Working More Effectively with Subcontractors

One of the highlights of every Masterclass: Project Manager Intensive course that I facilitate is “focus time.” Each company present gets 20 minutes to receive feedback from everyone else in the room on one or two topics of their choice.

As the facilitator, I get to listen and learn. This year, I picked up a couple of great ideas relating to working effectively with trade contractors, and they can help you too.

Setting Long-Term Schedules

While discussing scheduling trade contractors, and actually getting them to the site, this idea came up. Ask them for their long-term schedule. This may be as far out as three to six months. This can accomplish significant things:

  1. They’ll have to create a long term schedule!
  2. You can find holes are and perhaps schedule around them for your work.
  3. You’ll know whether they’ll be capable of handling all the work you have coming in.

Comparing their schedules to your company’s master schedule will enable you to plan better.

Tiered System for Subs

Give your trusted trade partners preferential services because they help you overcome your challenges. One company said they have the Quick Pay option. In general, the trades get paid in 30 days. But those that choose the Quick Pay have to meet some conditions, like using the company’s cloud-based software, showing up on time and so on.

I know many remodelers already pay in five to 10 days, so that may not be your thing. But the idea is to see what you want your trades to help you with, and then set up an incentive. If that incentive can be something you do anyway, like paying them, it doesn’t cost you anything extra. However, we know our trades can make or break us — so even if there’s a little extra cost it may be worth it.

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Find Extra Days, Get One More Job per Year

We talk a lot about process improvement. How can we make our processes easier, better, faster and ultimately cheaper. And most of the remodeling companies I get to work with have given considerable thought to improving their processes. 

But once major changes are made, continuous improvement is much more about finding the small, incremental changes rather than huge leaps.  It’s time to look for those little steps along the way that make an immediate and dramatic impact. As a result, sometimes it might seem like the extra effort is simply not significant enough or not important to implement. 

But consider this … how much would it affect your bottom line next year if you could get just one extra job through production? Would it make a big impact? Would it be worth the effort? 

I’m here to suggest it would.

Let’s Run Some Numbers

Let’s run some hypothetical numbers, and use a simple example to illustrate this idea. Say you do 15 jobs per year, at an average of $100,000 in revenue per job. The average job takes about 90 days in production, and you generate a good 30 percent gross profit margin. 

This gives you $450,000 in gross profit on $1.5 million in sales. Your overhead runs about $350,000 and you net $100,000 per year. All in all, not bad. 

So, then add in e continuous improvement process —LEAN, in our case — with the objective of reducing the number of days for a job from 90 on average to 84. By streamlining processes, improving communication, avoiding delays and eliminating other waste in the job, you reduce each of the 15 projects by six days. Would it make a big difference? 

You’ve Got Extra Days

Well, if you could take those 90 production days and do just one more $100,000 per year job, you would generate approximately $30,000 in additional gross profit. But, keep in mind our overhead has already been covered. So, the increase in gross profit would also yield a $30,000 increase in net profit. Therefore, your net profit would increase by 30 percent and bring you very close to the 10 percent of revenue that we like to see companies generate.

Your actual numbers may be different, but the process is the same. Could you improve your workflow just enough to do one “extra” job per year? It might be time to find out what LEAN could do for you.

Need Help Finding Those Extra Days?
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Doug Howard leads our Business Consulting and Coaching division at Remodelers Advantage. He’s worked with both Members and Non-members over the past 2 years and has produced some amazing results for his clients. Click Here to learn more about our Consulting & Coaching Services.

Team Building Through Troubleshooting and Problem Solving

[Editor’s Note] If you saw think you may have already seen this post, you aren’t imagining things.. the heat hasn’t gotten to you. We posted this 2 weeks ago, minutes before we launched our new website, and then the post went “poof” and went into cyberspace, never to be seen (or linked to) again… We didn’t want to miss the opportunity to hear from Tim Faller, so enjoy!

