LOW VOLTAGE AND AV · ELECTRICAL AND TECHNOLOGY · FIXED BY STEP 04

You Bid a Model Number, Then It Goes End-of-Life

Copper moves and comes back. A model number that gets discontinued never comes back, and the spec still calls for it.

WHY IT'S A LOW VOLTAGE AND AV PROBLEM

Trades with commodity exposure can point at a published index and write escalation language a GC will accept. Your exposure is a discontinued SKU, which no index tracks and no GC treats as a market condition. Division 27 and 28 scopes rarely include escalation at all, because the GC reads your bill of materials as a purchase order and treats it as a fixed price buy.

WHAT IT COSTS

The size of it

5 to 15% of the bill of materials can erode between bid and buyout with no contract mechanism to recover it. The alternative, pursuing a substitution approval, costs schedule, and schedule usually costs more.

OVERHEAD AT $1M to $5M

16%

CFOS target 15% for low voltage and AV.

GROSS MARGIN AT $1M to $5M

24%

CFOS target 26.5% for low voltage and AV.

NET PROFIT AT $1M to $5M

CFOS target 11.5% for low voltage and AV.

You priced a specific display, codec, or DSP core off a quote with a short validity window, and then the buy happens fourteen months later. In between, the manufacturer issues an EOL notice, or a price increase letter, or a tariff applies to imported panels. The spec calls out that part number, so the replacement is a substitution request routed back through the consultant, and by then you've got no schedule left to spend on an approval cycle. The margin is lost one line item at a time, and it goes uncaught until closeout.

WHAT TO DO

Three moves, in order

STEP 01

Put a written quote validity date on the bid, tied to the distributor quote behind it, and repeat it in the proposal so the GC signs onto the same clock you did.

STEP 02

Add EOL and substitution language to your Division 27 and 28 proposal: if a specified model is discontinued, the approved equal is accepted at current pricing.

STEP 03

Check a buyout variance the week each PO is placed, line by line against the bid BOM, so you learn about the erosion in month fourteen and not at final billing.

THE FIX

Step 04: Estimating system

The estimate maps one to one onto the job cost codes, so variance means something the day it appears.

CFOS-04 · CHAPTER 4

Make the estimate and the job cost report match

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

BENCHMARKS

Low voltage and AV 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 estimate and the actual never match

You can compare the estimate to the job cost report, but the two use different words, so the comparison means nothing.

SAME TRADE

What else costs low voltage and AV contractors money

LOW VOLTAGE AND AV · CFOS-01

Your Distributor Credit Line Sets Your Revenue Ceiling

The hardware is half the contract and it buys on a net-30 line from ADI or Almo, while the GC pays 90 days later. A credit manager who never saw your backlog sets your ceiling.

LOW VOLTAGE AND AV · CFOS-06

Shop-Built Racks Stall as WIP With No Billing Against Them

You loaded, terminated, burned in, and tested the rack in your shop because that's the cheapest place to do it. That's also the one place it can't be billed.

LOW VOLTAGE AND AV · CFOS-06

Commissioning Waits on the Owner's IT Department

Your commissioning crew is mobilized, on site, and idle, waiting on a help desk ticket. No one on the GC's schedule owns that date.

LOW VOLTAGE AND AV · CFOS-07

Your Own Closeout Releases Your Month-Three Retention

Retention comes off the rough-in cable bill in month three and releases at final acceptance in month twenty-four. Your own training session is the event that releases it.

LOW VOLTAGE AND AV · CFOS-03

Parts Are Covered. The Truck Roll Is on You.

The manufacturer warrants the box. Everything it takes to get a tech up a ladder to swap that box comes out of your overhead for twelve months.

SAME MECHANISM, OTHER TRADES

The same mechanism in other trades

CIVIL

You bid cubic yards and pay by the ton

You bid 40,000 yards of import and every scale ticket comes back in tons. The biggest cost line on the job is measured in a unit your contract never defined.

CONCRETE

Your Ready-Mix Quote Expired Eleven Months Before the Pour

Concrete has about a 90-minute working life from batch to placement, so your supply market is a haul radius with two or three plants. They quoted a market that's gone.

DEMOLITION

Your Bid Set A Scrap Price The Market Never Honored

You priced the steel credit in February and crossed the scale in October. The market moved and the subcontract had no escalation language for it.

QUESTIONS

What low voltage and AV owners ask

Spec'd display discontinued before buyout who pays the price increase?

Copper moves and comes back. A model number that gets discontinued never comes back, and the spec still calls for it.

What does it cost?

What do I do first?

Put a written quote validity date on the bid, tied to the distributor quote behind it, and repeat it in the proposal so the GC signs onto the same clock you did.

What are low voltage and AV contractors supposed to be making?

Low voltage and AV has 24% gross margin, 16% overhead and 8% net profit after taxes at $1M to $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 04, estimating system. The estimate maps one to one onto the job cost codes, so variance means something the day it appears. It comes from chapter 4 of CONTROL: C.F.O.S. Construction Financial Operating System.

OR HAVE IT HANDLED

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

What a fractional CFO does for low voltage and AV contractors

AUTHOR

JOSH LUEBKER

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

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