SECURITY SYSTEMS · ELECTRICAL AND TECHNOLOGY · FIXED BY STEP 04

A 30-Day Camera Quote Against an 18-Month Buyout

Electrical can point at a copper index and start a conversation. You're holding a distributor price list good for thirty days against a buyout that closes next spring.

WHY IT'S A SECURITY SYSTEMS PROBLEM

Your material is finished imported hardware quoted off a manufacturer or distributor price list valid thirty days, against a buyout that closes six to eighteen months after bid. There's no public index and no hedge for cameras, panels, readers, and switches, and no GC recognizes an escalation clause on them, so the entire movement is yours. The trade working next to you on the same job can at least argue copper, while your price can be revised by email.

WHAT IT COSTS

The size of it

You absorb full, unhedged price movement on the 45 to 60 percent of contract value that's material, and you absorb it on your longest jobs. A 12 percent price list revision on a job that's half material takes six points of gross margin outright.

OVERHEAD AT $1M to $5M

16%

CFOS target 15% for security systems.

GROSS MARGIN AT $1M to $5M

22%

CFOS target 25% for security systems.

NET PROFIT AT $1M to $5M

CFOS target 10% for security systems.

Write the quote validity date and a price revision trigger into the proposal itself, because there's no index you can point at when the price list moves. Escalation on copper is a normal discussion with a GC, while escalation on finished imported electronics is an argument you build from scratch, with the manufacturer quote attached and the revision notice as proof. Tariff and duty movement reaches you as a straight price list revision on thirty days notice, and it affects the material half of your contract. Then there's FAR 52.204-25, which bars Hikvision, Dahua, Hytera, Huawei, and ZTE equipment on federal work and everything flowing down from it, so the low cost OEM tier disappears on a whole class of jobs. If a specified camera turns out to be a rebadged covered manufacturer, the substitution to a compliant line is yours to price and yours to defend.

WHAT TO DO

Three moves, in order

STEP 01

Stamp every proposal with the manufacturer quote number, quote date, and an expiration that matches the distributor's, then hold the line on it.

STEP 02

Add a price list revision clause: a published revision before buyout becomes a change order with the manufacturer notice attached as backup.

STEP 03

Screen every specified camera, radio, and switch against the FAR 52.204-25 covered list at takeoff and price the compliant substitute before you submit.

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

Security systems 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 security systems contractors money

SECURITY SYSTEMS · CFOS-06

Your Last 20% Waits Behind the Owner's IT Department

Everything is mounted and terminated, and none of it works until the owner's IT group cuts the VLAN. The job parks at 90 percent complete with the contract tail on your balance sheet.

SECURITY SYSTEMS · CFOS-06

Dead Openings: Division 8 Buys It, You Pay for the Re-Trip

You roll a crew for forty doors, nine have no power transfer, and you leave. No one buys those hours back because you don't hold the hardware contract.

SECURITY SYSTEMS · CFOS-01

Warranty Starts at Ship Date, Yours Starts at Turnover

Gear bought in month six to beat lead times uses up a year of manufacturer coverage before the owner ever accepts the building. Failures fall between the two clocks and you buy the part.

SECURITY SYSTEMS · CFOS-01

GCs Won't Pay Stored Material on Software Licenses

You wire five figures for VMS and access licenses at PO, and the GC rejects them on stored material because there's nothing on a pallet to photograph. You're the bank until commissioning.

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 security systems owners ask

How to protect camera pricing between bid and buyout?

Electrical can point at a copper index and start a conversation. You're holding a distributor price list good for thirty days against a buyout that closes next spring.

What does it cost?

What do I do first?

Stamp every proposal with the manufacturer quote number, quote date, and an expiration that matches the distributor's, then hold the line on it.

What are security systems contractors supposed to be making?

Security systems has 22% gross margin, 16% overhead and 6% net profit after taxes at $1M to $5M. The all-trade average is 7%, so this trade is 1 point below it. The CFOS target is 10%.

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 security systems contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, led by the same author.

What a fractional CFO does for security systems contractors

AUTHOR

JOSH LUEBKER

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

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