CABLING BUSINESS MAGAZINE
Sept 2006 Cover Article
Feature - September 2006
Self-Defense for the Contractor
By Frank Bisbee
There are many pitfalls for the contractor. They need self-defense. Costs can sneak up and wipe out the profit from a project. Some of the surprises cannot be prevented, but most of the nasty developments can be avoided. Planning is crucial, and the agreement for the project should be well defined, with some clauses to address the unforeseen and unexpected expenses.
Attacks upon the contractor can come from many directions. Even the weather can pose a serious threat to even the best-laid plans. In the wake of Hurricane Katrina, we have seen resources choked and costs skyrocketed.
The other day, I overheard a contractor filling his truck at the gas station. The clerk inquired if he was going to fill up the tank and the contractor replied, "Nope, I've only got a hundred bucks on me." Gas prices soared so quickly that many contractors ended up paying the extra costs to do the jobs out of their own pockets. There are many other horrific examples of unexpected cost increases spiraling upward after the job has been negotiated and the deal signed. Medical and liability insurance can rocket up with very little advance notice. Contracts that must be performed over lengthy periods are very likely targets for these "bear traps."
In the electrical and communications industry, there are some counterfeit products. Some are even labeled and packaged to look identical to the "real deal." While the products in the electrical side are less prone to this problem, the communications cabling industry has had so many new products come on the scene that almost no one can keep up.
"For my money, going it alone is not an option," says Michael Shannahan, vice president of Communication Planning Corp. "The pace of technology in the communications network industry is moving so quickly that we would need a purchasing agent dedicated to only new products and improvements. Now, add the need for product testing and quality control, and bingo - now you need another dozen, or so, full time employees. Also, don't forget the billion-dollar-testing organization," he added. "The problems are more than just evaluating the product on a stand-alone basis, now you have to put it to work in a real network to calculate actual performance with other components. To do that type of testing, you will require some real high-dollar techs. Throw that in your budget."
Fortunately, there are powerful self-defense resources available that provide real solutions to the quality control challenge. We have researched the communications industry and found a set of solutions. By now, you should have gotten part of the message about why self-defense and a strong distributor is a "no-brainer" for the contractor. Let's add a few other self-defense bonus points to the distributor value. Face it; the distributor is the communications cabling and connector market's largest buyer. For the manufacturers, maintaining the best working relationship possible with a distributor is an absolute must. The distributor is where products converge and network systems are created. We don't buy parts anymore. We buy systems. The systems must be integrated and maximized.
Arthur Padgett, an independent communications consultant and 30-year veteran of the industry said, "Today the process of developing a design and evaluating alternatives for the cabling network infrastructure is more challenging than ever before. Functionality, performance, life-cycle term, and budget are thrown into the mix along with the entire technical specification. In the world of communications infrastructure, using a self-defense mind set and a distributor is a priority for the contractor. However, we still see many contractors failing to use or capture the values available from the distributor."
The time to find out about glitches or mismatches is not "after the fact." The communications infrastructure was once a formula of 80 percent labor and 20 percent materials. Today that formula has evolved to approximately 52 percent labor and 48 percent materials. Once the installation has been performed, a change-out to correct performance problems could cost the contractor the entire labor investment. That scenario is a death sentence for the contractors' profitability. If you think lawyers are the solution for that type of problem, you have a lot to learn.
Everybody knows that the customer will wait until tomorrow to order the network that they want yesterday. Timetables and availability on the labor side is somewhat controllable by the contractor. Cables, connectors, and other required materials, are a challenge of inventory and usually outside of the control of the contractor. Maintaining large inventories to service their customers is not a good business practice for the cabling contractor. We have all seen inventory building up in the contractor's warehouse and that sometimes adds up to a small fortune. Much of the contractor's inventory that is not installed immediately usually ends up as junk. Out of date, obsolete, or incomplete materials mean wasted dollars. As an option, the contractor should utilize the distributor to control inventory for their customers.
Having all of the materials for the communications network is only part of the solution. We must have the peripherals. We need labeling and record systems. We need testers and analyzers. We need to stay abreast of technology, codes, and standards. We also need to be able to predict the future. Building barriers to obsolescence requires a vision for the future. Planning for the future challenges while delivering today's solutions is imperative. Anything less is usually unacceptable. If you are a contractor, you do not want to go it alone.
Don't Wipe Out Profits
Another terrible pitfall for the contractor is the tester screen that proclaims, "FAIL" on the installed cabling. Face it, some products have been made so close to the minimum limits of the industry standards that if they go a little "minus," then the connected system will come up as failing. When this happens on a small or large job, the results are the same. Profit walks right out the door.
Good self-defense advice: Make sure your mindset is prepared for the unexpected. There are more than hurricanes out there.
Frank Bisbee is the Editor for "Heard On The Street," his monthly column found at www.wireville.com. For more information, contact Frank at 904-645-9077 or via E-mail at firstname.lastname@example.org.