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What Makes the Production Tracker Such an Important Tool?

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Because it Helps Keep Your Business Balanced

Recently we discussed the importance of keeping your construction business from getting out of balance. Achieving a balanced business requires paperwork and we know how construction contractors feel about paperwork.

I know, I know, paperwork is not a very exciting topic, but neither is concrete. And we all know how important concrete is in supporting a building. The same is true for paperwork and your business.

One of the three foundational piers in business is administration and finance. One of the building blocks in that pier is a Production Tracker. This tool provides valuable information for forecasting the company’s financial needs and production plans.

Wouldn’t it be helpful if you knew:

  • Which types of work were consistently the most profitable
  • How you were doing at meeting your financial goals for the year
  • When you should have the signed projects finished to stay on track
  • How well you’re doing at getting proposals signed
  • What the average price of your projects are

The Production Tracker is an Excel spreadsheet that lets you gather and track information. It has preset formulas that determine and sort the information you need to make your business more profitable.

This document provides information for:

  • Creating and recording project numbers
  • Tracking project bid amounts
  • Tracking dollars of signed proposals
  • Tracking dollars collected from projects
  • Percentage of jobs signed
  • Percentage of dollars signed per dollars bid
  • Percentage of dollars collected per signed
  • Average dollar amount of projects bid
  • Average dollar amount of projects signed
  • Average dollar amount of projects collected
  • Projected timeframe for doing signed projects
  • Projected date work should be done

This list can seem overwhelming but it’s really not.

Here is an example of what the Job List spreadsheet looks like.

Let’s go through the document and break it down into smaller brick size pieces.

Creating and recording project numbers – Having a numbering system can help you sort projects so that you can review which types and size of projects are the most profitable and what you do the most of. It may be that your most profitable ones are not the ones you do the most often. Having this type of information can help you to focus more of your attention on the right kinds of projects for you.

This Production Tracker is a place to list project numbers in conjunction with the size and types of the projects, as well as their chronological order. This document provides the numerical part of the project number specific to each project. The other portion of the project number is determined by job specific parameters that are not included on this document.

Tracking project bid amounts – Our Blueprint for Building a Better Proposal system provides the dollar amount for each project. Once a proposal has finished, the specific information to that project is entered into the appropriate cells on the spreadsheet. This information includes Job Number (column E), the Customer Name (column F), Description (column G), Bid Date (column H) and the Project Amount (column I). Regardless of the system you use for preparing proposals, you should have a dollar amount that could be entered into this document.

As each new project amount is added in the project amount column, the total project amount at the bottom will update, giving you a total dollar amount of the proposals you have done this year. Based on your company’s history, this dollar amount should give you a clear picture of where you are in relation to meeting your financial goals for the year. We will explain this further with the tracking dollars of signed projects.

Tracking dollars of signed proposals – Once a proposal has been accepted, the accepted dollar amount should be entered in the signed amount column. Initially, this amount should be the same as the amount in the project amount column. Sometimes the dollar amounts of projects are changed due to change orders. This can be either an increase or decrease depending on the change order(s).

As each new proposal gets signed the dollar amount of the signed proposal should be entered into the correlating cell in the signed amount column. Just like in the project amount column, as each new amount is entered in the signed amount column, the total dollar amount at the bottom automatically updates giving you a total of work you must currently do.

With the total of the signed amount column and the total of the project amount columns, you should be able to get a clear picture of where you are financially in relation to where you want to be at year end.

Let’s say your goal for the year was to generate a gross revenue of $400,000.00. Using the example, you can see that as of December 12th you were at $352,877.66. This is close, but not quite there. If you compare the signed amount to the project amount ($664,381.27) you will see that the signed amount is 53.11% of the project amount. Based on this percentage, to get the signed amount to $400,000.00, the project amount would need to be $754,000.00.

This information is critical to the survival of your construction business.

Your business needs to be built on a solid foundation.

We’ve covered a lot here today. In our next post we’ll pick up at tracking dollars collected from projects.

Check out this and additional business building tools and training here. If you have questions, feel free to schedule a free 30-minute business coaching call.

Portions from a previous post 1/7/23 

The “Job List” Is One of the Foundational Building Blocks of a Successful Construction Company 

Prayer is How We Communicate with God

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This Includes Saying Thank You

Communication is a process by which information is exchanged between individuals through a common system of symbols, signs, or behaviors. It is the transmitting of information. It is a two-way street; it goes both ways.

