Integrators are beginning to understand the value of being selective about the projects they take on
Throughout the year, we’ve been delving into data from the 2022 State of the Industry survey report, released by Commercial Integrator and NSCA.
One interesting point that stands out is the number of survey respondents who report revenue growth while simultaneously reporting that they’re completing fewer projects.
This is good news for NSCA members! Why? Because it means that integrators are beginning to understand the value of being selective about the projects they take on. Integrators not only need to stop de-valuing the work they do, but also start to charge an amount that reflects the talent and expertise they bring to the table (while also factoring in the increasing price of talent, supply chain issues, etc.).
So … is there a benefit to being “choosier” about which projects your company takes on? The short answer: yes!
It pays to spend time studying your company’s project performance over time so you can find your “sweet spot”: the types of projects that bring you the most profit. Your sweet spot depends on things like your team’s skillset, the type of work they enjoy, existing relationships, and the equipment you have.
Only your company can determine how much profit is necessary (or desired) on each job. Understanding true projects costs is key to identifying this number. Especially in today’s environment, where material and labor costs are moving targets, it’s important to make sure you leave enough room in quotes to maintain profitability if costs change after the project gets off the ground.
Before quoting any job, be realistic about the true costs involved.
- What will it cost in labor to complete the job, including wages, benefits, workers’ compensation, taxes, travel to and from the site, etc.?
- Do you have the in-house expertise to complete the work? If not, what will subcontractors or outsourcing cost? Can you get people lined up in time?
- Do you have the right tools and equipment to complete the job? If not, what will equipment rental cost? Can you get the equipment lined up in time?
- What will bonding and insurance cost?
- How much time will be spent managing and overseeing the project? Will this commitment sacrifice the quality of or resources dedicated to other projects?
- If upfront investments are required for this project, will they drain your working capital?
NSCA also offers several tools to help you understand true project costs. Our Financial Analysis of the Industry report and Labor Installation Standard guidelines can help you make more informed, data-driven business decisions about your billing rates.
A quick and easy way to see how a specific project is contributing to your company’s bottom line is to use our Project Contribution Simulator Tool. It demonstrates how properly burdening labor, spearheading eroding margins, and understanding the true costs of doing business will impact your bottom line.
With the information these tools give you, you can make well-informed decisions about the projects you want to work on—and the projects you decide to pass up because you know you won’t be profitable.
Another important note about choosing the right projects: It’s not only about the right job, but also about the right client. You’ll benefit the most from working with customers who know and understand the value you bring, and customers who want to invest in long-term relationships.
At first, passing on projects can be a hard concept to get comfortable with, but it gets easier once you realize the time and money wasted on chasing projects that bring financial risk with little reward.
For most NSCA members, profitability comes with large, more complicated projects—but not always. The only way to know for sure is to do your homework. Don’t be afraid to pass on the work that won’t pay off.
As the 2022 State of the Industry survey report seems to reveal, when you choose projects that allow your team to excel and be profitable, you may also be able to complete fewer jobs while maintaining—or even increasing—revenue so your company can continue to invest in new talent and technology that elevate its value.