problem Solution Building

Why is One of the Most Important Parts of a Construction Business Avoided So Much?

January 3, 2023December 24, 2022 by Mark Eastman

Because Admin and Finance are Out of the Contractor’s Comfort Zone

Most trades people like doing physical work, not paperwork. They like building things, not sitting at a desk making proposals or putting numbers in spreadsheets.

Avoiding paperwork is one of the biggest reasons construction companies struggle to stay in business.

They may be the most skilled craftsman out there but they consistently struggle to keep the business afloat. This includes things like –

Losing money due to under bidding projects
Not enough money to pay taxes
Can’t afford to have repairs done to the company pickup
Projects running over budget
Upset customers due to poor communication
Disconnection with production crews due to poor communication

An example of this is an email I received just this past week from a foundation repair contractor.

“I need help with all aspects of the business end of the business, and definitely with organization and systems. It’s easier for me to pick up a house than it is to figure out what to charge for doing it.”

All these problems can be solved with a good foundation that includes paperwork.

Whether it’s a dislike for doing paperwork or simply not knowing how to do it, paperwork doesn’t have to be as scary as it first appears.

It requires doing something different. If you keep doing what you’ve always done, you’ll keep getting what you’ve always got. (Variation of a Steven Covey quote) This reminds me of the Geico commercial where the group of young people choose to hide behind the chainsaws, rather than getting in the running car.

Recently we talked about the importance of building your business on a solid foundation. I told you that this foundation consisted of three piers, one of which is Administration/Finance. Let’s break this foundational pier down and see what it’s built of.

Administration – The process or activity of running a business or organization that includes but is not limited to –

Computer Systems
Team Member Records
Team Member Policies and Benefits
Office Support
Office Maintenance
Information Archiving and Distribution
Data Processing
Communications
Contract Preparation

Finance – The management of money that includes but is not limited to –

Budgeting
Invoicing
Cash Flow Forecasting
Financial Reports
General Bookkeeping
Accounts Payable
Taxes
Banking

Each of the things listed here has a mix of administration and financial aspects. A good example of this overlap is the Blueprint for Building a Better Proposal, which we’ve previously discussed in a series of blog posts and podcasts.

As we move forward discussing this foundational pier, I will share some of the different documents and processes that we’ve developed and regularly use at Timber Creek Construction.

The first one we’ll discuss is called the Job List. This is an Excel spreadsheet that serves several purposes, some of these are:

Generating consecutive and project specific job numbers
Tracking current total project bid amounts at present
Tracking current total signed projects at present
Tracking current total collected projects at present
Percentage of jobs signed
Percentage of dollars signed per dollars bid
Percentage of dollars collected per signed
Average dollar amount of projects bid
Average dollar amount of projects signed
Average dollar amount of projects collected
Projected timeframe needed to do the work based on annual revenue goal
Projected date work should be done based on annual revenue goal

We’ll dig into the Job List deeper next time.

I know, I know…this seems a little scary, but it doesn’t have to be with some help. Just remember that if your business doesn’t have a good foundation, it may not stay standing.

Check back in later to learn more about the Job List.

An “Out of the Box” Solution to Get Your Construction Projects Done

March 5, 2022 by Mark Eastman

Finding the Right Contractor for the Project Can Be a Problem

This is a construction industry issue…and it shouldn’t be.

We’ve all heard horror stories where someone either couldn’t find a contractor or hired one that later they wished they hadn’t.

I’m currently discussing this with someone in the middle of one of these situations.

After recently buying a home, they found a soft spot in the floor next to an exterior wall. With some further investigation they discovered some moisture damage that includes subfloor, floor joist and exterior wall problems. Some of the issues are structural.

The first hurdle was, having recently moved to a new location, they didn’t know anyone. They began looking for contractors, finally finding a few. After contacting them, only a couple came to look at the project. Of those who did, one never followed back up and the other said they wouldn’t do the structural work.

They had reservations about these contractors. It didn’t help that they had previously had issues with a painting contractor on a different house.

If this water damage is not fixed it’s going to lead to more significant problems in the future. Finding himself in this spot, the homeowner began to consider doing the work himself. He has done some small construction projects previously, but it didn’t take him long to realize this one was more than he could do.

Not knowing what else to do he contacted me.

