Home Performance Contracting: Our Next Great Opportunity
What exactly is home performance contracting, or HPC? In a nutshell, HPC is a holistic approach to achieving significant increases in levels of home safety, indoor comfort and air quality, and energy efficiencies. In this series of articles, I will focus on the reasons that HVAC contractors should dominate this evolving industry.
The HPC approach begins with a thorough home analysis, including all structural, electrical, and mechanical components, to ensure they cohesively deliver the safest, most comfortable, and most efficient home environment. The building is visually inspected both inside and out.
Then specialized tools and equipment are utilized to test for air leaks, insulation voids, and thermal bypasses. Mechanical equipment including heating, cooling, and water heaters are tested for both energy efficiency and combustion safety. Duct systems are measured in terms of airtightness and proper airflows. Electrical components, including panels, exhaust fans, appliance venting, and lighting, are tested for safety and efficiency. Windows and doors are examined for air leakage and efficiency. Utility bills are examined to analyze seasonal fluctuations or abnormalities.
Once this comprehensive analysis, commonly called the “test-in,” is complete and properly documented, the contractor recommends the solutions that will provide the biggest improvements in comfort and air quality, and the highest return on investment in terms of energy savings.
After implementing these solutions, the contractor retests each component to be certain that the solutions are performing as promised and that the house is in a safe condition. This is known as the “test-out” process. In some cases where there are government rebates or other incentives, the job is inspected by an independent third party to ensure that all procedures were properly followed and the workmanship is up to the defined standards. This inspection is referred to as the “quality assurance” process and is the final step in HPC.
Why Should HVACR Contractors Dominate the HPC Market?
Frankly, the reasons for our industry to own HPC are too numerous to detail in this article. But I will explain some of the reasons I consider most important and most vital to your business.
First, we already have the vast majority of the resources necessary to offer successful HPC solutions. We have the engineering knowledge, the right profile of employees, much of the necessary equipment, and the installation expertise to provide a solid foundation for HPC growth in our businesses. Moreover, we already have the customer base and relationships necessary to promote HPC in all the homes we visit. These attributes are not typically found in the insulation or home remodeling trades.
Another reason HVACR contractors should go after HPC work is that it is not seasonal. This lucrative addition to your business mix will go a long way in smoothing out the revenue peaks and valleys that have plagued residential HVAC contractors since the invention of the furnace. This enhances the value of your business. Additionally, this growth will create more jobs within your company, while providing a new step in your career path process.
HPC will also be a huge differentiator in your business. Early adopters will enjoy a significant advantage over their competition by having the ability and the expertise to offer their customers one-stop shopping for their total indoor environmental solutions.
Additionally, early research has shown that HPC will increase your average installation price by as much as $4,000 to $6,000. You will be amazed at how much your customers are willing to invest in a better quality of life for their families and increased home value. HPC is a very profitable business segment. So, since it’s the right thing to do, we do well by doing good.
And finally, HPC makes your company green. In today’s market, green is good. Our customers are attuned to environmental concerns, including the need for greater energy efficiency, significant reductions in our carbon footprint, and saving money.
Why is HPC Important to Customers?
The increasing demand for home performance solutions is driven by a number of factors. Most importantly, because of the poor economy and horrible gasoline prices, our customers are spending much more time at home. They are aware of their home’s comfort and indoor air quality shortcomings and are willing to make prudent investments in improving their indoor environments and the value of their homes.
There is increasing concern in both the public and private sectors over volatile and steeply rising energy prices and the realization that the energy crisis is not going away. Since homes consume about 20 percent of our nation’s energy, our customers understand that it is critical that we act now to reduce our energy usage.
Another driver for customer interest in HPC is that there are a total of 1,104 rebate programs offered either by the state or local utilities in the United States. These programs are listed in the Database of State Incentives for Renewables & Efficiency (DSIRE), maintained by the University of North Carolina. According to the DSIRE site, every state in the union lists at least two programs. This number does not include the various tax incentives, grants, and loans offered by many states. Participating utilities are aggressively marketing these programs in their territories. This drives an increase in customer awareness that, in turn, drives interest in HPC.
Although these incentives are currently important, they may eventually go away. I believe that lack of outside incentives will not impact our customers’ decision to upgrade their home environments.
Stay Away from the Back of the Pack
When I started in this industry, a large number of heating contractors did not believe that residential central air was going to succeed. Therefore, they stayed away from it until the market proved them wrong. By then, they were at the back of the pack and some of them never caught up.
As chairman of the Air Conditioning Contractors of America (ACCA) in 1988-89, I was an active participant in the argument for flat-rate service pricing in our industry. Many contractors said it would never be accepted. Yet, in 1990, as a partner in Callahan/Roach, I partnered in the development of the first commercially produced flat-rate system. Today, the majority of residential HVAC contractors embrace some form of flat-rate pricing.
The same doubts will probably hold true for home performance contracting. Some contractors will believe that it’s just a fad that will go away when the incentives are gone. They are wrong. HPC is here to stay. And it makes the most sense to reside in the HVACR industry.
Recently, I became an advisor to GreenHomes America®, a HPC franchise company. GreenHomes understands the need for the HVACR industry to dominate home performance and, because of this, offers franchises only to HVACR contractors. I partnered with GreenHomes because of their exclusive HVAC approach to the market and their unique ability to adopt the proven successful business practices utilized by their sister company, the Linc Service Network®.
Long before my GreenHomes involvement, I formed my opinions about HPC and the HVAC industry. I believe that HPC will provide the single biggest growth opportunity to HVACR contractors since the acceptance of residential central cooling in the late 1960s.
Those contractors who recognize this fact and get involved quickly will reap huge benefits. So take a hard look at HPC for your company. Make the decision to become the HPC leader in your market. At the end of the day you, your employees, and your customers will reap the rewards.
Publication date: 09/26/2011