- Posted by Dennis Dixon on March 9, 2010
In today's economic world, the ability of contracting professionals to accurately produce a Cost Estimate is a skill that is more essential now than in previous times. When things were booming in the contracting business, the consumer contract price was often a back burner consideration, behind financing, the interest rate and the market value of the work after completion. Consumer demand for services often exceeded supply in the form of qualified and professional contractors, suppliers and tradesmen. "Time" seemed to be the driving force in our industry.
Market prices were not always directly related to the level of quality.
The demand for contracting and remodeling work has declined since 2008 and is not expected to experience a dramatic growth spurt for quite sometime.
Here in the first quarter of 2010, consumers are demanding facts, figures, services ...and accurate pricing for their projects. It isn't just the consumer, as the financial rules have been and are still being re-written and modified to produce clarity and accuracy - whether it be new construction or remodeling. All eyes are on the money!
One key to success in the current situation of the construction industry is accurate and factual Cost Estimating. Professionals, such as architects, designers, contractors and remodelers need to know their facts, figures and production costs. Ballpark guesses about a projects' costs won't allow you to get past the cattle call audition.
So...How can I tune-up and polish my estimating skills for the 2010 marketplace? Incorporate the five steps and suggestions as listed below:
1. Plans and Specs need to be fully defined before offering a price. You cannot accurately estimate and solicit bids from subs until things are fully defined. (Maybe this should be steps 1 through 100 because lots of contractors and subs ignore this rule).
2. Work with the clients to complete the plans. Incomplete plans often lead to problems of indecisions, expectations not being met, and a requirement for lots of client-builder-architect interaction while that time should be spent building the project. Does a skier ever secure their bindings after proceeding down the mountain? You working hand-in-hand with the client produces synergy and comradery.
3. Minimize, if not totally eliminate Allowances. Filling in a spot with an allowance is postponing a decision. It generates a void/a pothole/a problem that must be resolved later. When is later? If a client cannot finalize selections, models, wants or needs associated with a specific line item of the production, such as appliance models/details, the ramifications of indecision multiply quickly. Lack of appliance models and selections impact: Cabinetry, Elec/Venting/N-Gas Plumbing, Countertops and even perimeter items such as floor coverings and wall colors. Allowances are a catalyst for discontent, false expectations and an unhappy client. Lastly, projecting an accurate allowance cost for an estimate Line Item Cost Category is difficult. Any additional costs, charges, fees, taxes, etc. are going to leave clients with an unprofessional opinion of you.
4. Estimate projects that you can handle. Taking on and estimating projects that are out of your experience realm are dangerous. You're in shark infested waters. And the sharks are the client, their referrals and their bankers. They'll be poised for attack at any sign of poor professionalism or experience. This situation occurs in difficult economic times because everyone is seeking work. If you still proceed into a situation such as this, be prepared to spend more money on supervision, book-keeping and paperwork.
5. Don't spin gold out of straw (as if you can anyway!). Novices can always find ways to save or cutout non-existent funds to save money and land the job. "I'll do the tile myself for $5 per SqFt and I'll use up all the old tile scraps that I have from my other previous projects". Some jobs aren't worth landing. Just because a potential client has an approved budget of $35,000 for a total Kitchen Demo and Remodel, does not mean that you should take this job. The clients arguing with you about the budget being able to provide funds for granite countertops vs. laminate tops is an argument that you cannot win (unless you donate the cost out of your pocket and or profit). Work with realistic clients, budgets and financial expectations. And, never, ever cut field supervision on the job to save money. It will lead to more problems.
Dennis A. Dixon, owner of Dixon Ventures, in Flagstaff, Arizona, is an author, speaker and general contractor, mainly focusing on combining craftsmanship with profitability in custom home building. Dennis has more than 25 years in construction, plus he is the author of Finding Hidden Profits: A Guide for Custom Builders and a columnist for Custom Home magazine. dixven@aol.com
- Posted by Tim Faller on March 3, 2010
Not enough has been said about leadership on the job site. Project manager, lead carpenter, and site superintendent all imply a role of leadership. But when it comes down to it more emphasis is put on tech skills and getting the job done than leadership. However, good leadership will result in better productivity with less effort.
