MECHANICAL · MECHANICAL AND LIFE SAFETY · FIXED BY STEP 06

Fab Release Is Gated By Two Clocks You Don't Own

The coil line has nothing to cut because the engineer has held your submittals for five weeks and the coordination model is still bouncing. You pay shop payroll either way.

WHY IT'S A MECHANICAL PROBLEM

The sprinkler contractor draws around your duct, and the drywall contractor doesn't have a fab shop on payroll waiting for an engineer's stamp. Mechanical is the only trade that models first for everyone else and pays fixed weekly shop labor that goes unabsorbed while approvals wait. Both delays are caused by other parties, and both end up in your P&L. The shop keeps drawing money out of your account through every week of it.

WHAT IT COSTS

The size of it

Five weeks of review stacks on top of a 30 week equipment lead time, and none of it shows in job cost. It turns up as shop underabsorption and a missed rough-in date the GC files as your delay.

OVERHEAD AT $1M–$5M

16%

CFOS target 15% for mechanical.

GROSS MARGIN AT $1M–$5M

25%

CFOS target 27.5% for mechanical.

NET PROFIT AT $1M–$5M

CFOS target 12.5% for mechanical.

Nothing gets cut in the shop until coordination drawings are signed and submittals come back approved, and neither clock belongs to you. Duct is the largest object in the ceiling, so BIM coordination routes mechanical first, which means you pay the modeling cost up front and absorb every re-route when electrical, sprinkler, and plumbing come back at you. Meanwhile the equipment and sheet metal submittals wait on the engineer's desk: the spec says 14 days, and 4 to 6 weeks is what you get. Fabrication release is gated on that approval, and the coil line costs the same every week whether there's a released package to cut or an empty rack.

WHAT TO DO

Three moves, in order

STEP 01

Keep a submittal log with the date sent, the contract review days, and the date each package came back, and attach it to every pay app so the record exists before the schedule fight.

STEP 02

Put a released backlog board in the shop: weeks of approved fabrication waiting in front of the coil line, updated every Friday. If it drops under three weeks, somebody makes calls that day.

STEP 03

Bill BIM coordination as its own line on the schedule of values, and send a written time impact notice on day 15 of a 14 day review window.

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

Mechanical 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 mechanical contractors money

MECHANICAL · CFOS-01

You Pay For The Chillers Six Months Before You Bill Them

The deposit clears in March, the balance clears at shipment, and the first pay app covering any of it goes in around August. Your credit line funds the months between.

MECHANICAL · CFOS-05

The Retention Waits On A Test Only You Can Pass

Retention releases against the commissioning agent's sign off, and the system being tested is yours. A building accepted in July can't prove its heating until the weather turns.

MECHANICAL · CFOS-06

Nine Trips To The Job, Two Of Them Billable

Your crew makes nine separate trips to that building, from underslab to punch. The schedule of values has one line on it that says rough-in.

MECHANICAL · CFOS-02

Prefab Spools Spend Money Three Months Before Install

The shop cuts duct and welds spools in month three for work that installs in month six. If that cost goes to overhead, every job reads rich and the shop reads like dead weight.

SAME MECHANISM, OTHER TRADES

The same mechanism in other trades

CIVIL

The grading permit clock isn't on your schedule

Third resubmittal on the grading permit, the power pole relocation is six months out, and your crew and iron cost money while no party in your contract chain is at fault.

CONCRETE

The 28-Day Break Decides a Pour You Already Billed

You poured in March on an approved mix, the cylinders came back low in April, and two floors have already gone up on the slab in question.

DEMOLITION

Four Clocks Own Your Start Date And You Own None

The machine is on the pad, the crew is standing around, and everyone is waiting on a letter from the gas company. None of the clocks that release your start belong to you.

QUESTIONS

What mechanical owners ask

Engineer has had my mechanical submittals for five weeks?

The coil line has nothing to cut because the engineer has held your submittals for five weeks and the coordination model is still bouncing. You pay shop payroll either way.

What does it cost?

Five weeks of review stacks on top of a 30 week equipment lead time, and none of it shows in job cost. It turns up as shop underabsorption and a missed rough-in date the GC files as your delay.

What do I do first?

Keep a submittal log with the date sent, the contract review days, and the date each package came back, and attach it to every pay app so the record exists before the schedule fight.

What are mechanical contractors supposed to be making?

Mechanical runs 25% gross margin, 16% overhead and 9% net profit before taxes at $1M–$5M. The all-trade average is 7%, so this trade is 2 points above it. The CFOS target is 12.5%.

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

What a fractional CFO does for mechanical contractors

AUTHOR

JOSH LUEBKER

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

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