Ep.50: Choosing Estimating Software with Jef Forward

Estimating accurately is critical to the success of any remodeling business. As you grow your business or hand off estimating to an employee, having the right system in place is paramount. It can feel like an overwhelming decision — there’s so much software available. The wrong decision will cost you lost revenue, but even worse — lost time.

Fortunately, there’s a simple strategy to help you navigate this very important decision.

In this episode, Jef Forward talks about estimating software with Tim and Steve. He’s worked with several estimating software packages and systems over the years, and shares what he’s learned.

Jef Forward is the founder — and co-owner with his wife Monica — of Forward Design Build Remodel in Ann Arbor, MI. For more than 20 years, Jef has performed every role within the company, including designer, laborer, carpenter, bookkeeper and estimator — you name it, he’s done it. Now with 24 employees, Jef has two full-time estimators.

Start your decision-making by looking at two factors — getting the estimate itself right and how the program’s output will be presented to someone other than the estimator — especially your clients. The first step is to not look at any software, Jef says. You can get distracted by all the bells and whistles of new programs and miss whether it will really work for you. He talks about the vetting process, what it can do for your estimating, and some of his favorite software choices, including:

  • How to create a Process & Needs document
  • Integrations with other programs
  • Deciding on must-haves and nice-to-haves
  • Mixing and matching vs. all-inclusive systems
  • Not looking for quick fixes
  • Evaluating and testing
  • Who to involve in making choices
  • The fine art of guessing
  • What to do by hand vs. what’s automatic
  • Slicing and dicing information
  • Client presentations and reports
  • And more …

Choosing the right estimating software for your company depends on many factors, but the work done up front will ensure you’re not saddled with a system that doesn’t fit. Taking the time and involving the team will help you make the right pick.

Tell Us More!

Do you have a suggestion for a topic or guest for an upcoming episode? Send Tim an email: tim@remodelersadvantage.com.

Listen to Episode 50 >>

Have You Ever Flown a Profit Simulator?

You don’t need a huge transformation in your remodeling business to see a huge transformation in the results you achieve. In fact, improving productivity and efficiency by only a few percentage points can rock your business world—in a good way.

This is what we demonstrate to remodelers the first time they work with us, either as University students, Roundtables™ members, at the Master Your Remodeling Business Workshop or by conducting a business review. It’s wonderful to see eyebrows raise when these busy business owners realize the impact that this little difference can have on their lives.

If you’re working too hard for too little money, you should look at three areas:

1. Sales Price

When we meet remodeling company owners for the first time, they are inevitably selling their work for less than they need . . . that is, if they want the benefits that come with a successful business.

If you’re saying to yourself, “I can’t charge more in my market. My clients already tell me I’m expensive.” I’m here to tell you that this is head trash. I can take you to any market in the US and most in Canada and introduce you to dozens of remodelers who ARE charging more in your market and living better than 90% of their competitors. It CAN be done – and we can prove it.

2. Overhead Expenditures

There’s nothing wrong with overhead. . . IF you can sell enough at the right price to cover these expenses AND create a net profit that is over and above your salary. If you’re not sure if your business plan allows you to do this, learn how to create a budget to see. You might need to pare back on the overhead expenses for a time until you can ramp up sales.

3. Production Efficiency

It absolutely kills me when I see a remodeling company producing work for more than they estimated the costs to be. After all of the work you’ve done to attract the prospect, qualify the lead, sell the darned thing, estimate it and do all of the work to organize the project, it’s terrible to then earn less money than you need and deserve.

So, if you can consistently produce your projects on budget or with less than a 2% variance either way, you’ll be in the catbird seat. (and if you don’t know if your jobs are being produced on budget, shame on you. Call us, we can help.)

The best remodelers I know focus on improving these three areas by a few percentage points each month, each quarter, each year. These small improvements can deliver a bang for every hour you invest.

It’s amazing how the dollars can pour in when these three areas are in alignment.

Want to see for yourself?

Click here to use our Profit First Simulator. Play around with the numbers, change the overhead, the net and the gross profit by a percentage or two and see how your life can change. Specifically look at how increasing that gross profit can reduce the volume that your remodeling company needs.

But before you go…

I’d love to hear from you! Let me know your thoughts in the comments below.

How a Job Autopsy Can Save Future Profits

This week I’ll share some examples of how slippage can destroy your profits. More importantly, you’ll see how performing a thorough job autopsy can prevent future slippage.

So if you’re looking for ways to increase your profits, look no further than this week’s episode of PowerTips TV and learn one very effective technique for eliminating waste and ramping up profits.

What about you?

Do you perform Job Autopsies? How does your slippage look? Anyone enjoying GRIPPAGE?!? I’d love to know! Tell me about it in the comments below!

When Job Costs Overrun… Take Quick Decisive Action

Every remodeler battles job cost overruns. They are universal to this business and are the single most common reason remodelers are not profitable.