There are essentially two extremes of leadership and one middle of the road type. It won’t be hard to see that I favor the middle of the road, but we have to see the extremes to appreciate the right course of action.
Authoritarian: The first is what we call authoritarian. This is the person that not only barks orders, but expects everyone to jump. They typically do not listen to input and will think and sometime say, “It’s my way or the highway.” Making it more complicated is the fact that this type of leadership is often conveyed not in words, because most people are smart enough not to say those things, but in attitude and actions. This type of leader will get instantiations results, a large amount of work gets done while they are present, and are often able to achieve goals by hard work. However, they often lose good staff members, stifle creativity and limit growth to what they can handle alone. All of which are not conducive to a company growing.
Laissez-faire: The second type is the polar extreme: laissez-faire. This essentially means “hands off”. The style is represented by a leader that simply allows the employees to work independently, gives little or no guidance and is often couched in terms like “I trust them completely”. This style can be good for highly self motivated people and works well in highly creative areas. It also offers a great deal of freedom which many enjoy. Unfortunately there is a downside. The leader may not really trust them and becomes extremely stressed about their work, while the employee feels that all is well. Often goals, like a budget, are not met because of a lack of involvement by the leader. And some are insecure, not knowing if they are performing to the leader’s standards or not.
At this point an old saying comes to mind that I believe is only half true. “You catch more flies with honey than with vinegar.” Most flies will enjoy, in fact, take advantage of the honey unless there is some teeth in it. This leads me to the third type of leader, authoritative or a coach.
Authoritative or coach: This is a leader that has a good nature, is comfortable with people, builds report easily, but also holds people accountable for commitments. This person gives clear directions; confirms that people know what is expected; achieves agreement and then holds people accountable for their performance. The benefits of this style are clear. Goals are reached because of the attention to results. Morale stays high because the leader knows their people and the work place is fun. Self motivated people get the chance to excel while others get the direction and guidance they need. But most importantly people are productive to the leader’s standard, even when the leader is not around, allowing growth to occur independent of the energy of the leader.
Tim Faller of Westerly, Rhode Island, founded Field Training Services in 1999, a firm committed to training production staff in good job-site management and helping companies develop production systems that produce profit. For 12 years, Tim worked at Hopkins & Porter Construction in Potomac, Maryland, where he started as lead carpenter, became production manager and then helped begin the New Homes division. Based on his extensive experience, Tim has conducted many successful lead carpenter training programs across the country. He is the author of The Lead Carpenter Handbook: The Complete Hands-on Guide to Successful Job-Site Management and the Lead Carpenter Audiobook. www.leadcarpenter.com
- Posted by Leslie Shiner, MBA on February 24, 2010
What’s the first thing you do when you get to work? Read email? How many of you check your email even before you make your first cup of coffee? Come on, admit it – how often during the day do you check your Blackberry, iPhone or other smart device.
With today’s multitude of communication options, many of us are experiencing communication overload. And without self control and good time management skills, we are actually less productive than in years past. Most time-management professionals will tell you that the first step to improving time management is to take control of your communication by not reading your emails first thing in the morning. Why is this?
First, emails cannot communicate importance or significance. Even with the little red exclamation sign, it takes time to sift through your email to find the few that are the most important. Each time you read the same email and put off answering it, you’ve wasted time
Second, email is disruptive. Some email takes only a few seconds to respond to, others require more action on your part. Set aside a specific amount of time each day to answer email. Limit each email session to one hour, to make sure you continue to be productive. You may schedule multiple email sessions during the day, but make sure they have a definite start and stop time. Otherwise, you’ll feel like you wasted the whole day answering emails.
Think about the message you send when you respond to emails immediately. You are telling everyone in your network (your clients, your co-workers, your friends) that the best way to communicate with you is to send an email. The consequences of quick response to emails will only generate more emails. As you try to respond quickly to clear out your inbox, you’re only asking for more clutter in your inbox.
Another problem with email is that threads can become so long that a phone call would have been a much more efficient method of communication. If your thread is more than three emails, pick up the phone and talk to the other party. You can always follow up with a review email, to reiterate what was discussed.
