IRRIGATION: Expand into Commercial

There’s an old saying in the irrigation industry: “Profit is sanity, volume is vanity.” This adage applies to contractors eager to get into commercial installation, says Kevin Gordon, senior product development manager for Hunter Industries, San Marcos, Calif.
     
“I wish I knew where that saying came from, but I’ve heard it in the industry for the last 20 years,” he says. “The biggest mistake is vanity or ego gets in the way and people get in over their heads. When somebody starts looking at volume first instead of profits, that’s where the trouble begins.”
    
Making the change from just residential irrigation installation should be done only if a contractor understands the different practices and technology required, is confident in his team’s production rates and understands how to bid accurately – not merely when he thinks it’s time to work on larger projects, experts say.

THE COMMERCIAL DRAW. Commercial work is understandably tempting. Although the net profit on commercial installations tends to be lower than residential installations (10 to 15 percent for commercial vs. 15 to 30 percent for residential) – economies of scale make up for it. A 15-zone commercial job could be in the $30,000 to $40,000 range, whereas a residential job with a few zones could cost several thousand dollars. 
 
Plus, commercial jobs keep crews busy longer, often up to a month, which decreases downtime and boosts profitability. “In residential, jobs are turning over much quicker, which means you need to make more sales,” says Judson Byleen of Judson Irrigation in Lincoln, Neb. “That short turnover can wear on you.”
 
Not to mention, installing commercial systems is get good way to build a relationship with the property manager, which can lead to service contracts down the road.
 
Selling commercial installation is much different from residential, as systems are typically designed and specified by architects or irrigation consultants, and then put out for bid. “With commercial, you can’t sell yourself and your value,” Byleen says. “If there’s a new commercial building going up, there may be 10 bidders.” Often, the lowest price prevails.
 
Things get tricky when contractors are eager to take it to the next level, but don’t have the knowledge or experience of sound bidding practices. Simply because of the scope, improperly bidding a large commercial installation is much more severe than a misquoting a residential job. A 40- or 50-zone commercial job may keep an entire staff busy for a month, absorbing 100 percent of the company’s resources. “One mistake can kill the whole company,” Gordon says.

BID RIGHT. “If contractors are going to make that leap from residential to commercial, they just need to use good solid biding practices and make money on the job,” Hunter’s Gordon says. “Don’t get overzealous and low bid. Yes, it’s a competitive world out there and a lot of times the low bidder gets the job, but not always. You have to keep you company’s health in mind when going out to bid.”
 
One of the greatest mistakes commercial contractors make is worrying about what everyone else is bidding, says Brian Klimek, president of Green World Irrigation Specialists, West Nyack, N.Y. “To me, price is labor, materials, overhead and profit. Everyone has different overhead; everyone has different profit margins, so you can’t worry about what they’re bidding.”
 
Improving bidding skills and efficiency are two ways to remain price competitive, Klimek says. 
 
“The best advice I got for doing commercial work was to time everything and track every cost,” Klimek says. He recommends developing internal benchmarks for how long it takes to complete every installation task, including installing sprayheads to trenching 1,000 feet of pipe. This can be done by timing technicians, finding an average time and calculating the cost do perform this activity. (See “Production Rate Guidelines for Irrigation Installation” on page 139.) When bidding, use your rates to calculate price. “Then, everyday you see where you stand on the job,” Klimek says.
    
In addition to “hitting your numbers,” it’s important to increase efficiency. Klimek’s firm began implementing lean management concepts over the last few years by focusing on how to reduce waste in one process per month. Switching out open trailers for enclosed ones has been the best change Green World has made, Klimek says. The measure has improved profitability by reducing downtime on the job. “One problem we used to have was not bringing enough material, but now there’s no driving off site to a supplier to get what we need.”

PRODUCT PRIMER. Once an irrigation contractor knows his costs and is confident in his bidding abilities, he’s ready to begin installing commercial systems. The difference between commercial and residential components tends to be a matter of scale and durability.
 
Because of higher water pressure on commercial jobs, pipe sizes are larger – 6 inches in diameter and up compared to 1-inch pipe for residential work. Fittings are larger to correlate with larger pipe sizes. In addition, the use of thrust blocks to support fittings is more common in commercial installation than residential, says Jim Laiche, commercial business manager for Toro Irrigation, Riverside, Calif. Thrust blocks are typically created by pouring concrete behind fittings at points where there’s a change in water direction. “In those larger systems, when you’re carrying water in a 6-inch pipe and it has to make a right turn, it carries a lot more force behind it than water in a 1-inch pipe does,” Laiche says.
 
Additionally, commercial installations with 3-inch pipe and up require the use of gasketed pipe rather than gluing or clamping pipes together, so the pipe can expand or contract with temperature changes.
 
Valves for commercial applications differ in their pressure ratings and durability. A typical residential valve has a pressure rating of 150 psi vs. 220 psi for commercial and the products are made from more robust materials.
 
The same can be said for commercial sprayheads and rotors. Commercial rotors can expel larger volumes (throwing water 50-plus feet rather than 20 to 40 feet for residential), and may be built with more durable materials to withstand the beating they’ll take from commercial lawn mowers and other equipment and traffic they’re likely to meet out in the field.
 
Pressure regulating devices that allow for the fine tuning of downstream pressure are also prevalent in commercial applications.
 
Likewise, commercial contractors should be familiar with specifications for check valves, which prevent low-head drainage, and swing joints (threaded connections of pipes and fittings between the pipe and sprinkler that allow for raising and lowering sprinklers without plumbing changes). “I’ve seen some consultants who prefer to have this connection on all heads,” Toro’s Laiche says. Swing joints aren’t used frequently in residential applications.
 
In terms of controllers, central control systems for commercial sites are generally more complex than residential controllers, manufacturers say. In addition to using smart or ET-based technology, commercial control systems likely require weather stations when they include more than two controllers per system. “A lot of contractors aren’t familiar with installing weather stations,” Laiche says. “A lot of times we see mess ups there.”
 
Another type of technology that’s becoming increasing popular for commercial sites is the two-wire system. As opposed to conventional multi-wire systems that require one wire going to all valves, plus one wire going to each valve individually, two-wire systems require just two wires plus a decoder for each valve. This setup saves on wire costs and allows for great labor savings in repairs and renovations. (Fore more information, see “Technology Focus: Two-Wire Systems” on page 136.) “That’s probably one of the fastest-growing segments today,” Gordon says. “Within five years, the majority of commercial systems installed will be two-wire.”
 
Another perk of the commercial market is the audience is more likely to invest in top-tier water-conservation products like ET controllers, pressure regulators, etc., manufacturers and contractors say. “For a commercial customer, their water bill is a much bigger percentage of their budget,” Gordon says. “Products that offer a 10 to 30 percent savings on their bill are a much bigger payback than they are a homeowner.”