Managing the Mega Project and Why Big Installs Aren't for Everyone - ResidentialSystems.com

Managing the Mega Project and Why Big Installs Aren't for Everyone

Each custom integration company in the industry has its own definition of what it means to work on a “mega project.”
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Denver-based Logic Integration, which made a name for itself with its design and integration of a “luxury missile silo” MDU residence last year, has completed projects from 20,000 to nearly 30,000 square feet, with $600,000 to $1.5 million in AV. Isaac Moyle, VP of operations for the integrator, agreed that planning and communication are critical to both maintaining proper cash flow and managing a schedule that lasts for months. Each custom integration company in the industry has its own definition of what it means to work on a “mega project.” In one market, for a one-man-band company, $100,000 of AV might be noteworthy. In another market, a veteran company might take notice only when an AV budget hits seven digits.

However you define the biggest project of the year (or perhaps the last five years), these endeavors offer equal parts risk and reward for CI owners. For a well-prepared company, the rewards can be a financial windfall, with media acclaim and pride. But, for a custom integrator that bites off more than he or she can chew, the risks are cash flow deficiencies, a devastated reputation, and even bankruptcy.

The most successful integration companies never shy away from mega projects, because they have learned how to manage them appropriately and reap their rewards. In this case, size does usually matter, for proper staffing is one of the keys to staying on top of projects of such large scale.

“Our size helps us handle these larger projects with relative ease,” said John Clancy, executive VP and CTO of ACS, which was founded as Audio Command Systems 35 years ago by CEO Robert Kaufman, now with offices in New York, California, and Florida.

According to Clancy, ACS has successfully completed projects in homes larger than 85,000 square feet and is currently working on closing the sale of a new system for a 100,000-square-foot home. He says that the electronics room and the infrastructure are the most amazing features of these projects.

“Quite often, we are asking for electronics rooms similar to IT server rooms with dedicated power, cooling, and raised floors that contain the low-voltage cabling,” he explained.

The low-voltage wire on these projects is typically measured in miles. “We are in the midst of a project now on over nine acres with multiple buildings all linked via fiber-optic cabling,” Clancy explained. “This is what is most unique about these types of projects. The individual rooms are somewhat typical, albeit larger, but contain the normal equipment, just as a whole a lot more both in quantity of rooms and the amount of equipment.”

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Logic Integration has applied many “commercial integration” principles to the way it handles residential systems like this one. For example, the company always meets with its electrical contractor early on in the project. The “discreet disciplines” that ACS has in place, he explained, allow his company to compartmentalize the various types of labor required for a mega project and to push through the sometimes overwhelming amount of design/CAD work, programming, and installation labor required.

“The overall dollar volume we sell per year also helps us handle the cash flow of a two- to three-year $2- to $5-million project,” Clancy noted. “Obviously staying on top of our billing so we don’t ever fall behind is important. Good project management and communication, both internal and with the other trades and professionals involved, is also key.

Custom Theater and Audio co-owner John Sciacca, who chronicled the challenges of managing a 21,500-square-foot/$600,000 Myrtle Beach, SC, project, in an article series on www.residentialsystems.com, said that his company was up front with that project’s builder from the beginning, establishing what they would need from a budget standpoint to keep the project on track.

“We told them very frankly that for a job this size, the product orders would exceed our credit limits with our manufacturer partners, that we just didn’t have the cash flow to ‘front’ these kinds of purchases, and we wouldn’t be able to order product until the deposits were received on schedule.”

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According to John Clancy, executive VP and CTO of ACS in the New York area, quite often his company is asked for electronics rooms similar to IT server rooms with dedicated power, cooling, and raised floors that contain the low-voltage cabling. When Sciacca’s company received a payment on this mega project, it immediately ordered and paid in full all of the equipment needed. This insured that the money didn’t “bleed out” to something else and that it was able to take advantage of any prompt pay terms, Sciacca noted.

To stay on schedule, Sciacca blocked out days each week where he would have a crew go to the job. He also brought in extra help for some of the “grunt work.”

“On a mega-job, there is always something that can be done, so we constantly blocked off days to go there, and any time there was a hole in the schedule, we would go there,” he said.

By the time it was complete, Custom Theater and Audio’s mega project featured seven separate racks, one 42U rack in the main distribution area, five 18U racks (one located in each bedroom), and a 30U slide-out rack in the media room.

“I made a decision early on to decentralize the system, so it would be easier to service and support and upgrade later on as the client wanted to,” Sciacca said. “This project used over nine miles of cabling, including 112 wired Ethernet ports, and 26 video cameras. It also features a massive Lutron HomeWorks system with over 300 lighting loads and automated drapery control.”

Sciacca believes that documentation–especially of the network–is “beyond crucial” on a project of this size.

