proposals Solution Building

Chances Are Your Construction Company is Going to Fail

May 14, 2024May 11, 2024 by Mark Eastman

How Can You Change the Odds in Your Favor?

According to the US Department of Commerce, 96% of construction companies fail within the first 10 years. This is a higher failure rate than any other kind of business.

If you’re in construction…this is a problem.

Having been in construction for more than 40 years, I understand how hard it can be to build a successful business. It takes a lot more than just knowing construction to be successful. Knowing business is as important as knowing construction.

Over those 40 years, I became aware of the problems and began to understand them. I gathered information and learned how to implement it into my business.

That’s why I beat the odds.

I’ve learned a lot over those forty-plus years and here are 7 reasons that construction companies fail:

Insufficient Cash Flow – Without a positive cash flow, it is hard for construction companies to keep their doors open. A lack of cash flow makes it hard to pay for materials, make payroll, maintain tools, etc.

When cash flow is negative, companies often make hasty decisions or take on jobs that aren’t a good fit for their company. This can result in further profit loss and more cash flow problems.

Unprofitable Projects – A lot of construction companies fail simply because their projects are unprofitable. Guessing at what a project is going to cost to do is not a very good plan. This is why having a proposal system that is consistent and accurate is essential to staying in business.

At Timber Creek Construction using our Proposal system, we consistently come in 25% under budget. This is in before overhead and profit.

Doing Estimates Rather than Proposals – It’s essential to establish clear communication with construction customers. Creating a detailed proposal, rather than just estimating, gives both the construction company and the customer a clear understanding of what will be provided and what they can expect. Following up with a contract is another step to achieving this goal.

There are as many bad customers out there as there are bad contractors. Some of those customers simply want to get the work done for free. They will argue about things that, they claim, were promised. A signed proposal and contract will help to prevent this from happening.

No Production Payment Plan – Having an accurate and understandable payment schedule with construction customers will set your construction company on the road to success. Not having a payment schedule requires your company to finance the project and consumes your cash flow. You are not a bank.

In my experience, you need to get some money prior to starting a project. This amount will depend on the size and type of project. Then invoice the customer with weekly progress payments that coincide with the percentage of completed work as outlined in the proposal. Customers appreciate a well-documented payment schedule that communicates clearly.

Not Using Change Orders – Unforeseen issues and changes creep into most construction projects of any size. Changes orders are needed when changes are made to the project’s scope of work. When a job change occurs, the construction company should submit a change order to the customer for approval. Waiting until the end of the job to bill for additional costs will be problematic. It will often result in customers being upset, giving bad reviews, and resisting paying.

Customers get excited about the work that is being done until the final bill comes. Then they find themselves over extended and unable to pay.

Poor Customer Service – Most construction companies don’t listen to their customers very well. These companies just focus on completing the work according to the contract. If they get paid, they assume all is good. But remember, construction companies are in the business of serving customers, this includes communicating clearly and consistently.

Most customers will only do a handful of sizable construction projects in their lifetime. Construction companies should remember this and help them build their dream.

Lack of Organization and Processes – Building a sustainable construction business is impossible when the bulk of the business is operating without being organized. To stay in business, you need processes and systems that can be efficiently managed by the people you hire to help you.

For companies that use sticky notes and boxes full of folders, you have a problem.

Job leads and customer management, project details, task management, communications, schedules, progress tracking, equipment management, the list goes on and on. Each of these elements is extremely time-consuming, error prone, and can negatively affect profitability and cash flow.

You can avoid making the same mistakes most construction companies make by being aware of and understanding these problems. Then implementing and learning processes and systems to ensure that your company succeeds.

This will help you to be in the top 4% of businesses in the construction industry.

Successful construction companies use business tools to build, increase profits, and manage their businesses. Now that you have a clear understanding why construction companies fail, it’s time to make some course corrections.

To help you with this we have a Business Building Toolbox with tools that can help you change the odds in your favor. We also offer training and implementation of these tools into your business if that would be helpful. If you have questions, schedule a free 30-minute construction company consultation.

