Contractors use prefabricated electrical systems to meet tighter schedules and save on labor costs
Long Island City, N.Y.-based E-J Electric Installation Co. recently completed work on a 500MW natural gas power plant in Queens. The electrical contracting firm installed the plant's major equipment, including combustion and steam turbines, air pollution controls, air-cooled condensers, and a heat recovery steam generator (HRSG). Because the owner of the plant — Astoria Energy LLC — was looking for opportunities to cut three months off the production schedule, E-J Electric decided its best option was to use prefabricated systems, even with equipment as large as the HRSG, which was pre-assembled in Indonesia. “You can usually shave days off the schedule,” says Tony Mann, vice president, E-J Electric. “But if you can figure out how to bring major pieces of equipment in prefabbed, you can save months.”
Feeling the crunch of faster deadlines on smaller budgets, many electrical contractors look for opportunities to use prefabricated electrical systems to speed installation and decrease labor costs. From fixture whips to larger pieces of equipment, many projects present multiple opportunities for this process. “We look for the most productive, cost-efficient installation,” Mann says. “Prefab can be a big part of that.”
In-house or onsite? To keep up with this growing practice, some contracting firms perform the pre-assembly work on the jobsite while others have opened in-house prefab shops. Depending on the job, however, most firms use a combination of pre-assembled products — in-house or from a manufacturer — and onsite prefabrication of individual components.
“To get everything coordinated and done in time, prefab is the only real way to make that happen,” says Greg Gossett, vice president of corporate operations for Indianapolis-based ERMCO. “It's the competitive nature of our business.”
ERMCO has been involved in assembling and installing prefab products to some extent for the last 20 years. However, it's only been within the last six that the electrical contractor fortified its efforts and entered into an agreement with two vendor companies, developed its Construction Services Group, and organized a separate department with its own crew — a prefab shop — to manage the company's growing prefab business. “There are very few jobs that we wouldn't insist on trying to utilize some sort of prefab,” says Gossett.
Within the last six years, prefab systems have become more standard in the industry, says Mann. But unlike ERMCO, E-J Electric doesn't work out of its own permanent prefab shop. Where appropriate, the company sets up a prefab shop on the jobsite. “We look at each project individually to see where the opportunities are for prefab,” says Mann. “Each project's different based on the size of the job and the location. What we do there is we have journeymen electricians packaging whatever needs to be done.”
In New York, where E-J Electric works on many of its projects, space is often limited. “Many times there aren't laydown areas,” says Mann. “So we may look at more prefab opportunities there.”
The fast track. “Ten years ago, a large project would last 24 months, and a fast-track project would be 16 to 18 months,” explains Gossett. “Now, the norm for a project is 16 to 18 months, and when you're talking fast-track, it's even shorter.”
The evolution of the shorter schedule can be attributed to the construction boom driven by the recovering economy as well as more knowledgeable building owners who, according to engineers as well as contractors, want more construction for fewer dollars in less time.
“Everybody's looking at ways to get everything done within a shorter period of time,” says Mann. “As long as we're upholding the quality, the owners want to see how we can get things done faster. So working that way may be a requirement to do business in the future in order to keep up with the fast pace of certain projects. Prefab will be the only way to get done in the schedules that they're looking at. Time is money on any project.”
Saving time by assembling products and systems off site in a controlled environment not subject to fluctuations in weather or the timetable of subcontractors is a definite bonus. “When you're not using prefab, you're always affected by weather or other trades on the job,” says Gossett. “If somebody's not getting done in time, there's always some impact to schedule.”
Systems built in an onsite facility or a remote shop and then packaged and delivered to the site aren't affected in the same way. “Using prefab, the electrical contractor is always there and ready on almost any task,” says Gossett.
Crew cuts. “In general, labor is the largest burden for a contractor,” says Joe Pede, product manager, Construction Products Group, Thomas & Betts Corp., Memphis, Tenn. “What the industry is experiencing is a dramatic trend to cut costs in rough-in installations, fixture installations, and pipe bending.”
Using prefab systems may be the easiest way to lessen the labor burden while remaining competitive in the marketplace. At ERMCO, the number of workers in the prefab shop coincides with the amount of work the company has been charged with. Working within its local union guidelines, the firm will hire between eight and 20 employees — a mix of journeymen and apprentices — who work under a foreman in the shop. “We've always got a good lead foreman out there because quality control is critical,” says Gossett. “If you don't send a good quality project to your field, the whole process falls apart.”
ERMCO's prefab shop works hand-in-hand with its Construction Services Group, which determines which jobs should involve prefab. However, it also stays busy with smaller jobs that don't go through the project review phase. “We're working on these long-term projects all the time, but by having that crew in place it allows us to respond immediately when a foreman calls in and needs conduit bent or wire cut and shipped to his job. We've got the staff on hand to do it.”
On the more “cookie-cutter” installations, where electricians are expected to build from 100 to more than 1,000 items, working in a controlled atmosphere allows the contractor to better manage the schedule and mix of labor. Less-skilled workers can be put on the less-complicated tasks, and the more skilled workers can oversee the project. Gossett says that this situation is also ideal for training newer, younger workers. “Everybody needs a basic knowledge of the tools and material,” he says. “The lead people can guide and train the younger folks. It's a good training ground.”
This will help when baby-boomers begin to retire. It's no secret that membership in the trades is down, and that the electrical industry is expecting a severe worker shortage in the near future. Prefab may be an important solution during that time. “When you go from having 300 people on a job to having 100, you have to find a way to be able to complete that project,” says Pede. “You can't spread it out from one year to four years. So that's causing a lot of innovation. It's causing an acceptance in the marketplace for labor-saving products. Prefab for the rough-in market is leading that charge right now.”
