Most people in construction would not consider themselves entrepreneurs. They see themselves as self-employed.
There’s not a huge difference between the two, but it is significant.
It’s the difference between working in your business or working on your business.
Someone who is self-employed is earning income from their own business, trade, or profession. This is how most people working for themselves in construction see it. It’s just a job like any other.
Most of them started out working for someone else. They learned their construction trade but not the business. Being self-employed tends to overlook the business part.
Doing business is scary…not to mention most self-employed construction people don’t like doing paperwork. The problem is, like it or not, self-employment is being in business.
An entrepreneur, on the other hand, is someone who organizes, manages, and assumes the risks of the business. This difference is mostly perspective, and it’s critical. It’s how you see yourself.
It’s about where your focus is. Are you focused on just showing up on the jobsite every day doing construction, or is it bigger than that? This is the difference between having a job and owning a business.
Is what I’m doing just a job or is it building a business?
If we see ourselves as just having a job, the daily rat race becomes overwhelming and is often the reason self-employed contractors go out of business within the first five years. The numbers are staggering.
So if you see yourself as self-employed, what are you going to do to avoid becoming one of these statistics?
The first step is becoming aware. You have to see the problem before you can do anything about it. Then you can decide if you want to keep doing things the way you always have or do something different.
After you become aware of the problem, you need to understand it. This is where things are going to get harder. It’s going to require some research. This is going to take time that you don’t have, but it’s time well spent if you want to stay in business.
Now that you understand the problem, you will need information and instructions for implementing changes. I know this sounds like a lot, and you may be wondering, is it really worth it?
If it is, then you need to learn these new and different ways of doing business and change how you do things.
If this seems like too much, maybe you should just go back to working for someone else!
If you decide that you want to accept the title of entrepreneur and work on building your business rather than just working a job, then we can help.
If you have questions about transitioning from self-employed to entrepreneur, you can set up a free 30-minute construction company consultation. It’s up to you. You get to decide if you want to accept the role of entrepreneur or continue working as an employee for yourself.
To Build the Business of Your Dreams You Must Take Action
“I AM A PERSON OF ACTION.” “My future is immediate. I will grasp it with both hands and carry it with running feet. When I am faced with the choice of doing nothing or doing something, I will always choose to act!” – Colonel Joshua Lawrence Chamberlain
For years people have asked me where I came up with the business system and procedures that I use. As I thought about it, I realized that early on my business and life had developed without much intentionality.
I was a dreamer at an early age. I had big ideas and plans for my life. Then there was a portion of my life where I became disillusioned and accepted that my dreams were just that…dreams.
I decided I was just kidding myself the whole time.
Then in 2012 I had “A Life Changing Wakeup Call” and realized that I had gotten sucked into a world of doubt. I had given up and quit dreaming. It can be hard for those of us that are dreamers to turn ideas into action.
After my accident, I began to think about what my life was and what I had expected it to be. I became reenergized about dreaming and about life. It’s great to be excited about life again!
Dreams are just dreams if no action is taken.
Not that my life was terrible before the accident, it just wasn’t what I had envisioned. I had been living without a clear plan, and there was so much more for me to accomplish.
At that point I decided to become more intentional.
I’ve always been a planner but it’s sad that it took a hit in the head for me to realize the importance of intentional action.
When we’re young the tendency is to think that we’ll have all the time we need. There’s no need to think about the future…we’ll get around to that someday. Then one day we wake up and realize life is flying by and we haven’t done those things we wanted to.
You don’t have to wait until you’re smacked in the head to become intentional.
Think of your business as a construction project. It all begins with a dream. You can see the vision of the completed project in your mind. The tricky part is getting that dream out of your head and making it a reality.
Having a plan will let you see if it looks like your dream or not. It’s easier to make changes and corrections during the planning stage, rather than the construction.
After I realized that that my dreams weren’t going to happen without actions, I began to develop business tools and systems needed for building my dream business. It would have been easier if I had some help.
It’s always a good idea to have the help of a professional when drawing out plans and building your dream business. Their experience, knowledge, and skill can save you time and money.