Building Anything is Better When You Start with a Plan

January 31, 2024January 27, 2024 by Mark Eastman

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.

If you’d like more information about the proposal system referred to in this blog post, you can check it out here. You can learn more about some of the other tools for building a successful construction business here. If you have any questions, schedule a free 30-minute construction company consultation.

Previous posts in this series:

What is “business clarity” and how do you find it? (12/24/23)

What Does it Take to Build a Successful Construction Company (12/31/23)

It’s Time for the First Meeting (1/14/24)

Being Aware of Bid Mistakes is the Best Way to Avoid Them (1/21/24)

Getting Signed Construction Proposals, What’s the Best Number for You?

September 26, 2023September 24, 2023 by Mark Eastman

How to Know What Your Number Is and What You Should Do with It

I have been reading Simon Sinek’s book Start with Why this past week. In it, he discusses how customers will do business with companies and not even really know why. He says that it often has more to do with trust than price.

This is where word of mouth marketing comes in. If someone you trust shares about the great experience that they had with a company, you’re more likely to do business with that company.

This got me to thinking about the closing ratio of our proposals. Our closing rate has almost always been higher than industry standards. This is in large part due to many of our projects either being

repeat customers or someone that has been referred to us by one of our past satisfied customers. It does not seem to be this way for most construction companies.

With the hit and miss way of doing business in the construction industry, it’s amazing to me that there are any construction companies out there at all.

Another thing to be aware of and something that is often overlooked is when our closing ratio gets too high. Selling a lot of jobs is a good thing, but when this number gets too high, it’s a good indication that your pricing is too low.

Is your bid-hit ratio ok?

When asked the questions… “Do you know what your bid-hit ratio is? Do you keep track of it? How do you use it?” Most contractors have no idea. Well over 50 percent don’t have a clue what their ratio is. Less than 25 percent know and track theirs.

This is like driving a car blindfolded — trying to go somewhere without a clue where you are headed!

In order to determine how many jobs to bid on and what type of jobs to bid on, you must know your bid-hit ratio. Track it regularly. Track it for all projects you bid on. Track it by customer.

Having a system will help you determine which jobs to bid on and which jobs not to bid on. It will also help you determine when to eliminate a project type or customer from your plate and seek out better opportunities to invest your estimating dollars.

Knowing the percentage of proposals that get signed can be a critical piece of information and may determine whether your company will stay in business or not.

Most small to medium sized construction companies run their businesses by just throwing a dart and hoping it hits a dart board. They have no real idea of what they’re doing.

I would bet my annual salary that most construction companies have no idea of what percentage of their proposals turn in to actual construction projects. This is vital information to have for building a profitable business.

This is why we have a Job List tool for tracking this information in our construction business. This tool will do a lot more than just tracking the percentage of signed proposals.

You can find out more about this tool here –

I realize that the whole business thing can be daunting and overwhelming, but it doesn’t have to be.

The Job List tool, as well as, the Proposal, Contract, Change Order, Payment Application, and Saving Account Transfer tools are some of the tools that will be coming soon in our Business Building Toolbox.

If you have questions about the Business Building Tools and if they would be a good fit for your construction company, you can schedule a free 30-minute construction company consultation here.

It’s Christmas Time and This Is the Most Wonderful Time for Giving

December 17, 2022 by Mark Eastman

However, Proposal Systems are Not What We Normally Think of When We Think About Giving

Giving is an interesting word. For such a small and simple word, I had no idea how complex it was. In the Meriam-Webster dictionary there are sixteen different definitions with several sub-definitions for the word give. This is just as a verb, plus there are additional ones for uses of nouns, etc.

Just like the large number of definitions for the word give, there are a lot of great ways of giving.

One way of giving is the traditional wrapped presents under the Christmas Tree. And who doesn’t look forward to getting together with the people we love and sharing in the excitement of unwrapping that unknown gift?

Another great way of giving is sharing our knowledge and experience.

In my forty years in the construction industry, I learned some things. 😊 After struggling trying to figure out how to do accurate proposals, communicate clearly with customers and prepare a production budget, I knew there had to be a better way.

