The future of AFCIs and their impact on small businesses

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kenman215

Senior Member
Location
albany, ny
Let me start off by saying that I don't want this thread to be about the merit of AFCIs. The question that I'm posing is that it would seem that the ultimate future of AFCIs will be for them eventually to become smart breakers installed in a separate, dual
voltage panel, with network access, so as to enable updates on arc detail to be uploaded to the panel. I don't know what the numbers would be on this, but I could easily see the cost of the panel and breakers to be upwards of three grand. If you look at the cost of materials of a typical residential home, three to four thousand more dollars would double how much the EC would have to shell out for the whole job.

There are a lot of ECs out there who are just a guy and a truck, I used to be one. Residential builders have a nasty habit of not paying on time, and I'm wondering how that added cost the small time guys would be forced to carry would affect their sustainability. Back in the old days, it wasn't uncommon for my builders to be three or four houses, aka a month, behind. That would typicall amount to about 9-12K I'd have to carry. That was a stretch at times and sometimes I had to get creative with funding the materials for the next job, but there is no way that I could have swung twice that. Thought?
 

cadpoint

Senior Member
Location
Durham, NC
Having read enough here, I can only say that cost of product and servicing should be covered and
that in your case you should not be hesitant to charge for it either.

What it really sounds like is that you need to change your payout and billing practices.
 
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roger

Moderator
Staff member
Location
Fl
Occupation
Retired Electrician
The EC should not be shelling out, the customer will be. With markup, hopefully.:)

Just another added cost that needs to be dealt with upfront.
Exactly. I may not agree with something that is mandated but if all bidders are playing on a the same field it doesn't matter. I like material sales and the mark-up that accompanies it.

Roger
 

kenman215

Senior Member
Location
albany, ny
Having read enough here, I can only say that cost of product and servicing should be covered and
that in your case you should not be hesitant to charge for it either.

What it really sounds like is that you need to change your payout and billing practices.

I'm not speaking about me personally. Im talking about self-employed, probably residential, guys who are trying to build their business. For a lot of them, 50% or more of their business will come from a single builder. When there's only one hand feeding you, you tend to take a lot more crap, such as waiting to get paid for 30, 60, or 90 days after a project is done. Your options are limited in that situation, carry the material cost longer and get paid late, or don't start any new projects until being paid for the last one. But you also have to work often enough to have money to live on. My original post did not talk about absorbing the increased material cost, it was about carrying that cost. Small to mid residential builders have a habit of financing part of their jobs through their sub's credit line. These are the guys that I think get hurt in the end...
 

JFletcher

Senior Member
Location
Williamsburg, VA
Right now, for VA, we need AFCI for bedroom receptacles only. The home we are currently doing has a 22kW generator with ATS going in, and about 120 can lights all with LED trims. A few (or lot more) more AFCI wouldnt raise the materials cost on the job even 10%. But its not a typical home...

Breakers are one of the last things to go in; there should be sufficient payment on the project by that point to cover their cost. A 'smart panel' loaded with AFCI on everything... bleck. Programmable/adjustable AFCI... I cant imagine how expensive that would be.
 

kenman215

Senior Member
Location
albany, ny
Right now, for VA, we need AFCI for bedroom receptacles only. The home we are currently doing has a 22kW generator with ATS going in, and about 120 can lights all with LED trims. A few (or lot more) more AFCI wouldnt raise the materials cost on the job even 10%. But its not a typical home...

Breakers are one of the last things to go in; there should be sufficient payment on the project by that point to cover their cost. A 'smart panel' loaded with AFCI on everything... bleck. Programmable/adjustable AFCI... I cant imagine how expensive that would be.

Everything that everyone, including yourself has said about payment structures and the way they should be, I absolutely agree with. Maybe we just have more unscrupulous builders in NY then you guys do elsewhere, but I personally know of at least half a dozen smaller builders that have gone out of business owing their ECs at least 30 grand or more. I know twice as many electricians that owned their own small business and closed up shop because waiting for payment from GCs ended up financing all of the profit out of their jobs. The company I work for now does over 20 million annually, and according to a conversation I had with our comptroller, we currently have 750 grand in accounts receivable that are 60 days or more past due...

