This is a guest post by Fred Paris. Fred teaches our 6 week Solar Startup Accelerator where students get the tools (budgeting, planning, pricing, project management) and business plan they need to start new solar business or solar division within an existing company, in 6 weeks. You can read more about the Solar startup class here. You can enter your email to get 1 of the 30 discounts available here. Fred is also hosting an awesome webinar on “How to Profitably Price Residential Solar” on Tuesday April 1st at 1pm EST.
Enter Fred –
1. Define the Skills Needed of a Solar Subcontractor.
To sell, design, and install PV without employees, you will need to work with subcontractors (subs) that have skills, tools, and construction savvy to implement PV projects to your specifications. Sounds a lot simpler than it is.
We sell, design. and install residential systems between 2 and 15kW. We need to hire three professional trades: electrician, roofer, and a general construction contractor. The electrician and roofer are required for most rooftop projects, while the construction contractor will work with the electrician for ground and pole mounts. We also use the construction contractor to reinforce trusses or roof rafters – as may be defined by a structural engineer.
Define the skills you need and specialize. Be careful of the subcontractor that says they can do it all. Perhaps they can, but as the PV project owner, you need to understand the detailed costs of the individual tasks. Only by understanding, the granularity of cost can you negotiate with contractors with clearly defined ‘scope of work’ statements.
2. Apply People Management skills
As the PV systems integrator, you may not have direct employees, but you will have vested interests in how the subs get along with each other. Having a clear scope of work is a good start, but you also need to see a working relationship develop between the subs. Subs need to work with each other ‘practically’ to determine that they will not be in each others way, and ‘financially’ to capitalize on such common needs as renting a lift. Both the electrician and the roofer might rent a single lift for roof top equipment and modules.
There is a need to recognize that installing rooftop solar energy requires ‘working on the roof’. There are good electricians that do not like high steep rooftops. In these instances, the roofer is ‘supervised’ by the electrician from a safe position or from the lift, bringing the electrician into visual and audible range of the roofer.
It is important the subs know how to work with each other and the management skills of the PV integrator is critical. Help the contractors work with each other. Make sure they understand the scope of their individual tasks and how they integrate with the other trades. If your trades cannot work together, or are having inter-trade conflicts, find a new mix of subs.
Beyond the roofer and electrician, you will need access to general construction. A general construction crew will build all the reinforcement for ground systems, ballast, or foundation, and will install pole-mounted systems. This contractor installs any rafters and truss reinforcement that may be required on a project.
The electrician is always positioned as the primary trade. The licensed electrician will often be the point of contact for rebate communication and relations with the state.
3. Define the Scope of Work
You will get to a point where you can call your electrician and say something as simple as: “Hi Joe, I have a new 7500 watt rooftop system going in downtown. They have 200 Amp service and I am planning on two inverters. When can you look at the project for me?” You then make the same call to the roofer.
After a few projects the electrician and roofer know where one trade stops and the other starts. For rooftop projects, the roofer and the electrician work it out to see who will install the mounting system and modules. In some instances, the roofer will install the mounting system and the electrician the modules. Understanding the details of work for each of the trades can avoid misunderstanding or ‘change of scope charges’
It’s key that you provide a very specific and detailed scope of work for each party involved and a process to verify that the work was done, and done how it was specified.
4. Make Payment Arrangements and Cash-flow Management
You need to be right up front with your subs about when they can be expected to be paid and how much. As the PV System provider, you may likely arrange a three-payment schedule with your customer. Perhaps you get some money up front, a payment when construction begins, and a final check when the system is turned on and all documentation completed.
That incoming revenue is part of your project cash flow. The other part is what is being paid out for hardware and services. Tracking “Cash Flow” on a project basis and plotting the payments to subs when they expect to be paid is important. Your payment arrangements with the customer need to cover hardware, software, labor, and fees. Your cash flow objective is to stay on top and in the green. This is cash-flow management.
5 Document all Insurance
As we hire subcontractors (subs) you need to be sure they have the proper insurance coverage. You need to ask the contractor for proof of liability insurance and workmen’s compensation coverage. In many jurisdictions, if the subcontractor does not have workmen’s compensation you may be required to pay a premium for the people on your project.