have typically performed maintenance and project surveys for many years, identifying equipment model and serial numbers, location, access, component attributes, and taking photographs. The more information the better! Belts, filters, motor and compressor horse power, and any issues that exist, or are able to be discovered need to be noted. Photos can show dirty coils or filthy heat transfer surfaces, poorly accessed panels, missed repairs, or any other oddity that show neglect (all without indicting the facility staff using language).

The collection of financial information can be narrowed down to a few categories, or become a very thorough evaluation of many cost categories. We’re going to focus on the most basic financial review or cost analysis. We would want to collect financial information in three main cost categories; (1) two years of annual utility costs (if in a spreadsheet, we also need a copy of a few bills to show rate structure and cost per unit), (2) a few years of major component replacement and major repair costs, and (3) annual labor costs or outsourced services costs (this would also include the current agreement, if one exists). Many other cost categories can be collected and investigated including in-house staff costs, administrative costs, parts and materials consumed, and even the cost of lost productivity.

Costs are examined to “follow the money trail,” which means many businesses or facility owners are “nickel and dimed” by re-active repair costs, “band-aid” costs, costs that do not resolve issues and lead to excessive energy costs, and premature equipment failure costs. Costs can always be reduced through a proactive approach to maintaining and operating equipment. Reactive costs always cost more, and a thorough investigation of costs over a few years will reveal inefficiencies and neglect. Of course, should the competition for a specific maintenance agreement or project not be justified through the cost analysis, we must rely on lack of documentation, poor communications, neglect, or some other behavioral issue that would lead the prospect away from the competition. Many emotional issues are extremely important, such as a lack of comprehensive communications, hot and cold spots, unresolved issues, and the pain of unacceptable escalating energy costs. Many concerns outweigh the financial justification we look for, and yet any benchmarking, unusual financial information collected, Energy Star ratings, and review of out-of-line expenses help prove that our proactive, thorough tasking will truly save money over any reactive approach.

By merely introducing the cost categories mentioned, or using a visual aid such as an operating cost pie chart, will alert the prospect to the total costs that go into maintaining and operating an HVACR system. This presentation of the cost categories alone can prompt the prospect, and their accounting department, to help justify your proactive recommendations! Equipment manufacturers, ASHRAE, BOMA, the DOE (Energy Star), and several software programs (such as North Boundary) have cost analysis calculations and formulas using Cost of Operations worksheets that will produce a Financial Analysis. The financial analysis and cost justification tools are items that we are happy to share! Connect with me using the contact information below. There are many cost analysis tools available to contractors today, and we want to help you work with these tools.
The physical survey and cost analysis constitute the Building Performance Assessment, and can be used in a simple form or very sophisticated manner. Either way, the introduction of building operation and ownership costs for HAVCR should be included with the physical survey information.

James Graening

James Graening

Training Consultant at www.JamesGraening.com
James Graening is a well-known trainer with JamesGraening.com and has worked with dozens of contractors in the U.S. and Canada.
James Graening
James Graening

James Graening

Training Consultant at www.JamesGraening.com
James Graening is a well-known trainer with JamesGraening.com and has worked with dozens of contractors in the U.S. and Canada.
James Graening

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