While a lot of construction companies are great at “constructing”, they often struggle with the business side of things. There’s a lot more to owning and operating a construction company than just building.

Unexpected costs, changes to projects and poor communication plague the construction industry.

It doesn’t have to be this way.

That’s why I developed the Blueprint for Building a Better Proposal system. This proposal system will give you the documents and instructions needed for preparing proposals that communicate clearly and accurately with the customer, while allowing you to be profitable.

This system includes templates for:

Bid sheet – A Word document with all the construction sections and individual items already listed out with space for filling out the scope of the work to be done, dimensions, materials, locations, etc.

Worksheet – An Excel spreadsheet with all the construction sections and individual items already listed out with optional overhead and profit markups already inserted in the appropriate cells.

Estimate – A word document with spaces to fill in the pertinent information, i.e. customer’s information, what will or will not be supplied by the contractor, the scope of work, the estimated price for each specific element and a total estimated price.

Proposal – A word document with spaces to fill in the 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.

Contract – A word document with spaces to fill in the pertinent information, i.e. customer’s information, list of referenced documents, construction funding information, property specifics, project start date and legal terms and conditions.

Proposal-Contract – A word document that is a combination of a proposal and contract in one.

It also includes:

Data Base – An Excel spreadsheet with prices for material and labor for a wide variety of specific construction tasks. This information can be copied and pasted to the worksheet.

Instructions – Complete and comprehensive instructions for how to use this system and put it to work.

Example documents – Complete Bid Sheet, Worksheet, and Proposal for a hypothetical construction project.

Back to the spirit of giving –

I want to give of my experience and knowledge because I want to see more successful construction contractors and more happy construction customers.

So, this Christmas we’re giving by reducing the $497 price of our Blueprint for Building a Better Proposal system by 80%.

The Christmas price is only $97!

This reduced price will allow contractors to give clearer more accurate proposals to their customers.

If you know someone in the construction industry that you think would like the chance to save $400 on this proposal system…give them the link to the Blueprint for Building a Better Proposal or give them the link to this blog post.

We also have a free document you can download called the 7 Bid Mistakes. It will walk you through the common mistakes that cost contractors a fortune and how to avoid them. And because it’s free…we’re giving it too.

Poor Communication is the Number One Reason for Disagreements

February 26, 2022 by Mark Eastman

Avoid Disagreements by Going the Extra Mile to Achieve Clarity

As I stepped out of my comfort zone this week and prepared the proposal for VB Homes’ “construction proposal system”, I was reminded of the importance of communication.

As I worked on this proposal, I considered reasons for them needing this system and it reminded me of the importance of good communication. The consequences of poor communication are huge.

An excerpt of a previous post from August 2016

Over the last few days, I was reminded of how important good communication is.

Two separate instances have come to my attention confirming this.

One situation is of a customer who had been given a price for a project and then after the project was started (concrete was poured) found out the price for the project was more than they were told. This caused some real problems for both sides.

The second was someone who had a project done with no written agreement. Once the project was almost completed there were some quality issues. This left both the customer and the contractor in a place where they felt cheated. The contractor billed for work done but wasn’t getting paid. The customer felt that the work was below standard and couldn’t get the contractor to come back and fix it.

As is usually the case there were extenuating circumstances in both situations and both sides had legitimate viewpoints.

Both projects would have had less problems had there been clearer communication from the beginning.

It has been my experience that there are differing opinions on how much detail should be included in the communication between customer and contractor. The bottom line is that it needs to be enough so that all parties involved know what to expect.

Rarely have I known small to midsized contractors to spend the time and effort to include very many details.

I understand, it takes time. The question we should ask is this…

Is it better to spend the time communicating before the project starts or wait until there’s a problem and everybody’s upset?

On the other side there is the possibility of too much information and the customer being confused and feeling lost (I know, it’s hard to believe that I just wrote that).

Often large commercial contracting firms and architects do this. I recently was aware of a commercial project that the communication was overly complicated. There were forty-one pages of drawings and a spec book over 1” thick and it wasn’t that big of a project.