Have you ever felt like your business and/or your life were out of balance? It’s a little like a three-legged table with a short leg…kind of wobbly.
I know I have felt this way and sometimes still do. You have probably heard the saying ‘feast or famine’. This seems to be especially true in the construction industry. It refers to the common problem of either having way too much to do, or worrying about how you are going to pay the bills if you don’t get some work soon.
Sometimes this is caused by situations beyond our control. The economy, the weather, or some other external force. More often than not the reason is an “out of balance business”.
I wrote about this originally in April of 2016, and it’s a topic that is still relevant. I say this because I’m currently going through one of those times of famine. This is not due to a lack of leads for construction projects. It’s because I’m spending time getting the coaching and consulting for construction companies started.
One thing that I’ve learned over my 40+ years in construction is that business is a lot like a three-legged table.
When all the legs are the same length, it helps provide a level, sturdy platform for the company to sit on. When any one or two of them is too short, the table begins to lean. If it tips too far the company will slide off.
It’s never good when a company crashes to the floor.
The three legs of the construction business are:
1 – Sales/Marketing – Searching for and finding customers that you can help by providing your service and/or product through word of mouth, advertising, and awareness. Meeting with potential customers, determining what they want/need and preparing estimates, proposals, and contracts.
2 – Production/Operations – Organizing, scheduling, and maintaining construction projects. Determining who the right people are to perform specific tasks. Knowing the parts that are needed and making sure they fit. Maintaining communication between all parties involved.
3 – Administration/Finance – The preparation of documents needed to communicate, track, and record all aspects of the business. The filling out and filing of income, expense, banking, and tax papers. This leg is one of the easiest for ‘tradespeople’ to neglect. When it gets short, it can really cause the table to lean.
The tabletop is the big picture planning and organizing. It’s what connects the three separate legs. It’s easy to give too much attention to one or two legs and forget the others. This is when the tipping begins.
To get so focused on production of projects that we forget to follow up with a new customer shortens the Sales/Marketing leg.
To get so into preparing proposals that we forget to invoice shortens the Administration/Finance leg.
To work so diligently on tracking expenses that we don’t leave enough time for working on projects shortens the Production/Operations leg.
There is no perfect formula to keep the table from ever leaning.
The most important thing is to realize that it can happen and continually strive to keep the table balanced.
Most of us in construction started out by learning our trade while working for someone else. This is how I got started. The problem with this is that while I learned how to build a building, I wasn’t taught how to build a well-balanced company.
After years of struggling and learning things the hard way, I developed Business BUILDing tools that are great for building a construction business.
Just like any tool, if you don’t use them…things don’t get built.
Having the right tools and using them only goes so far. You also need to continually work to keep the table legs the right length so that the company doesn’t come crashing to the ground.
This is why at Solution Building we offer coaching and consulting to help you keep your construction business well supported and level.
Now that I’m done sharing this solution, I’m going to get to work on some proposals so that I can lengthen the Production/Operation leg of my construction business!
Why Does Everyone Tell You It’s Easy When It’s Not?
Helping people in the construction industry build their businesseshas been a real struggle. They say they need a better way of doing things but won’t take the time to do anything about it. They struggle with construction proposals, change orders, payment applications, saving money, communication, etc.
I know because they tell me this all the time. Not to mention, I was there too once so to totally understand.
So why don’t they do something about it?
Because, doing something about it is not a simple thing. I know because I struggled with these same problems in my construction company. Then I decided to do something about it. But what?
I began looking for solutions but couldn’t find what I needed. This involved things like computer software, hiring a consulting firm, etc. Not that any of these things were bad, but they didn’t fix the problems.
This is when I realized that there is no magic solution. It’s going to take time and hard work.
It’s a little like building a building…there’s no computer program you can download from the internet, or it won’t magically appear from a blueprint or some written instructions. It requires time and hard work.
When building a building there’s going to be bumps along the way, it’s not like after the first one is built the second one is going to be much easier. But, with each new project it gets better. The mistakes are reduced, and the process becomes more repetitive with experience. Then at some point it becomes so routine you can do it in your sleep.