You may have added workers in the field and in the office to keep up with the booming business of the past few years. Are they working as a team or as individuals? If they’re not all working together, it may be costing you money on jobs and in the office. It’s time to pull them together through troubleshooting and problem-solving.

Team members want to win, they just don’t have the information or opportunity to do so. Here are some ways to get folks working together, while solving problems that may be eating into your profits.

Identifying Problem Areas

Most business owners think they must be the person to make everything work and fix every problem that develops. Instead, gather your team to identify the areas of the company that need work. Be sure they have all the information they need. If you’re struggling to meet the budgets on jobs, for example, be sure they know it and how bad it is. Identify all the things the administrative folks need to fix, then look at the field issues.

Prioritize It

After you have a list of things to fix, let the team prioritize where to start. After they say the estimate needs to be fixed (Yes, I know how it will go!), agree to work on that, then nudge them to a field problem. Once the list is prioritized, get to work.

Brainstorming for Team Building

Have a meeting to brainstorm solutions. There are several very important aspects of brainstorming that you need to keep in mind.

All ideas are valid. Never say something like “that won’t work” or dismiss any idea. People will shut down. You want to create is a continuous stream of ideas — at some point the one that resonates with everyone will pop out.

If someone sits back, let them know you’ll call on them in a few minutes so they can prepare. Many people will hold back, so actually calling on them involves them. Great ideas will come out.

Be prepared to actually adopt something the group suggests. In my consulting, it’s amazing to me how many of the field staff will tell me that the owner asks but then ignores what they say.

Don’t leave the meeting until a next step is decided. After the brainstorming, get consensus on the next step. Designate a small group to select the best path to take. Within the group, decide the best idea to tackle and assign people to work out the details. The owner of the company shouldn’t say “Thank you for all this. I’ll get back to you.” Let the team help with the specific solution.

All this takes time, but most of your problem areas can’t be solved in one easy step. By getting the team involved they are more motivated and you get a better solutions that they will embrace. And they’ll draw together as they do it, creating the kind of cohesive team that will drive business forward.

Ep.52: Growing Through Team Engagement with Michael Sauri

We’ve talked about getting your Production team engaged in refining your systems and processes by encouraging them to make decisions and look for problems.

But have you considered involving Production in the Design process?   

In this episode, Michael Sauri talks about how and why he did just that with Tim and Steve. Through this change, Michael sped the growth of his company.

Michael and his wife Deborah started TriVistaUSA in 2005 and the company’s grown to four times the size in as many years — with decreased overhead and increased take-home for their family and employees. Michael received the 2018 Fred Case Remodeling Entrepreneur of the Year.

Engaging Production in Design started with Michael working with an architect on a project, and being frustrated — he wanted to offer more options for his client. Michael asked his Production Manager to offer his ideas. Now, everyone involved in a job is involved in the Design process. He tells you how you can do it, and why:

  • What a charette is
  • Employing a charette concept in other areas
  • Work with your team’s strengths
  • Looking back to other projects for inspiration
  • Using creativity in problem-solving
  • Why input spurs engagement
  • Reducing on-site problems before they can start
  • Changing processes as you grow
  • Why it saves time overall
  • Who to involve and when
  • How to get started
  • And more …

Tapping into your team’s experiences and insights is the first step to getting to the best outcomes and solutions. It’s a continuous process, but can pay dividends in your bottom line, and in employee loyalty.

Listen to Episode 52 >>

Ep.51: Getting a Trade Show Education with Lauren Moore

We’ve talked about trade schools and skills training, but today we focus on what you can learn at trade events. Attending and sending your team can broaden everyone’s skill sets and knowledge bases.

In this episode, Lauren Moore discusses what goes on behind the scenes at shows and events with Tim and Steve, why you should consider attending, and why sending your team is great idea.

