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Hey folks, Phil Zito here and welcome back! In this post, and for the next several posts, we are going to be doing something a little unique. We're going to be going through projects from start to finish, literally going to be spending time on every aspect of a BAS project from handing it off to operations, all the way to closing it out and handing it back off to the customer. Then after that, we're going to shift over to sales and walk through the entire sales process. Everything from how to initially target customers all the way to advanced closing strategies. So, that's what you can expect from us for the next several weeks into months. 

So, this post is going to be about sales to operations handoffs. You may have heard of these as project turnovers, project release meetings, project handoff meetings, etc. The thing here that I want to focus in on is:  

  • What is a sales to operations handoff?  
  • Why is it important?  
  • How do you do it?  
  • What documents do you need to do, and everything in between.  

In order to do this, I am going to step into our Installation and Configuration course, which has a well-defined sales to operations handoff process. It's actually one of the first things we teach the students in that course. As always, all the resources I mention here can be found at Smart Buildings Academy. If you find these next series of posts very valuable to you, then I encourage you to either check out our Course Page, or our consulting services where we will help you build these processes and procedures into your building automation business.  

Alright, so as I start to look at the sales to operations handoff process, I open up my sales to operations handoff document that I have built into our Installation & Configuration course. The first thing I come to is a document checklist, then I have a handoff checklist review, and then I have any re-estimating and any details. Before I get to any of this, let's talk about the importance of this. 

I remember early on in my career, I was an Operations Manager. I had just gotten out of the military, and I was super excited. One of the sales guys came over and just handed me a job and said, “Alright, I'm going off golfing.” I literally chased him down into the parking lot and was like, “No, you're going to hand this off to me.” And he's like, “No, I'm gonna go golfing,” and I said, “No, I'm not gonna accept this on my books until you hand it off to me.”  

We went back and forth, and ultimately, the Branch Manager basically told me, “Salespeople rule the world, you're just gonna do what he says and don't complain.” It was at that point that I was like, “This is stupid. We're taking on this thing that this guy just literally tossed over the fence, and I'm supposed to execute it.”  

Now, in the grand scheme of things, it was like a $15,000 change order. It wasn't anything big to create a huff and puff about, but I have seen time and time again, where salespeople want to complain about operations folks and operations folks want to complain about sales folks, but neither of them collaborates. The salespeople don't do a handoff to the operations team, and then they wonder why the operations team doesn't know about schedule changes, or little nuances to the project plans, or expectations as far as what the estimate was to mean. Then the operations team doesn't feed back to the sales team any information. They don't take the accountability of, “Hey, this was underestimated or overestimated,” or, “we were able to do this and you want to factor this into your estimates.”  

So, a sales to operations handoff process is one of the kind of linchpin processes and procedures that a really well run operations and sales team should have. The sales team should be releasing this information to the operations team, and this meeting shouldn't take more than 30 minutes. Then, at the end of a project, there should be a project review, in which the project team reviews several things, and then feeds that information back to the sales team.  

Alright, so you are sitting there, you're an operations manager, you're a project manager, and you get a new project that gets booked. So, salespeople sell it, they create their estimate, they enter it into the booking system because they get a PO, or a letter of intent, and they book it. What next?  

Well, first thing, you should have some form of booking system to alert you that a project has now been added to you. I've seen a lot of smaller organizations do this well, and then some large organizations do this well, but the medium organizations tend to suffer with this. The smaller organizations do it well, because oftentimes, the same person who's executing the job is probably selling the job from a project management perspective.  

On the large organizations, they have very detailed business systems that have flags and alerts. As soon as something's added to the contract booking system, it immediately alerts the operations team. The medium organizations however, they tend to suffer because they don't have a really good way outside of their weekly or monthly meetings to track these bookings.  

What will happen is maybe something gets booked the first week of the month, but the project manager doesn't become aware of it until later in the month. Oftentimes, especially the plan in spec sales, what will happen is that project that is booked is actually behind schedule by the time we get on it, because we're estimating off 100% CDs, or maybe even drawings that are released for construction. We're expected to be underway with submittals and now that's three weeks that have been wasted because the operations team has not been brought up to speed.  

So, this really needs to be an ingrained process, that when a salesperson books a job, meaning they send out a quote, that quote is approved, and they then get a PO (Purchase Order) or Letter of Intent back. That then enables them to book the job, add it to the backlog that needs to be executed, and then they should have a release to operations. At this release to operations, it is critical that they bring, at a minimum, the following information to the operations team: 

  • Who the owner is  
  • The general contractor 
  • The architect 
  • The engineer at that mechanical  
  • The electrical  

If there is commissioning, if there is some other trade that needs to be coordinated with, that information should be presented as well. So, you will need the contact name, the contact email and potentially the contact phone number. Any information that has been communicated to you around project schedules should also be communicated.  

Once you have that contact information, then you need to move on to the scope of work. They need to hand off a clear, concise scope of work, with the intent around the scope of work. If it's something super vague, like 18 Air Handlers, but there are no details whatsoever, they should be prepared to explain the details and how they came about with their estimate.  

If you as a salesperson cannot explain the details and why you came up with the estimate you did, or your estimator can't explain that, then do not be surprised if the operations team re-estimates the job and removes margin from it in order to account for those costs. The clearer you are in your scope of work, the easier it is for the estimate to be turned into submittals and bill of materials.  

A set of the project specifications, project drawings, and addendums should be presented and they should be presented in electronic format. PLEASE DO NOT SCAN THE SPECS. By using electronic format, the operations team that's doing the submittals can go into PDF tool, search it using keywords, and can find what they're looking for in the spec a lot easier than if it's just a scanned, written copy.  