With all that information the customer was overwhelmed and unclear about the project. Don’t get me wrong I like details and information. I think it is essential to good communication. The problem is that if it’s too complicated the customer still is uniformed and lost. This is still poor communication.

Ultimately proposals should be about helping customers know what to expect and get their dream project done.

I have lost count of the number of times that I’ve heard customers say that a building project was the worst experience they ever had. How sad is this?

They were excited and looking forward to having some new project done and then they are left with feelings of regret. I think there’s a balance between the two extremes.

This is where the real challenge is, finding the sweet spot for all involved.

There is a lot to consider when it comes to good communication, but the first thing is, ask questions and listen to the answers. As a contractor, don’t go into a project with your preconceived ideas of what the customer wants.

Find out what THEY want and HELP THEM BUILD IT.

Hopefully the proposal sent to VB Homes was clear and understandable and gives them a clear picture of what to expect.

Doing a Proposal for Doing a Proposal System is Out of My Comfort Zone

February 19, 2022 by Mark Eastman

But “Comfort Zone” is Just an Excuse to Not Fulfill My Purpose

There have been a few times when I stepped outside my comfort zone and the results were not what I’d hoped for. On the other hand, there have been times when I stepped out and the results were better than expected.

So, if this is the case why is it that I push back at taking chances? The comfort zone is called that precisely because that’s what it is…comfort-able.

The problem is we won’t ever achieve our purpose in life if we stay comfortable.

Living the life God wants us to live requires getting uncomfortable once and while.

There are a lot of boundaries we put up to keep ourselves from going out into the big scary world of the unknown. It’s not that these walls are bad things. They may even be good things.

I know that, in an effort to be sure that I’m prepared before I go out there, I’ve done things like trainings, classes, courses, etc. You know, to be sure that I know what I’m doing. Ray Edwards refers to this as “educrastination”. These are not bad things; we just need to be careful to not let them trap us in our comfort zone.

There’re also tool barricades. I tell myself that this new tool, gadget, program, system or process, will make me better prepared to confront the big scary unknown outside of this place of comfort.

Here’s what I do know. If I don’t go out there and do that thing that I’m scared of, I’ll never accomplish the thing that God wants me to.

Okay, okay, I’ll do it.

I’ll start working on a proposal for making a proposal system for VB Homes.

Last week I wrote that I was rethinking how my proposal system could be more helpful to contractors. I know of a couple of local contractors who got my proposal system and then didn’t use it. Why not…

I developed a system that works so well at efficiently preparing consistently accurate proposals.

Why wouldn’t every contractor want to use it?

Back to last week’s post.

After being connected with Chris Ettel of VB Homes by a mutual friend. Chris and I met a few times discussing my proposal system and I began to see that there might be some things in my system that could be changed to work better in their business.

I realized…not every contractor is the same.

At our last meeting we discussed the possibility of me designing and developing a modified version of my system that would work for them and their specific needs. He was very receptive to this idea…

Now comes the big scary, outside of my comfort zone thing.

Just like when I started doing construction, I didn’t know how to do proposals, this is the same thing. I made it through that scary thing I can make it through this one.

Here I go stepping out of my comfort zone.

I’ll let you know how that goes.

As a Construction Company It’s Hard to Make a Profit

December 26, 2021December 26, 2021 by Mark Eastman

We Work Too Hard in the Construction Industry to be Giving Away Money

Just like there’s a proper way to do construction projects…the same is true for proposals.

You don’t shingle the roof before you pour the foundation or start hanging sheetrock on a wall that hasn’t been framed.

There’s a proper way to construct a building. Doing proposals is the same. Having a system for doing proposals makes this possible.

Pricing of any construction project uses the same information to arrive at a dollar amount…material and time needed to do the work. Where problems arise is in overlooking or forgetting something, guessing at how long it will take, or unclear communication.

The key to unlocking the profit vault is having a system that prevents overlooking, guessing and poor communication.