Lauren has been in the conference planning and continuing education industry for almost 10 years. She started out working within medical education and is now concentrating on construction professionals. Lauren’s goal is to curate the best, most timely, and well-rounded education programs possible for her attendees. Working with industry professionals, she organizes and manage over 150 sessions and 75 speakers annually at the JLC Live events as well as the Remodeling Show co-located with Deck Expo. Each education program takes up to 10 months to plan and produce, forcing her to become a master in organization.

If you’ve never been to a trade show or conference, Lauren says you should just start on the show floor, and maybe one session in the conference program. Then look at it from your team’s perspective — what do they need to know? She stresses the importance of:

  • Live demonstrations for technical education
  • What you can learn from distributors
  • Why networking is a huge education component
  • Why the admission and other fees can turn into savings on the job
  • Getting continuing education credits
  • How to set it up for your team
  • And more …

Including where to find the free beer. Every little bit of knowledge gained can save time and money on the job site, paying dividends on your investment.

Keep It Up!

We’ve gotten some great suggestions so far for topics and guests — share your ideas with Tim: tim@remodelersadvantage.com.

Listen to Episode 51 >>

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 >>

Ep.49: The Numbers that Matter Most with Judith Miller

For many people, the actual building of the project is what Production is all about. Looking at the bigger picture, Production has a great deal of responsibility to keep profit up. Production is a huge contributor to the financial health of the company.

It’s about the numbers — but what numbers are critical for the Production team to know and track?

In this episode, Judith Miller talks about the critical numbers for Production with Tim and Steve.

Judith is the resident financial expert at Remodelers Advantage, and says the numbers tell the story of your company. In college she studied architecture — but failed physics — and switched majors, graduating with a degree in economics. She has combined her love of architecture and building with economics to become a high-level strategist in the remodeling industry. Judith has been a facilitator for Remodelers Advantage Roundtables for more than 15 years, is a featured speaker at industry events, and frequently published in Remodeling Magazine.

If you can lay out a roof, which can be complicated, you can understand the numbers if you put your mind to it, she says. Looking at what numbers are trending, Judith says she’s seeing over-billing numbers decreasing, indicating a drop in sales from last year to this year. The economy may be slowing, Judith says, which makes understanding the numbers from the production side even more important. She talks about:

  • How field labor efficiency affects the bottom line
  • Indirect costs
  • Controlling slippage to protect from slowing sales
  • Job costs to look at in Production
  • Acceptable gross margin levels
  • Profit, loss, and overhead
  • Why the little stuff matters in job costing
  • The 80/20 rule
  • Why to estimate hours over dollars for labor
  • The most important things to hit in your budgets
  • Solving problems together

The most important factor in your bottom line isn’t a number, Judith says, customer satisfaction is. And that’s driven by employee satisfaction. So as you dive into the numbers together, avoid finger-pointing, and work as a team to figure out how to make your company more profitable.

Here are the links to Judith’s webinar about the Labor Burden Calculator:

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Listen to Episode 49 >>

Ep.47: An Introduction to LEAN with Doug Howard

Today we’re talking about LEAN in Production. Doug Howard has been helping remodeling companies see how they can make their processes better, cut wasted effort, and streamline their systems for better profits.

In this episode, Doug talks to Tim and Steve about what it can do for your company — especially in Production.

Doug Howard, RA’s director of consulting services, is an entrepreneur, government official and small business consultant with more than 25 years of experience in leading organizations and assisting his client companies.

LEAN is the idea of having principles and practices to fuel continuous improvement.

One of the best things about LEAN is how clear and simple the concepts are to understand — it works as well for small- to medium-sized companies as it does for huge global enterprises. Doug talks about getting from your current state to your future state with fewer steps in your processes, and where to start, including:

  • The Eight Wastes, and how to eliminate them
  • How to apply the Five Whys to Production to find the root cause
  • Addressing the workplace with the Five Ss
  • How LEAN works with the Zero Punch List concept
  • How it improves the customer experience
  • Why LEAN is like a GPS
  • Involving your subs in the process
  • Conditioning your thought process for the long haul
  • And more …

Including Tim’s interpretation of what LEAN stands for. You’ll learn how to build a system that fits your business.

