Imagine that on a Friday, you surveyed what had been an exceptionally busy week. Equipment sales had gone especially well. But when the bookkeeper comes in the next day with the week’s report run, it turns out you lost money.

Chuck Wilson, executive director and CEO of NSCA, says that based on the organization’s surveys, integrators as a cohort are getting better at estimating the materials side of job costing. However, as projects become more complex and change orders more frequent, they’re falling behind on the time/labor side of the estimate equation.

“It’s called ‘scope-creep,’” says Wilson. “Things like on-site safety training and preparation of necessary documentation adds significant amount of time to projects that wasn’t originally budgeted for. There used to be enough margin built in, especially on the materials side,” but, he adds, materials costs and thus their margins are declining at the same time that overall margins are dropping, thanks to increased competition among both manufacturers and integrators. “Today, there is simply no margin of error anywhere in the estimate anymore, and what it takes to make up a loss of, say, $1,000 in overruns on one job will be exponentially higher on the next.”

There are solutions. Wilson points to the job-costing training that InfoComm and NSCA offer their members, and he emphasizes the importance of the PM’s role in forecasting potential time/manpower cost overruns and in compelling the integration crew to stick close to the work plan. Wilson also says that the more experience an integration company accumulates, the better it will be equipped to project possible delays. “An experienced project manager will know, for instance, that a certain contractor requires the integrator to be present at every meeting, so they’ll provide for that in the time estimate, or the fact that government projects will have more documentation requirements that take additional time to execute,” he explains. Wilson also notes a nuance that’s come out of the tightened margin environment that everyone is now working in: “A lot of integrators complain about low-cost companies entering the systems integration market, but it’s those same low-cost companies that are having the hardest time learning what the real costs of are.”

Spencer Bullins, southern territory manager for AMX and who spent 28 years in the systems integration trenches himself before that, agrees that labor projections are the most challenging parts of job-costing. “And there are two parts to [job-costing labor estimates],” he says. “After you estimate your labor costs going in, you also have to protect them from anything that impacts them during the job.” Design/build projects can offer some measure of flexibility on time since the integrator is the contractor, but when the integrator is acting as a subcontractor, they can be at the mercy of the schedule—or lack thereof—of other trades. “If electrical is running behind with conduit, you might have to demobilize a crew till they finish,” in Bullins’ hypothetical narrative. “You can negotiate to go into overtime or to extend a deadline, but to do that you’re going to need to have documented very precisely the time your labor would have taken. The other trades—electrical, mechanical—they know this, but it’s not that widely realized in our industry.”

Software Side Solutions

Knowledge is power and those who do not understand history are bound to repeat it—well-worn aphorisms but ones that encapsulate the essence of the software equation. Integrators need to be able to collate the man-hour histories of their projects, down to the time it takes to pull a wire and terminate it, and to be able to apply that to new bids going forward. There have been some very good software solutions that do exactly that and that are specifically adapted to the commercial integration business. Companies like Solutions360, Bid Magic and D-Tools all assert to offer comprehensive job-costing capabilities for integrators. But their usefulness comes with a set of aphorisms of its own: you cannot win if you do not play, and GIGO (garbage in/garbage out).

“We deal with a lot of prospective customers and we see that they’re moving so fast trying to get the deals through the door, especially the owner/operators are flying by the seat of their pants very often,” says John Graham, executive vice president of Solutions360, a Canadian software developer. “Amazingly enough, it works most of the time, but still, I’ll go into an office and see a two-inch stack of paper from a project that has all the information, but no one has the time to analyze and quantify it, to learn from any mistakes and avoid them next time, or take what worked and apply it again.”

That’s not as easy as it sounds, Graham acknowledges. “Not all sports bars are the same,” he says. “The one in the 150-year-old building is going to be trickier and more time-consuming than one in new construction. The problems are hidden in the details.” What software does is integrate the financial side of a project with its technical requirements, giving project managers a view toward how time management impacts profitability. “That’s the only place left to squeeze any additional margin out of.”

Commercial integrators are not strangers to using software for job costing, but, says Rich Riehl, founder of Bid Magic, too often it’s off-the-shelf solutions like QuickBooks or Microsoft Excel spreadsheet programs, which he says are too generic to make a meaningful connection between costs and establishing workflow and labor values.

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