Do Your Due Diligence

As service agents, all projects we undertake are meant to be profitable for all members of the supply chain. While navigating through some projects, though, we encounter circumstances that erode profits and may cause harm to our businesses and reputations or those of other involved parties.

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At the most basic level, each member of the supply channel shares the same goal of being good custodians of the scope of service for which we are responsible. We never want to be party to a performance penalty event, as outlined in the job’s contract. In fact, we all must remain vigilant in our quest to avoid deficiencies in performance or delivery that would result in this. A job well done includes anticipating difficulties and acting with regards to keeping yourself and other supply chain members out of hot water to the degree of reasonable expectation. Of course, the notion of reasonable expectation can be a moving target.

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Regardless of your position in the industry, key points in the process of planning should include selection of projects to bid on and costs related to placing bids, such as safety issues and coordination of meetings and performance bonds. We should all be selective and choose only those jobs that best match our capabilities and offer time frames in which we can complete the work effectively and efficiently. It is recognizing what we are capable of that will most influence our ability to be successful and ultimately foster repeat business. In addition to the principals or team members of your own firm, it will serve everyone well to know key participants with all relevant parties, such as the architectural, consulting, general contracting, manufacturer representatives, kitchen equipment contracting (KEC), equipment installation, service technicians and the owner’s various representatives.

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Monitoring the completion of each step will pay dividends by avoiding delays, cost over-runs, changes or extras. Poor coordination, planning or design has drained the profits from many projects, which has proved fatal to some businesses. As a project concludes, address any punch list item with a sense of urgency. Failure to do so may result in back charges related to completing such items.

Also, we must remain aware of manufacturing capacities and costs of raw materials. For example, the cost of copper tubing has increased by 275 percent in the last 16 months, having a serious impact on installation costs of walk-in refrigeration as well as the manufacturing costs of the equipment. Similar leaps in raw material costs have occurred across the board. Plumbing, electrical, insurance and labor costs continue to rise in response to pressures of inflation. Bear in mind these ascending expenses in relation to the timing of a project award.

In terms of warranty administration, the resources necessary to support a project after turnover to the owner will grow exponentially with larger jobs or with longer terms of warranty. As a service agent, we have seen channel partners paying for services for the equipment owners as far as two years past start-ups based on turnover dates and punch list corrections.

So by being selective, capable, attentive and prudent, one can have great success with projects of any size and scope.

“Parting Shot’’ is a monthly opinion column written on a rotating basis by guest authors. The opinions expressed are not necessarily those of FE&S.

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