Proposals should be done, so that you –

Avoid miscommunication
Have happy satisfied customers
Have budgets for customers
Provide scope of work to production crews
Have budgets for production crews
Take responsibly as the professional
Have a more profitable business

This is accomplished through five simple steps. These five steps are –

1st – Gathering information – Gathering the right information correctly and effectively is critical to preparing an accurate and thorough proposal. The initial gathering should include:

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 important thing in this step is to gather any and all information needed to prepare an accurate proposal. Using the system’s Bid Sheet minimizes the chance of overlooking things because the different areas of a construction project are already listed out.

2nd – Preparing a scope of work – This is the process of taking the information that was gathered and describing 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. This written description will be transferred to the Proposal and serve as a written description of work to be performed and materials to be provided.

3rd – Pricing the project – This process is the copying and pasting of pertinent information from the Data Base to the appropriate cells of a blank Worksheet.

4th – Quantities – Fill in the quantities of the work on each line item included in the project. This may be lineal feet, square feet, square yards, cubic feet, cubic yards, numbers of pieces, etc. Now you have prices for each of the different tasks to be performed.

5th – Preparing the proposal – Now you have everything needed to complete the Proposal. Take the descriptions from the Bid Sheet and the prices from the Worksheet and put them together on the Proposal. After filling out some job specific details the proposal is ready for the customer.

Proposals done well, above everything else, is the one thing that will contribute to you having a profitable business!

The Blueprint for Building a Better Proposal system provides clear and accurate proposals…every time.

You can get the Blueprint for Building a Better Proposal and have proposal system that will do all this and more. This system is currently at a reduced Holiday price of $497 plus it currently includes some bonus templates.

If you would like to learn more about how proposal mistakes cost construction companies a fortune, check out this free download.

Can You Imagine What It Would be Like to Build a House Without Power Tools?

November 20, 2021 by Mark Eastman

So, why is it That Most Construction Contractors Will Do Proposals Like That?

Think about building a house by sawing every board and sheet of plywood with a handsaw. Mixing the concrete all by hand. And driving every nail with a hammer.

This sounds like a long drawn out, difficult method for building.

This is how most construction contractors do proposals.

The same way they’ve been done for 100 years. It’s like building with hand tools but it doesn’t have to be like this.

There’s a power tool for doing proposals.

When doing proposals, the old “hand tool” way the contractor will do them the same way grandpa would have.

If they are a particular person, they will determine the size and quantities of the material needed. This will include –

The cubic yards of dirt that needs moved
Cubic yards of concrete
Boards needed for framing of floor, walls, roof
Siding, exterior trim, exterior paint
Shingles, roofing underlayment, flashings
Insulation for floor, walls, attic
Doors and windows
Base, casing, stairways, misc. trim
Cabinetry, countertops, closets
Interior paint, stain, clear finish, wallpaper
Carpet, vinyl, tile, etc.
Plumbing pipe, fixtures
Heater, AC condenser, ductwork, registers
Electrical wiring, fixtures, receptacles, switches, breaker panels
Porches, decks, railings

Once these things have been figured and counted, they will get prices for each of them to determine the cost. Then they will guess at how long it will take to do the work and put a price to it.

Less detailed contractors just guess at the whole thing.

Building a house takes a lot of pieces. The same number of pieces…regardless of how you figure the price.

Wouldn’t it make more sense to have a power tool that would allow you to consistently determine the price whether you are a detailed person or not?

The Blueprint for Building a Better Proposal is a “power tool” for doing proposals.

This power tool provides:

A scope of work that communicates clearly with customers and production crews
A budget providing production crews with a clear understanding of time allowed and material costs
A system that allows for delegating portions or the complete proposal process

To get this “power tool” in more contractor’s business toolboxes, we’re offering a Holiday Special beginning Black Friday through the end of the year. This special includes a reduced price for the proposal system plus free bonus templates.

In addition to the reduced price for proposal system there’s going to be a contractor drawing for a…

DeWalt cordless tool kit

Check next week’s post (11/28/21) for details of how to get entered in the power tool drawing.

If you or someone you know would like to learn more about how this power tool can help avoid the 7 common bid mistakes contractors make that cost them a fortune.

Click here.

The Why Question is the Most Important One That Gets Asked the Least

July 10, 2021 by Mark Eastman

WHY is That… and What Do We Do About it?

