For mechanical contractors, the busy season is a great opportunity to show customers that they can rely on you, but the increased workload creates a lot of stress for employees and customers, especially during a skilled labor shortage. Here we explore some innovative ways to balance the stress between supply and demand and optimize workflows for technician productivity during the busy season and beyond.
The Magnitude & Implications of the Skilled Labor Shortage:
There is currently a 40% shortage of skilled technicians in the workforce. Moreover, the industry experiences an 8% net loss of technicians each year. The growing gap between labor supply and service demand is only expected to worsen over time for mechanical contractors. To make matters worse, demand for mechanical service calls increases by an average of 30% during the summer months according to the usage data in ServiceTrade.
There’s a difficult balancing act that contractors face. On one hand, they can hire more technicians to meet the demand during the busy season, but this may result in excess labor and higher operating costs during the slower periods. On the other hand, hiring just enough technicians to handle the baseline demand may lead to unhappy customers and churn during peak seasons when response times are crucial. So, how can contractors find a balance?
1. Update how you prioritize service calls
Traditionally, mechanical contractors prioritize service calls based on urgency, revenue, and margin. However, introducing a new metric called “Gross Profit per Labor Hour” and creating a customer scorecard can revolutionize this approach.
Gross profit per labor hour:
Karim Nice, owner of BlueHat Mechanical, introduced us to this powerful metric. Gross Profit per Labor Hour enables contractors to identify customers who generate more profit with the same amount of labor, allowing them to prioritize work that maximizes their earnings. Without it, contractors may not realize that the top-grossing customer may have significantly lower gross profit for labor hour compared to a slightly smaller customer.
Creating a customer score:
To consolidate the metrics and prioritize customers effectively, contractors can create a customer score. Some key metrics to include: total revenue, margin, gross profit per labor hour, average work order total, and quote acceptance rate. By assigning points based on different ranges within each metric, a weighted score is obtained. This score enables contractors to sort their customer list and identify the customers who bring the most value to their business. Dispatchers can use this score to determine priority order, giving faster service to high-scoring customers.
By using metrics like gross profit for labor hour and creating a customer scorecard, contractors gain a deeper understanding of which customers drive the most value for their business, so they can prioritize their work accordingly.
2. Stop wasting technicians’ time
Another valuable tip is to stop wasting technicians’ time on unnecessary tasks. Reallocating administrative tasks to other team members protects technicians’ productivity, even beyond the busy season. So, some do’s and don’ts:
❌ Don’t require techs to hunt for work order details.
Set technicians up for success by equipping them with the tools they need to get the job done as efficiently as possible. This includes work order details, equipment details, service history, and any additional instructions or access codes. By doing so, you eliminate the need for them to spend valuable time contacting others for information.
❌ Don’t have techs create quotes and invoices.
Unless absolutely necessary, refrain from having technicians create quotes and invoices in the field. While you may bill for those labor hours, it’s more efficient to delegate these administrative responsibilities to other team members, especially when there is a technician shortage. You can still bill for those hours, just don’t have your technicians doing it.
❌ Don’t have techs run to the parts house.
Similar as above, it’s vital to optimize the utilization of your highly skilled and expensive technicians to do the skills they’re trained to do, especially given the ongoing labor shortage. So instead, allocate these tasks like running to the parts house to junior or non-technical staff. You can still bill for those hours as you would normally.
✅ Do have techs document equipment issues.
Encourage technicians to capture every repair opportunity and have them do it in a way that makes it easy for the office to generate accurate quotes and determine if repairs can be deferred until the busy season subsides. Documenting repairs creates future revenue opportunities for your business.
A commercial service platform like ServiceTrade helps mechanical contractors set their technicians up for success.
3. Keep projects agile and on budget
K & R Mechanical, a ServiceTrade mechanical customer, excels at keeping projects on budget and on time. A tip their Vice President of Service, James Mugabero, recommends is to hold daily project review meetings where you review financial reports and check operational statuses.
Review real-time financial reports daily.
Review the financials of every project to see if you are projected to be over or under budget based on where each project is from the expected completion. Comparing projects side-by-side gives insight into if there are project(s) that you can reallocate resources from to a project that is over budget or behind schedule. Looking further into each project’s performance gives insight into what is affecting the budget.
Hold team stand-ups each day.
During the daily project review meeting, check the performance of projects from the previous day, so you can make decisions for today. You may discover the opportunity to relocate technician resources to service calls. The operational review ensures you never lose track of a project and maintain technician efficiency.
To keep projects on budget during busy seasons, implement a daily project review meeting where you analyze real-time financials and conduct operational review. These practices enable better resource allocation, risk assessment, and decision-making, ensuring projects stay on track and meet financial targets.
The 3 big takeaways to start implementing now:
- Prioritize work from a complete view of a customer’s value.
- Delegate tasks like quoting and invoicing to the office.
- Review projects daily to plan resource deployment and protect your profit margin.