It takes time and hard work, but it’s worth it.
This brings me back to the problem at hand – helping people in the construction industry build their businesses.
I’ve been working to get other construction companies to use the business building tools and systems that they have been asking for. I’ve been working on this for years and wondering if I’m supposed to keep trying. Then I think back about the difficult journey of building my construction business and keep going.
Part of the problem, like building the first building, is there’s a big learning curve, and it takes time to learn it.
I realized the other day that this is not just a construction business problem…it’s an every kind of business problem.
And the problem is this, we’ve become an immediate gratification society. We don’t want to wait for anything, and a business is no different.
We’re being over promised on social media and the internet with advertisements telling us how we can buy this thing and lose all the weight we want by next month or make a million dollars in six months, etc., etc.
Don’t believe it…it’s a lie.
I’m not saying these things are impossible. What I am saying is that they are highly improbable. After spending a lot of money and not achieving expectations, people are left disappointed and feeling like failures.
Marketing does a great job of doing what it’s supposed to. It gets you to buy things. The problem is the marketing makes it look easier than it is.
Building a business, like building a building, is not for the faint of heart.
This is why I’m going to tell you right now, if you buy our business building toolbox it’s not going to magically make your business an overnight success. Implementing and learning to use these tools is not magic.
Like any tool, if you buy it and don’t ever get it out of the box, you’ll never learn how to use it. If you’d like to learn more about how we can help you through long journey of building a successful construction business, schedule a free 30-minute construction company consultation.
It’s Like Quality Construction, It Sets You Apart as a Professional
As Gene is driving to his weekly Saturday training with John, he remembers how hard it was in the beginning to convince himself to take the time to learn this system and how glad he is that he did. He thinks back over what he’s learned during the past several weeks:
Digging down to figure out why he was doing construction and the importance of that clarity.
Communicating clearly with the customer with a Scope of Work.
Last week’s focus on how to price a project clearly and profitably.
Gene’s getting excited as he pulls up to the SMR Construction Company office. Today they are going to put all the pieces together, creating a finished proposal.
After John and Gene have some lunch and get caught up on the past week’s events, John asked Gene, “You know how exciting it is when you see a new home coming to completion after starting with nothing but a blueprint? That is what we’re going to do today…we’re going to see…
A proposal taken from blueprint to reality.
Let’s get started.
The final step in preparing the Proposal is to transfer the information from the Scope of Work and the Worksheet to the Proposal template.
If you use a project number, insert it behind the number sign at the top of the page, below the proposal title. Next, insert the customer and project information in the open areas as it pertains to the project.
Insert your company name at the beginning of the introductory sentence.
Copy and paste the description of the work to be performed and material to be supplied from the Scope of Work in the body of the Proposal template.
Next, take the prices from the Worksheet for each individual task described on the Proposal, and place it under each task on the right side of the page. At the end of each section, put the total price for that section. This allows the customer to see a price for each section, i.e. foundation, framing, roofing, etc.
Now that the description of the work to be performed, the materials to be used, the prices for each task, and the subtotals of each section have been placed on the Proposal, it’s time for the project subtotal to be inserted at the bottom. Insert a separate price for the sales tax below the subtotal. Sales tax rates will be determined by the location where the work is to be performed.
Next insert the project total after, “For the Sum Of:” on the Proposal both in written and numerical forms, this duplication (just like on a check) helps with clarity.
Now that you have a project total you need to determine how payments will be made. There are several different factors which can determine how this will be done, i.e. the size of the project, when material will be ordered and/or paid for, the financing of the project, your personal preferences, etc. This could be done at the completion of set production tasks, scheduled times (weekly, monthly, etc.) or when the project is finished.
Determining the date in which the Proposal will expire will be up to you. If the Proposal includes some materials that fluctuate in price often then you may want the expiration date to be sooner rather than later. A standard time frame is 30 days.
The duration of time to complete the project can be determined from the Worksheet. At the bottom of the Worksheet there are four cells, with corresponding amounts for each category.
