By Ivan Collins, President and CEO, Innoface Systems, Inc.
For an AV subcontractor, a strong prime/subcontractor relationship can create years of profitable opportunities. A bad one can turn even a seemingly straightforward project into a nightmare.
If you’ve been in the AV industry for a reasonable amount of time and have successfully integrated large-scale projects, chances are you’ve been approached by both large and small prime contractors looking to hire your company as a subcontractor.
At first glance, this can seem like a great opportunity—and in many cases, it is.
However, choosing the wrong partner for an audio-visual project can be costly. You can lose significant amounts of money, valuable time, and, most importantly, relationships and reputation.
A strong prime/subcontractor relationship can create years of profitable opportunities. A bad one can turn even a seemingly straightforward project into a nightmare.
Here are some of the most important do’s and don’ts AV integrators should consider before agreeing to work under a prime contractor.
1. Vet the Prime Contractor
As a newer or less experienced subcontractor, it can be easy to view your company as subordinate in the relationship simply because another company holds the prime contract.
That couldn’t be further from the truth.
The best working relationships occur when both parties understand the value the other brings to the project. The prime contractor needs a qualified AV integrator just as much as the integrator needs a well-managed project. Ultimately, everyone has the same objective: delivering a successful system to the end user.
Before signing anything, do your homework.
Review the contract early. Ask to see the subcontract agreement as early in the process as possible. Some agreements are heavily weighted in favor of the prime and can transfer substantial financial and schedule risk to the subcontractor. Pay particular attention to:
- payment terms
- indemnification
- insurance requirements
- liquidated damages
- retainage
- change-order procedures
- termination clauses
- schedule obligations
If the terms are unreasonable, negotiate them. If they cannot be resolved, be prepared to respectfully decline the project. Depending on the circumstances, you may also propose your own subcontract terms or addendum to ensure both parties are adequately protected.
Ask for references. Request two or three references from AV integrators or other specialty subcontractors who have previously worked with the prime. If a company regularly manages subcontractors but cannot provide anyone willing to speak positively about the experience, consider that a warning sign.
Get to know the people managing the project. When possible, have lunch, schedule a video call, or meet with the project manager, executive, or owner. Contracts matter, but projects are ultimately managed by people. Communication, professionalism, organization, and integrity can tell you a great deal about what the working relationship will look like once the pressure of the project begins.
2. Understand the Schedule Before You Commit
Get a copy of the project schedule and, when available, the Gantt chart before agreeing to perform the work.
One of the fastest ways for a subcontractor to get into trouble is to sign a contract without fully understanding the schedule obligations attached to it.
You may discover that drawings are due in three days, equipment is expected onsite next week, or installation dates were established months before your company was even brought into the project.
Once you sign, those dates can become your responsibility.
A good prime contractor should be transparent about the schedule and clearly communicate what is expected of your organization. Unrealistic deadlines should not suddenly appear after the contract is executed.
Failure to understand the schedule can lead to additional labor costs, project delays, disputes, potential liquidated damages, and ultimately damage to your company’s reputation.
Know when drawings are required, when submittals are due, when equipment must arrive, when programming and commissioning are expected, and—most importantly—when boots need to be on the ground.
If you cannot meet the proposed schedule, communicate that before signing the contract. Request schedule adjustments in writing or decline the project.
3. Review the Design and Make Sure It Will Actually Work
Never assume that because a system appears on a drawing, it will function exactly as expected in the field.
AV systems are sometimes designed by consultants, architects, engineers, manufacturers, or other parties who may not have the same field experience as the integrator responsible for making everything work.
A design may look perfectly reasonable on paper but present real-world problems involving signal flow, cable distances, network requirements, mounting conditions, acoustics, control, power, equipment compatibility, or the actual way the end user intends to operate the room.
Review the entire solution carefully before installation.
- Look at the signal flow.
- Verify equipment compatibility.
- Confirm cable distances and pathways.
- Review network and power requirements.
- Make sure mounting conditions are realistic.
- Understand how the end user expects the system to operate.
The integrator is often the last technical party touching the system before the customer uses it—and that means design problems can easily become perceived as integration problems.
If you identify a concern, document it and bring it to the prime contractor early so the appropriate architect, consultant, engineer, manufacturer, or system owner can address it before it becomes an expensive field issue.
4. Control Change Orders and Scope Creep
Few things can destroy the profitability of an AV project faster than uncontrolled scope creep.
On active construction projects, requests can sound deceptively simple:
- “While you’re here, can you move this display?”
- “Can you add another microphone?”
- “The customer wants this rack relocated.”
- “Can your technician take care of this while he’s onsite?”
Individually, these requests may seem minor. Collectively, they can add significant labor, equipment, programming, engineering, travel, and project-management costs.
