FIRE ALARM · MECHANICAL AND LIFE SAFETY · FIXED BY STEP 07

Your panel ships months before you can bill a dollar

Sixty grand of control panel is on your shop floor and there's nothing on the pay application it can go against.

WHY IT'S A FIRE ALARM PROBLEM

Fire alarm is a closed proprietary line. Devices only talk to their own panel, so every piece comes from one authorized distributor at that manufacturer's price sheet, with no second bid and no substitution to soften the buy. Engraved annunciators and voice message firmware are built to order once the point count is locked, so the lead-time clock doesn't even start until submittals come back, and Fire-Lite currently lists panels discontinued outright for component constraints.

WHAT IT COSTS

The size of it

On a $400K fire alarm scope, $140K to $180K of proprietary equipment is out the door 60 to 120 days before the first material dollar is billable.

OVERHEAD AT $1M–$5M

16%

CFOS target 15% for fire alarm.

GROSS MARGIN AT $1M–$5M

24%

CFOS target 26.5% for fire alarm.

NET PROFIT AT $1M–$5M

CFOS target 11.5% for fire alarm.

The panel, the SLC steps, the NAC power supplies, the voice-evac amplifiers, and the engraved annunciator all leave your bank account at submittal approval. The first pay application that can cover them comes 60 to 120 days later, and only if the GC's stored-material clause lets you bill gear that isn't installed. Most of those clauses want bonded off-site storage with title transferred before they release a dollar. Meanwhile the distributor's terms are net 30 and the clock started the day the order shipped. You cover the stretch on a supply-house line at 1.5% a month, or on a card.

WHAT TO DO

Three moves, in order

STEP 01

Pull your open jobs and list every panel, amplifier, and annunciator you've already paid for, with the PO date beside the date it first appeared on a pay app.

STEP 02

Read the stored-material clause on each of those contracts this week, and get the off-site storage certificate and title-transfer paperwork submitted the same week the gear ships.

STEP 03

Add one line to your monthly cash meeting: equipment paid and not yet billed, by job, and don't close the meeting until every dollar on that line has a billing date next to it.

THE FIX

Step 07: Monthly cadence

Weekly bookkeeping, cost to complete, and one CEO report, on the same days every month.

CFOS-07 · CHAPTER 7

The monthly close that takes a contractor 5 hours

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

BENCHMARKS

Fire alarm 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

Profitable on the P&L, out of cash

Your P&L says you made money and your bank account says you didn't. Neither is wrong.

SAME TRADE

What else costs fire alarm contractors money

FIRE ALARM · CFOS-01

Two hundred drafting hours with no cost code to hold them

You've got NICET time, riser drafting, and battery calcs stacked up on a job where you haven't set a single box, and no cost code holds any of it.

FIRE ALARM · CFOS-04

A 30-day quote can't hold a nine-month buyout

You bid the equipment off a quote good for 30 days, then bought it out eight months later at the new price sheet, with no second vendor to shop it to.

FIRE ALARM · CFOS-05

You gate the CO, which is why your retention pays last

The building can't get its certificate of occupancy without your acceptance test, and you're still chasing ten percent a year after you passed it.

FIRE ALARM · CFOS-06

You bid three trips and you've made nine

The estimator priced two mobilizations, and then the schedule gave you six: boxes, wire pull, trim, programming, pretest, acceptance, retest, and ERRCS.

FIRE ALARM · CFOS-03

A dirty detector at 2 a.m. isn't warranty work

The building is a year old, the detector is dusty, the fire department rolled, and you sent a tech in the middle of the night with no PO.

SAME MECHANISM, OTHER TRADES

The same mechanism in other trades

CONCRETE

Eight Tons of Rebar Tagged to a Drawing That Changed

The EOR approved the placing drawings, the fab shop cut and bent to the bar list, and then somebody moved a footing. Now you own bundles tagged to grid lines that no longer exist.

DEMOLITION

Your Breaker Burns Tool Steel That Overhead Pays For

A hammer chews $9,000 of tool steel on one teardown and the job that ate it never sees a dollar of the cost. The margin looks fine and the bank account disagrees.

DRYWALL

Lead-lined board is eight weeks and non-returnable

The imaging room's board is eight weeks out, cut to the shielding drawings, and the deposit is gone the day you release the order.

QUESTIONS

What fire alarm owners ask

Can I bill for a fire alarm panel before it's installed?

Sixty grand of control panel is on your shop floor and there's nothing on the pay application it can go against.

What does it cost?

On a $400K fire alarm scope, $140K to $180K of proprietary equipment is out the door 60 to 120 days before the first material dollar is billable.

What do I do first?

Pull your open jobs and list every panel, amplifier, and annunciator you've already paid for, with the PO date beside the date it first appeared on a pay app.

What are fire alarm contractors supposed to be making?

Fire alarm runs 24% gross margin, 16% overhead and 8% net profit before taxes at $1M–$5M. The all-trade average is 7%, so this trade is 1 point above it. The CFOS target is 11.5%.

Which part of the system fixes it?

The step is number 07, monthly cadence. Weekly bookkeeping, cost to complete, and one CEO report, on the same days every month. It comes from chapter 7 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 fire alarm contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, run by the same author.

What a fractional CFO does for fire alarm contractors

AUTHOR

JOSH LUEBKER

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

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