Want to Get LEAN? Online LEAN Course Enrolling Now

Improve Your Profits & Grow Your Business by Mastering Continuous Improvement Through LEAN – This class is designed for you to get the knowledge, tools, hands-on experience and planning processes to leave ready to begin a LEAN effort at your company and the support to get rolling in the first 90 days.
Click Here for More Information >>

What’s on Your Mind?

If you have an idea for a guest or topic for the show, let Tim know at tim@remodelersadvantage.com.

Listen to Episode 47 >>

Ep.46: Working with Architects with Jason Stearns

There are many different ways to work with architects in the remodeling industry, whether you’re working in the design/build model or as a builder using plans developed outside your company. Regardless of the work model, most remodelers agree the architectural plans they get at the beginning of the production process are only half done. So communication is paramount during the build phase.

In this episode, Jason Stearns discusses the ins and outs of working with different architectural firms from the Production standpoint with Tim and Steve.

Jason has been working in high-end residential market in San Francisco for almost 30 years. He joined Jeff King & Co. as Director of Production in 2017. Since then, he’s helped implement the use of Procore for their production teams, standardized the project scheduling formats, and started a weighted numeric skills assessment system for the evaluating the carpentry and labor staff to identify needed training for advancement.

In each of their projects, there are two clients — the homeowner and the architect, Jason says. He and his team want to deliver the project that realizes the original vision for both parties. To make everyone happy takes clear communication and rigorous documentation of every email, phone call, and design change. Jason tells you how to make that happen, including:

  • Getting information when you need it
  • Establishing good working relationships
  • Creating schedules that work off the budget
  • Looking at the schedule as a living document
  • Identifying milestones for the architect
  • Making objective arguments
  • Staying ahead on change orders
  • And more …

Keeping track of all communications is a major challenge, but it’s the best way to ensure that the completed project is a success for all parties.

Keep the Suggestions Coming!

This topic was suggested by one of our listeners. If you have an idea for a subject or guest, send it to Tim at tim@remodelersadvantage.com.

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Listen to Episode 46 >>

Ep.45: The Strength of a Technical Education with Paul Lewandowski

Technical education at the high school level seems to be fading, but it’s growing at the college level. There are more programs turning out skilled workers that can start producing for home remodeling and construction companies on Day One.

In this episode, Paul Lewandowski of Fox Valley Technical College talks to Tim and Steve about the benefits of a technical education for students and their employers.

Paul has taught residential building construction at FVTC in Oshkosh, WI, for 18 years. The program started in the late 1990s, when members of the local home builders association and the local NARI chapter approached the college hoping to start a program to train carpenters primarily for the residential market.

Every year, students build a nearly custom 2,000-sq.-ft. house for the college’s foundation, which is sold at market-rate to fund future home-building projects and scholarships. The scholarships can be used by students throughout the college, not just the building students.

Paul talks about the program, what his students learn — and how. Half of their time is spent in the shop at the school, the other half building the house. He discusses how you can take steps to get organized and help build trade programs at schools near you, as well as:

  • Where FVTC finds students
  • How he teaches quality carpentry
  • The paper test for trimwork
  • The tools required of students
  • Where they get jobs after graduation
  • What remodelers can expect from the students
  • Getting more women into the programs and industry
  • Finding trade colleges near you
  • Dealing with unions
  • And more…

The best thing you can do to solve your labor shortage and promote the industry as a great place to work is to get involved and be persistent at the local level.

Keep Talking To Us

We asked for suggestions for guests and topics, and you’re coming through — thanks! If you’ve got an idea for us, drop Tim an email at tim@remodelersadvantage.com.

Listen to Episode 45 >>