The Labor Price is the total amount of labor costfor the project. The Hours, is the total man hours needed for the project, dividing the hours by $60/hr. This hourly rate can be adjusted to whatever dollar amount you determine. The Days are the total hours divided by 7 hours of production per day. The Weeksare total working days divided by 5 days of production per week. You then have the number of working days needed to complete the project. This will then be entered into the corresponding blank space on the Proposal. It’s a good idea to add a little more time for the unplanned.
You now have completed the proposal!
At this point I recommend going back through and proofreading the scope of work for each task, checking the math to make sure that the prices on the Proposal add up correctly. Don’t be surprised if a few of the numbers on the Worksheet totals are off a cent or two from the total on the Proposal. This happens sometimes due the combinations of formulas on the spreadsheet. The most important thing is that the prices on the Proposal add up correctly.
Now sign the proposal and deliver it to the customer.”
John looks over at Gene and asks, “Well what do you think?”
Gene smiles and says, “You’re right. It does feel like seeing a house where there wasn’t one before. It’s very satisfying.”
“Know this Gene, it’s also going to be like building the first house. You’re going to have questions when you start using the proposal system. Start using it and let me know when you have questions. It will be tempting to go back to doing bids like you used to, but don’t.
Providing proposals like this communicates clearly with customers and prevents misunderstandings. It gives you a production budget and scope of work for the production crews which increases your bottom line. This is different than how most companies do proposals and will set you apart as a reliable professional.
“Next week we’ll review your experience and spend our time answering those questions.
It’s week six of learning the Building a Better Proposal system. As time consuming as learning new things is…Gene is beginning to see the benefits this proposal system will provide.
Just like building a house uses repeated actions to reduce the need to think about how to do things, this proposal system does the same thing when bidding construction projects.
As they settle in and begin the meeting, John tells Gene, “Let’s take a quick look back at what we’ve covered so far. We started by asking ourselves some foundational questions. Next, we discussed the common mistakes contractors make when doing bids. Then we went over the system and its parts. The last couple of weeks we’ve worked on gathering information and turning that info into a Scope of Work. Today, we’re going to start working on Pricing the Project
Communicating a clear description of the project is achieved with the Scope of Work. Accurate pricing is equally important to avoiding misunderstandings.
Poor communication will cause heartache, poor pricing will cost you money.
Open the Worksheet template. This blank Worksheet is where you will paste the information from the Data Base as it relates to each of the specific tasks of the project.
The Worksheet template has six different options for overhead and profit ranging from 20% overhead and 10% profit to 40% overhead and 20% profit. You can use whichever of the six options works best for you on the specific project you’re working on.
Typically, larger projects, i.e. new construction, large renovations, remodels, or large additions will use smaller percentages, while small projects will use bigger ones. You can use whichever works best for you. These percentages can be adjusted after you have finished the pricing if you want them increased or decreased. These documents can be modified with custom percentages as well.
Open the Data Base and prepare to copy the appropriate content into the correlating cells of the Worksheet of the project you are working on. Use the previously written Scope of Work to determine which of the categories specific to the project need to be copied from the Data Base and pasted on the Worksheet.
If more than one item for a specific task is needed, for example shingles, synthetic underlayment, and metal flashings, these individual items will be entered separately then added together to create one price for roofing.
You can add as many additional rows as you need, just be careful to keep the formulas intact by filling the content of the existing row to the new ones.
Determining which tasks should be inserted into the Worksheet is the next step.
Most of the tasks on the Data Base have options; determining which to use will depend on the specifics of the project. For example, how is the excavation, trenching and landscaping going to be done…with a skid loader, mini excavator or by hand?
Once it’s determined which methods, actions or materials are to be used for a specific project, copy the pertinent cells from the Data Base and paste them to the Worksheet.
After the pertinent information from the Data Base has been placed on the Worksheet it’s time to…
Enter the quantity of the work to be done.
Fill in the quantities needed to do the work for each item listed on the Worksheet. This may be in lineal feet, square feet, square yards, cubic feet, cubic yards, or numbers of pieces. Once this is completed for all the categories, you’ll have a price for each task of the Proposal!
