Author: Thomas E. Glavinich

A Guide for Entering the IBS Market

The integrated building systems (IBS) market is the future of the electrical contracting industry and will provide growth opportunities and enhanced profit potential for the electrical contracting firm. The challenge for the electrical contracting firm with a going concern in traditional electrical contracting is how to successfully enter the IBS market. IBS market entry is a diversification problem for the electrical contracting firm and making the transition from a focusing solely on the traditional power distribution market to a new market mix involving both the mature power distribution market and the IBS market is the key to future success.

This guide is the result of the research project entitled Developing Strategies for Successfully Entering the Emerging Information Technology Market that was sponsored by ELECTRI International (EI). The goal of this project is to assist the electrical contracting firm’s diversification into the IBS market. Barriers to successful diversification into this market were found to be primarily people and organizational issues. Even though several barriers involve workforce, competition, and financial issues, closer examination reveals that these barriers also have their roots in people and organizational issues. At the outset, it was believed that the electrical contracting firm’s business form, finances, technology, material and equipment, and installation practices would be the key considerations. While these issues are certainly important, the research reveals that these issues take second place to company and industry culture, management and labor issues, and customer perception. There is a need to focus on people and organizational issues rather than hard business and technological issues for the electrical contracting firm entering the IBS market or expanding its market presentation. As a result, this Guide for Entering the IBS Market (Guide) focuses mainly on people and organizational issues.

Chapter 1 provides an overview of the IBS market. At the beginning of Chapter 1, the challenge facing the electrical contracting firm considering IBS market entry sets the stage for the remainder of the Guide. Following this, IBS and the IBS market are defined, the differences between the emerging IBS and traditional power distribution markets are highlighted, and the reasons why an electrical contracting firm should enter the IBS market are provided. Chapter 1 ends by making the point that profits are higher and competition lower for innovative electrical contracting firms working on the leading edge of technology in the IBS market.

The ten critical success factors (CSFs) for electrical contracting firms entering the IBS market are covered in detail in Chapter 2. These CSFs were identified through surveys and interviews with electrical contracting firms involved in the IBS market. The ten CSFs are the foundation for the remainder of this Guide.

The importance of expanding the electrical contracting firm’s business paradigm is covered in Chapter 3. This chapter stresses the importance of upper management commitment to success in the IBS market, and then addresses market definition for the electrical contracting firm and includes both a discussion of the differences between the traditional power distribution and IBS markets and a list of potential IBS services that can be provided. Finally, this chapter introduces the concept of the electrical contracting firm as a systems’ integrator.

Chapter 4 addresses the electrical contracting firm’s need to identify a market niche and focus on that niche. This is a very important section that lists the various IBS systems found in commercial, industrial, and institutional (CII) buildings and then describes how the electrical contracting firm can segment the IBS market to better focus on its customers’ needs and capitalize on its strengths. Potential competitors and the electrical contracting firm’s areas of competitive advantage are then discussed.

Diversification and diversification strategies are covered in Chapter 5. The purpose of this section is to assist the electrical contracting firm in its selection of the diversification strategy that is best for it. Both related and unrelated diversifications are addressed in this section as well as selecting an organizational form for entering the IBS market.

Chapters 6 and 7 stem from Chapter 5. Chapter 6 covers the importance of partnering with manufacturers and suppliers in the IBS market, and staffing for IBS market entry is discussed in Chapter 7. The diversification strategy selected by the electrical contracting firm for IBS market entry will determine its organizational form and staffing needs.

Chapter 8 provides guidance in marketing and business development. For the most part, IBS work is obtained differently than traditional power distribution projects. In the IBS market, the electrical contracting firm is not just selling efficient installation. With IBS, the electrical contracting firm is selling system solutions as well as after-installation service to its customers. This section addresses a number of important topics including the impact of the electrical contracting firm’s name on customer perceptions to the need to cross-sell with its traditional power distribution business.

Once the electrical contracting firm is selected, it must perform the IBS installation. Chapter 9 covers delivering IBS services including establishing customer needs and requirements and managing IBS system design that is often required on IBS projects. The purpose of this section is to provide an overview of IBS project management and touch on a couple of important topics. A more complete coverage of IBS project management topics can be found in the EI project report entitled Successfully Managing Limited-Energy System Projects that resulted from a related study.

