FIRE PROTECTION: TWO BUSINESSES IN ONE TRUCK
New-construction contracting and inspection-testing-maintenance are different businesses: different margins, different billing cycles, different labor.
This page covers one problem. The full picture for this trade, including the other places margin leaks, is on the fire protection operating system page.
WHERE THE MONEY GOES.
New-construction contracting and inspection-testing-maintenance are different businesses: different margins, different billing cycles, different labor. NFPA 25 ITM work recurs annually ($1,000 to $2,100 per system per year is a published market range) with five-year internals at $800 to $2,500, and it pays fast; contract work pays big and slow. Blended books hide which side is propping up the company.
THE NUMBER TO MEASURE IT AGAINST.
Fire Protection contractors run about % net profit at $1M to $5M, rising to roughly 11% at $5M to $10M. The CFOS target at $1M to $5M is11.5%, set at 10 percent before taxes or 3.5 points better than your trade's average at your revenue, whichever is higher. A problem like this one lives in the distance between those two figures rather than in a loss on any single job.
Gross margin over the same bands runs % to 25%, against a CFOS target of 11.5%.
THE SYSTEM THAT FIXES THIS.
Cost codes built against the estimate, so a job can be read while it runs.
FREQUENTLY ASKED.
