School Projects

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To land educational institutions as customers, do your homework and follow their rules.

With approximately 130,000 K-12 schools in the United States, according to the National Center for Education Statistics, plus more than 4,000 colleges and universities, the education market offers plenty of business opportunities for HVAC contractors. Cracking that market, however, take a bit of time and extra effort.

“Getting into schools is more difficult and time consuming than your average customer acquisition process,” says Sam DeAngelis, chief executive officer of Colorado Climate Maintenance, Inc., in Englewood, CO. “The type of work you do in schools isn’t anything unusual, but the back-end, administrative side is a challenge, especially in the beginning.”

A referral prompted Colorado Climate Maintenance to bid on its first school project about nine years ago. The job was straightforward—a $3,000 unit replacement—but landing it was anything but. First, to become an authorized vendor, the company needed to file paperwork and obtain a certificate of insurance in the school’s preferred format. More problematic, DeAngelis says, was figuring out who reports to whom in what can be a school district’s convoluted organizational structure.

“Finding out who the real customer is—and who all the supporting players are—is more difficult compared to other commercial applications, where you have a definite owner or property manager and management structure,” he notes. Depending on the state, the district, the school, and the type of HVAC work, decisions makers may include maintenance janitors, school supervisors, facilities managers, purchasing agents in central administrative offices, district treasurers, and even the school board itself.

Colorado Climate Maintenance relies on its software system to track who makes the decision on what type of job, who solicits bids, and who should receive the invoice—all of whom may be different people—in the 22 public schools it works in. All the schools are in the same district, one of Denver’s largest, which has its own maintenance staff.

“Many times, their maintenance people diagnose the problem, but call us because they don’t have the time, manpower, or equipment to replace something—or they get stuck on a problem,” explains DeAngelis. “Our goal is to have the school district look at us an as extension of their staff—so they contact us whenever they need support, whatever the need is.”

How to Make the Grade
In addition to performing service work, Gundlach Sheet Metal Works, Inc., headquartered in Sandusky, OH, has taken on design-build and plan-and-spec projects for several K-12 school systems. For both new construction and retrofits, Gundlach Sheet Metal typically works with a district’s architect and/or engineer as well as a construction manager. Many schools also involve environmental consultants or certified Leadership in Energy Efficiency and Design (LEED) inspectors, as part of a commitment to greener, more efficient facilities. Doing so adds complexity to projects and pressures contractors to know the specifications—and their attendant costs—backward and forward.

For instance, “You have to be open to meeting all the LEED requirements, such as keeping ductwork clean, storing it properly, and keeping it sealed during the entire project,” explains Roger Gundlach, the company’s president. “Also, there may be criteria related to the percentage of products purchased from U.S. manufacturers, and you may have to wash all the coils and change the filters before you turn the building over.”

Nationwide, construction and retrofit work is becoming plentiful because the Department of Energy estimates the average age of a U.S. school at 45 years—old enough to need replacement or significant upgrading. According to the 20th Annual School Construction Report, issued in 2015 by School Planning & Management, school districts in the United States spent more than $14 billion on construction projects during 2014 alone. More than half (55%) of that total went for new construction, while $3.14 billion was devoted to retrofitting and modernization of existing buildings. HVAC systems top the list of components most often upgraded when elementary and middle schools are modernized and rank second for high schools.

Here are some tips for moving into the education market:

Pick and choose carefully. Identify school projects that fit with how you already do business. Colorado Climate, for example, focuses on service, maintenance, and replacement work; it avoids big projects that involve construction and remodeling because it doesn’t operate in that market niche. Adds Sam DeAngelis, “We also decided not to pursue work in another nearby school district because the research we did indicates that district doesn’t fit our customer profile.”

Gundlach Sheet Metal likes bidding on school projects where it can serve as the prime HVAC contractor or those that require fabrication of sheet metal—one of the diversified company’s specialties. “Retrofit projects where we can do all the automation systems, equipment replacements, and upgrades really suit how we do business,” notes Roger Gundlach. “We also like projects where, when the work is done, we can become the school’s service contractor.”

On the flip side, the company avoids schools that require three bids on all service work, no matter how easy or complicated. “We don’t want to waste our time with schools that look only at the bottom line—we want customers we can form a relationship with,” says Gundlach.

Do your legwork. Colorado Climate Maintenance’s salespeople track changes in school district personnel and monitor overall operations. They know, for example, the spending threshold above which a project must be competitively bid; that enables the firm to divide a project into smaller, less expensive phases at the customer’s request.

In addition, they must know the in-service days, holiday breaks, and summer vacations, when a school district often schedules HVAC work to avoid disrupting classes. “We also stay on top of the district’s budgeting process and cycle, so we can provide estimates for possible action items,” adds DeAngelis. “Maybe 25 percent of those estimates will actually get into a budget, but for those that do the district knows who to call.”

Carefully read the paperwork. “Either because of their own rules or state laws, school systems generally have very detailed plans, specifications, and schedules that have to be met,” says Gundlach. “If you bid on school construction, go into it with your eyes open, knowing that many people will be examining your bids, your work, and your bills.” That translates into abiding by all the rules for bidding, submitting AIA forms correctly and on time, completing work on schedule, and following the sometimes arcane procedures for getting paid.

Be patient. Like most bureaucracies, school systems tend to favor a paperwork-heavy, hurry-up-and-wait approach to working with contractors. After being selected for a job, you might wait weeks or even months before being able to perform the work; after completion, a month or so may pass before all the right people have signed off on your invoice.

You may wait much longer for payment on construction and retrofit projects, warns Gundlach. On most large school projects, “It takes at least a year to get all your retainage. Of course, if you and the other contractors all do a really good job and get the punch lists done on time, the timeline can be much faster,” he says.

“Schools are like your worst customer and your best customer at the same time,” concludes DeAngelis. For example, they may request a large number of bids at the same time, for budgeting purposes, then let months pass before deciding which projects to pursue.

On the other hand, service and repair work can be consistent and noncompetitive when you’ve developed a relationship with the decision makers. As Gundlach says, “Like any customer that has a good experience with your company and service techs, schools will continue to call you when you take care of their problems through quality service.”

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Posted In: ACCA Now, Management, Money