Alright, so we have our scope of work, our project specifications, drawings, and addendums. Now we're going to want to move through the handoff checklist. We're going to want to talk about any submittal requirements, submittal dates, commitment dates, and it needs to be complete by x date, it needs to be manned with 24 hour labor, or it's a prison, etc. It just details anything that could be unique, that could impact scope, labor, execution, subcontractors, things like that. So, we want to understand submittals, dates, middles, project, deadlines, etc.  

Now we go into kind of a touchy topic, which is really going to be dependent on how your business runs your financials. Now, some businesses we've worked with, they approach an estimate as kind of the holy grail. The estimate is the estimate, it's what's going to be booked, it's what's going to be executed, and they true it up at the end with executed margin.  

Other businesses I work with, they take the estimate, they re-estimate it, if necessary, to add cost for labor, missed materials, etc. Then they, in an ideal world, inform the salesperson of why they did the re-estimate. They will pull the booking, re-estimate it, and then rebook the project with the proper labor, subcontractor and material costs. That's the approach that some organizations will take when they are dealing with re-estimates.  

So, I can't tell you which one you should do. That's based on your organization. Personally, I like to have two touch points. From a costing perspective, I like to have estimates that can be educational in the beginning, like, “Hey, this was missed. Let's do that.” I also like to have project closeout reviews at the end where I say, “Okay, this is the issue we ran into, this is what we need to account for moving forward.” You can start to have, these contractors, these engineers, these are the things we need to account for because even though it said partial Cx, we got in there and it was not partial Cx. It was full Cx and so we need to address that moving forward.  

Alright, from a project sales to operations handoff, the next thing that needs to happen is scheduling. This is not involving sales; this is involving the operations team. The project manager or labor coordinator should now start to look at the lifetime of the project. They should look at the spec and understand when submittals are required and understand the baseline of what different percent completion is going to be measured (POC). They should look at the project timeline, which they should get from their first project meeting, and then take that timeline back into it, and start to block in labor, subcontractor, and material costs.  

So, one of the things that we hammer heavily in our BAS Project Management course, is getting each individual project to be profitable, as quick as possible. This is so that you're not working off of overhead for your trade working capital, but you're rather working off of billings, from your projects, for your trade working capital. So, we want to start to consider that.  

We want to start to think, what can we put, in what order, in order to execute backlog and generate revenue. Typically, that's going to be submittals. Very aggressive, submittal cycle. That way, we can get submittal approval so we can get material on order, and also can start to pre-stage our subcontractors.  

Be cognizant of the contract. These are little nuances that you want to understand when you're doing your sales to operations handoff and initially, laying out your project team and your project timeline. Be cognizant of how you're able to bill against the project.  

  • Is it paid when paid?  
  • Is it percent of completion?  
  • Is it phase-gate like task-based?  

What is going to determine your ability to bill out and your ability to pay out? It's one thing to bill out, but then if you have paid when paid, you may bill out but not get paid because your higher contractor has not been paid, and so the payment is not trickling down, which means you can't make your material or subcontractor payments through the revenue of the project. You have to rather, make those through the revenue of the business, and that is not ideal. You want to try to avoid that.  

So, you want to start to understand, how are we going to bill out? When are we going to bill out? What's the process? Additionally, during this time, you're going to want to submit any initial clarifications, RFCs, and information requests, RFIs, that were discovered during this handoff. You're going to want to get those out the door as quickly as possible.  

So, to recap on this approach, a sales to operations handoff is critical. Personally, I would do them on every project. I know it seems routine, and it seems unnecessary, but I've seen $10,000-$12,000 projects turn into $60,000 projects, because something was missed, something around the material or something around the labor was missed. Because of that miss, that then caused un-estimated charges to be racked against the project, causing the project to basically become a margin suck, essentially taking the profitability out of the business because the project is negative. There's just so little bandwidth on the smaller projects.  

So, in my opinion, you should definitely be doing a release to operations on every project. To recap, what do you do: 

  1. You meet with the salesperson 
  2. You get the contact information, the scope of work, project specifications, project drawings, and addendums.  
  3. You then review the project handoff checklist understandings, middle requirements, understanding how buildings are going to be executed, understanding timeline and understanding any nuances related to the project that the salesperson can communicate with you. 
  4. You re-estimate the project, if your business approaches estimates in that way. That way, you have an accurate representation of the pricing, the cost of labor, materials, and subcontractors that are going to be allocated to that project.  
  5. Once you have a perfect snapshot of that, or as perfect as you can get, then you move in to executing the project, which we'll be talking about in our next post,  

So, I said to you about how we need to re-estimate. I'm going to go much deeper in the next post into performing those takeoffs and re-estimates. If this is something that is interesting to you, and you would like to build out these kinds of processes and procedures for your business, then definitely reach out to us. That's something we help our customers with.  

So, you can reach out by completing the form at the bottom of this post and clicking “Submit Comment”. You can also click the Contact drop-down in the top right of the page and reach out to us.  

Additionally, we teach this in our courses, so you can check those out by going to Smart Buildings Academy, scrolling up to the Courses drop down, and starting to look at our courses.  

If you have any questions, do not hesitate to reach out. If you have any different ideas on how to perform sales to operations handoffs, I'd love to hear from you! I'd love to hear how they've worked for you. I'd love to hear what you do in your business for sales to operations handoffs.  

Thanks a ton for being here and I hope you have an awesome day! Take care. 

Phil Zito

Written by Phil Zito

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