The best way to spend the first hour of the day is to select a few tasks to complete before you check your email. Review a job schedule, check with a subcontractor or supplier, produce a proposal – these are all tasks that require concentration. Lock your door, turn off your email, and produce the work you need to produce.
Commit to spending the last part of every day determining two to three tasks you need to complete the next morning. Then, when you come into the office, do not open the email, but complete those tasks. Make yourself spend one full hour producing work, before reading your email. It’s a hard habit to break, but I’m confident you will see yourself become more efficient. Try it and post a comment to let me know how it goes.
Leslie Shiner—author, speaker, and trainer—has more than twenty years experience as a financial and management consultant. She is the owner and principal of The ShinerGroup, a consulting firm helping businesses gain financial control. As a business coach, she has worked with both small and large businesses to help them better understand their business practices and maximize their profits. She is the author of “A Simple Guide to Turning a Profit as a Contractor.” Ms Shiner is an engaging speaker with a long history of rave reviews. She continues to receive high praise for her ability to make financial management interesting, understandable, and even entertaining.
- Posted by Michael Stone on February 17, 2010
One way to get your phone to ring is to make sure you are presenting an appealing image to the buying public.
Start with your company logo. Is it clean and fresh, good colors and eye catching? Look hard at your font, your colors and the image you are presenting, and if it’s time for an update, go for it. If you have been in business some period of time, can you incorporate “XX Years of Serving You” in your logo? Stating your company’s age will lend trust to your name. Don’t forget to make sure that your business cards and all your other advertising show your image.
Have you looked at yourself in the mirror recently? Do you dress well, project a professional image, and look fit and trim? Or do you look like you just crawled out from under a house? If you want to be paid like a pro, you must think, speak, look and act like a pro. Clean clothes, haircut, shoes shined, clean vehicle, these are all part of a professional image.
Do you present yourself around town as a pro? Do you always have fresh, clean business cards to hand out? Can you give your elevator speech at a moment’s notice? Do you look good and most important, have a smile on your face? Honestly, would you buy from you?
If you’re in business, get in it. Present to the buying public what the buying public wants to see. Trying to be a rebel or doing things “your way” will get you a quick exit out of business. Get your image right.
Michael Stone of Camas, Washington, has more than four decades of experience in the building and remodeling industry. He is author of Markup and Profit; A Contractor’s Guide, published by Craftsman Book Co, and his second book, Profitable Sales, A Contractor's Guide was released in 2007. Michael offers Coaching and Consulting services for construction companies throughout the U.S., as well as products for business management, and is a frequent speaker at national and regional construction related events and will be speaking at JLC LIVE in Providence. www.markupandprofit.com
- Posted by on February 12, 2010
All indicators are that the recession is slowing down and that in the future it will bottom out. This means that the economy will slowly recover. It may never reach the craziness of the past decade but a rebound none the less. This means those that have survived need to be ready. Even those that are still in the game see the need to be ready. Ready for what? Ready to squeeze every bit of profit out of the jobs that they do get. And to serve the client in a way that creates referrals, making it easier to sell and make a profit.
The emphasis over the last two years with many remodeling companies has been to spend their training money on sales and marketing, a need that became clearer as the abundance of jobs dried up. I believe it is time to start investing some money in training the production staff once again. The companies that have survived saw the recession coming and got ready. The same is true now about the recovery.
Two major areas stand out. The first the need to manage the time spent on the job, or labor costs. The second, managing the clients expectations and high quality customer service in the field. I know it is clear to every business owner, but I will refresh your memory here, that a small amount of time saved everyday will make enormous differences to the bottom line. If your labor cost is $40 per hour and you have 5 people in the field and each one saves 15 min per day the profit for your company goes up roughly $13,000 per year! 1 hour of training, done properly with follow up, can accomplish this, and only cost you $400.00 in labor including lost production time! Let’s look at customer service. The cost of a carpenter saying the wrong thing at the wrong time is enormous! Taking the time to train them, by role playing, how to answer those difficult questions and it will save you countless dollars and many sleepless nights.
