Mark: Today on PowerTips unscripted, we talk to Doug Howard, senior consultant of Remodelers Advantage. Uncertainty Economics, slower processes. There are a lot of outside factors that are impacting preconstruction and construction workflow and therefore your profitability. Remodeling company owners need to not accept these conditions, but develop the strategies and practices to overcome them. Doug is here to help you do just that and you’ll hear all about it in just a minute.

Victoria: You had me at Hello. He looks like a you know.

Victoria: Hi, this is Victoria Downing and welcome to PowerTips Unscripted, where we talk about tips, tactics and techniques to help you build a strong, profitable remodeling company. And I’m here with my co-host, Mark Harari.

Mark: Hi there.

Victoria: Hi, how are you?

Mark: Awesome.

Victoria: You know, we’re in the midst of roundtable meetings there, so exciting. And we’re hearing all sorts of cool things that are going on. But we’re also hearing about some of the challenges our members face. Well, our guest today is going to be sharing some of that cool stuff with us.

Mark: It’s going to be good.

Victoria: You know, facilitating roundtables, meetings gives you such an inside look into what’s happening in the marketplace as a whole.

Mark: It’s great to have a finger on the pulse of the industry, isn’t it?

Victoria: And that’s what remodelers advance is all about. So let’s get started.

Mark: Start away.

Victoria: Doug has been a senior consultant with remodelers Advantage since 2017 and facilitates eight roundtable meetings every year. He’s worked with several hundred remodeling clients to help them develop strategy, understand financials, improve processes and enhance profitability. Hey, Doug, how are you?

Doug: I’m good. How are you?

Victoria: Good. Glad to have you back on the show.

Doug: Thanks for having me.

Victoria: So today we’re talking a little bit about what throughput pre-construction thinking ahead, starting to think upstream. Tell us, what have you been seeing as you’ve been diving into the intimate details of dozens and dozens of companies? What do you think are some of the biggest challenges facing our members and remodelers going into next year?

Doug: Yeah, I think the biggest challenge really is the flow of work coming out of pre-construction in the construction. For a lot of folks, 2023 was a good year, but for a lot of them it was not the year they thought it was going to be, and a big part of it was we sold enough and we could have built enough, but we couldn’t get enough into production because of different slowdowns and things like that and because of some of the news that’s out there, I think a lot of people are already preparing for sort of an underperforming 2024 and that’s not a great way to start the year.

Victoria: No, for sure. So you talked about slowdowns and delays and a bunch of things. So what are you seeing as the causes for that lack of throughput?

Doug: Sure. I think the single biggest cause is really not identifying the power of pre-construction for most of these companies. Right. So that our folks if you ask somebody who’s in charge of sales, they can tell you and if you ask somebody who’s in charge of production, they can tell you. And then if you ask them who’s in charge of pre-construction, you either get no name or like seven names and, you know, we we talk about the sales to production hand-offs, and that’s still an important component.

Doug: But I think for some people they think, you know, someone packages it up and throws it over the wall and then someone grabs it and goes and builds it. And the reality is, is that, you know, how that pre-construction process goes and how much interaction there is between Britain and the production team really determines, you know, how that flow goes.

Doug: Pre-Construction needs to remember its only purpose is to keep that production engine going at a pace that’s going to make us profitable.

Victoria: So define pre-construction for us.

Doug: So to me, it’s everything that happens from the time we get the sale, whether it’s a design agreement or into the design process, all the way up into demo day for the construction team. Right. So it’s everything that includes estimating going from that ballpark price down to a specific number usually involves getting the construction agreement done. But then all the design, the revisions, the product, ordering everything right up until, you know, handing that to the production team to do their thing.

Victoria: So what are some examples of ways that people could improve this pre-construction process? But even before that, let’s say there’s the seven people involved, Are there specific bottlenecks that you’re seeing?

