Procuring Pro AV
While the traditional owner-general contractor-electrical subcontractor-low-voltage sub-subcontractor model worked until the 1990s, it doesn’t make sense to contract pro AV systems that way today.
Contractual evolutionJustifiable markups?Contract differently
WHETHER A pro AV project is an integrator-only design-build, or design-bid-build using an independent consultant, there’s a contract involved. For the integrator-only option, the contract will include the design, the equipment, and the installation of the equipment. In a bid option, the integrator’s contract is based on design documents already prepared by the consultant, though there is always further development of the design during the submittal and installation phase of the project.
For larger projects involving a construction team working on the base building in which the systems are to be installed, there’s usually a chain of contracts from the owner to the contractors and subcontractors. The owner or end-user is paying for the building and its systems and is the ultimate source of the contracts. Contracts are usually let to a general contractor who will typically then subcontract to the other traditional trades such as mechanical, electrical, structural, plumbing, civil, etc. Often in larger building projects a construction or program manager may be separately contracted to handle the project, or perhaps may even be part of a general contractor’s organization.
While the construction manager has changed how some of the traditional trades are contracted, the way low-voltage system installations are contracted has evolved even more over the past decade. This evolution started with the older low-voltage trades — telephone, fire alarm, life safety, nurse call, paging, and sound reinforcement — settling in to a fairly accepted arrangement subcontracting to the electrical contractor. This is why the older MasterFormat specifications included these trades under Electrical Division 16. However, this arrangement has become less acceptable in recent years.
As the data/telecom, pro AV, and other low-voltage trades such as building automation emerged, the logical place for them was alongside the other low-voltage trades under the electrical contractor who subcontracted to the general contractor. But the growing impact of the technologies on the building and the budget made this less viable. In addition, this traditional arrangement came with a dollar cost beyond the basic subcontractor cost — a markup that ultimately goes back to the building owner.
In a common scenario, the low-voltage contractor (data/telecom, AV, or any of the others) contracts to an electrical contractor at a given price. The electrical contractor passes this cost on to the general contractor in his or her contract with a markup, often of about 7 or 8 percent. The general contractor then marks up the electrical contractor’s contract by another similar percentage in his or her contract to the owner, which could be a markup of about 15 percent (or more in some cases) on the cost of a low-voltage system. While this may not be an issue when the low-voltage system is $20,000 on a multimillion-dollar building project, it could be if the low-voltage system itself is a multimillion-dollar one.
For some low-voltage contractors such as fire alarm, paging, and sound masking, this markup is justifiable because the subcontractor will be onsite and require onsite coordination during the majority of the construction process. However, for pro AV projects in new buildings, much of the work is done offsite during the heavy construction period because AV electronics don’t fare as well as conduit and backboxes in the middle of construction. Though the point-to-point AV cabling may be pulled when construction is still well underway, the bulk of the onsite AV work isn’t done until the end of the construction phase when the site is cleaned up and the base building contractors are moving out.
During the main construction phase, the other low-voltage contractors may also have a big push at the end to get their equipment installed after the site is relatively clean, but they typically don’t need to stay onsite like an AV integrator does. On a large project, the AV integrator could be finishing up the installation while the building is being occupied. On top of that, in most projects the AV systems may be the only technology systems in the building that require training of non-technical end-users. While other trades have trained the building’s technical operations staff, the AV design and install team are just preparing to train the faculty, the sales staff, or the CEO.
While AV is now a permanent fixture in the building design and construction industry, it’s still a different kind of work with a schedule that’s different from the more traditional trades. Because of these differences, the typical subcontractor markup placed on the AV work may not be as justifiable as it is for other trades.
To some degree, moving up the chain helps alleviate the “low-voltage equals low rank” problem that sometimes occurs on the construction jobsite. But this is particularly crucial for the pro AV integrator and data/telecom contractor. Many low-voltage trade organizations such as the International Communications Industries Association (ICIA), National Systems Contractors Association (NSCA), and Building Industry Consulting Services International (BICSI) have been working to get their scopes of work pushed up the contract ladder in a variety of ways, one of which included providing the Construction Specifications Institute (CSI) with input on the new MasterFormat 04 structure.
With the exception of power and lighting systems control and low-voltage power sources, the new MasterFormat 04 pulled all low-voltage systems out of the electrical section and put them in other twenty-something divisions, including the new Communications Division 27 where AV now lives. During the development of the new MasterFormat, this change created a huge fervor among the electrical contracting community and more struggles are sure to come. Regardless of CSI’s stated intent not to define contract structures, the separate division will create conditions that will make it more likely that low-voltage systems could be contracted at least one leg up the contract ladder, giving them more clout than before. And it may even save the owner a few dollars.
Procuring Pro AV
While the traditional owner-general contractor-electrical subcontractor-low-voltage sub-subcontractor model worked until the 1990s, it doesn’t make sense to contract pro AV systems that way today.
As for pro AV, I’ve argued that the AV integrator should be contracted by the owner directly, bypassing the general contractor altogether on a project. And this argument has often been successful. Though it’s fair for the general contractor to charge for the site coordination with the AV integrator that occurs during cable pulling and near the end of the job without holding the subcontract, it shouldn’t be as much as they would mark up the electrical or mechanical contractors given their relative time working together on the jobsite. And for the owner, a direct contract to an AV integrator on a $2 million AV system could knock somewhere between $100,000 to $300,000 off of what they would pay in a subcontracted or sub-subcontracted arrangement.
Though it was often difficult, many AV integrators graduated up the contract chain years ago, particularly if they were involved in large AV projects. At the same time, many smaller integrators have and continue to get stuck under electrical subcontracts, which needs to change. In any case, owners, construction managers, and architects should carefully consider how the AV contract best fits into each new building or renovation project by understanding the nature and requirements of integrating AV systems. Because of the special nature of pro AV and its impact on the building, the AV team needs to come in early and stay late in the building design and construction process to do our jobs correctly and well. And that may mean contracting differently compared to the norms of the 90s.
Tim Cape is a contributing editor for Pro AV and the principal consultant for Atlanta-based technology consulting firm Technitect LLC. He’s an instructor for the ICIA Audiovisual Design School and an active member of the consultant’s councils for both ICIA and NSCA. Contact him at [email protected].