As I’m working on the workshop for Building a Better Proposal system, I was contemplating WHY questions.

Why –

Should construction contractors do proposals?
Don’t they?
Does a customer want to do a construction project?
Do we do the same things over and over expecting different results?
Do people in horror movies repeat the same bad decisions?

Small children constantly ask the why question, over and over and over…? You know what I mean. This is how they learn. Why do we outgrow this sense of curiosity and stop asking the WHY questions?

The answer to all questions starts with WHY.

Why should construction contractors do proposals?

This question is the one that baffles me as much as any. How can contractors expect customers or production crews to know what work is going to be done and what it’s going to cost without some clear communication? I don’t think you would buy a truck without knowing what you were getting. I know I would be disappointed if I ordered a new $70,000 truck and when I got it, it was a 1999 ½ ton pickup missing a wheel and the driver’s door.

Why don’t contractors do proposals?

The most common answer to this question is that they simply don’t know how. This is something that just isn’t taught. Most contractors start out doing construction, not paperwork. They figure out some guesstimation process and then wonder why customers are upset when they get a bill that is higher than they expected for less work.

Why does this customer want to do this construction project?

This should be the primary question that a contractor gets the answer to. It is more important than what. The “what” answer has a “why” answer behind it. The why question doesn’t have to be asked directly, but regardless, needs to be answered. The why is the foundation for the customer’s dream. A foundation is critical to building construction projects and dreams.

Why do we do the same things over and over expecting different results?

We all do this to some degree. Why? Why do we continue to repeat things thinking it will be different this time? We shouldn’t do things just because… “we’ve always done it this way”. The more we walk back and forth in a rut the deeper it gets and the harder it is to get out. I heard it said once that a rut is just a grave with both ends kicked out. Stop walking and determine if this what you want and if it’s the best plan. If not do something different.

Why do people in horror movies repeat the same bad decisions?

This question is a fun example of the previous one. If you’ve ever watched any horror movie you’ve seen this. The teenagers are in a dark scary place and instead of getting out they continue to hide in a basement, an attic, a cemetery, etc. The GIECO “horror movie” commercial is a great example of this.

It’s up to us to decide, are we going to do something different or stay in the rut?

These are just a few questions about construction proposals and…horror movies. 😊 We should be asking the WHY question about everything. This is the most important question there is.

We have the choice. We can just keep doing things the same way…or we can stop and ask why. Why are we doing this? Whatever “this” is. Until we answer the why question all other questions are harder to answer.

Be like a child and ask, why…why…why…why… and never stop.

Dollars and Cents Are What Make a Construction Project Profitable…or NOT

April 11, 2021 by Mark Eastman

Having a System for Proposals, Is Better Than Just Guessing

It’s week six of learning the Blueprint for Building a Better Proposal system. As time consuming as learning new things is…John is beginning to see the benefits this proposal system will provide.

Just like building a house using a system that repeats routine actions prevents time being spent rethinking and guessing at how to do things. This system will do the same thing when preparing proposals.

As they settle in and begin the meeting, Gene tells John, “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 bidding. Then we went over the system and it’s 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

In this step we will determine the price for the project. Communicating a clear description of the project took place in the Scope of Work which is important in avoiding misunderstandings. Accurate pricing is equally as important.

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 to be 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 used from the Data Base and copied to the Worksheet.

If more than one item for a specific task is needed, for example shingles, synthetic underlayment and metal edging, 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.

How to determine which tasks should be inserted into the Worksheet

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 quantities of the work to be done.

Fill in the quantity needed to do the work for each item on the Worksheet. This may be 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 prices for each task of the Proposal.

This system offers a constant repeatable process for preparing accurate proposals and is the difference between making money or losing money on construction projects.”

Gene looks at John and asks, “Well, what do you think?”

“Well, I thought my head was spinning before today. Now I’m getting dizzy.”, replied John with a grin.

“I know it seems like a lot, but it really isn’t, once you get started using it.” Says Gene 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.”

Guessing is not a good way to build a profitable business.