Doug: I think the most challenging one really is design. Most most folks work through estimating sometimes a little bit inaccurately, but they work for estimating because they’ve got to get that number to get the construction agreement. But when we have stuff in design, usually it’s a, you know, designer or design team and not really through any fault of their own, but they just have multiple projects that are working on.

Doug: And when I ask them how they prioritize, some are still working first in, first out, some or some are doing a little bit on everybody every day. Some wait to see who’s screaming at them. Right? But the reality is we should be backing into the launch date for the construction project to say, okay, this is the priority because by this date, this project has to be ready to go to keep production working at that pace.

Doug: That’s going to keep them profitable. So I think that’s the biggest challenge. It’s an even bigger challenge and people are use it outside designers and outside architects because the feeling as well, I gave it to me, there wasn’t much I could do. We’re seeing some people really manage that process really well, like, Hey, Joe, the architect, you’re working on four projects for us.

Doug: If you’re going to spend any time on our stuff this week, this is the one that needs to be moving forward, most, you know. But a lot of people just aren’t even having those conversations.

Victoria: Right? So, okay, so besides having those conversations and focusing on the projects that are what the easiest, the fastest to get into production, what are some other ways they can improve this pre-construction process?

Doug: Well, I think some of it is really just a matter of streamlining the process. You know, sometimes we ask the first seven things that we need to get ordered and get those squared away, and we’ll come back for more selections later on, when in fact, maybe there’s more that we can accomplish with fewer meetings. Maybe we don’t have to have three or four selection meetings.

Doug: They wouldn’t get it down to three by just streamlining, which doesn’t sound like a lot. And it’s not the meeting itself, but it’s all the coordination that goes back and forth. It’s some of the things that we learn even just in the sales process, right? Like set the time of your next appointment, your next follow up. I can’t tell you how many people I talked to in the middle of August that we’re trying to get jobs in for the fall.

Doug: And they call and find out that their customer was in Italy for two weeks. Right. Well, that customer didn’t decide to go to Italy that morning. Right. Asking the question like over the next four or five weeks when we’re really going to need you. Are you out of pocket? Because we could have gone out two days earlier before they left for Italy, done those answers and been working on it while they left.

Victoria: Right.

Doug: It’s just the fundamentals of staying on top of our game. And I think there’s a belief that, you know, so much is out of our control. I think our best performers and, you know, you see it all the time. They’re the ones that say, if there are more things out of my control, I’m going to be twice as good at the things that I do control.

Victoria: Okay, great. Other examples of ways to improve communicating with your clients or controlling the design. What else?

Doug: I think just very specific customer expectations, too. You know, it’s, you know, when we start a process, Hey, these are milestone dates. We’re going to need to hit. Let’s go ahead and set your time right now. So we’re going to the showroom or, you know, we generally do two revisions, maybe three. But sometimes we say like, we’ll design it until you’re happy.

Doug: Well, for the customer, that could sell like 17 revisions. Yes. And so then all of a sudden, Preqin is feeling the pressure of something that sales kind of set up as a false expectation.

Victoria:

Doug: And so those things are really important. Another big part is just understanding the predecessor activities. When we sent internal milestones, internal deadlines, and, you know, we’ve been giving the clients a tool to use that where they can put in the launch date. And we measures like the seven or eight things that they have to do to get to that launch date.

Doug: And it backs into a set of internal deadlines. Well, when people have those internal deadlines, it’s a lot easier for them to look at it and say, okay, well, this has to happen this week. So I meet that deadline. And so, again, I think a lot of it is just really, really good communication. The other big piece is getting production involved in these discussions early on, things that we heard that are easy to miss and estimating things that are easy to part of a design or things that are easy.

Doug: When someone gets to production that says, well, that’s not the best way to do that. When those conversations are happening after the design is done and after the customers been given a fixed price, it’s a much bigger challenges than saying no. So and this came up at our last roundtable meeting, and it was one of the funnier skits that I’ve seen of people presenting to each other.

