As an experienced operations manager in the solar industry, odds are you’re familiar with the term soft costs – all of the costs associated with the project on top of the hardware components of the PV, EV or Battery system. Even if or not you’re familiar with the term, we’d venture a guess that you’re more than familiar with how these insidious costs affect your business and there are times that the thought keeps you up at night. Based on our conversations with hundreds of solar operations leaders and business owners, you’re not alone.
Soft Costs Represent 67% of the Total Cost of a PV Installation Project
According to the Solar Market Insight Report by the Solar Energy Industries Associate (SEIA) and Wood Mackenzie Power & Renewables, soft costs comprised 67% of the cost of a residential PV system. The same report also refers to soft costs as the “biggest cost-reduction opportunity in residential and small commercial solar.”
Don’t believe your operation is suffering from death by “1,000 soft costs”? Below is a common list of anecdotal complaints that we hear from solar operators on a daily basis. After conducting numerous case studies and analyzing these common factors, we now have concrete knowledge of how these costs impose a significant downward pressure on margins, sapping away up to tens of thousands of dollars in lost profits for the average solar company. Worse yet, this decline happens gradually, incrementally and insidiously – making it hard to notice for busy solar business owners and senior managers.
Here are a few examples:
- Forcing your field team to use multiple apps and tools to do their work and report on their process.
- Lack of a mandatory standardized process for your field team to follow through each phase of a project.
- Not providing enough context or access to critical documents to each stakeholder throughout the project.
- Providing too much context so that the person has to wade through mounds of irrelevant data and documents to get what they need.
- Not effectively including external stakeholders like designers, engineers, fulfillment partners, and customers into a centralized project execution platform.
- Project managers being required to manually update the status of projects and transition them from one phase to the next based on constantly asking different people.
- No centralized platform to keep the field and office teams connected to log tasks, collaborate and review work orders.
- Having to log into multiple software, spreadsheets and emails to gather up a report about a project for handoffs.
The right tool to eliminate soft-costs | mobile-work Process Management & Automation (mPMA)
So, what can you do to avoid these pitfalls and keep them from eating into your solar business margins? The answer lies in having in place the right digital mobile tools. As it turns out the legacy IT tools available to solar companies are woefully inadequate for the job. Truth is these tools were designed and built for another era: when everyone worked from the same office and frankly when the pace of work was much slower. Today’s work environment is very different and work software has not caught up!
Workers and even managers are mobile, remote and often working in a time-shifted manner executing an ever-growing volume of projects. The pandemic has only amplified the new challenges for workers and managers and the solar energy sell has shifted.
The nature of getting projects done is also different. More and more companies are now relying on partners to sell, design, permit, install or service their projects. Existing tools like CRMs or office-based project or service management solutions are too rigidly designed and cater to the needs of single organizations executing routine workflow – not a web of partners dealing with a 101 project types.
The writing is on the wall: a new breed of software technology is needed. Enter mPMA, short for mobile work process management and automation, solutions such as (shameless plug) our own Scoop® platform. This is a radically new approach that has proven extremely effective (and as a result is seeing rapid adoption across the industry) in battling soft costs and in this post and subsequent ones in the series we will delve into how this all works.
Identify these 3 common causes for inflammatory soft costs, and resolve the problem before your operations team hits a crisis point.
1. It takes too long to kickoff a project with the right information
Depending on when the Project Management team takes over the project from Sales or Business Development – there will already be critical information. Getting all the mission-critical information you need from clients at the beginning of the project is a vital step to ensuring operations run smoothly, and to prevent insidious inefficiencies from creeping into your processes. Although capturing and storing job site information during kick-off was a breeze when you were only working on 3-5 projects a month, the overhead, complexity and therefore soft costs associated with the onboarding of each new client grow exponentially as you ramp up your volume of projects.
The Scoop project tracker eliminates the need for manual handoffs, data and document transmissions between stages of the project. By automating these processes, Scoop is able to significantly reduce delays and minimize the need for data re-entry by having the appropriate pictures, documents and other data appear automatically for each role in the project – creating effortless continuity throughout the project from sales to service.
2. Site surveyors arriving to projects without enough context
We see this happen time and time again in the industry. For example, your field techs show up to a job thinking they only need to perform a routine task, only to realize the services they actually need to provide can’t be done because they didn’t bring the proper parts or equipment required to fulfill the task. What should have been a one-time site visit now becomes a costly multi-visit operation, instantly doubling (at least) the soft costs associated with travel time and hours worked. The examples here range from repeat site visits through to your tech team having to spend 10-20 extra minutes on each site rummaging through emails and unfriendly office-based tools (spreadsheets, CRMs and office based PM tools) to find the critical information related to their phase of the project at this specific client site.
Add rich contextual details to task assignments. Every past activity and detail for a particular installation starting from sales to installation, commissioning, preventative maintenance and O&M can easily be accessed with a few taps on the Scoop mobile app.
3. The manual process of sourcing, uploading, and distributing site images to send to your finance partner or manufacturer.
As your team progresses through a project there are a number of junctures where you may be required to submit a report to your finance partner, manufacturer or end client. Examples of these reports include Site Mechanical or Electrical Evaluations for finance partners loan approval process, Job Closeout / QAQC reports for manufacturer dealers and Service or Preventative Maintenance reports for solar customers and site owners. In all of these cases your team is faced with the time-consuming task of locating a multitude of details, measurements, pictures and notes and formatting these into a report. This is a hugely cumbersome process especially since in many cases the specific data items may not even be available (think missing pictures of racking after modules have been installed!)
With Scoop’s unique app-based and global data field architecture all aspects of a given project and client site including pictures, documents, measurements and other specs are carried seamlessly throughout the project. As a result when a project reaches a stage that requires reporting, the underlying data has already been captured in the appropriate global data and via the previous set of steps mandated in preceding apps. With Scoop’s automated PDF Generation Wizard, creating a custom ready-to-submit report then is a matter of a single click or alternatively fully automated via workflow automated actions.
Of course these are just a few of the many factors contributing to soft costs and erosion of solar companies’ profit margins. We will continue our series in a future post and identify the next 3 areas to monitor and proactively tackle to prevent creeping soft costs.