Ninety percent of overruns will be in the labor category. That’s not surprising since estimating labor is an act of judgment and the actual job performance is subject to so many variables.

If you can get your labor estimates and actuals to match up within 2 %, you have done the hardest work to make your company profitable.  Here are some tips on solving job cost overruns in labor and subcontractor costs:Continue reading

The Importance of Accurate of Job Costing

To make money consistently in remodeling, you need accurate estimating. In order to have accurate estimating, you need accurate job costing to give you constant feedback on your estimating system. As you prepare a project estimate, you are setting many goals. Your goals are the material cost you hope to meet or beat, the labor cost you hope to achieve, and the subcontractor cost you anticipate.

Once you have sold the job and production begins, you keep records of your expenses for that job in each category of your estimate. How are you doing on meeting these goals? This collection of data is critical to your success because it sets the stage for accuracy in your future estimates. Only by gathering accurate and timely job cost information will you be able to gauge job performance, and keep your estimating information up-to-date.

Job costing has a second important benefit—as a big picture financial control. You are working hard to keep total job costs at the percentage of income you target with your markup. You watch your P & L to see how you are doing overall. You watch each individual job to insure that the job is staying on target. If you need to lower job costs it is much easier, at the individual job level, to investigate the overrun problem and solve it.

Reviewing Profit and Loss statements shows clearly that job costs are usually a remodeler’s single biggest area of expenditure—often running 65-70% (or more) of total company expenditures. If they run out of control, your business is out of control. If your job costs are 79% but were planned for 70%, you will lose 9% from the net profit line. Thus job costs need careful analysis.

In a remodeling company where expenses are out of control, the greatest problem often lies with job costs that are overrunning estimates by a significant margin and bleeding the company of profitability. Accurate job costing data is needed for three reasons:

– to help tighten cost control on ongoing jobs
– to prevent overruns on future jobs
– to build a cost history for estimating

Collecting job cost data helps tighten your current job expenditures. Knowing that an ongoing job is beginning to overrun can help you tighten up on costs on that job. You may be able to recoup some of your costs through better monitored change orders, by using different subs, or by encouraging workers to produce more efficiently. Thus it is helpful to have job cost reports on a weekly or biweekly basis to rein-in overruns on current jobs before they get out-of-hand and you end up losing money on the job. By reviewing cost data with your salespeople and your production manager and lead carpenter, you are sending a clear signal that jobs must generate the gross profit the company needs to operate. Jobs only generate that gross profit by coming in on budget and preventing future overruns.

Using the Power of Job Cost Reports

We are lucky enough to work with some of the smartest people in the industry — and I love it because they, like everyone here, believes in sharing their expertise and knowledge to help everyone in the community succeed. One of my favorites is Tim Faller, president of Field Training Services. Tim is a master of production and the systems that make this department hum (as well as being a super nice guy!)  As a consultant, Tim’s changed the profit picture for many remodelers by showing them how to shore up their internal processes and capture every bit of profit.

Tim’s allowed me to share the main article from his recent newsletter with you.  It’s all about Job Cost Reports — one of the most important information sources you have.  Too few remodelers use this tool effectively.  Tim shows you how.

Everyone reading this understands how important it is to set and meet a budget for a job but many find it difficult to do. Half the battle is setting and selling an accurate budget for the job, the other half is getting everyone involved in meeting it.  Here are some tips:

Use the estimate as the first Job Cost Report.

The estimate for the job should be evaluated as a job cost report looking for issues that may present themselves in the future. The person running the job should spend time before the job starts to evaluate and learn the estimate so that they can identify any potential errors or omissions. If any of these are found then they can be dealt with before the job starts. Most problem areas are either swept under the rug or not even found leading to ignorance during construction. But if a discussion of them is started early than a possible solution can be found. In other words, simply discussing them will lead to solutions whereas ignoring them will lead to financial loses.

Train non-managers to read the reports.

One very common mistake that business owners make is to ask a Lead Carpenter to use a job cost report but neglect to train them in how to use them. Every business owner has had a learning curve to learn the financial aspect of the business. This is true even though they have a heavy motivation to do so. It is unrealistic to expect someone that is in the business to work with their hands to pick up financial info without time, training, and patience.

Train solutions.

The most important aspect of training is to get around the age old statement, “it is what it is.” This statement is usually uttered after an owner shows a Lead Carpenter a report stating that the job is over budget on framing! The meaning of the statement is “there is nothing we can do now”. By letting this stand an owner reinforces the belief that the reports are worthless and can be ignored. So what has to be done is for the Lead Carpenter and owner/manager to stop for a few minutes and identify the problem and find a solution.  There is always a solution. It may be for a future job estimate or it may be recouping the money on another aspect of the job.

To learn more about Tim and how he helps his remodeling clients succeed, click here.

And if you’re getting ready to hire new employees as your workload increases, be sure to take the time to hire the best. Click here for to learn about our Candidate Matching Service.