Doug: But two of our really colorful members exhibited a relay race or demonstrated a relay race because I kept saying, this isn’t like tossing it over a wall when you watch a relay race, Right? They run side by side for a period of time. It’s the same speed and literally put that baton from one hand into the other.

Doug: So when you think about preconstruction and production, they’re not just something that happens before the other. There’s a period of time they need to run together on them.

Victoria: That’s a great analogy. I like that one a lot.

Doug: And when they have that handoff, it’s like firm. We take those things, we’ve decided to put it in the hand of production. It also makes it much less likely that production is going to come back and say, Hey, this was our fault.

Victoria: Right. Right.

Doug: Not about the blame. And we like to point out that on these projects, we don’t win or lose by department. We win or lose as a company.

Victoria:

Doug: And a lot of times I’ll hear people say, well, you know, that job was, you know, a nightmare. But production did what it was supposed to or precor and, you know, did a great job. And it’s like, well, there aren’t too many teams that walk off a field and say, we lost, but the offsets won. All right.

Mark: Well, so, Doug, you mentioned early on about either remodelers will not have a name for someone that owns the process, or they’ll have ten names that they throw at everybody in the process. And clearly, if everybody owns a process, nobody does. Right. So who do you how do you help them through that? Who do you recommend in the process and what does that look like?

Doug: Sure. And I think it’s one of three things. If a company is big enough and can can afford it, a preconstruction manager is great. Someone that is really, you know, taking that process from sales over to production, overseeing the schedules, working with that architect, doing those kinds of things. It’s not someone on the pre-construction team and it can’t really be anybody.

Doug: For some people it’s an estimate or for some it’s a lead designer. But that person is sort of like they’re working in their role, but they’re also taking responsibility for the pre-construction schedule. So they are kind of a little bit elevated, maybe part of the leadership team, if that’s not the right approach, then we’re at least looking for people to put a pre-construction coordinator in there.

Doug: Now, this isn’t a senior level role. This is more of a, you know, kind of a support role. But it’s also someone that says my job is to keep a close watch on that schedule, let somebody know when things are falling behind. But one of those three scenarios is that either at a very senior level or an operating level or support level, somebody is watching the schedule, setting priorities, communicating with production, that kind of thing.

Mark: Just a quick follow up, because, you know, I love you’re the king of analogy and I love the analogy. And one of your big analogies is often to use flying planes and and, you know, being merciless and all that kind of thing or.

Doug: Just.

Victoria: Versus what kind of planes besides fly.

Mark: A fly a helicopter. But how about that? Okay.

Victoria: Sorry. Yeah. Right.

Mark: So anyway, and you know, it’s funny because in aviation, a big issue I watch actually, I was just watching last night, air disasters, which is always fun to watch before you get on a sort of plane.

Doug: I like to show them on the plane.

Mark: Yeah, that’s. That’s good, too. But but, you know, one of the big things is the preflight checklist, right? And they have to go through and and this is an industry that’s built on checklists. Do you find that remodelers are using checklists? And how’s that.

Doug: Working? That’s a great question, Mark. I feel like most of our folks have great checklists and they’re nicely tucked away in a binder somewhere or going somewhere. Right. You know, the immediate reaction to finding out that we have a problem or a challenge or going through process improvement or maybe a job autopsy is we add something to the checklist, right?

Doug: And then you ask people, like where the checklist when do you look at them? How do you train, how to use them? And a lot of folks, it’s not right in front of them. So I think a big part of and it’s funny cause sometimes people bring us into it to look at their processes. I need more processes and someone other team will say, Well, haven’t we already done this?

Doug: And you dig a little deeper and you find they’ve got processes they just haven’t really been following them, or maybe during code that weren’t posted when we had all the surge of activity and we didn’t have to be as tight on our sales process or pre time. So I think that’s that’s a big part of it. But, you know, you’re exactly right, Mark, because, I mean, a pilot could be 20 years of pilot super experience.

