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12 min read

SBA 283: How to Perform Sales to Operation Handoffs

By Phil Zito on Sep 29, 2021 6:00:00 AM

Topics: Podcasts

In this episode we discuss how and why to perform sales to operations handoffs for your building automation projects

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Phil Zito 0:00
This is the smart buildings Academy podcast with Phil Zito Episode 283. Hey folks, Phil Zito here and welcome to Episode 283

Phil Zito 0:10
of the smart buildings Academy podcast. And in this episode and for the next several episodes, we're talking like two dozen episodes, we are going to be doing something a little unique here, we're going to be going through first projects from start to finish, we're literally going to spend episodes on every aspect of a VA s project from handing it off to operations all the way to closing it off, closing it out and handing it back off to the customer. Then after that, we're going to shift over to sales. And we're going to talk through the entire sales process. Everything from how to initially target customers all the way to advanced closing strategies. So that's what you can expect from the podcast for the next several weeks into months. So this episode is all going to be about sales to operations handoffs, you may have heard these as project turnovers, project release meetings, project, handoff meetings, etc, right. And the thing here that I want to focus in on is what is a sales to operations handoff. Why is it important? How do you do it? What documents do you need to do and everything in between. In order to do this, I am going to step into our startup and checkout course, which has a well defined sales to operations handoff process, it's actually one of the first things we teach the students in that course. As always, all the resources I mentioned here can be found at smart podcasts at smart buildings Academy comm forward slash 283. Once again, that is podcast at smart buildings academy.com forward slash 283. If you find these next series of podcasts very valuable to you, then I encourage you to either check out our courses or our consulting services where we will help you build these processes and procedures into your building automation business. Alright, so as I start to look at the sales to operations handoff process, and I open up my sales to operations handoff, handoff document that I have built in to our startup and checkout course, the first thing I come to is a document checklist. And then I have a handoff, checkout checklist review. And then I have any re estimating and any details. But before I get to any of this, let's talk about the importance of this because I remember early on in my career, I was an operations manager. And I had just gotten out of the military, I was super gung ho super excited. And one of the sales guys came over and just handed me a job. And he was like, Alright, I'm going off golfing, and I literally chased him down in to the parking lot and was like, No, you're gonna hand this off to me. And he's like, No, I'm gonna go golfing I was like, No, I'm not gonna accept this on my books until you hand it off to me. And we went back and forth. And ultimately, the branch manager basically told me, salespeople rule the world, you're just gonna do what he says, and don't complain. And it was at that point that I was like, This is effing stupid. We're taking on this thing, that this guy just literally tossed over the fence. And I'm supposed to go and execute it. Now, in the grand scheme of things, it was like a $15,000 change order. It wasn't anything big. It wasn't a thing to create a huff and puff about. But I have seen time and time again, just where salespeople want to complain about operations folks and operations folks want to complain about sales folks. But neither of them collaborate. You know, the salespeople don't do a handoff to the operations team. And then they wonder why the operations team doesn't know about schedule changes or little nuances to the project plans or expectations as far as what the estimate was to mean. And then the operations team doesn't feed back to the sales team. Any information, you know, they don't take the accountability of, hey, this was underestimated or overestimated, or we were able to do this and you want to factor this into your estimates. So a sales to operations handoff process is one of the kind linchpin