This system offers a consistent repeatable process for preparing accurate proposals and is the difference between making money or losing money on construction projects.”
John looks at Gene and asks, “Well, what do you think?”
“Well, I thought my head was spinning before today…now I’m getting dizzy.”, Gene replied with a grin.
“I know it seems like a lot, but it really isn’t once you get started using it.” John says reassuringly. “Experiment with it this week. Call if you have any questions. Next week we’ll bring everything you’ve learned together into a proposal ready to be presented to the customer.”
Construction projects are consistently more profitable when you’re intentional with the dollars and cents.
Clear Communication is Critical to Happy Customers
Last week John explained to Gene what project information needed to be gathered…
Project info (customer name, mailing address, project address if different than mailing, phone number, email address, project overview, budget, project deadline, any other relevant information)
Measurements and dimensions, existing and new
Building materials, existing and new
Pictures of pertinent areas and existing construction
Customer’s design ideas and finishes
Overlooking or forgetting something is a sure way to lose money when doing a construction project.
This week they’re going to take the information gathered and turn it into a Scope of Work. This will be the foundational form of communication between everyone involved in the process, i.e., customer, contractor, sub-contractors, employees, etc.
As they get started on this week’s meeting John asks Gene if he had an opportunity to use the Bid Sheet this past week and if so, how it worked.
“Yes.” said John. “It was a little awkward in the beginning. By the time I was finished gathering the project information I was glad I had it because there were a couple of things that it reminded me to do.”
John replied, “That’s great. Do you have any questions?” Not yet.” said Gene. With a smile John said, “You will before we’re done.
Okay. Did you bring it with you”? “I did.” said Gene, “I’ve got it on my laptop.” John told him to open it up and follow along. “Today we’re going to work on the most important part of communication between contractor and customer…the Scope of Work.
What is a Scope of Work?
A Scope of Work clearly defines and explains the work to be done. It should describe what is included in each specific task in terminology that both the customer and the contractor understand. A scope of work describes the work to be done on a project, who is responsible for completing the work, how the work must be performed (techniques used), and what materials will be used. It helps in the smooth operation of a project, minimizing situations leading to disputes. It is the first step to building a mutually beneficial relationship between a contractor and customer.
Communication with the customer needs be simple and direct while explaining clearly and thoroughly.
After having gathered the information needed for the project using the Bid Sheet, write out in a few sentences, or less, what each specific task is going to consist of. Explaining what you’re going to do in a way that a person with little or no construction knowledge can understand. Include as much detail and specifics as needed to be clear on what is or is not included in each part of the project.
Once this process has been finished for each task included in the project, you have a Scope of Work ready to be transferred to a blank Proposal template.
Another week has gone by and Gene’s looking forward to today’s meeting. As they wrapped up last week’s meeting, John indicated that they would “actually” learn the first step in the proposal system today.
As Gene enters SMR Construction Company’s conference room, John is sitting at his computer with a Power Point on the big TV ready to go. “Good afternoon, Gene. Are you ready to get started learning the first step for doing better proposals?”
“I’ve been looking forward to it all week long.” says Gene.
“Okay. There’s oriental takeout there on the counter. Fill a plate and let’s get started.”
As they fill their plates, John asks Gene,
“When you begin talking with a new customer, what’s the first thing you ask?”
Gene ponders the question as he sets down. “I ask them about their construction project. What is the work they want done? For example, are they wanting to add on a room addition or remodel the kitchen or do they want to replace the windows?” Then Gene continues “You know…
WHAT is it they want done?”
John responds, “This is the typical question asked by most contractors. Without a doubt, it’s a question that needs to be asked. But there’s another question that will help you serve your customers better in achieving their construction dream.
The most important question is WHY.
Why does the customer want to do this project? Do they need more space, does something need repaired or replaced, are they looking to make an area more usable, or is it just because they want to? Learning their “why” early helps clarify their “what”.
As the construction professional, it’s your job to guide the customer through this process. Most customers have very little if any experience doing construction projects. Often, they get ideas from DIY programs on TV or the internet, other people’s projects, etc. and they just want one of “those”, whatever that is.