Doug: It could be their seventh flight of the day. And they still painstakingly go through that checklist because it’s it’s that important. And I think it’s a great training tool for for folks as well, you know. But so I think they’re out there. But I think finding a way to make sure they’re in front of folks and they’re part of the that handoff and really defining that.

Doug: You know, it’s as important as the the punch list, you know, where we should be going from the pre-check all the way through to the watch list with that level of.

Mark: Remodeling company’s need, just like in the airplane cockpit alarms that go off if you didn’t do a checklist item.

Victoria: Yeah.

Doug: No, that’s exactly right. And then they need to leave you sitting on the runway for hours and hours. Well, let’s figure it out.

Victoria: You know, Doug, you talked a bit about internal milestones for that pre-construction process. Can you give us a couple of examples?

Doug: Yeah. So, I mean, if we have a job that we know is going to start on December 1st, you know, people know what they need when permits need to be submitted, when, you know, final revisions need to be done, preliminary drawings, all those things. So a lot of times we’ll have somebody spell out their process and it’s interesting when we do that because it usually takes them a couple of iterations to get everybody to agree.

Doug: So let’s say there’s 14 steps for pre-construction on average. You know, we sort of say, okay, this takes four days, this takes a week and a half, and we plug those in. When they put that launch date in, it backs them up. And a lot of times you’re like, my, we’re already too far along. Right. So is that launch date really realistic?

Doug: Because I’m sure you guys have heard this, but people will say, well, this used to take this should be a six week process, but it’s not. It’s an eight week process. And it’s like, well, for a lot of people over the last two years, you know, things that were a six week process are now an eight week process, but we’re still scheduling and repricing.

Doug: It went through a six week process. Right. So that’s part of it. But when each of those individual deadlines, you know, sort of get defined and then we can go to the design team and the estimate or and give them some advance notice that this is one, we’re going to need this step in the process. It just allows them to plan much better.

Victoria: Yes.

Doug: Yes. I like to see a pre-production schedule that’s almost as detailed as our production schedule. So the designer, the architect, the person submitting the permits should look almost similar to the same schedule we have with the plumber, the electrician.

Victoria: The contractor mean that makes a lot of sense. How does team alignment and thinking of upstream impact the workflow on profitability?

Doug: Right. So upstream is a concept I love. It was captured in a book by Dan called Upstream. In the first page of the book, he shares a story, an allegory that’s been used in public health for years. So, you know, these two guys are out of the park and there’s a stream running through the park, and all of a sudden there’s a kid that’s, you know, choking, waving their arms, you know, clearly struggling to swim.

Doug: So the guys jump in and grab the kid out of the water out, and then all of a sudden there’s another one and they jump back in the water and they pull that kid out. And by the time this happens, the third or fourth time when the fourth kid comes down, one of the you know, the guys jump back in the water to grab the kid and the other one starts running up the hillside and the one in the water says, where are you going?

Doug: And he says, I’m going upstream to find out who’s throwing these kids in the water. Now, the story ends with once he gets there, he realizes there’s a little footbridge and the guardrail has been broken. So kids are sitting on the edge of it and jumping in the water where they should. So obviously, the message is fix the bridge, right?

Doug: Fix the guardrail or we can spend our days being really, really good at plucking kids out of the water with the concern that if we missed one, it’s a big deal. Yeah. So when we look at production, we spend a lot of time plucking kids out of the water with lots of things that could have been dealt with further upstream.

Doug: So when we share that story, we actually tell this particular story with folks and get them understanding that from the from the time we sell something until the time we start building it, you know, this process is working downstream. And a lot of the problems we experience that show up in production could have been dealt with before, double checking in order or a better scope of work or even just using the same terminology, which is a challenge in some ways.

Doug: Right. And the nice thing about that is when we start that conversation, it’s not about, you know, why did you do me in or why did you do such a poor job on something that’s left me this problem. And we’ve actually and I love when people do this, they’ll say, well, doggone this, we went upstream and talked to the architect and it’s yeah, using that terminology says, okay, we’re getting the fact that it’s not just, you know, someone in their role struggling, it’s that the process is not making it easier to have it flow all the way through.