Materials world. Not only does prefab cut down on the number of workers needed on a job, but it also reduces the number of products. “Instead of ordering 50 parts, you're now ordering 10,” says Pede. “Working the traditional way, contractors had to buy all of these components and put them together onsite, install them onto the stud, and bring their MC cable to it. It took around 30 days to do the rough-in. Now with prefab, you can cut that job's installation time by 50%. With some products it could be up to 70%.” According to this formula, that cuts a 30-day installation down to seven to 10 days, just from having to work with and deliver fewer components.
In addition, it seems that contractors are now expecting more cost savings in labor than they are from products. Vendor partnerships have changed the way contractors price materials. “The whole charge with material used to be ‘Beat the last 2% you can out of these vendors for the lowest price on material,’” says Gossett. “You have a hard time demanding the best service possible when you cut the last nickel out of the job, so we're not as concerned with the pricing now. For us to be successful, they've got to give us the best competitive pricing because so much of their revenue is based on what we do. So we're working as partners.”
Pede agrees, stating that in today's world of comparison shopping using technology, the prices of materials are fairly consistent. Contractors know what to expect on pricing. Therefore, the savings in prefab comes from using less labor on the job. “As far as price, you can only drive it down so much,” he says. “If they buy a product for $5, and it costs them $7 to put it in, the total is $12. If they buy it for $6, and it costs them $1 to put it in, they save $5.”
ERMCO's vendor partners are expected to help with the projects' pre-planning stage. They ship the material to ERMCO kitted and packaged in the way it needs it. According to Gossett, this helps prevent any material mix-ups. “There were times when you might have ordered 50 die-cast fittings, but you got steel fittings instead,” he says. “With the coordination and communication we've got with our vendor partners, all of those issues are gone.”
Of course, there are costs built into purchasing pre-assembled products versus individual components, so it's up to the contractor to determine what level of prefab should be used on a project-by-project basis. When using manufacturer pre-assembled parts, the top line will be more expensive. The return is that the savings in the back end will make up for it.
Price isn't the only factor increased in the top line either. Using pre-assembled products requires coordinated pre-planning. Under vendor agreements, the contractor must communicate with its partners from the very first planning stages. ERMCO has even gone so far as to have vendor offices in its building. “They know every bit of material we've got in a job,” says Gosett. “We get them involved early in the scheduling process.”
Using prefab to make up costs at the back end can be a risk. From the estimating group to the design team to the construction installation team, each worker must be apprised of even the smallest changes in plans because design changes could mean expensive modifications.
“If there are design changes, your project team doing assembly needs to know about it as soon as possible,” says Gossett. “Everyone has to be involved, so it takes a lot of pre-planning. But the payoff on the back end is well worth it. A lot of people have a hard time realizing that they're going to recoup on the back end of this project the upfront investment they're going to make.”
Multi-tasking. By having its own prefab shop, ERMCO has also solved the problem of having to move and secure expensive tools, such as bending and wire-paralleling equipment and breaker test sets, on a jobsite. Not only does this save up to 3 hours of setup and teardown each time the equipment needs to be moved to a new location on the job, but both the equipment and workers also perform the tasks in the comfort of a climate-controlled atmosphere. As an added bonus, the equipment is then available for work on multiple projects at once.
“We'd rather have our guys out in the field measure the bends, and then send us the bend requirements,” says Gossett. “We pre-bend the conduit here in our shop on the expensive equipment, and send it back out. If it involves expensive equipment that's difficult to move, that needs to be used on multiple projects, we'll do it here. If it involves more than two or three of any assembly that's going to be built repetitiously, we'll do it here.”
Opportunities for prefab. In order to remain competitive, contractors may have to be creative in the ways they use prefab products and systems. Valued workers will be the ones who can suggest time-saving procedures. “All the jobs have prefab opportunities out there,” says Mann. “The key to the field is to identify where we can do this. It's really the supervision that's key to the process in the field. Supervisors need to be trained to identify the opportunities where we can do this. It's still new, so they need to be asking for it, which they're starting to. That's what they need to do.”
Gossett also feels that the best way to meet owner demand was to set up its prefab shop. “We polled our customers, and what they were concerned with was cost, schedule, and safety, so we looked at what we could do to affect that the most,” he says. “We felt that prefab was the No. 1 thing we could do.”
In terms of bidding on projects, firms that can't meet the tight schedules dictated by the facility owners will be left behind. “If you have a contractor who's doing prefab and somebody who's not, that might be the determining factor,” says Pede. “The contractor that can go to the owner and say ‘Well, I can have the job done in 10 months, and my competitor is going to take 14 months’ is going to get the job.”
However, competition among contractors may take installation to new heights. “I think it's great for the industry,” Pede says. “It's causing a lot of innovation. It's making contractors, manufacturers, and distributors sit back and look at traditional installations and ask, ‘Is this the best thing to do? Is there a better way? Is there a faster way?’”
Safety Zone. With prefab, working faster doesn't necessarily mean working less safely. Safety remains an important part of the installation process. By using prefab systems, contractors allow their workers to perform duties in a controlled atmosphere. It also limits the time workers have to perform tasks on ladders and lifts and in harsh elements, such as heat and rain. “We never talk about the process of installation or the job cost without talking about safety,” says Greg Gossett, vice president of corporate operatoins at ERMCO, Indianapolis. “A large portion of work that would have been done 75 to 100 feet in the air, we perform here in our prefab shop. That allows the workers in the field to be that much safer.”