Guides
A working brief on electrical contractor expansion
Expansion starts with the work your crew already delivers reliably. This brief covers capacity, cash, licensing and the gates that stop a bad job.
What to take away
- Find the bottleneck on your own dispatch board before you add a crew, a van or a service area.
- US licensing sits with state boards and local authorities. Canadian licensing sits with the province.
- Build the labor rate from your payroll, your burden and your billable hours.
- Holdback and retainage are receivables, not working capital.
- Write the stop rule as a number and a date, and name who can call it.
Find the bottleneck on your own dispatch board
Most expansion plans begin with a map. A week of your dispatch board is the more useful document.
Track where jobs wait. A service call that sits three days for a permit points at the permit queue, not at marketing.
A fit-out that stalls because one journeyperson is the only person who can commission the gear points at training.
Write the bottleneck on one line. 'We lose two service calls a week because the estimator is also the project manager.'
Capacity and price move together, which is why the pricing and profit guide sits beside this section.
US licensing first, Canadian regulators second
There is no national electrical license in the United States. Authority sits with state boards and with the city or county that issues the permit.
California separates contractor licensing at the Contractors State License Board from electrician certification at the Department of Industrial Relations. Texas licenses electricians through the Department of Licensing and Regulation.
In other states, electrical licensing is a city or county function. A state credential then does not cover the next town over.
Reciprocity compacts link some states. They rarely cover local permits or inspection.
Canada runs on provinces: the Electrical Safety Authority, Technical Safety BC, Alberta Municipal Affairs and the Commission de la construction du Quebec.
Red Seal certification travels between provinces. The license to do the work does not. Work through the state and provincial license questions before you bid across a border.
Roles a second crew needs by name
A second crew is not a copy of the first. It needs named people, or the work routes back to the owner.
- Journeyperson licensed where the work happens.
- Apprentice at a ratio the state or province allows.
- Estimator who prices from takeoff and labor units.
- Project manager who owns schedule and change orders.
- Dispatcher who updates customers when a part is backordered.
Name the owner of each role before you commit. An unnamed role becomes the owner's second shift.
Example: a billable-hour rate from your own payroll
Figures below are illustrative. Swap in your payroll, your burden and your hours.
Billable-hour rate from payroll
| Line | Illustrative figure | Where it comes from |
|---|---|---|
| Journeyperson and apprentice wages | $32.00 and $16.00 per hour | your payroll and your ratio |
| Two-person straight labor | $48.00 per hour | the two wages added |
| Payroll burden at 28 percent | $61.44 per hour | taxes, insurance, workers comp, paid leave |
| Productive-hour factor of 0.80 | $76.80 per hour | travel, shop, training, warranty |
| Overhead recovery | $17.14 per hour | $12,000 monthly overhead divided by 700 billable hours |
| Billed rate at 12 percent net margin | $106.75 per hour | cost of $93.94 divided by 0.88 |
Burden commonly runs 25 to 35 percent of wages. Non-productive time commonly runs 15 to 25 percent.
A field employee paid for 2,080 hours a year typically bills 1,500 to 1,700. Dividing cost by 2,080 understates the rate.
For wage benchmarks by state and metro, the Bureau of Labor Statistics publishes Occupational Employment and Wage Statistics for electricians.
Retainage and holdback are not working capital
Payroll runs weekly. Progress payments arrive later, and each one is partly withheld.
Retainage and holdback
Held back
- Ontario
- 10 percent of the contract price
- British Columbia
- 10 percent
- US private commercial work
- commonly 5 to 10 percent
Released
- Ontario
- 60 days after substantial performance is published
- British Columbia
- 55 days after completion
- US private commercial work
- per contract, and some states cap public work at 5 percent
Mechanic's lien deadlines are short and set by state. Cornell's Legal Information Institute outlines mechanic's lien basics.
Run the gap as a number. A $60,000 progress bill with 10 percent holdback leaves $6,000 outstanding for two months.
If that gap exceeds your line of credit, the expansion is not ready. The margins and break-even article shows how the same figures decide whether a job was worth taking.
Safety programs that scale with headcount
Training obligations grow with the crew. OSHA 1910.332 sets who must be trained and what the training covers. The training requirements are the starting point for a second-crew program.
NFPA 70E is the workplace standard US insurers cite. CSA Z462 is the Canadian counterpart.
One note replaces the disclaimers that would otherwise repeat. Requirements vary by jurisdiction, voltage, occupancy and contract. Confirm scope, permits and inspection with the regulator where the work happens, and take tax and legal questions to your accountant.
Gates and a stop rule with numbers
Gates and a stop rule
- Demand gatesigned work or a documented pipeline covers the added monthly fixed cost.
- Licensing gatethe license and permit path exist for the new area or scope.
- Staffing gatenamed people hold the roles and the ratio is legal.
- Cash gateworking capital covers payroll, material and holdback through the cycle.
- Safety gatewritten programs, training records and PPE match the work.
- Launch gatevehicles, tools and dispatch are ready before the first job.
Write the stop rule as a number. 'If signed work does not cover the added $9,000 in monthly fixed cost by the end of month four, we stop and release the van lease.'
Name the person who can call it. Without a name, sunk cost decides. The hiring and training guide covers the ratios and paperwork behind the staffing gate.
