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.
Subcontractors wait an average of 167 days for retainage against 99 days for GCs, and two of three subs give up 10% where one of three GCs does. Fire alarm is at the far end of that curve because its scope can't close until everybody else's does. The money you earned setting boxes in month four is the last money on the job to move.
The size of it
On a $400K scope that's $40K, usually more than the job's entire net profit, and you finance it for 18 months at your own cost of capital.
Your rough-in starts in month three or four. The AHJ acceptance test, the signed NFPA 72 record of completion, as-builts, O&M manuals, and owner training all come after every other trade has demobilized and gone home. The GC knows the CO hangs on your test, so it holds your retention hardest and longest, and it holds it through the punch tail of trades that have nothing to do with fire alarm. A ceiling grid change that moves one smoke detector reopens your punch list months after you already passed acceptance.
Three moves, in order
Step 05: Software and bookkeeping alignment
Live job costs inside thirty seconds, with the bookkeeping cadence that keeps them current.
What else costs fire alarm contractors money
The same mechanism in other trades
What fire alarm owners ask
Why does the GC hold fire alarm retainage the longest?
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.
What does it cost?
On a $400K scope that's $40K, usually more than the job's entire net profit, and you finance it for 18 months at your own cost of capital.
What do I do first?
Get every open retention balance out of the general AR bucket and onto its own aging by job, with the acceptance test date and the CO date beside each balance.
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 05, software and bookkeeping alignment. Live job costs inside thirty seconds, with the bookkeeping cadence that keeps them current. It comes from chapter 5 of CONTROL: The Construction Financial Operating System.
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.
Wrote CONTROL, the 8 step system behind these figures. More about the author.