Three months in and the solar coaster is starting to pick up. The 2017Q4 SEIA Market Insight Report came out in mid December and I picked it up again to review. There, in all its glory, was a chart that exemplifies the solar growth we see throughout the year. Quarter 4 of each year is massive and stands out clearly. Which means everyone is very busy in the second half of the year. Maybe it’s time to take a look at 4 things that you can do to make the end of year go more smoothly and profitable….
1. Pay attention to truck rolls
One strategy is to spread the builds out over time. This is a great idea if you are trying to leave major costs like modules until the very end for financing purposes. But it also means the cost of the system will inevitably go up. Why? Because of task-switching. Did you know that the American Psychology Association found that changing tasks can chew up 40% of your day? So, changing projects day-to-day isn’t quite that bad but when you start thinking about shifting the appropriate tools from place to place, the time it takes for everyone to grasp the project, and to get to site, you start seeing a churn that costs money. If you, as a company, are planning on shifting folks around then keep the cost of doing so in mind.
Typically, a truck roll alone to a site costs $500 to $800 because the crew who goes on site is unlikely able to work on another site. Which means you have a truck dedicated to one site no matter how many hours of work they do. In other words, there is a high cost to spreading site work out over time. Make sure you account for it.
2. Holidays matter
Depending on your company’s configuration, in the last 2 months of the year there are only 39 working days unless your team does 6-day work days, in which case there is an overhead cost too. In contrast, July and August have 44 working days which means the last two months of the year have a 8 percent reduction in time available to build.
How do you solve for this? Ramping up part-time crew can help but keep in mind that other companies will be doing the same thing. Consequently, your mixed labor rate will be higher.
3. Incentivize earlier builds
Since build-pipeline is always a challenge, getting projects pulled forward can make a big difference with crew availability. Where possible, get your clients to agree to an earlier build by giving them a discount. After all, more solar equals more profit ultimately so if you can stuff your pipeline early for a minorly diminished profit, do it.
Pulling projects is not easy, but quantifying the benefit can make a huge difference in the conversation. One option is to work up the “end of year” bid taking into account the other factors we’ve discussed and then work up the “middle of the year” bid. There will be a difference that doesn’t impact your profits. It may only be $500 but that could be all it takes.
4. Understand your customers
Fundamentally, what is driving your customer? Are they focused on the tax credit? Are they focused on the fiscal year? Are they in it to win it? Their answer can shed a lot of light on how you might be able to position them. With the tax credit, getting just enough done for it to qualify before the end of the year and finishing up in the more relaxed time could really reduce your workload. Maybe you can pull them up in the schedule with some sort of incentive or push them into January.
With all these things to build into your pricing, I think it’s always a good idea to reflect on the fact that it is always better to have too much work than not enough. So congratulations on figuring out how best to schedule your teams to handle the workload!
We are here at PVBid to help you succeed. So if you ever want to talk though how to handle your pricing or good ways to reduce your overhead reach out and we’ll talk it through. Our reporting system can help you understand your true costs over the course of the year too.