Too often when we pray, we’re focused on asking God for things we want, and we should ask God for those things. But this doesn’t mean that praying for things we want means we’ll get them.

We need to make sure the things we’re asking for are in alignment with the things God wants.

The other thing that happens too often when we pray. We forget to thank God for all the prayers He does answer.

Notice how the definition of communication above isn’t just talking. It’s the exchanging of information.

When it comes to prayer, communication includes our thoughts. God knows our thoughts, the good, the bad, the positive, the negative, the ugly, and even the sinful because there is nothing that God does not know.

In Psalm 139:1-2 David says, “O LORD, you have searched me and know me! You know when I sit down and when I rise up; you discern my thoughts from afar.”

The message of David tells us that our thoughts, whatever the dynamics of them may be, are important to God, and because it is so important to Him, He discerns fully and continually reminds us that these thoughts matter.

However, we should also be careful as to what we are thinking about. This is particularly mentioned in Isaiah 55:8 as stated, “For my thoughts are not your thoughts, neither are your ways my ways, declares the LORD.” 

David had an interesting relationship with Saul. One minute David was like a son to Saul, and the next, Saul was trying to have David killed.

Through all this tumultuous relationship, even after having a couple of opportunities to put an end to it and take Saul’s life, David stayed true to God and His plan.

After Saul and his sons are killed in battle, David is made king. David went to the Lord with a prayer of thanks. (2 Samuel 7:18-29) David humbles himself and asks God why He has made a simple shepherd a king. David says,

“You know what I’m really like.”

David goes on to say, “O Lord God, I am your servant; do as you have promised concerning me and my family. Confirm it as a promise that will last forever. And may your name be honored forever…”

Prayer is often looked at as a formal thing. Something that is high and mighty. It is talking with God after all.

We need to remember that it is just communication with our Father in Heaven. Remember to thank Him for all that we are and all that we have.

What is a Construction Scope of Work and Why Do You Need One?

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Clear Communication is Critical to Happy Customers

Last week John explained to Gene what project information needed to be gathered…

  • Project info (customer name, mailing address, project address if different than mailing, phone number, email address, project overview, budget, project deadline, any other relevant information)
  • Measurements and dimensions, existing and new
  • Building materials, existing and new
  • Pictures of pertinent areas and existing construction
  • Customer’s design ideas and finishes

Overlooking or forgetting something is a sure way to lose money when doing a construction project.

This week they’re going to take the information gathered and turn it into a Scope of Work. This will be the foundational form of communication between everyone involved in the process, i.e., customer, contractor, sub-contractors, employees, etc.

As they get started on this week’s meeting John asks Gene if he had an opportunity to use the Bid Sheet this past week and if so, how it worked.

“Yes.” said John. “It was a little awkward in the beginning. By the time I was finished gathering the project information I was glad I had it because there were a couple of things that it reminded me to do.”

John replied, “That’s great. Do you have any questions?” Not yet.” said Gene. With a smile John said, “You will before we’re done.

Okay. Did you bring it with you”? “I did.” said Gene, “I’ve got it on my laptop.” John told him to open it up and follow along. “Today we’re going to work on the most important part of communication between contractor and customer…the Scope of Work.

What is a Scope of Work?

A Scope of Work clearly defines and explains the work to be done. It should describe what is included in each specific task in terminology that both the customer and the contractor understand. A scope of work describes the work to be done on a project, who is responsible for completing the work, how the work must be performed (techniques used), and what materials will be used. It helps in the smooth operation of a project, minimizing situations leading to disputes. It is the first step to building a mutually beneficial relationship between a contractor and customer.

Communication with the customer needs be simple and direct while explaining clearly and thoroughly.

After having gathered the information needed for the project using the Bid Sheet, write out in a few sentences, or less, what each specific task is going to consist of. Explaining what you’re going to do in a way that a person with little or no construction knowledge can understand. Include as much detail and specifics as needed to be clear on what is or is not included in each part of the project.

Once this process has been finished for each task included in the project, you have a Scope of Work ready to be transferred to a blank Proposal template.

Here’s an example of a Scope of Work using the information from the Bid Sheet we worked on last week.”

As they’re wrapping up this week’s training John tells Gene. “Next week we’ll get into the pricing of a project.”

The real value of this Proposal System is in the pricing.

Previous posts in this series:

What is “business clarity” and how do you find it?

What Does it Take to Build a Successful Construction Company

It’s Time for the First Meeting

Being Aware of Bid Mistakes is the Best Way to Avoid Them

Constructing a Building is Better with a Plan, a Proposal is No Different

Do You Want to do a Good Construction Proposal?