Phil Zito 5:03
processes and procedures that a really well run operations and sales team should have, you know, the sales team should be going and releasing this information to the operations team. And this meeting shouldn't take more than 30 minutes. And then at the end of a project, there should be a project review, in which the project team reviews several things. We'll talk about that in a later episode, and then feeds that information back to the sales team. Alright, so you are sitting there, you're an operations manager, you're a project manager, and you get a new project that gets booked, right, so salespeople sell it, they create their estimate, they enter it into the booking system, because they get a PEO, or a letter of intent, or however they book it. And they book it. What next? Well, first thing, you should have some form of booking system, right something to alert you that a project has now been added to you. And I've seen a lot of smaller organizations do this well. And then some large organizations do this well, but the medium organizations tend to suffer with this. The smaller organizations do it well, because oftentimes, the same person who's executing the job is probably selling the job. From a project management perspective on the large organizations, they have very detailed business systems that have flags and alerts. And as soon as something's added to the contract booking system, it immediately alerts the operations team. But the medium organizations, they tend to suffer because they don't have a really good way outside of their weekly or monthly meetings to track these bookings. And what will happen is maybe something gets booked the first week of the month, but the project manager doesn't become aware of it till later in the month. And oftentimes, especially the plan in spec sales, what will happen is that project that is booked, is actually behind the schedule by the time we get on it, because we're estimating off 100% CDs, or maybe even drawings that are released for construction. And we're expected to be underway with submittals. And that's three weeks that have been wasted, because the operations team has not been brought up to speed. So this really needs to be an ingrained process, that when a salesperson books a job, meaning they send out a quote, that quote is approved, and they then get a p O, which is a purchase order or Letter of Intent back. And that then enables them to book the job, add it to the backlog that needs to be executed, and then they should ever release to operations. At this release to operations, it is critical that they bring the following information to the operations team. So I'm going to talk about the information that needs to be brought. Then I'm going to talk about the gotcha reviews, then I'm going to talk about re estimates and then final estimate booking Alright, so when the salesperson brings this to the project manager, they should add a minimum at a minimum, have who the owner is the general contractor, the architect, the engineer at that mechanical and the electrical, if there is commissioning,

Phil Zito 8:22
if there is some other trade that needs to be coordinated with, that information should be presented as well. So you will need the contact name, the contact email and potentially the contact phone number, but at least the name in the email, and any information that has been communicated to you around project schedules should also be communicated. Once you've got that contact information, then you need to move on to the scope of work, they need to hand off a clear concise scope of work with the intent around the scope of work. If it's something super vague, like 18 Air Handlers, but there's no details whatsoever, they should be prepared to explain the details and how they came about with their estimate. If you as a salesperson cannot explain the details and why you came up with the estimate you did or your estimator can't explain that, then do not be surprised if the operations team re estimates the job and removes margin from it in order to account for those costs. Because the more clear you are and your scope of work, the easier it is for the estimate to be turned into submittals and Billa materials. A set of the project specifications project drawings and addendums should be presented and they should be presented in electronic format. Please don't scan the specs, please get electronic query double specs. That way the operations team that's doing the submittals can go into PDF tool, can search it using keywords and can you know find what they're looking for. spec a lot easier than if it's just a scanned written copy. Okay, so just make sure you get those those do exist, this isn't the 1990s anymore, so you don't really have to worry about that. Alright, so we've got our scope of work or project specifications, drawings, addendums. Now we're gonna want to move through the handoff checklist, we're gonna want to talk about any submittal requirements, and any submittal dates, any commitment dates, any, you know, this is liquidated damages, and it needs to be complete by x date, it needs to be manned with, you know, 24 hour labor, stuff like that, or it's a prison, it just details as to anything that could be unique, that could impact scope, labor, execution, subcontractors, things like that. So we want to understand submittals, dates, middles, project, deadlines, etc. Now we go into kind of a touchy topic, which is really going to be dependent on how your business runs your financials. Now, some businesses we've worked with, they approach a estimate as kind of the holy grail, right? The estimate is the estimate, it's what's going to be booked, it's what's going to be executed, and they trude up at the end with executed margin. other businesses I work with, they take the estimate, they re estimate it, if necessary to add cost for labor, missed materials, etc. And then they, in an ideal world, inform the salesperson of why they did the re estimate, but they will go and they'll pull the booking though, estimate it, re estimate it rather, and then rebook the project with the proper labor, subcontractor and material costs. That's the approach that some organizations will take when they are dealing with rough estimates. So I can't tell you which one you should do that's based on your organization. Personally, I like to have two touch points. From a costing perspective, I like to have estimates that can be educational in the beginning, like, hey, this was missed. Let's do that. And I like to have project closeout reviews at the end where I say, Okay, this is the issue we ran into, this is what we need to account for moving forward. And you can start to have, you know, hey, these contractors, these engineers, these are the things we need to account for because even though it said partial CX, we got in there and it was not partial cx it was full cx and so we need to address that moving forward. Alright, from a project sales to operations handoff, the next thing that needs to happen is going to be scheduling. This is not involving sales, this is involving the operations team. But the project manager or labor coordinator should now start to look at the lifetime of the project should look at the spec and understand when submittals are required should understand kind of the baseline of what different percent completion is going to be measured PRC is going to be measured. And they should look at the project timeline, which they should get from their first project meeting, and then take that timeline back into it, and start to block in labor, subcontractor and material costs. So one of the things that we hammer really heavily in our VA s project management course, is getting each individual project to be profitable as quick as possible. So that way, you're not working off of overhead for your trade, working capital, but you're rather working off of Billings, from your projects for your trade working capital. So we want to start to consider that we want to start to think, what can we put in what order in order to go and execute backlog and generate revenue. Typically, that's going to be submittals. very aggressive, submittal cycle. That way we can get submittal approval so we can get material on order. And also can start to pre stage our subcontractors. be cognizant of the contract. These are little nuances that you want to understand when you're doing your sales operations handoff and initially laying out your project team and your project timeline. be cognizant of how you're able to Bill against the project is it paid when paid is it percent of Completion is it phase gate like task based, what is going to determine your ability to bail out and your ability to pay out because it's one thing to bail out but then if you have paid when paid, you may bail out but not get paid because your higher contractor has not been paid and so the payments not trickling down, which means you can't make your material or subcontractor payments through the revenue of the project, you have to rather make those through the revenue of the business. And that is not ideal. You want to try to avoid that. So you want to start to understand, like, how are we going to bail out? When

