If you’re one of the thousands of solar installers comprising the 64% of national marketshare, how can you compete with the big guys who make up the rest? In the last post in this series, we talked about moving to the cloud as a lesson to learn from how the big guys operate. Another target for cost control is design: from sales proposals to engineering. Read on for tips on controlling your design costs.
How Did We End Up In This Design Bottleneck?
Design staff have often been the most difficult to acquire and retain. It’s a remnant of how the solar industry has grown up by fully staffing in each area of expertise and growing those areas lineally as the company expanded. This cycle affecting the staffing of design departments is directly related to the direct-to-consumer customer acquisition strategy that dominates the industry instead of following the Design-Bid-Build cycle of the construction industry. But that’s another post for another time.
Lately, design has become one of the most expensive labor cost centers at a solar company as automation innovations chip away at other costs. Great design staff are also in high demand, low supply, and generally locked up by larger solar installers. You could get in a bidding war for this resource pool and invest a lot in training up talent that will likely leave to chase an opportunity at a larger company with better perks.
Consider instead taking a page out of the book of many leaner solar companies and set up a more flexible design workforce solution.
Step 1: Look for Automation Opportunities
- Pre-Sale & Proposals
A wide variety of proposal generation tools and services are available now that can help reduce the cost of acquiring your solar customer, focusing on developing a design that the customer will agree to. Remember, the product in residential solar is the design. The quality of the design creates the lasting value in the relationship with the consumer in how it succeeds in meeting the customer’s stated need (reduction in utility bill, offset of certain loads like summer AC, etc). The customer service support, fun brand, and project management is window dressing. Downplay the importance of your design and the associated costs in all the other areas will increase and remain difficult to control due to managing re-work (i.e. the design doesn’t follow local code interpretations, if you allow the customer to change their mind, if sales staff have an incentive to oversell the customer to benefit their own commission).
- Understand and Document Design Requirements: AHJ and/or Utility
Develop your own database of these design requirements or use one of the public databases. Either way, you must capture and use any special design or construction requirements as far upstream as possible. Otherwise, expect a significant amount of your design staff’s work will result in rework as promises made during sales are rolled back during construction planning.
If your company covers a small enough territory, develop relationships with the building department staff in all the jurisdictions where you do the most of your business. A quick Pareto chart of AHJs where sales happen will show you the 20% of jurisdictions where you likely do 80% of your business. Focus on those relationships first. Then, evaluate the jurisdictions that are giving you the most headaches. Are they worth doing business in based on the amount of rework required?
- Engineering & Permit Packages
Following from that statement that the design is the product in residential solar, all tools, process, and policies of the solar company should orient around streamlining the delivery of the design until it reaches the roof in the installation moment. Any proposal tool or service should be able to output a series of files or drawings that can be submitted to a local jurisdiction with minimal changes. Proposal tools that cannot hand off to an engineering phase lose value after the sale. If a design engineer must start over from scratch to “draw boxes on boxes” – laying out a property, roof obstructions, and modules- did you actually make gains in sales with your proposal system? If you don’t know, have an analyst run the numbers with you so you can decide the best course of action.
When informed, you can decide if it makes sense to proceed with two separate tools or if it adds value to your business to have One Unified Design Tool with a limited proposal function and a more robust set of features for generating plan set drawings.
Step 2: Consider Outsource/Offshore Options
Companies can have a difficult time carrying the costs of a fully-staffed design department when sales might not always be there to support it. There are many options to flexing the staffing resource pool: from one-man home office designers, solar-specialized design outsourcing firms, to bid-for-design software platforms. You could choose one of these options or, depending on the size of your operation and amount of projects per month, choose a mix of these options. No matter what, ensure you have the right expertise, hand-offs, and quality control checks in place to ensure value is not eroding as is moves through the process.
In order to ensure outsource or offshore options will work, run the numbers and find out if the blended costs of managing the outside resource and providing quality control results in actual costs saved. You may have to look far downstream in your operations to installation or long-term support for indications of this. This is crucial work.
Step 3: Build a Strategy That’s Right for Your Company
From simplifying and automating to blending the right mix of in-house and/or outsourced staff, the most important part of this process is to build the strategy that is right for the size of your company and business model you are operating under. This is where there is no one “right” answer. Only by analyzing your operations, knowing your profit goals, and understanding the process of your company will you know which areas of opportunity need addressing and how. Spend the time investing in this analysis, yourself or with employees or contractors you trust.
If you can’t perform this analysis, you should stop now before trying to streamline anything else. If you cannot measure it, you cannot improve it. And if you cannot set a goal for improvement because you don’t know where you are now, you cannot improve. In another post, we will tackle the basics of Lean Process and Critical Path Mapping- great tools for benchmarking and setting operational goals.