Commercial plumbing contractors looking to expand often consider taking on mechanical projects. And, while mechanical work certainly dovetails nicely into a plumbing business, it does require a very specific set of abilities, relationships and other considerations that must be accounted for prior to jumping in.
When projects are put out for bid, the plumbing and mechanical packages are virtually always entirely separate. Most companies that wear both hats separate the plumbing and mechanical divisions. Jedd Mercer, vice president of construction at Smith Mechanical, a Columbia, Maryland-based plumbing and mechanical contractor, underscores the importance of maintaining a clear division between both disciplines. “We have separate estimators and project managers on both sides,” he says. “They are all experts in their field, and the bids and management of projects are kept separate.”
PREPARING FOR MECHANICAL
Initially getting set up to take on mechanical work requires a significant amount of legwork. Major vendors will want to feel comfortable that a new account has the resources in place to properly handle the work. “We go through a thorough vetting process when evaluating potential new accounts,” says Ben Hedenberg, sales director at Trane (Ingersoll Rand), a global manufacturer of HVAC equipment. “It’s definitely important that those installing our equipment are fully competent on our systems.”
To instill confidence with key vendors, contractors typically need to have onboarded at least one estimator and one project manager with notable mechanical experience. Prior to investing in human capital resources, contractors are well-advised to initially engage in discussions with vendors to ensure they will open them up as an account and to understand what their expectations are. It’s also important because no competent estimator or project manager will accept a position with a sea of unknowns.
Another consideration when working with new vendors is the level of pricing you will initially receive and the ability, if any, to negotiate pricing on a per job basis. Many manufacturers have tiered pricing tied to volume. While it is unlikely any new contractor will receive the deepest discounts right away, it is important to be at a level where you can be competitive from the start. This is a major reason why it’s important to convince key vendors that the volume will eventually come.
BUILDING RELATIONSHIPS
As with any type of contracting, the backbone of establishing a solid mechanical division is cultivating relationships. Well-grounded commercial plumbing contractors naturally have the advantage of already having a portfolio of accounts and established relationships through the plumbing business, but they will hardly be known to major mechanical manufacturers. In initially establishing relationships with mechanical vendors, most in the industry suggest focusing on no more than two key vendors supplying similar items. “It’s important to convince a supplier like us that you’re going to be dedicated to building a mechanical business and then follow through by landing some decent projects,” Hedenberg says. He also emphasized the importance of a rigorous product training program for new vendors.
Product training, particularly in the first month or so of forging new vendor relationships, can significantly inhibit the ability to pursue new work because of the time commitment manufacturers expect new vendors to invest in it. Even if an experienced estimator is brought on board, they will likely need to devote some time to product training because manufacturers typically have training requirements or expectations for dealers — not for individuals. After the initial training has been complete, manufacturers often have periodic training for new products, normally in the form of “lunch and learn” or day-long sessions.
Most manufacturers have a couple of key personnel, like a regional vice president or a territory sales manager, who are important to build solid relationships with from the beginning. “You’re definitely better off establishing a few really good relationships with a couple of select vendors than trying to befriend everyone,” says Bobby Hedrick, HVAC division manager at JA Croson, a Sorrento, Florida-based plumbing and mechanical contractor. “I speak with our top area (vendor) managers several times a week, have lunch with them, play golf with them and consider them friends. That helps with the business relationship tremendously.”
FOCUSING ON THE CUSTOMERS
Once the vendor relationships are in place and initial training is behind you, it’s advisable to focus on a handful of existing customers who are already solid plumbing accounts. “We’re always trying to further develop what we already have in place,” Mercer says. “If a customer is happy with our work in one division, they will almost always give us an opportunity with our other division.”
Mercer suggests having a key contact in the plumbing division who has the relationships in place to introduce the mechanical estimator and project manager to the existing customer in a face-to-face meeting. He also underscores the importance of setting the correct expectations from the start. “Don’t tell a new account you’ll quote every opportunity they send you if in reality you want to limit the size of the jobs you’re taking on and the geography you’re willing to cover,” he says.
Management and execution of the first few projects will be especially critical because, as a new face to the mechanical business, you will initially be placed under a microscope. “Anytime a contractor enters into a new trade or starts doing work with a new customer, there is no margin for error,” Hedrick says. He advises taking very few projects initially to ensure that they are managed with precision and a solid reputation is established from the beginning. The last thing any contractor wants to do, he adds, is to load the hopper up with new projects and then not have the management or installation crews in place to properly deliver on them.