“You need to know what every wire is, where it is plugged in and what it is connected to,” he stated. “For instance, what is on Port 4 of the switch on the other side of the house? Which amp channel does the porch far left speaker connect to? And, unless you are truly a network expert, you will want to work with a company that can offer you outstanding backend support, Sciacca advised. “We probably spent 40 hours on the phone with Pakedge where they helped us iron out, configure, and troubleshoot networking issues,” he added. “I think that decentralizing the system was a huge benefit, and I would definitely repeat that if possible. I would also try to do a better job of estimating the labor, as everything seemed to take about 25 percent longer than I thought it would.”

John Polk, owner of Audio Video Guys in Houston, TX, is in the construction phase of a project featuring 12,760 feet of wire (not including the extensive boat house and pool area), four racks (one just for the Trump Tower- Panama-inspired grand entry “art light” installation’s controllers and RGB LED drivers), and multiple 90-inch TVs. Because the company works exclusively on retrofits and remodels, it rarely experiences mega projects like this one, but Polk said he was lucky to be able to bill this one project as a time and materials project. “We don’t have to manage change orders,” he said. “We bill labor as performed (monthly) and collect 50 percent deposits on equipment before ordering.”

Polk has learned that especially on larger projects that one should never work with an architect that still only does “hand drawings,” and he’s found it beneficial to go to every meeting, even when there is no reference to his part of the project. Also, he plans on travel time and includes it in project management fees.

“On a ‘mega’ project, all the trades collect a PM fee,” he said. “There are too many meetings and ‘emergency’ decisions that happen, to not bill for the time.”

Denver-based Logic Integration, which made a name for itself in the custom world with its design and integration of a “luxury missile silo” MDU residence last year, has completed projects from 20,000 to nearly 30,000 square feet, with $600,000 to $1.5 million in AV. Isaac Moyle, VP of operations for the integrator, agreed that planning and communication are critical to both maintaining proper cash flow and managing a schedule that lasts for months.

“To successfully execute a mega integration, you have to plan, plan, plan,” he stated. “If you do not plan every aspect of the project, you will fail. This even includes the timing of payments from the client.”

Logic Integration has applied many of “commercial integration” principles to the way it handles residential systems. For example, the company always meets with its electrical contractor early on in the project.

Moyle also concurred with Sciacca that most integration companies don’t have the flexibility to front the money for ordering materials for a mega project client, therefore, it needs to ensure payments are collected prior to each stage of the project.

And, in addition to the “tangible benefit” from a large infusion of cash for mega projects, even more important, he said, is the company’s morale and sense of accomplishment when every person has touched a part of the mega project.

“A lot of man-hours, planning, and meetings go into mega projects,” he offered. “The publicity is another benefit to successfully completing a mega project.”

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Audio Video Guys in Houston, TX, is in the construction phase of a project featuring 12,760 feet of wire, and four racks. One rack is just for the Trump Tower-Panama-inspired grand entry “art light” installation’s controllers and RGB LED drivers pictured here. Sciacca echoed Moyle, stating the primary benefit is more money, but that mega jobs are also very rewarding professionally.

“At the end of the job, our entire crew had an enormous sense of pride over what we accomplished and how awesome the system was,” he said. “It’s the kind of job that you want to tell people about. Also, the mega-jobs allow you to use the types of gear that you really want to use where you aren’t constrained by budget. It was fun to be able to install the kind of gear–Sony 4K projector, 11.2-channel Monitor Audio Platinum speakers, 144-inch curved acoustically transparent screen, Kaleidescape, 20-plus zones of audio, video intercom over touchscreens–that you would love to have in your own home.”

Of course, a the pitfall, Sciacca pointed out, is that there is a “ton of stress” involved, and “the customer feels like they own you.”

“If they call, you need to answer and come,” he said. “I’ve been to the house on Sunday and after-hours a few times. Also, on a project this large, if something did go wrong, it could be a company-ending failure. The types of clients that can drop this amount of money on an entertainment system are also the type that could sue you out of business. Also, it is going to take far more labor than you anticipate. There are just so many things that you won’t have imagined, that the labor will likely (far) exceed your estimate. For example, I spent over an hour each day just walking around this house getting to different areas or trying to find someone.”

Clancy believes that the biggest benefit to tackling mega projects is the experience gained from working on them. “It’s really helped us handle the mid-size and smaller projects with better efficiency and utilize the disciplines required on large projects for projects of all size,” he stated. “We’ve done dozens of these over the years, and since our first, we’ve learned a lot and made sure that what we do on the largest projects gets implemented on all of our projects.”

In his market, bidding on projects of this scale is highly competitive. “Often we are one of five or so bidders on these, and the temptation to cut corners to reduce pricing to win the project is there,” he pointed out. “We’ve lost bids on these projects at times to companies who’ve done this, so lowering our price to win a job like these is a huge mistake. Also what we’ve witnessed on some of the bids we’ve lost, are projects that are awarded based solely on price alone and not qualifications. We have taken over more than a few of these projects after losing the initial bid. It’s not easy for a smaller company to handle these projects that sometimes require immense resources to complete and service beyond installation.”

Moyle agreed that mega projects can be “resource hogs” that, if not managed well, could put a company out of business. However, he added, “The benefits far outweigh the pitfalls.”

Jeremy J. Glowacki is editorial director of Residential Systems.

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