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

WHY IT'S A FIRE ALARM PROBLEM

The call comes at night, there's no PO, and the owner on the other end is still holding your retention, so no one in your shop wants to be the one who sends the invoice. Every one of those hours is fully burdened labor with a night premium, charged against jobs you already closed and already reported a margin on. It settles into overhead where it looks like the cost of doing business.

WHAT IT COSTS

The size of it

Fifteen to forty unbilled callback hours per completed job in year one take the last two points of margin off work that closed months ago.

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.

Fire alarm's callback tail looks like no other trade's, because a failure calls the fire department. Dust and humidity in a first-year building push smoke detectors into drift and nuisance trips. Sealed lead-acid standby batteries are a wear consumable that dies inside the warranty window. Elevator recall, smoke control, and duct detector interlocks quit working when another trade rebalances a system months after you left the site. NFPA 72 also requires an annual inspection and test starting one year after acceptance, which the owner reads as still under warranty.

WHAT TO DO

Three moves, in order

STEP 01

Keep the job's cost code open for twelve months past acceptance and code every callback by reason: warranty defect, nuisance trip, battery, other trade, or owner-billable inspection.

STEP 02

Give the owner a written warranty scope the day you deliver the record of completion, with what's covered, what isn't, and your inspection and test rate on the same page.

STEP 03

Total last year's callback hours, divide by jobs completed, and load that number into your overhead rate before you price the next bid.

THE FIX

Step 03: Overhead calculation

What indirect cost really comes to at your size, and the rate your estimating template should be using.

CFOS-03 · CHAPTER 3

The overhead rate your bid sheet should cover

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

You're bidding below your own overhead

If the overhead percentage in your estimating template is lower than what you actually run, every job you win loses money before a single hour is worked.

SAME TRADE

What else costs fire alarm contractors money

FIRE ALARM · CFOS-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.

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.

SAME MECHANISM, OTHER TRADES

The same mechanism in other trades

CIVIL

Trench dips appear inside the bond window

The parking lot settled over your sewer line eighteen months after acceptance, and who pays comes down to whether the density test for that station and that lift is in a file.

DEMOLITION

They Found A Tank A Year After You Demobilized

An old UST turns up under the pad twelve months after your last load left, and every finger points at the contractor who isn't on site anymore.

DRYWALL

The eleven-month callback hits this year's payroll

It's March, two of your best guys are in a truck all month fixing houses you finished last spring, and none of those hours bill.

QUESTIONS

What fire alarm owners ask

Charging owners for fire alarm nuisance alarm calls during warranty?

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.

What does it cost?

Fifteen to forty unbilled callback hours per completed job in year one take the last two points of margin off work that closed months ago.

What do I do first?

Keep the job's cost code open for twelve months past acceptance and code every callback by reason: warranty defect, nuisance trip, battery, other trade, or owner-billable inspection.

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 03, overhead calculation. What indirect cost really comes to at your size, and the rate your estimating template should be using. It comes from chapter 3 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.