HVAC · MECHANICAL AND LIFE SAFETY · FIXED BY STEP 06

Temp heat on your units is a change order

They dried the building in, fired your rooftops in November, pulled drywall dust through the coils until March, and now they want a clean warranty at turnover.

WHY IT'S AN HVAC PROBLEM

No owner borrows the drywall or runs the flooring for four months before acceptance. Your equipment is the only installed product on the job that other trades operate as a construction tool, and it wears while they do it. That makes your warranty exposure a function of the GC's finish schedule, and the wear stays invisible until somebody opens an access door at closeout.

WHAT IT COSTS

The size of it

Filters and coil cleaning run $800 to $2,500 per unit at turnover, months of warranty burn off before the owner takes the building, and a failure in month 14 comes fully out of pocket.

OVERHEAD AT $1M–$5M

16%

CFOS target 15% for HVAC.

GROSS MARGIN AT $1M–$5M

24%

CFOS target 26.5% for HVAC.

NET PROFIT AT $1M–$5M

CFOS target 11.5% for HVAC.

HVAC is one of very few trades whose permanent installed product gets consumed by other trades before anybody accepts it. Once the units are set and the building is dried in, the GC wants conditioned space so drywall, tape, flooring, and paint can move. Manufacturer warranty starts at first operation or start-up, not at substantial completion, so the clock is running months before the owner has the keys. While that unit is running, coils foul with joint compound dust, filters load out in weeks, and belts and bearings put on hours that go uncounted. At turnover the owner expects equipment that looks and performs new, and coil cleaning, filters, and any early failure fall to you unless there's a written temporary conditioning agreement with its own cost line and an agreed warranty start date.

WHAT TO DO

Three moves, in order

STEP 01

Don't energize a unit for temp conditioning without a signed agreement that states the start date, the filter change interval, who pays for it, and the agreed warranty start date.

STEP 02

Open a temporary conditioning cost code and bill filters, coil cleaning, and run hours monthly while it's happening, so it never becomes one ugly number at closeout.

STEP 03

Photograph every filter change and log the hour meter reading on each unit, and attach the log to the closeout package as your record of what the building did to your equipment.

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

HVAC 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 HVAC contractors money

HVAC · CFOS-01

Your biggest PO gets paid months before it can be billed

You wired the deposit in April, paid the balance in July, and in September the unit is still in a leased warehouse with nothing on the pay app to show for it.

HVAC · CFOS-04

You bid a price the factory never agreed to hold

You bid it in March, released it in June, and it ships in February at whatever the factory is charging in February.

HVAC · CFOS-03

An unsigned model turns into shop burden that was never bid

The coil line isn't running, the plasma table is idle, the shop foreman is on payroll, and you're chasing the plumber and the sprinkler contractor for a signature.

HVAC · CFOS-04

Bid pounds and bought pounds are two different numbers

You bid 42,000 pounds of duct and the mill invoices add up to 51,000, and there is nothing in the building that tells you where the other 9,000 pounds went.

HVAC · CFOS-07

Retention rides on a report you didn't write

Field work wrapped in April, and your last five percent is still waiting on a heating verification somebody has to schedule for cold weather.

SAME MECHANISM, OTHER TRADES

The same mechanism in other trades

CIVIL

Four mobilizations, one mob line item

You clear and grub in month one, come back for wet utilities, come back again for paving subgrade at closeout, and the contract still has one mobilization line.

CONCRETE

Six Trips Back for Pads and Sidewalks, One Unit Price

You were first on the site and you're still coming back for stairs, pads, curbs, and exterior flatwork, all priced inside a per-yard number that assumed you never left.

DRYWALL

You Go Back Six Times And No Ticket Gets Signed

You hung the corridor in March and you're still sending a guy back in June, one hole at a time, on somebody else's dime.

QUESTIONS

What HVAC owners ask

GC using my rooftop units for temporary heat during construction?

They dried the building in, fired your rooftops in November, pulled drywall dust through the coils until March, and now they want a clean warranty at turnover.

What does it cost?

Filters and coil cleaning run $800 to $2,500 per unit at turnover, months of warranty burn off before the owner takes the building, and a failure in month 14 comes fully out of pocket.

What do I do first?

Don't energize a unit for temp conditioning without a signed agreement that states the start date, the filter change interval, who pays for it, and the agreed warranty start date.

What are HVAC contractors supposed to be making?

HVAC 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 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 HVAC contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, run by the same author.

What a fractional CFO does for HVAC contractors

AUTHOR

JOSH LUEBKER

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

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