Hello fellow solar folk! It’s a bright new year and wow was 2016 quite the packed solar year. I can’t believe how much solar capacity was installed. SEIA predicts that a full 14,000 MW of solar capacity was installed (based off of the first 3 quarter’s performance). That’s a crazy amount of power! Just think about the number of bids that went out – At a rate of 25% closing, you could draw the rough conclusion that installers in the US bid on over 50 GW of solar! Every winning project has to be built and executed effectively. The best way to do this without losing money is to have a crystal clear understanding of scope. PVBid addresses scope effectively (especially when it comes to making changes quickly) but I want to talk about it more generally. Before we dive in, please understand I am not providing any legal advice and you should take a look at my disclaimer at the bottom of this article.
If you are already in the solar industry, I’m sure you’ve experienced the scope-drop; that time a project was sold to a customer, key issues weren’t well defined, and the installation crew ends up going around-and-around trying to resolve the issue at great cost to the solar installer. In the end both parties walk away disgruntled and vowing never to work with “them” again. There are a lot of causes: the sales team is knocking out 4 times the projects than are actually built, the uniqueness of the system, the designer neglected the scope, the system changed at the last second, and the list goes on. Almost all of that can be resolved quickly and easily by understanding the difference between inclusions, exclusions, and assumptions. So let’s define those for the purpose of this blog article:
- Inclusions: A description of tasks, items, and actions that are “included” in the scope. For example, “200 Solar modules, 340 Watts each, polycrystalline, with silver frames.”
- Exclusions: A description of tasks, items, and actions are specifically “excluded” in the scope. For example, “Any painting materials or labor.”
- Assumptions: A description of tasks, items, actions, and circumstances that are assumed to be the case but have not been clearly defined or require further investigation. For example, “Ground is sandy loam and free of large boulders, rocks, or other obstructions that would prohibit vibrated posts.”
So what is the difference?
Inclusions define exactly what you are providing in detail. If you craft your solar bid as an “inclusive” bid then you are saddled with the task of exhaustively defining what is provided. Think about homeowner’s insurance. The coverage is often “inclusive” coverage, meaning only what is clearly included will be covered by your insurance provider and everything else is implicitly excluded.
Exclusions define what is not being provided (the opposite of inclusions). If you craft your solar bid as an “exclusive” bid then you must define what you will not be providing in your service because everything else is implicitly included. So when writing your scope document, keep in mind how it is written overall.
Assumptions are a bit of both worlds. They allow a semi-legal description of the bid’s foundations. Technically, any assumption could be put under the exclusions and inclusions but I find it is just clearer to state the things you know to be vague and “best guesses” under assumptions. It allows both parties to understand clearly what is a guess while still putting the best price forward. I’ve seen assumptions used as a way to outline what the estimator thinks will happen that the customer can then ask for “worst case” pricing on top of that. Otherwise, as a solar sales person, you are stuck with presenting a bid that is way too expensive compared to your competition.
I’m curious if anyone approaches this differently. Shoot me an email at email@example.com and let me know! I’ll also be at the NABCEP Continuing Education Conference in March. Let’s sit down and chat there too.
Now, for the legal disclaimer: I am not a lawyer, legal counsel, advisor, or in any way a person who can be construed as being the final say with regards to this article. I have provided this as an opinion piece with the intent to help you, the reader, understand broad concepts that you need to explore and understand independently and have proper legal counsel advise you. These definitions are my own and may not apply in normal legal situations as most legal documents have a section that clearly defines what each term represents for that document so consult your legal counsel as nothing in this document is legally binding unless appropriately deemed so.