Every project is as different as the customer. Without blueprints, specs or seeing the existing location, the chances of giving the customer the project they want is almost impossible. Unless they have a full set of blueprints and specifications to bid from, you need to gather the information for each specific project.
The customer will have a vague image in their mind of what they want. It’s the contractor’s responsibility to guide them to the realization of that dream.
Last week we talked about the documents and definitions that make up the proposal process. Here are the steps to preparing a proposal:
Gathering information
Preparing the Scope of Work
Pricing the Project
Quantities
Preparing the Proposal
The important thing when gathering information is to not overlook something. This is what makes the Bid Sheet so important. It includes a list of most of the different construction tasks that might be needed and provides space under each task for a brief description, dimensions, specific notes, drawings, etc.
A pre-determined list minimizes the possibility of forgetting something.
The information gathered can be recorded in whatever way works best for you. It can be handwritten on a printed out Bid Sheet template, or it can be entered directly to a Bid Sheet on a tablet, smart phone, or laptop.
Using the Bid Sheet minimizes overlooking things because the different areas of a construction project are already listed.
If you use an electronic device (tablet, smart phone, or laptop) to gather the information, you can enter it in the appropriate space on the Bid Sheet template. With most electronic devices now, you can either type, write, or draw right on the device.
Using an electronic device streamlines the process and reduces the chance of something getting overlooked. Be sure to keep a copy of the template for the project you are working on; this will leave a blank template for the next time.
Forgetting to include something in the proposal is a sure way to lose money.
There are over one hundred items listed on the Bid Sheet and it still doesn’t cover every possibility. Construction projects vary a lot. Even small projects can include a lot of different pieces. If you leave one of the pieces out, someone’s going to be disappointed.
Here’s an example of finding out the WHY:
When meeting with customer, Jane Smith, she explained that she wanted to add a laundry/sewing room to her house but didn’t know where to start or what it should include.
We asked her WHY.
We found that she loved to sew and did a lot of it. Currently she used the table in the main floor dining room for measuring and cutting and did the sewing on a machine in the basement. In addition, her washer and dryer were in two separate closets in the master bathroom. Both situations were inconvenient.
Finding out “her why” helped us to find solutions for building her dream.
Here’s an example of the information gathered on the Bid Sheet:”
As they were finishing up John said, “If you’re serious about doing better proposals and haven’t got your Building a Better Proposal Stystem yet, I would suggest that is the first thing you do.
I would recommend you use the Bid Sheet this week when you meet with a customer wanting a proposal. Bring it with you next week so we can use the information from the Bid Sheet to prepare a Scope of Work.”
If you’d like more information about the proposal system referred to in this blog post, you can check it out here or join us at the free Building a Better Proposal Workshop at 10:30 CST on Saturday, February 10th. Attendees will be able to get the proposal system at half price plus a 90-minute, one-on-one training on how to use it for free.
You can learn more about some of the other tools and training for building a successful construction business here. If you have any questions, schedule a free 30-minute construction company consultation.
So Wouldn’t You Like a Plan for Doing Construction Proposals
It’s Saturday, and today will be Gene’s third meeting with John. Even though there’s been no change in Gene’s overwhelming workload, today is the first time he’s not considered canceling. He knows the value of this information and is looking forward to the opportunity to learn more from his mentor.
It’s Gene’s turn to provide lunch and John’s in for a treat…Gene’s bringing chili-cheeseburgers and fries from the Burger Station. Driving to John’s office, the smell of those burgers is more than Gene can bear, so he samples a few fries on the way, just to be sure they’re okay.
Gene had barely gotten in the office door before John yelled out from the conference room, “You brought Burger Station!”. Over the years when Gene was working for John, the two of them frequented this fine establishment often.
As Gene gets lunch out, John says, “We have a lot to cover today, so we better get started. As we go through this today, think about building a proposal as compared to building a construction project. Now let’s review…
First, we started with WHY…
Why do you do what you do? Why should you do proposals? Both these questions are similar to the question we should ask customers when they’re considering a construction project. Why do you want to do this project?
