ACHRNEWS

Get Both Feet in the Decisionmaker's Door

December 13, 2010

Commercial building owners and operators know their energy costs are high. HVAC-mechanical contractors know they can do things to help, but there is a disconnect between their offices, and it’s nothing more than a language barrier.

Speak in their language and you have a much better chance of getting their attention, their comprehension, and maybe even their patronage. That was the message from the webinar “Selling Project and Service Work to Building Owners: A BOMA Chairman’s View,” hosted by AirAdvice.

Kevin Skurski of AirAdvice said the webinar’s goal is “to enable contractors to effectively target building owners and operators, while understanding their world and what they’re faced with. It will take a lot for you as a contractor to really get their attention.”

What contractors need to know, said speaker David Hewett, is how to get a yes.

The first step, he said, is to clearly understand the market. (Hewett, a past BOMA chair, is principal of David W. Hewett Inc.)

OWNED OR LEASED?

Commercial spaces fall broadly into two categories:

1. In investor-owned buildings, the owner leases the space. He or she is looking for ROI from potentially multiple tenants. “He’s constantly trying to find new tenants,” Hewett said. “Economics is a recurring theme.”

2. Owner-occupied buildings are primarily for the use of the owner’s employees; it may also lease surplus space. “They’re looking to hold a building that makes occupants satisfied.” The work environment, comfort, use, and satisfaction are key ideas. “They want to make the business work,” said Hewett.

Contractors need to be aware of the “math of ownership.” That is, costs compared to other properties on the market; how much it costs to build a property like that, with depreciation; “value based on capitalization rate in the net operating income,” which Hewett said is the most common.

REDUCING EXPENSES

This is language that gets their attention. Operating income comes from revenue (lease payments and other fees), and a reduction in operating expenses. “The bigger their expenses, the lower their income,” he said.

“Utilities are a major one for contractors.” The owner may assume these are fixed expenses, when in fact a contractor can help lower them. It creates cash flow and a means to capitalize it (increase building’s value).

“It’s a big impact to them,” he said. “It helps them understand your value. Energy is one of the largest operating expenses the owner has to deal with. Your ability to impact that expense becomes very important.” A contractor’s goal, he said, is to help property managers in their focus on the budget.

Investors’ top concerns are incomes and expenses, Hewett said. The person to deal with is the one whose daily duties center on the operation of the building. “You need this relationship; they deal with the operating budget” and report to the property management company, or directly to the owner.

As a first step, consider what their day looks like. They are probably dealing with deadlines and problems before they even arrive at the office. That’s why “you need to be looked at as a problem solver,” Hewett said, not just as a fix-it company. “Their biggest problem is money. Show them the return on investment, the impact on the budget. Solutions have to impact the budget in a positive way.

“Sell yourself as a long-term partner,” he continued, providing longer-term solutions rather than quick fixes. “Focus on building that relationship.”

CHIEF ENGINEER: A GREAT CONTACT

Another top contact should be the chief engineer, who Hewett described as a decision maker. He reports to the facility manager (FM), who depends on him for advice.

The FM “deals with things that the property manager isn’t,” like furniture, phones, and fixtures. The chief engineer is dealing with occupants’ comfort levels. “He’s more in tune than the property manager is.” Safety is also a concern.

Like the other users, his day is filled with known deadlines and unexpected pressures. Again, he needs a problem solver, not a repairman. “ROI is even more important, because he has to go to the CFO for approval.” He is also looking for long-term partners. “He doesn’t need more daily hassles; he needs results.”

WHAT THEY WANT TO KNOW

With this contact, contractors need to show what they’re doing, concisely and in a focused way. The contractor’s case studies should show how they made people more comfortable, solved an existing problem, and saved money. Don’t be afraid to use numbers, Hewett advised.

Show how much they could save by showing the savings on a similar building. “Investors will be able to capitalize on the savings and the building’s value will go up. The FM, on the other hand, wants to know “how much you saved in the budget.”

From there, the contractor can provide benchmark data, such as how much energy the client uses, what it costs, and what you can do to help them save money.

Still, “They’re going to focus on a low-bid mentality,” Hewett said. “That’s the life they live, especially in the facility arena. But if you are able to show the difference in your bid, you don’t have to be the lowest.”

For more information, visit www.airadvice.com and www.davidwhewett.com.

Publication date: 12/13/2010