The fact that ECs have to supply materials is one of the things that sets us apart from a lot of other subs, and is also what makes us get screwed the hardest when GCs don't pay on time, or don't pay at all. The situation would be the same for small time framing, siding, and roofing outfits if they had to front the material costs. JP, as you mentioned, in the house you're working on, such a panel wouldn't be a large percentage of the total cost of job, but knock that home down to a 2500 sq ft, 3 bedroom house with a dozen incandescent recessed and a couple of paddle fans, and where does that percentage go?
 

romex jockey

Senior Member
Location
Vermont
Occupation
electrician
A typical resi panel full of retails an average of $1000

So if you're suggesting that be contractually last on the list , you'll find your GC's handyman sparkin' up temporarily for you

If you're suggesting afci's incorporate internet accessibility to 'smart meter' contractual slow pokes into darkness , i'd say they'd finally acquire some real world viability.....~RJ~
 

goldstar

Senior Member
Location
New Jersey
Occupation
Electrical Contractor
My original post did not talk about absorbing the increased material cost, it was about carrying that cost. Small to mid residential builders have a habit of financing part of their jobs through their sub's credit line. These are the guys that I think get hurt in the end...
I think you struck a nerve here:thumbsup:
 

kenman215

Senior Member
Location
albany, ny
A typical resi panel full of retails an average of $1000

So if you're suggesting that be contractually last on the list , you'll find your GC's handyman sparkin' up temporarily for you

If you're suggesting afci's incorporate internet accessibility to 'smart meter' contractual slow pokes into darkness , i'd say they'd finally acquire some real world viability.....~RJ~
I think that connect ability of AFCIs will be where it ends up. I don't see them being a truly viable product until then. But let's face it, that topic has been beat to death on this forum. So it's a $1000 dollar panel now, that by 2008 code cost lest then half that. And what will it cost in the future, if that's where these things go?

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kenman215

Senior Member
Location
albany, ny
A typical resi panel full of retails an average of $1000

So if you're suggesting that be contractually last on the list , you'll find your GC's handyman sparkin' up temporarily for you

If you're suggesting afci's incorporate internet accessibility to 'smart meter' contractual slow pokes into darkness , i'd say they'd finally acquire some real world viability.....~RJ~
I think I might have misinterpreted your post. Were you suggesting that the startup ECs gain "some real world viability?"

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roger

Moderator
Staff member
Location
Fl
Occupation
Retired Electrician
we currently have 750 grand in accounts receivable that are 60 days or more past due...
Over 30 is SOP, over 60 is expected, and over 90 is not uncommon, it's just the way things are now. Unfortunately it means that as a contractor you have to be able to wait things out and pay your suppliers before you are paid or make sure they know up front that they get paid when you get paid (the second part usually doesn't fly).

In todays world many GC's require conditional lien waivers from your vendors and subs before they will release your progress checks and unconditional waivers before the final payment and or retention is released.

Roger
 

kenman215

Senior Member
Location
albany, ny
Over 30 is SOP, over 60 is expected, and over 90 is not uncommon, it's just the way things are now. Unfortunately it means that as a contractor you have to be able to wait things out and pay your suppliers before you are paid or make sure they know up front that they get paid when you get paid (the second part usually doesn't fly).

In todays world many GC's require conditional lien waivers from your vendors and subs before they will release your progress checks and unconditional waivers before the final payment and or retention is released.

Roger
It's a system designed against the little guy.

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goldstar

Senior Member
Location
New Jersey
Occupation
Electrical Contractor
It's a system designed against the little guy.
No question about it. If you take on big work for big bucks you have to be well capitalized in advance. There's also a certain amount of trust involved and hope that that big GC won't cheat you out of those $$ you've earned. While signed contracts help somewhat they don't guarantee that you'll get all your $$ if the GC goes belly up. I'm sure the vast majority of us can take a hit on the chin for a few hundred $$ but when it starts to get up around $10K that's when it starts to really hurt.
 

kenman215

Senior Member
Location
albany, ny
And if you are a little dog you need to learn how to play with the big dogs or don't play with them at all. This is true for all types of business.
You're absolutely right. For a lot of guys it's a trial by fire scenario. Most of them don't realize or haven't had the mentoring or financial acumen to realize that they should have at least six months of their personal expenses in the bank before they even think of opening up a business for themselves.

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JFletcher

Senior Member
Location
Williamsburg, VA
kenman215;1700600JP said:
, as you mentioned, in the house you're working on, such a panel wouldn't be a large percentage of the total cost of job, but knock that home down to a 2500 sq ft, 3 bedroom house with a dozen incandescent recessed and a couple of paddle fans, and where does that percentage go?

Too high.

"The fact that ECs have to supply materials is one of the things that sets us apart from a lot of other subs"

You're going to have to help explain this to me. an EC is no more a bank than any other trade. If it's not a T&M job, a portion of payment is expected up front. My thinking is "if you cant afford, at the very least, materials up front, why should I believe you can afford any of the work?".

Is this mostly industry-wide where ECs are installing materials on their own dime? If so, this has to stop. You wouldnt expect a fancy countertop co to install a $10,000 tiger stripe unobtanium-rock countertop in your home w/o at least first paying for the custom countertop, would you?

I remember a comm job I did about 7 years ago, talking to the head electrician there... he was lamenting that they were almost $200k in arrears on that project just on materials. It didnt make sense then and it doesnt now.
 
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