Chapter 10 addresses “branding” the electrical contracting firm in the IBS market. Competition in the IBS market makes it very difficult for the electrical contracting firm to successfully compete for work on price alone. Instead, the electrical contracting firm needs to differentiate itself from its competitors in the eyes of its customers. This “branding” or differentiation can be accomplished in a variety of ways which are discussed in this chapter. Chapter 11 discusses pricing IBS services, and is directly related to branding.

Planning IBS market entry is the subject of Chapter 12. Chapter 12 discusses why it is important for the electrical contracting firm to plan its market entry and then execute its plan accordingly. The whys and how to develop a business plan are also covered in Chapter 12. Lastly, the importance of benchmarking actual progress against planned progress is discussed.

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Blueprint for Electrical Contracting Firm Business Development

The Blueprint for Electrical Contracting Firm Business Development was generated by a team of investigators working with a Task Force of 16 electrical contracting industry leaders. The researchers define business development as the leadership function that ensures a sustainable business future for an EC firm through continuous improvements to its processes and services to better meet current and future customer needs.

The researchers created a manual that provides EC firms with an understanding of business development and explains why business development is crucial to a firm’s continued success and survival. The manual also shows through examples and case studies how to implement – successfully – a business development strategy.

While the manual applies to EC firms of all sizes, its focus is on smaller EC firms (the majority of the industry) that may not have the time and resources to dedicate to business development. The manual provides a step-by-step process for EC firms to develop a business plan by addressing each of seven key elements: Purchaser/Customer, Product/Service, People, Production/Delivery, Promotion, Pricing, and Profit.

Energy Security and the Electrical Contractor

Energy Security and the Electrical Contractor is a white paper that was written by Dr. Tom Glavinich. The paper addresses how the electrical contractor will play a key role in assuring that the U.S. will have an adequate and reliable electric power supply in the future. As emerging small-scale generating technologies such as fuel cells, photovoltaics, microturbines, and others become economically viable, there will be a shift from the traditional central power plant to local distributed generation (DG). These small-scale generation technologies will be incorporated into commercial, industrial, and institutional (CII) buildings to meet the increasing demand for electric power. In addition, state-of-the-art building control and automation systems will also result in increased CII building efficiency thereby reducing the demand on the utility grid. This paper discusses the important role that these technologies and the electrical contractor will play in ensuring a secure U.S. electric power supply in the 21st Century.

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Guide for Addressing Electrical Installation Seismic Requirements

To completely assimilate the new seismic requirements may take some time because it involves too many players. To help electrical contractors prepare for such a challenge, the objective of this study is to provide necessary information for electrical contractors to deal with the impact of the IBC seismic requirements. To achieve the objective, this report first discusses seismic requirements in the 2006 IBC and then the rest of the report covers major aspects of a typical electrical project, focusing on dealing with the seismic requirements, including:

·         Bid preparation and submittals

·         Contract negotiation and formation

·         Managing seismic design

·         Materials and equipment procurement

·         Installation

·         Project closeout

·         After installation warranty and services

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Guide to Benchmarking Field Operations

The purpose of this guide is to promote the use of field benchmarking to improve the quality, productivity, and safety of electrical construction. Field benchmarking increases electrician participation in the decisions that affect the daily work and the quality of the workplace environment. Effective field benchmarking develops mutually agreed to performance goals, designs work processes to achieve these goals, and then sets performance criteria for measuring the effectiveness of work processes.

This guide provides a step-by-step approach for implementing an effective field benchmarking program in the electrical contracting firm. Benchmarking can be a key element of the electrical contracting firm’s continuous improvement program. Benchmarking provides the yardstick against which improvement efforts can be measured. Without measurement, there is no way of knowing if progress is being made toward goals or not.

Field benchmarking is a special case of benchmarking that focuses on improving the electrical contracting firm’s field operations. Field benchmarking is not just about setting performance goals and measuring performance toward their attainment. Field benchmarking is about measuring the ability of the electrical contracting firm and electricians to design effective and efficient construction means and methods to get the work completed on time, within budget, and in accordance with the contract documents. The field benchmarking process presented in this guide requires active crew involvement in the continuous improvement process, open lines of communication between the contractor and the crew, and most importantly trust.

A word of caution. Field benchmarking is not about evaluating crew or individual electrician performance. Field benchmarking is about evaluating and improving the work processes that the crew works within. For field benchmarking to work, the electrical contractor must take responsibility for many of the problems in the field, listen to and value the electrician’s suggestions about how to improve the process, and work directly with the electrician to improve the process. Field benchmarking requires trust and openness on both sides which requires an investment of time, effort, and training.