Theses homeowners used to live closer and knew me through a family member. The first question was, would I come the 2+ hours to do the work?

We’ve done work further away than this before, but they were bigger projects.

My biggest concern was finding qualified sub-contractors willing to go that far for a project of this size. It will be harder with everyone currently being so busy here close to home.

I felt his pain and really wanted to help him!

It’s a problem to find qualified construction contractors, especially in sparsely populated areas. There are too many people who call themselves contractors, but really are just a guy with a hammer.

Having run into this problem numerous times throughout my career, I have given a lot of thought to possible solutions to this problem.

One of the options that continually came up in these situations is long distance construction consulting.

What exactly would this long-distance construction consulting consist of?

This is the real question, isn’t it?

The customer’s issues come down a lack of construction experience and include things like –

Questions to ask the contractors
Communication to expect from contractors
Construction processes, standards and codes

What if there was a way for construction customers to have an experienced contractor in their corner? Someone to explain the process and support them through the process.

I’m working on this as an option for this customer. Providing the support and insight needed to get their repairs done. Giving them the comfort of a professional they trust that has their back through this process.

This service would include –

Me going to the job site and evaluating the project
Preparing a scope of work that could then be presented to less experienced contractors, giving them the expectations for the work to be performed.
Preparing a budget for the customer so they would have a price to compare to prices from contractors
Me reviewing pictures and reports from the customer as the onsite manager

This would be similar to what a general contractor would provide with the exception of actual construction work.

Now I’m going to get to work on figuring out what this service will cost them and preparing a proposal for it.

I will let you know how this construction customer consulting goes as we move forward.

The Bulk of The Communication Responsibility Lies on The Contractor

November 9, 2022November 10, 2019 by Mark Eastman

How To Build A Better Proposal

Every contractor, at some time, has had an unhappy customer. This is almost always due to poor communication and/or a lack of understanding. It may have been some small misunderstanding or might have been major enough to result in being fired or going to court.

Several years ago, a partner and I were meeting with a customer early in the process of building a new home. The customer pointed out that the distance from the electric meter to the house was more than the 50’ allowance, as per the written proposal.

He asked if this was a problem. My partner told him no, it wasn’t a problem. Guess what…

It was a problem.

The problem didn’t surface until later when the customer was billed for the additional 100’. After some digging, the communication breakdown was uncovered.

The customer asked, “if it was a problem”. What he really was asking was…”is it going to cost more?”.

My partner’s response in reality was, “we can dig the additional 100’, but it will cost you three times as much as the allowance in the proposal”. This isn’t what was said.

Neither individual intended nor expected this to be a problem. It was a simple matter of misunderstanding…a lack of communication.

Communication is, …the exchange of information and the expression of feelings that result in understanding.

Understanding is the tricky part.

Why is it that contractors don’t communicate clearly through concise written proposals to customers? Here are the four main reasons for this:

First is time – It takes more time to prepare a detailed written proposal. We’re already so busy that we can’t keep up and with the limited time we have, we aren’t going to spend it on preparing a proposal.

Second is comfort – I started this company because I loved to build, plumb, wire, pour concrete, roof, etc., etc. The trade is what I know, and I don’t like doing paperwork, I want to go swing a hammer.

Third is knowledge – It’s hard to know how long something is going to take or how much material is going to cost. If I give the customer an approximate price or even better if I can just get paid for time and material, I know I won’t lose any money.

Fourth is no system – When we started the company, no one ever explained the importance of having a business system in place. A business system is the blueprint for building your business. Detailed proposals are one of the foundational pieces needed to keep it from collapsing.

These are four valid reasons for avoiding doing proposals, but…

The cost of not preparing detailed proposals, is far more expensive.

The customer also has some responsibility in preventing construction projects from falling apart and the high cost of poor communication. This whole construction process is overwhelming to most customers and they need to know what should be included in the communication.

But the customer isn’t an experienced contractor that does this for a living.

If only there was a process for doing proposals that:

Saved time.
Could be done by office staff.
Didn’t require a four-year degree or twenty years of on the job training.
Included all the necessary parts and pieces

What if I told you that there is such a system and you could have it? There is and it’s going to become available in the next few months. Over the next several weeks we are going to breakdown the system, go through the different documents and processes in detail and explain how it works.