Introduction
With your involvement in design/build or design/assist projects, you can offer and suggest high-efficiency equipment and controls. Through your service division, you can offer building tune-ups and enhanced O&M to maintain the high-performance systems your construction division has installed. By helping your customers reduce their energy costs and improve operations, you not only protect your customer base, but you open up new opportunities for additional projects.
Business Opportunities for the Construction Division
By leveraging the BPS offerings of your service division, you can attract new clients and enter new markets. Differentiate your company as a contractor with services beyond the typical competitor.
- Offer high-efficiency equipment and points of control to support optimum building performance.
- Specify a building tune-up as a follow-on service.
- Promoting your service division's building tune-ups and enhanced O&M services:
- may bring back more construction opportunities from that customer
- may turn into capital improvement projects
- Negotiate BPS services into the specifications to give yourself a competitive advantage.
- Position your company as environmentally responsible and focused on sustainability.
Business Opportunities for the Service Division
By offering building-tune-ups and enhanced O&M services, you can attract new customers while taking advantage of opportunities generated by your construction division:
- Immediately turn construction projects into service contracts by offering enhanced O&M during the warranty period:
- Help owners maintain building performance.
- Get to know facility personnel during the warranty period.
- Provide building tune-ups for the construction division as part of the commissioning process.
- Revisit existing customers to offer this new service.
- Visit your competitors' customers to offer this new service.
- Position your company as environmentally responsible and focused on sustainability.
- Offer building tune-up and/or enhanced O&M as a specification item.
- Team with engineering professionals to offer more robust services.
Talking Points
Building tune-ups and enhanced O&M services provide many benefits to building owners. As you address your customers' questions, here are a few points to make:
- Bottom-line savings are immediate.
- Enhanced O&M results are measurable and verifiable. You can easily track:
- dollars saved,
- energy saved,
- reduction in complaints, and
- reduction in unscheduled service calls.
- Better building performance improves the value of your customer's investment.
- Green buildings are in demand. BPS may influence LEED-EB qualification.
- Green buildings attract tenants and employees.
Potential Revenue
The following scenario illustrates the revenue potential of adding BPS to your service offering.
Larry runs Ace Contracting and his service department currently books $10,000,000 in revenue from annual O&M contracts with a 50% markup. He anticipates growing the business 5% each of the next five years. The building tune-up and enhanced O&M concepts are well-received by the service, sales, and operation staff. Each year they are successful in converting 5% of the base revenue into building tune-ups and 10% into enhanced O&M agreements. Markups for the tune-ups and enhanced packages are conservatively calculated at 40% and 50%, respectively. As a result of this success, they are also able to develop capital projects for replacing equipment equal to 30% of the new BPS business, and expect a 50% markup on this work.
The service department's success in BPS also feeds new work (estimated at an additional 5%) to the construction department that they would not otherwise have gotten. This new work is billed at a 35% markup.
Summary of assumptions used for the business model
| Current annual contract sales: | $35,000,000 |
| Current annual service contract sales: | $10,000,000 |
| Projected growth: | 5% |
| BPS Addition | |
| Enhanced O&M: | 10% of service contracts |
| Building tune-up: | 5% of service contracts |
| Equipment projects related to BPS: | 30% of other BPS sales |
| Capitol projects related to BPS: | 5% of other BPS sales |
Entering these assumptions into the Business Model Tool for mechanical contractors produces the results shown in the figure below.