Reduce termination time and improve profitability

Network cabling contractors need to keep an eye on product costs and the bottom line while balancing customer requirements.

It is important to remember that not every bottom line benefit can be measured in the product cost on the invoice. Sometimes, a product's ability to make the contractor more efficient can outweigh the purchase price.

One such example is termination speed. Labour costs are a major piece of a cabling project — an area where customers may look to cut their own costs. So, if contractors bid lower labour costs than their competition, they stand to win more business. Of course, they can't just go in there and slash labour costs below the point of profitability.

The key is driving labour efficiencies that give the breathing room to profitably bid lower labour costs — simply put, contractors need to be able to get it done faster. If contractors can do the job faster than their competitors, they can bid lower, win the job and still turn a decent profit.

Let's look at an example of a basic Cat 6 UTP job and how termination times impact profits. In this sample, we're looking at a theoretical 1000-drop Cat 6 job. To make it easier, we're just looking at the terminations, not pulling cable or testing — just terminating jacks. Obviously, this is a very simplified look at just one aspect of a project, but it does a good job of showing how the amount of time saved per jack can add up to significantly better profits and better chances of winning for you. Let's start with actual termination times.

Outlet A can be terminated in one minute, outlet B in two minutes and outlet C in three minutes. When it's time to calculate a bid, you're not going to base your labour estimate on the exact termination time — that would leave no margin for error and would be totally impractical in the real world.

Table 1.

Let's say you add two minutes to the actual termination time for each outlet to calculate your bid estimate (as you can see in the table below). While you're estimating a lower labour cost on the bid for outlet A than for B or C, you are in fact giving yourself more room between your actual termination time and your bid estimate. For outlet A, your bid estimate is 3x higher than your actual time. Outlet B cuts it to 2x and outlet C leaves just a 60% cushion. That extra room can have a real impact on your profitability.

Table 2.

The potential benefits to your bottom line become clearer when your start putting it to hours and dollars (as in the table below, which continues the previous scenario). For outlet A, you calculated your bid on a 50-hour labour estimate, based on 1000 outlets at three minutes each. At, let's say, $90 an hour, that's $4500. That's a good deal lower than both B and C — so you're putting yourself in a strong position to win. But if you look at your actual termination time, the job may only take a little under 17 hours. It would take you two and three times as long with outlet B and C. Even though you bid your labour significantly lower with outlet A, you are actually way more profitable, making around $270 an hour vs $180 and $150 for outlets B and C. By the time it is all said and done, you made as much money (and maybe more) with outlet A, but bid lower and won the job.

Table 3.

While the previous example might get you thinking about the benefit of faster terminations, what if you could terminate that Cat 6 jack in just 30 seconds? Under the exact same scenario as before, the ability to terminate outlet A in just 30 seconds doubles your profitability. You're making $540 an hour and absolutely killing your competitors. You're doing the job in a little over 8 hours compared to 50 hours for the poor guy who chose outlet C.

Table 4.

At this point, you may be thinking that estimating 30 seconds per jack is a bit on the aggressive side. Aggressive? Absolutely. Impossible? Not at all. In fact, Siemon offers two separate cat 6 outlets and termination methods that come in under that 30-second benchmark. Using Siemon's Z-MAX 6, cabling contractors have clocked terminations times as low as 23.5 seconds (www.siemon.com/zmaxchallenge/winners). Based on the exclusive Z-TOOL, the Z-MAX line innovates the entire termination process, starting with the lacing process, which is typically the most time-consuming part of a termination.

Image source: Siemon