Despite the fact that cost-is-no-object HomeAV projects occupy only the smallest top percentile of all the work done in the channel, they garner the most attention: features in magazines (both AV and architectural), awards like CEDIA’s annual systems competition, and of course the press releases of the manufacturers whose gear took center stage in the project of some celebrity or other.

In that light, large projects are held up as an aspirational goal for residential AV pros. It’s implied that AV dealers, if they work hard and brush their teeth can “graduate” into the realm of routinely doing high-six and low (or even high) seven-figure projects.

Of course, the truth is a little more complicated than that.

For those that don’t already know, I’ll tell you right now that there is a huge difference between executing five figure projects and ones that are much, much larger. Furthermore, I’ve seen firms eagerly bite off on large projects without having the necessary capabilities to deliver it, and it’s sunk them.

Any good salesman can land a half-million or million-dollar project. That’s the easy part. But it takes a symphonic effort from the entire AV team, designers, programmers, installers and office admin to actually pull it off, and do it profitably. In the next few columns I’ll endeavor to suggest how to make that happen.

The first requirement is actually more of a soft skill: discretion.

Despite the temptation to brag to friends and colleagues, being responsible for a million dollar project requires you to be modest and keep that information to yourself. More often than not, high net-worth individuals prefer to keep a low profile.

On one large job I did a few years ago, the homeowner had to hire security for the job-site on weekends when she learned that neighbors were walking through her half-built home, giving themselves tours of the monumental architecture. And when your clients include not just industrial magnates but celebrities and media personalities, you’ll be required to protect your client’s privacy to a greater degree than you already do.

Most of all, an AV company’s business management has to be sound. Million dollar jobs can cripple an installation firm if not managed well. A well-managed large-scale project has a firm keeping on top of all aspects of the project.

Financials, such as collecting deposit checks at various intervals along the design, install and finish stages need to be carefully controlled. Additionally, change orders along the way have to have a rigid process.

You absolutely need to have a contract signed at the beginning stating who has authorization to request changes, with proper paperwork signed off every time a change is requested. These can add up quick and can really put a dent in profits if this is not laid out in the beginning at the quote stage.

You’ve also got to be equipped to deal with complications that are beyond your control.  As everyone knows, delays in other aspects of the house construction can delay the AV side of the job, and therefore delay your cash flow. Although delays may have nothing to do with you, it is something that you have to deal with all the time, and on a project where you’re waiting for a hundred-thousand dollar progress payment, it becomes even more significant.

Let’s go a little farther into business management side. Wanting to do big jobs is one thing, but that’s not enough. For one thing, do you have the experience with large jobs to price the quote correctly? What that really means is: Can you do the job profitably?

Financially, can you really afford to take on a job that will tie up your resources for months or years? On that note, what is the opportunity cost to your business (lost revenue and opportunity) while you’re married to this job?

Do you have the discipline to keep the project deposits separate from your operating account? In other words, you’re not spending the profit before you earn it.

Still more operational and financial questions need to be answered: Do you have the credit lines with your manufacturers to support the amount of purchases necessary to deliver on this project?

No matter how big the job and how carefully you’ve structured your payment schedule, you need to have a backup plan and the ability to handle a little bleeding. What happens if the client is slow to pay? What happens if the client cancels mid-job? Even with an ironclad contract, can you spend years litigating while being owed half a million dollars?

This can never be said enough: Get every change order signed. Never, ever have a verbal agreement for changes. If you do, you will be sorry. Most important of all is what you must do before making a deal at all. Investigate the client before signing on. If his reputation precedes him, run far away. The best thing you can do for your competitor is step aside and allow them to jump on an “opportunity” that puts them out of business.

Funny story: I once inherited a project for a local real-estate magnate with a bad reputation who, had it been up to me, I never would have agreed to work with. However, we were still only in the pre-wire stage when fortune smiled upon me: The client shopped around and found a hungry young AV company who poached the project by underbidding us. I took this as divine intervention, and after consulting with our company president, walked away. In total we only lost about five grand on the terminated project.

The punch-line came eighteen months later. One of the owners at the rival company approached us and asked if we would either testify on their behalf in a civil suit: The client had stiffed them, owing them over a quarter million dollars. We politely declined, although behind closed doors we laughed and laughed.

With that object lesson in mind, craft a deposit schedule so you’re always working with the client’s money, never your own.

Also, jobs like this can take two years or more to finish. In that time, specific models of product will come and go. Build in fine print to the contract that allows for model and technology changes in the case of discontinued gear, which actually protects both you and the client.

On the operations side, the system design must be sound, much more so than in smaller jobs, as the price to fix a bad design can be more than the profit built into the original quote.

Regardless of the size of the system, it is the AV pro’s job to make sure the system is working 100 percent. Ultimately this boils down to the principle of simplicity. The best systems, no matter how large, are ultimately simple. By contrast, a poorly designed system, regardless of the price is so unnecessarily complicated and filled with so much stuff that it’s doomed from the moment the contract is signed.

A perfect example of this is an instance where a client of my old firm was building a home on Vancouver Island. Mindful of the travel expenses, we advised him to solicit a design quote from a local integrator, which he then passed to us for review. (By the way, to be fair, the client did pay the local AV pro for their quote — and to be honest, for this individual a few thousand dollars was pocket change.)

While the un-named integrator was clearly enthusiastic, their design was, to be kind, haphazard. After much discussion, the client decided that they would be much more comfortable paying us the travel costs to fly back and forth between Edmonton and Victoria to carry out the project.

Do you have any advice or good stories about really, big jobs? Let us know in the comments!