Second, we discussed that communication is the contractor’s responsibility.
We are the professionals in this arrangement. We shouldn’t expect the customer to know everything about construction. This is why they are looking to hire someone to do their project. It’s up to us as contractors to communicate clearly.
Third, we discussed bid mistakes.
These mistakes are commonly made and are costly. Being aware of them ahead of time helps you know what to avoid and increases the opportunity for happy customers. Not to mention it gives you a big advantage over your competition.
In our meeting two weeks ago I gave you the proposal overview to take and review. Today we’ll go through it and break it down. I know it seems like we’ll never get to actually doing a proposal, but think about it like a construction project…
The designing and planning take as long as the construction.
Let’s start by looking at the documents included in the system and a brief description of each.”
Bid sheet – A Word document with the various construction categories and individual tasks listed with space for filling in the scope of the work to be done, dimensions, materials, locations, etc., for each category as needed for clear communication.
Worksheet– An Excel spreadsheet with all the construction categories and individual tasks listed with overhead and profit markup formulas.
Proposal– A Word document with space to fill in pertinent information, i.e. customer’s information, what will or will not be supplied by the contractor, the scope of work, the proposed price for each specific element, a total project price, payment arrangements, and project duration.
Data Base – An Excel spreadsheet with prices for material and labor for a wide variety of specific construction tasks. This information will be used in the worksheet template.
After reviewing and discussing these documents and definitions, they looked at the process of doing a proposal.
STEP 1 – Gathering Information
Gathering the right information correctly and effectively is critical to preparing an accurate and thorough proposal. Once you’ve been contacted by a potential customer, start by scheduling a meeting to discuss their project and find out what they hope to accomplish. At this initial meeting gather –
Measurements and dimensions, existing and new
Building materials, existing and new
Pictures of pertinent areas and existing construction
Customer’s design ideas and finishes
The information gathered at this meeting can be recorded in whatever way works best for you. The important thing in this step is to gather any and all information needed to prepare an accurate proposal. It can be handwritten on a printed out Bid Sheet template, or it can be entered directly to a Bid Sheet on a tablet, smart phone, or laptop. Using the Bid Sheet minimizes overlooking things because the different areas of a construction project are already listed.
STEP 2 – Preparing the Scope of Work
After the preliminary information has been gathered it’s time to clarify the scope of the project by writing out the description of each specific task in terminology that both the customer and the contractor understand. It needs to include enough specifics to be thorough without being too technical. It doesn’t help communication if the terminology is confusing to the customer. This written description on the Bid Sheet will be transferred to the Proposal and serve as a written scope of work to be performed and materials to be provided.
STEP 3 – Pricing the Project
Next is putting prices to the project. This process involves two different Excel spreadsheets, the Worksheet and Data Base. Based on the descriptions written on the Bid Sheet, content from the Data Base will be copied and pasted into the correlating cells on the Worksheet. After the pertinent information from the Data Base has been placed on the Worksheet, it’s time to fill in the quantities.
STEP 4 – Quantities
On the Worksheet you will fill in the quantity needed to do the work on that line item. This may be lineal feet, square feet, square yards, cubic feet, cubic yards, numbers of pieces, etc. Once this is completed you will now have prices for each of the different tasks listed on the Proposal.
STEP 5 – Preparing the Proposal
Now you have everything you need to complete the Proposal. You will take the descriptions from the Bid Sheet and the prices from the Worksheet and put them both on the Proposal. After filling out the customer’s information at the top of the page, the scope of work, the price for each task, the total project price, how payments are to be made, and the duration of time to do the project, the Proposal is ready to be presented to the customer.
As they wrapped up the meeting, John looked at Gene and asked him what he thought so far. Gene said, “I had no idea there was this much to doing proposals.”
John said, “I know. That’s why most contractors either guess at their bids or just give estimates…and we’ve all seen how that well that works out.
Next week we’ll dig deeper into GATHERING INFORMATION.