Phil Zito 15:20
are we going to bail out, what's the process, etc. Additionally, during this time, you're going to want to submit any initial clarifications RFCs. And information requests are a fies that were discovered during this handoff, you're going to want to get those out the door as quickly as possible. So to recap on this approach, a sales to operations handoff is critical. Personally, I would do them on every project. I know it seems routine, and it seems unnecessary. But I've seen 10,000 $12,000 projects turn into $60,000 projects, because something was missed something around the material or something around the labor was missed. And because of that miss that then caused on estimated charges to be racked against the project causing the project to basically become a margin suck, essentially taking the profitability out of the business because the project is negative. Cuz there's just so little bandwidth on the smaller projects. So in my opinion, you should definitely be doing a release to operations on every project. And to recap, what do you do, you meet with the salesperson, you get the contact information, the scope of work, project specifications, project drawings, and addendums. You then review the project handoff checklist understandings, middle requirements, understanding how buildings are going to be executed, understanding timeline and understanding any nuances related to the project that the salesperson can communicate with you, then you re estimate the project if your business approaches estimates in that way. That way you have an accurate record record. What's the word not recollection, representation of the pricing, the labor the material, and your subcontractors rather the cost labor materials subcontractors that are going to be allocated to that project. Once you have a perfect snapshot of that or as perfect as you can get. Then you move in to executing the project which we'll be talking about in our next episode, which will be performing takeoffs and re estimates. So I said to you about how we need to re estimate. I'm going to go much deeper in the next episode into performing those takeoffs and re estimates. If this is something that is interesting to you, and you would like to build out these kind of processes and procedures for your business then definitely reach out to us that's something we help our customers with. So you can reach out by going to the Contact Us form you can find that at podcast at smart buildings Academy comm Ford slash 283. And you can scroll to the top right and you'll see a contact drop down and you can hit that and reach out to us. Additionally, we teach this in our courses as well and you can check those out by going to podcast smart buildings academy.com for slash 283 scrolling up to the courses drop down and starting to look at our courses. If you have any questions, do not hesitate to reach out if you have any different ideas on how to perform sales operations handoffs, I'd love to hear from you. I'd love to hear how they've worked for you. I'd love to hear what you do in your business for sales operations. handoffs, Thanks a ton for being here. And I hope you have an awesome day. Take care

Phil Zito

Written by Phil Zito

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