This guide is divided into six chapters and an appendix. Chapter 1 introduces field benchmarking and how it can be used to convert crews into self- managing teams. The five key elements necessary for an effective field benchmarking program are presented in Chapter 2. In Chapter 3, the eight-step field benchmarking process is discussed in detail. The “how to’s” of benchmarking are presented in Chapter 4. A generic field benchmarking procedure is provided in Chapter 5 that can be used by the electrical contracting firm as a model for developing its own field benchmarking procedure tailored to its needs. Chapter 6 discusses organizational learning as an important part of field benchmarking. Lastly, the appendix to this report provides a selected bibliography for additional information about benchmarking.

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Innovative Service Contracting Practices

The objective of this research project was to identify innovative practices that the electrical contracting firm can use to develop a profitable service business. Service work can provide the electrical contracting firm with a steady income stream to balance the cyclical nature of the construction industry. In addition, service work can provide the electrical contractor with an advantage over competitors when customers build new facilities or renovate existing facilities.

This report highlights 27 best practices that were identified for building a successful service operation during this research project. These best practices came not only from the electrical contracting industry but also from other trades that do a significant amount of service and from other industries. It was found that all service organizations have three elements: service strategy, infrastructure, and process. However, successful service organizations have developed these three elements and less successful service organizations have not. The best practices described in this manual have been categorized as strategy, infrastructure, or process best practices to help the electrical contracting firm understand how the best practices are related and how they can be effectively implemented.

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Quality Assurance Guide for Inside and Outside Electrical Contractors

The goal of this 1995 research project was to develop a detailed guide that can easily be used by both inside and outside electrical contractors to prepare effective quality assurance programs. This goal was supported by the following three research objectives:

• Identify the needs and requirements of inside and outside electrical contractors for a quality assurance program.
• Provide a tool that can be an integral part of the electrical construction firm’s total quality management (TQM) program.
• Develop and publish a guide that can easily be used by both inside and outside electrical contractors to develop and implement effective quality assurance programs for electrical construction.1995

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Successfully Managing Limited-Energy Systems Projects

Limited-energy systems (LES) are becoming an increasingly large part of the commercial, industrial, and institutional construction dollar; and this trend will continue. In time, the market for the installation of distributed building control and communications systems, along with the interconnecting infrastructure, will dwarf the traditional power distribution market. The purpose of this education program is to facilitate the electrical contracting firm’s successful entry and ongoing participation in the emerging LES market by offering a structured program for managing LES business and projects.

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T&D Worksite Shock Protection Strategies

The electric power industry has long recognized the need to protect workers aloft and on the ground from dangerous voltages that can occur during construction and maintenance operations on overhead transmission and distribution (T&D) lines. Current regulations, codes, and standards require that an equipotential zone be established where there is a possibility that a worker may be exposed to dangerous voltage differences. Equipotential zones are intended to minimize dangerous difference in potential through grounding and bonding. Much of the industry focus to date has been on establishing equipotential zones to protect workers aloft because these workers are perceived to be in the closest proximity to the hazard. However, workers on the ground are also in danger and establishing an equipotential zone to protect workers aloft may actually create a hazardous condition for the linemen, groundmen, and equipment operators working on the ground. There is little direction on how to establish an equipotential zone on the ground at the worksite. Methods used to protect workers on the ground vary throughout the electric power industry and are often based on industry custom and practice. The purpose of this research project is to develop strategies to protect workers and the public on the ground in the vicinity of overhead T&D construction and maintenance operations from being exposed to potentially hazardous voltages.

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The Emergence of the IBS Contractor

As building environmental systems become increasingly complex and interdependent, there will be a growing demand for an integrated building systems (IBS) contractor. Currently, owners of commercial, industrial, and institutional (CII) facilities are struggling with the need to integrate building systems to achieve needed system functionality, interoperability, and efficiency. Rising energy costs and the drive for “green” buildings is currently fueling the demand for building system integration. The need for an IBS contractor will only increase in the future as more buildings incorporate intelligent materials, distributed generation technologies such as building integrated photovoltaics (BIPV), comprehensive life safety and security systems, advanced communication systems, and open-architecture control systems. Since intelligent building materials and systems rely on power, communications, and control (PC2) systems, the electrical contractor is in a unique position to assume the role of IBS contractor.

This research project investigated the future market for an IBS contractor and identified ways that the electrical contractor can fulfill this role.

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