Government entities are driving HVAC contractors into the home performance arena through code changes, rebates, and tax credits, insists John Waldorf, general manager, Estes Heating and Air Conditioning, Atlanta, GA. “If you’re not in the business of providing home solutions, customers will go to another contactor who will.”
He is quick to point out, however, that even without these incentives, HVAC contractors should consider venturing into building performance. “You come up with a better solution for your customers, the average sales price goes up, your profit margins go up, and you wind up with happier, healthier customers who get a return on their investment through savings,” he says.
What Is It Anyway?
Although the definition can vary widely, Rob Minnick defines building performance as “looking at the home as a system to determine how well it is performing.”
Minnick, who is general manager of Minnick’s in Laurel, MD, wonders how HVAC contractors can service and install equipment without considering the condition of the rest of the home, particularly its overall energy consumption.
“How can you do a proper Manual J calculation on a home unless you know how it’s performing?” Minnick asks. “That’s why it’s important for HVAC contractors to be involved, especially on existing homes. Your responsibility as an HVAC contractor, the way I see it, is to serve the customer and put in an HVAC system that works with the house. The only way I know of doing that is performing an energy audit to get a dashboard of how the home is performing. The energy audit also gives me the information I need to perform a correct Manual J.”
If customers won’t pay $100 for the specially priced audit that local utility companies are currently subsidizing, he performs an energy analysis or “clipboard audit” instead. “During an energy analysis, we verify and check off the information that we see visually,” he explains. “During an audit, we pull out equipment and perform combustion analysis, pull out the blower door, perform the infiltration/depressurization of the home.”
Steve Saunders, CEO, Tempo Mechanical, Irving, TX, recalls a situation he encountered last year for a large home with multiple systems. “We were one of six or seven contractors the owner asked for proposals for air conditioning on a unit or two,” he says. “In that instance, we were the only ones that pulled out a load calculation and ran a load for them. The owner then asked, ‘Well what about my whole house?’ Our consultant walked around and replied, ‘If you’re serious, we really need to do an energy audit.’”
After explaining what the energy audit entailed, the consultant performed a complete home performance assessment and proposed reducing his overall tonnage by 12 tons. “Across six systems, that’s a lot,” Saunders says. “The contract price, which included ducts, insulation, thermal bypass, HVAC equipment, lots of controls work, and related performance items, was $89,000.”
One reason Saunders finds the home performance arena attractive, he says, is he can build long-term historical relationships with customers. “Home performance can be a one-time $50,000 or $100,000 contract or it could be a $25,000 contract for a period of 10 or 20 years,” he says. “Now all of the sudden, you double or triple the lifetime financial horizon of your client base.”
Another reason he makes home performance a priority: Survival. “If you don’t do it, there’s a pretty good chance you might not make the cut in the next five to eight years because the best companies are going to offer comprehensive services and more value to clients,” he says. “We’re head over heels into this as a concept. Our focus on energy efficiency and environmental friendliness across all our business lines is the one single driving factor that has helped us navigate the downturn in the economy. Revenue retention is going to be exceptionally important as the economy remains complicated.
HVAC Should Lead the Way
Right now, a variety of different trades are eying home performance as a potential opportunity for expansion, according to Saunders. “The window people want to play. The lighting people want to play. The indoor air quality people want to play. Everybody wants to participate in home performance.”
Matthew Todd, sales and engineering manager, Entek Corporation, Vancouver, WA, believes the HVAC trade is the obvious choice to take the lead in the home performance effort.
“The devices we operate and sell are the largest energy consumers and, if not selected properly, can be energy hogs,” he says. “No other trade has the aptitude or skill set. Insulators can’t. Window people can’t. Roofing guys can’t. Our equipment is complex and expensive; other trades don’t have any business touching it. The HVAC guys really need to run the show. We’re systems thinkers, and we look at the way systems function. We run the loads on the home, and we need to have intimate knowledge of the construction and insulation. We always have had to know that.”
Customers benefit big time because they can deal with one vendor, instead of 15, Todd says. “Customers like single points of contact. That’s what they’re happiest with. It’s such a hassle for them to take off time and meet with a contractor or orchestrate a multi-faceted, multi-trade install. If you pull all those guys together for them, most people are willing to pay for it. That’s huge for them.”
Before You Take the Leap
Minnick believes that all HVAC contractors should take a look at the home performance arena to see what it is all about and if it is something they want to pursue. “Our equipment is the biggest energy use in the home,” he says. “We can reduce the cost of operating the system by making the house perform better.” Contractors offer this advice to those considering expansion into home performance:
- Get educated. Todd recommends contacting a company such as Comfort Institute or GreenHomes America to obtain the necessary information and training for owners, partners, and lead salespeople.
Waldorf agrees. “The companies I have seen that are successful all have an alignment with one of those companies that help them not only get the technical certifications and the tools, but help explain how to market and how to train technicians to generate leads. If you’re not making money at it, you’re not going to succeed.” - Add one service at a time. “Like anything else, you start where you are and then you add,” Saunders says. “We see contractors adding a blown-in insulation business to their HVAC business. I can make a case for that. Duct tightness, equipment replacement, indoor quality controls, demand response—there are all these different sets of services. Most contractors cannot offer them all. You have to add one, then another, and then another. Add capability where it makes sense.” If you’re not careful, he cautions, you can end up adding too many services and then be unable to deliver them effectively.
- Take a ride. “My recommendation is to see if there are any energy auditors in your area to partner up with,” Minnick says. “Do some ride alongs. Go out on some energy audits. You can start learning why audits are important. You can use the company as a subcontractor or move into doing it, whichever you prefer.”
- Change the culture. Your culture can no longer concentrate solely on the equipment, emphasizes Todd. “We have to look at everything— the ductwork, filtration systems, and insulation. We need to understand the envelope itself. At most HVAC companies, it’s all about service. It’s all about getting that equipment running and getting to the next job.” Management needs to lead this cultural change, he says. “You have to believe it, and you have to bring everybody else along with you. Everybody from the person who answers the phone to the technician who is out in the field needs to understand this is a part of our business now. That takes time.”
- Listen to customers. After you stop focusing solely on the equipment, you can focus on customer needs, Todd says. “We don’t go in with a set prescription in mind. That’s the key. That’s huge. You have to listen to the customers’ problems. When they tell us about their rooms, asthma, or dust, we need to hear that, and not just fix the equipment. If you take care of the problems the right way, you’ll have someone who will grow with you as a customer in your business model over time.”
- Consider different salespeople for home performance. At his company, Todd has noticed a peculiar tendency: Salesmen who have a successful track record in selling traditional HVAC systems may find it hard to switch to home performance. “They can’t get out of the mold,” he explains. “They have a way of doing things, and the longer they’ve been doing it, the harder for them to adapt.” He adds that two new employees “who don’t know the world exists or turns any other way than home performance are knocking it out of the park.”
- Evaluate equipment costs. Unless you subcontract energy audits, you’ll need to purchase equipment, including a blower door, infrared camera, and combustion analyzer. Fortunately, Minnick says, the price of that equipment is coming down. “Building performance is not new. Building science is not new. It’s been around for several years. It’s just getting the instruments to do the testing were so expensive years ago that no one was touching it. Now the technology is reasonably priced.”
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