The key is establishing the original scope clearly and documenting anything that changes it.
Before work begins, make sure your team understands exactly what is included—and equally important, what is not included.
When a request falls outside the contracted scope, document it immediately and follow the project's established RFI, field directive, or change-order process. Identify the additional labor, equipment, schedule impact, and cost before proceeding whenever possible.
Be especially careful with verbal directives in the field. A superintendent, project manager, customer representative, or other trade may ask your technician to perform additional work, but that does not necessarily mean the person requesting it has authority to approve the additional cost.
Your field technicians should know who is authorized to approve changes and when they need to stop and contact their project manager.
Also document conditions outside your control that create additional work. If another trade blocks your pathway, electrical power isn't ready, the network isn't available, the room isn't accessible, or your crew has to return because prerequisite work wasn't completed, document the condition with photographs, daily reports, emails, and other appropriate project records.
The goal is not to nickel-and-dime your prime contractor. Good partners occasionally accommodate one another. The goal is to prevent a pattern of undocumented additional work that gradually eliminates your project margin.
A $100,000 contract can quickly become a $120,000 project that you're still only getting paid $100,000 to complete.
5. Secure a Deposit When Possible
Whenever possible, secure a deposit or mobilization payment before beginning work or purchasing significant equipment.
Some prime contractors will agree to deposits and others will not. Either way, understand the financial requirements of the project before accepting it.
If your organization cannot comfortably finance equipment, payroll, travel, rentals, subcontract labor, and other project expenses while waiting for the prime contractor’s payment cycle, reconsider whether the project is financially appropriate for your company.
Prime contractors expect their subcontractors to have the resources necessary to fulfill their contractual obligations.
A deposit can also reduce your financial exposure if a project is delayed, canceled, disputed, or becomes involved in litigation.
Just as important, understand when you will actually be paid.
Review whether the contract contains pay-if-paid or pay-when-paid provisions, milestone billing requirements, retainage, extended payment terms, or other conditions that could significantly affect your cash flow.
A profitable project on paper can become a financial burden if you have to carry the project costs for several months.
6. Know the Closeout Requirements Before the Project Starts
Some AV projects have surprisingly detailed closeout requirements, and they are often overlooked until the end of the project.
You may be required to provide:
- as-built drawings
- equipment schedules
- serial numbers
- warranty information
- programming files
- configuration backups
- training documentation
- O&M manuals
- test results
- photographs
- specific electronic file formats
- physical binders
- detailed end-user training—and occasionally what feels like a few backflips and cartwheels.
Know exactly what is required from the beginning.
A good rule of thumb: Start building your closeout package when you start the project.
Do not wait until installation is complete to begin collecting serial numbers, documenting changes, organizing configuration files, or assembling manuals.
Maintaining closeout documentation throughout the project makes the final submission substantially easier and reduces the likelihood that your final payment or retainage will be delayed because of missing documents.
Whenever possible, submit your closeout package early.
Choose Your Prime Contractor Wisely as an AV Subcontractor
A good prime/subcontractor relationship can be extremely valuable and can lead to years of successful projects for both organizations.
Not every difficult project is the result of a bad prime contractor. Construction schedules change. Equipment gets delayed. Customers change requirements. Designs evolve. Unexpected conditions appear in the field.
The key is working with organizations that communicate openly, operate fairly, understand the value their subcontractors bring to the project, and are committed to solving problems rather than assigning blame.
Before signing your next subcontract, ask yourself:
- Do I understand the contract?
- Do I understand the schedule?
- Do I trust the design?
- Is the scope clearly defined?
- Can my company financially support the project?
- Do I understand exactly what will be required to close it out?
If the answer to those questions is yes, you may have the foundation for a great partnership.
If not, sometimes the most profitable project is the one you choose not to take.
Looking for an Experienced AV Integration Partner?
Innoface Systems, Inc. has more than 25 years of experience delivering professional audio-visual solutions for commercial, government, education, corporate, hospitality, and institutional environments.
We understand that working as a subcontractor requires more than knowing how to install AV equipment. It requires understanding construction schedules, documentation, coordination with other trades, project communication, safety requirements, commissioning, training, and closeout.
We work with general contractors, electrical contractors, technology firms, government contractors, manufacturers, consultants, and other prime contractors that need an experienced AV integration partner capable of representing their organization professionally in the field.
Whether you need support for a single AV project or are looking to establish a long-term integration partnership, we welcome the opportunity to discuss how Innoface Systems, Inc. can support your team.
Prime contractors and organizations seeking an experienced AV subcontracting partner are invited to connect with us on LinkedIn or contact Innoface Systems, Inc. at 1-877-721-4040 or info@innofacesystems.com.
Ivan Collins is President and CEO of Innoface Systems, Inc.