This is the First Step in Building a Better Proposal
Even though Gene was still overwhelmed, and his schedule was packed, he knew the only way to ever get control was to keep his upcoming appointment with John.
Gene had spent a lot of time this past week considering the questions John had asked at the first meeting.
Why do you do what you do?
Do you love what you do?
Why do we need to do proposals?
As Gene was driving to the office of SMR Construction, these questions were still banging around in his head with a wide variety of answers and no real clarity.
As he entered the office, Gene smelled something amazing. He hadn’t realized how hungry he was. John was providing lunch this week, and the smell made his hunger apparent.
In the conference room John was stirring some chili. “Lunch is ready. Grab a bowl and let’s get started.”
As they sat down John asked, “Did you come up with answers to the questions?”
Gene sat there for a minute and said, “I’ve come up with way too many answers. About the time I think I have it figured out; another answer shows up.”
John grinned, “That sounds about right.
The important thing is not having every answer to every question, but rather to continually be asking the questions and actively looking for the answers.
I still ask and answer questions every day.”
“A good way to find WHY answers is to figure out things that work and things that don’t. Let’s start with a WHAT question. John handed Gene some papers and said,
Here are seven mistakes that construction companies consistently make that cost them a fortune in both time and money. The first one is…
#1 Customers lack clarity – You remember the story I told you last week about that misunderstanding I had with a customer? This is a perfect example of how the lack of customer clarity is a problem. You need to provide a clear detailed description of the work and the materials you’re going to provide. A clear scope of work helps avoid customer confusion. The Building a Better Proposal provides a system to give clarity to your customer.
#2 Production crews lack clarity – The scope of work not only provides customers with clarity, but it also gives the production crews a clear understanding of the work to be done. This prevents subcontractors and employees from doing more or less than the project includes. Too much work done means cost overruns. Too little and the customer is unhappy. The Building a Better Proposal system gives the production crews a clear description of the work to be done.
#3 No production budget – When the production crews don’t know what the budget for the project is, they often spend more than expected. These cost overruns mean less profit.
When I was just starting out in business a banker told me…
If you take care of the pennies, the dollars will take care of themselves.
Let your production crews know how many pennies they have to spend. This will lead to more dollars of profit. The Building a Better Proposal system provides the production crew with budget numbers.
#4 Unsatisfied customers – Unhappy customers can be a series problem. Not only can they be a drain on company morale, but they can cost you money and hurt your reputation. They’re paying you to have their dream turned into reality. When they don’t have an accurate project amount before the work’s done, they won’t be happy when it’s finished and costs more than they expected. The Building a Better Proposal system gives the customer a clear expectation of cost before the work starts so that when it’s done for that price, they’ll be happy.
#5 Unprofitable projects – One of the biggest problems in construction is Guesstimates. Guessing at the amount of time and material it’s going to take to do a project is a big risk. Different size projects require different overhead and profit margins. The Building a Better Proposal system provides predetermined options of overhead and profit when preparing a proposal.
Proposals done this way can increase the profitability of your projects.
#6 Trying to do everything yourself – Most small construction companies only have a few employees. Their focus is usually on the physical construction which doesn’t leave time for doing accurate detailed proposals. Most contractors don’t like paperwork. This leads to hasty, inadequate, and oversimplified proposals. The Building a Better Proposal is a system that allows you to focus on doing construction while office staff does paperwork.
#7 Your bidding system isn’t customizable – Most construction projects consist of a variety of different areas of construction. You need a system that gives you the freedom to pick and choose what’s included and what’s not. Because markets vary greatly based on geographic locations, you need a system that you can adjust to your area’s specific requirements and rates. The Building a Better Proposal system allows you to customize proposals in these ways and more.”
John could see that Gene’s eyes were glazing over. “I know this is a lot to take in and doesn’t feel like we’re getting any closer to actually doing proposals, but I assure you…
Getting clear on these mistakes is the first step to providing better proposals.
If you have questions about the Building a Better Proposal tool or how we can help you take control of your construction business, set up a free 30-minute construction company consultation.
Manage Cookie Consent
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional
Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes.The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
