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Lack of management can lead to costly project delays

Industry representative outlines risk posed by HVAC contractors that do not have a strong financial grasp on the business

| | Nov 25, 2018 | 9:31 am
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Kentucky, USA, 25 November 2018: Discussing how lack of management can lead to costly project delays, Scott Ritchey, Vice President, Plumbers Supply Company, and author of Make More Money: 12 Profit Pillars for HVAC Contractor Success, said that when it comes to commercial performance-based or time-based projects, many large and successful contractors fail to manage the job in terms of labour, material and scheduling. “That causes them to miss times and dates,” he said, “or, worried about hitting that penalty in the contract, they hire more people and add more cost and that backfires on them.”

From an engineering perspective, Ritchey said, most contractors are able to specify the necessary system to achieve the target performance. “They understand the science of air conditioning and design,” he stressed. However, Ritchey said that if engineers, general contractors and HVAC subcontractors don’t have a strong grasp of the financial considerations required, they run the risk of going out of business in the middle of a project, costing the firm and clients even more. “The general contractor negotiated the initial price,” Ritchey stressed, “[but] the rescuing contractor, who is coming in, is not bound to that initial price. Yet, the firm is in a bind to get the project done, so the rescuing contractor can charge whatever he wants because they need him.”

This, Ritchey said, is the risk stakeholders take, if the initial contractor does not understand the financial aspects of the business and does not implement the necessary measures to ensure that he is able to remain profitable and complete the job, beyond the science and engineering aspect of the project. Scheduling, buying and developing the right inventories for a project, he said, are vital factors in contracts of performance-based jobs, stressing that it must be taken into account, from the onset, to ensure the benefit of all players down the line.

 

Hannah Jo Uy is Assistant Editor at Climate Control Middle East magazine. She may be contacted at hannah@cpi-industry.com


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