ELEVATOR · MECHANICAL AND LIFE SAFETY · FIXED BY STEP 06

Your elevator doesn't get built until layouts come back

Six weeks of architect and GC review stack on top of your lead time, not inside it, and the factory doesn't cut a rail until the stamped layout comes back.

WHY IT'S AN ELEVATOR PROBLEM

Most subs measure lead time from the day they place the order. Yours starts the day an architect signs, which means the party holding your schedule has no money at risk in it. Two approvals, held by two different parties, come in front of a single manufacturing clock that can't start early.

WHAT IT COSTS

The size of it

Six weeks of review plus a two-week out-of-tolerance hoistway fix moves the whole schedule two months to the right while you fund the deposit and burn estimated hours on a job with no billing activity.

OVERHEAD AT $1M–$5M

18%

CFOS target 17% for elevator.

GROSS MARGIN AT $1M–$5M

27%

CFOS target 29.5% for elevator.

NET PROFIT AT $1M–$5M

CFOS target 12.5% for elevator.

Release for manufacture is gated on approved layout drawings: pit depth, overhead, hoistway plumb, entrance sizes, and machine room or MRL clearances. Until that approval comes back, the 20 to 40 week clock hasn't started, so every week the drawing waits on somebody's desk is a week added to the back end of the job. Then comes a second gate almost no other trade has, the field hoistway survey before mobilization. If the concrete or masonry is out of plumb or the pit runs short, you either eat rail bracket and entrance remediation or you stand down while another trade fixes structure. Both gates belong to other people, and both get blamed on the elevator sub.

WHAT TO DO

Three moves, in order

STEP 01

Date-stamp submittal out, approval in, and release to factory on every job, and age open submittals in your weekly meeting the same way you age AR.

STEP 02

Send a written schedule impact notice the day review passes your contract turnaround, stating the new release date and the new test date, copied to the GC's scheduler.

STEP 03

Require a hoistway survey after the shaft is topped out and before rails ship, and price every tolerance exception as a change order that same day.

THE FIX

Step 06: Project management

Billing dates, change orders, and notices, written as standards that work without anyone chasing them.

CFOS-06 · CHAPTER 6

Billing and change orders that hold without chasing

What this step changes, what it depends on, and how to tell it's installed.

BENCHMARKS

Elevator by revenue band

All 7 bands are published. The CFOS target is beside the figure up to $10M to $25M, and the 4 bands above that are labelled modeled.

ACROSS EVERY TRADE

The change orders you did and never billed

The field did the work. The paperwork never caught up. Ninety days later there is no record that proves it happened.

SAME TRADE

What else costs elevator contractors money

ELEVATOR · CFOS-01

Five lead times run one car, and none of it is billable

The controller and machine are set, the entrances are eight weeks out, and there's nothing on the pay application because a car with four of five components doesn't run.

ELEVATOR · CFOS-06

Acceptance testing waits on everyone else's scope

Your final billing hangs on an A17.1 acceptance test you can't schedule and can't pass alone, and a failure caused by the fire alarm contractor still costs you the re-inspection.

ELEVATOR · CFOS-04

You bid steel in March and buy it in September

The stainless cab and #4 entrances got priced on bid day and bought half a year later, and the lump sum contract has no escalation language in it.

ELEVATOR · CFOS-01

Warranty year eats the margin you already billed

Cash leaves in month three for the factory deposit and comes back in month twenty-six, and then you owe twelve months of maintenance on a job that's already closed.

SAME MECHANISM, OTHER TRADES

The same mechanism in other trades

CIVIL

The grading permit clock isn't on your schedule

Third resubmittal on the grading permit, the power pole relocation is six months out, and your crew and iron cost money while no party in your contract chain is at fault.

CONCRETE

The 28-Day Break Decides a Pour You Already Billed

You poured in March on an approved mix, the cylinders came back low in April, and two floors have already gone up on the slab in question.

DEMOLITION

Four Clocks Own Your Start Date And You Own None

The machine is on the pad, the crew is standing around, and everyone is waiting on a letter from the gas company. None of the clocks that release your start belong to you.

QUESTIONS

What elevator owners ask

Elevator layout drawing approval took six weeks who pays for the delay?

Six weeks of architect and GC review stack on top of your lead time, not inside it, and the factory doesn't cut a rail until the stamped layout comes back.

What does it cost?

What do I do first?

Date-stamp submittal out, approval in, and release to factory on every job, and age open submittals in your weekly meeting the same way you age AR.

What are elevator contractors supposed to be making?

Elevator runs 27% gross margin, 18% overhead and 9% net profit before taxes at $1M–$5M. The all-trade average is 7%, so this trade is 2 points above it. The CFOS target is 12.5%.

Which part of the system fixes it?

The step is number 06, project management. Billing dates, change orders, and notices, written as standards that work without anyone chasing them. It comes from chapter 6 of CONTROL: The Construction Financial Operating System.

OR HAVE IT HANDLED

Everything on this page is something you can install yourself, andCONTROL is the order to do it in. If you would rather buy the finished result, SPM The Construction CFO does this work for elevator contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, run by the same author.

What a fractional CFO does for elevator contractors

AUTHOR

JOSH LUEBKER

MASTER ELECTRICIAN · 150+ PROJECTS · $2.1B+ MANAGED

Wrote CONTROL, the 8 step system behind these figures. More about the author.