Doug: And when folks get that, they start having much better conversations.

Victoria: Okay. All right. Great. So and through those conversations, eliminate those issues, making everything go more smoothly and therefore making more money because it’s a vision.

Doug: So, like, can we do on sites with the company? It is very natural if we break them into groups for someone to say, let’s put the salespeople together, let’s put the preq1 people together and the production people together. And I almost always totally reshuffle the deck. Anything we’re going to want, we’re going to want to work on.

Doug: I want some representation of each of those groups in the individual projects, because when we start talking about why are we going back and doing rework or why are we struggling with scope of work? It’s the interaction between those departments that finds the real clues to fix it. Yeah.

Victoria: Yeah, that’s great.

Mark: This is really good stuff. So are there any how does a company measure this kind of I mean, are there KPIs? How can they measure what’s happening?

Doug: Yeah. Yeah. So, Mark, I’m going to go back to your comments about planes. The fly right. So good. And we talked about this at the summit, right? I tell people, you know, when you first get your pilot’s license, you’re you’re cleared to fly what they call visually rated, right? You can fly a clear day as long as the conditions are good.

Doug: And in kind of a humorous way, I describe what the conditions being clear for a remodeling company about, you know, everybody gets their selections right the first time. Every budget lovers, every idea that they want and you know, all those. And of course, usually folks are laughing because they experience none of this stuff in the right. And so it’s not just about being able to fly on a clear day, but as a pilot you can then get instrument rated, right, which takes a lot more training.

Doug: You have to learn what the instruments are, what the acceptable ranges are, and then what do you do when something’s not in range? How do you react in a timely way but not overreact? How do you know which way you’re pointing and that? And then in that when you get that rating, you can fly in much more challenging weather.

Doug: Well, my feeling is most of our folks for years to come are going to be flying in challenging weather. And so we start looking at what those instruments are. Everything from the time we’re spending at each stage of pre-production, really true profitability on jobs, actual closing rates. We do prospect prospects of construction. What I find is people, you know, when people give me a number, like 50%, I’m like, you know, that’s not a real number, right?

Doug: Our closing ratio is 50%. Literally, because you’ve been doing this ten years. If it’s not 50 point something, it’ll be like. Right. And so as we dig into it, we find, well, what’s you know, I love to ask people like, what’s a win, What’s important for the company? Customer satisfaction. Great. How do we measure it? Well, we survey our customers on a scale of 1 to 10.

Doug: We do it every month or every week. Great. Can you show me the scores for the last month? Well, we don’t write the scores down or anything. You know, we don’t really. Those was more like, okay. And so the fact is, I think a lot of people and I’ve been bringing this up in every meeting this fall sort of measure things which really measure things.

Doug: And I like to point out to them in the line of work that we’re in, if you sort of measure a two by four and don’t really measure it, you probably don’t end up with a very good structure. And so it’s you had to stay low quality. But but the reality is, if it’s that important, we need to measure it.

Doug: And when we do, it’s like, well, that’s telling us something. So I think there’s three or four statistics in marketing. I think there’s three or four in pre-construction, namely how much time it’s taking us at each stage where we’re getting hung up. And then, of course, you know, just profitability in production, but really by phase of the job, you know, not just to say, well, we had 3% slippage on that job.

Doug: Okay. And then at the end, I think someone’s got to look at and say, okay, we’re pricing jobs at 40% and this one came in at 28. Did we give up some percentage points in sales? Did we lose some in pre-construction in the product? Like, where’s the lead? I mean, imagine a plumber trying to fix a problem and not figuring out where the week was.

Doug: And to me, it’s like if we have this pipe design for 40% and we’re getting down to only getting 28% off the other end, we got a leak somewhere right? So he’s got to figure out where it is and fix it. But and it sounds super simple, but if you don’t measure anything along the way, it’s more of a general discussion.