Think about it. The old adage, “pay now or pay later” is never truer than when it comes to your staff. Almost every business around us learned it years ago; it is time for us as an industry to catch on. Invest some time, invest some money, and invest some energy and it will pay off.
Tim Faller of Westerly, Rhode Island, founded Field Training Services in 1999, a firm committed to training production staff in good job-site management and helping companies develop production systems that produce profit. For 12 years, Tim worked at Hopkins & Porter Construction in Potomac, Maryland, where he started as lead carpenter, became production manager and then helped begin the New Homes division. Based on his extensive experience, Tim has conducted many successful lead carpenter training programs across the country. He is the author of The Lead Carpenter Handbook: The Complete Hands-on Guide to Successful Job-Site Management and the Lead Carpenter Audiobook. www.leadcarpenter.com
- Posted by on January 28, 2010
As the saying goes, those who fail to plan, plan to fail. As we have struggled over the past 18 months, many contractors are now beginning to see a light at the end of the tunnel. While the lead time for sales remains prolonged, the business is out there and clients are starting to come back.
As the economy improves and business begins to grow, I suggest you make a commitment to planning. Even with limited resources, companies that are focused on creating a viable process will reap the benefits. Consider all the aspects of your business and think about the following:
- Determine your Core Values – what is it about your company that makes your clients hire you? Use that information to strengthen your marketing efforts and build your brand promise.
- Identify your company targets over the next six months. How do you plan to complete projects on time and on budget?
- Perform a skills assessment – what parts of your business do you need to improve to be able to achieve your targets?
- Create a measurable action plan including accountabilities, determining who is responsible for achieving what, and by when.
The best part about creating a plan is that the effort put into that planning process can help you focus on your business. There are no right or wrong answers in creating a plan. Start by creating one measureable goal for you to complete within the next two weeks. Some examples are a specific number of proposals created, a number of potential clients contacted, or a number of networking activities completed. Spending a few minutes each day to create and monitor goals will go a long way to helping your business recover and build a better company.
Leslie Shiner—author, speaker, and trainer—has more than twenty years experience as a financial and management consultant. She is the owner and principal of The ShinerGroup, a consulting firm helping businesses gain financial control. As a business coach, she has worked with both small and large businesses to help them better understand their business practices and maximize their profits. She is the author of “A Simple Guide to Turning a Profit as a Contractor.” Ms Shiner is an engaging speaker with a long history of rave reviews. She continues to receive high praise for her ability to make financial management interesting, understandable, and even entertaining.
- Posted by on January 21, 2010
The construction industry is rapidly changing. Technology has taken us down new paths, providing new ways to run our business and reach potential clients. At the same time, many of those potential clients we are trying to reach are struggling to pay their bills. Other potential clients can’t get the financing they need to do the work they want.
In the current business climate, the only construction-related businesses that will survive are those that focus on their education – learning what works, what doesn’t work, what’s new.
Based on our phone calls and emails from contractors across the country, many construction companies throughout the US and Canada are succeeding now by doing just that. They are investing in their education. From that investment, they learned they need strong marketing and advertising programs to survive, so they ramped up their marketing and advertising programs. They are surviving, and some are even thriving.
You can do the same. There is a great deal of valuable, free information available on the Internet. There is even more valuable information available for purchase. Find it and continue your education. If you live in the northeast, you are fortunate to be near the JLC LIVE conference that will be held in Providence, Rhode Island March 24 through the 27, where you’ll have access to some of the best construction-industry instructors in the country. And you’ll meet many contractors who are succeeding now. They’ll be there because they are still learning and still growing.
It takes time and it takes money to continue your business education. When you are scrambling to keep your business alive, it’s difficult to invest the time and money, but that’s also when it is most crucial. When you make the investment, the return can be a successful construction business - and that’s what you want.
Michael Stone of Camas, Washington, has more than four decades of experience in the building and remodeling industry. He is author of Markup and Profit; A Contractor’s Guide, published by Craftsman Book Co, and his second book, Profitable Sales, A Contractor's Guide was released in 2007. Michael offers Coaching and Consulting services for construction companies throughout the U.S., as well as products for business management, and is a frequent speaker at national and regional construction related events and will be speaking at JLC LIVE in Providence. www.markupandprofit.com