Doug: And I think that’s why they keep having the same conversations. And I know you guys have seen it, but to me, especially with some groups we’ve been with for a while, you know, sometimes you see someone making a commitment that they made a couple of years ago, like they figured this out a couple of years ago and it’s gotten away from them again, right?

Doug: Yeah, that’s very, I think, frustrating for them. But it’s a good indication that we took our eye off the mesh.

Victoria: Right. Yep. Yep.

Mark: Awesome. All right, well, let’s continue the analogy, I think, Doug, where we’re getting we’re preparing the plane for landing. So we’re going to we’re going to go into the lightning round. You ready? Yeah.

Doug: And now here’s a reminders advantage. Lightning round. It’s a trap.

Mark: All right, let’s put 60 seconds on the clock. What is your favorite business book and why?

Doug: I like Good to. Great. I think it really kind of gives the right framework for folks at a higher level. So that’s that’s what I always start with.

Mark: If you weren’t a consultant, what do you think you’d be doing?

Doug: I’d be a tour guide at Mt. Vernon.

Mark: What are you not very good at.

Doug: Anything related to construction.

Mark: Name a movie you’ve seen more than ten times.

Doug: Miracle.

Mark: Awesome. What’s. What’s your biggest pet peeve.

Doug: And people not listening to me?

Mark: Saga. In one word, describe your high school self.

Doug: My high school sucks. Confused?

Victoria: I think one of the reasons your consulting clients like you so much is because you’re funny.

Doug: Which is the only reason the numbers play out. Yeah.

Victoria: So that was awesome. This is really good. It’s fitting right into what I’m seeing also in the roundtable meetings and interactions. Our members. So thank you. But before I let you go, I want you to share your five words of wisdom with our listening audience and share why they resonate with you.

Doug: Sure. My five words are measure what you must improve once you decide something’s important. You’ve decided it’s a critical factor for profitability or success or growth, or your own happiness or whatever. The best way to figure out if we’re going to be able to do something about it improve it is to measure it. And yeah, so measure what you must improve.

Doug: All right, that’s perfect.

Victoria: Thank you so much, Doug. We appreciate your time. And I know you’re off to another roundtable meeting, so have a great one. Good to talk to you again soon.

Mark: And if people want to if people want to reach out to you, how would they and to pick your brain and actually just maybe want to find out how funny you are.

Doug: If they live at a high elevation, they can just go to the mountaintop and scream, I’ll hear them. You want to use technology? Doug At remodelers advantage dot com is the best one I call.

Victoria: Thanks, Doug.

Doug: All right. Thanks.

Victoria: Bye. That was good stuff. You know, and I think that a lot of people forget just going back to to the basics. But I like the fact that he really focused hard on pre.

Mark: I love the upstream stuff. Yeah.

Victoria: Yeah. That made a lot of sense.

Mark: You know, just you’re constantly working downstream on fixing the things that. Well, why don’t we just go up upstream and and fix it. The origin of the issue. Right? Instead of cleaning up the picking out the kids out of the.

Victoria: Water, you know, one of the things that came to me when he was talking about that was I was at a recent roundtable meeting. And one of the issues in this particular company was that their construction drawings, every designer did it differently. There were no standards. And so that seems that could be an easy fix upstream before it got to production.

Victoria: And they don’t depending on the designer. Right. You know.

Mark: Well, like you mentioned, just getting them to everybody using the same terminology. Right. You know. Yes. A perfect example.

Victoria: You know, that was another good one. This last meeting, one of the companies uses terminology that was so unfamiliar to the rest of us, they had to put in a little glossary. And I was like, What’s that? That’s a we put in a glossary. okay. Yeah, that. Yeah, that’s.

Mark: Great. That’s that’s good stuff. All right. Well, we want to thank Doug for sharing these great insights into the process. And we want to thank you for listening week in and week out. I’m Mark, Harare.

Victoria: And I’m Victoria Downing. See you next time.