Building Anything is Better When You Start with a Plan

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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)

 

It’s Time for the First Meeting

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And Gene’s Not Sure He Can Squeeze It In

It’s Friday, and Gene is in his normal state of overwhelm. He’s supposed to be meeting with John tomorrow afternoon to go over the Building a Better Proposal system, and he doesn’t know how he can fit it in.

There are still so many things that need to be done.

“Maybe we can reschedule,” thinks Gene, “I’ll just give John a call and see about moving the meeting back a week… Okay, that’s enough.” Gene says to himself. “The whole purpose for this meeting is to change things, so that I don’t have to feel this overwhelmed.”

“I’m tired of always feeling out of control.”

A few minutes after noon on Saturday, Gene pulls up in front of the SMR Construction Company office and admires the building. As he gets the pizza out of the truck and goes up to the front door he thinks, “I sure hope I can have a place like this someday.” As he walks through the door John greets him with a solid handshake and a grin as he says, “I wasn’t sure that you would make it.”

“I wasn’t sure either.”, Gene says with a smile. “I came really close to calling yesterday, to see about rescheduling.” “I’m glad you didn’t.”, replies John. “You’ve taken the hardest step in a series of hard steps.”

“The first step is the hardest. It requires a change of thinking and direction.”

“Bring the pizza and let’s go into the conference room.”, John says. As they make their way into the spacious comfortable room Gene thinks back on when they used to have their weekly production meetings in this very room. Looking back, he realizes how much he had taken what John had accomplished for granted.

John hands Gene a plate and they both get some pizza. “There’s water and soda in the fridge like always.”, says John, “Help yourself.” As they set down and start eating John asks Gene, “Why did you start your own construction company?”

“Why do you do what you do?”

Gene sat there for a while chewing his pizza at the same time chewing on this question. “Why was he doing this?” He had asked himself this question a lot, but it was usually a question of frustration, not really looking for an answer.

After what seemed like an eternity, Gene answered, “I really don’t know. I suppose that seeing what you had accomplished, I wanted the same thing.”

“That’s the same answer I would have given if I’d been asked why I started SMR Construction.”, agrees John. “It wasn’t until I realized that to have a successful and profitable business, one that I was running rather than it running me, I needed to make some changes. One of those was to answer that question.”

“The WHY is more important than the HOW. Maybe your why is to make a lot of money, the enjoyment of building, the control that comes with owning your own company, something completely different or a combination of things.”

“Do you love what you do? In your current situation, do you even like it?”

Now Gene has another unanswered question to ponder. Does he like what he does? Life sure was easier when he worked for John. What was it that prompted him to go into business?

John interrupted Gene’s thinking, “Gene, you probably won’t get the full answer to these questions today, and we’ve already been discussing this for a while now. I would suggest that you take some time to think about these questions and dig down deep to find the answers.”

“The answer to these questions is the foundation your business will be built on.”

“Before we run out of time today, let’s move on to the topic you came for, a better proposal system. Here’s an overview of the proposal system that we’ll go over today. These are yours to make notes on and take with you.”

“Just like the why question for your business, you should answer the why question about proposals.”

“Why do we need to do proposals?

“Gene, there is a huge misunderstanding between construction companies and customers. The biggest part of this gap is poor communication. Even when attempting to communicate clearly, it often goes badly. Let me give you an example.”

“Several years ago, I met with a customer early in the process of building a new home. The customer pointed out that the distance from the electric meter to the house was more than the 50’ allowance, as per the agreement. He asked if this was a problem. I told him it wasn’t a problem. Guess what…”

“It was a problem.”

“The problem didn’t surface until later when the customer was billed for the additional 100’. After some research, the communication breakdown was uncovered. The customer asked, “if it was a problem”. What he was really asking was…”is it going to cost more?”.”

“The response ‘in reality’ was, “It’s no problem to dig the additional 100’, but it will cost you more.” Neither party intended nor expected this to be a problem. It was a simple matter of misunderstanding…a lack of communication.”

The bulk of the communication responsibility is the contractor’s; we are the professionals after all.

If you follow along on the overview, on page 2 you can see the importance of a proposal system and why you need it. Page 3 has reasons for and common reasons against doing proposals. Page 4 is a list of documents included in the system and descriptions of how they work. Pages 5 and 6 are an overview of the proposal system.”

“As we wrap up today, Gene, I would recommend that we schedule some time weekly to work through the proposal system. I know that you don’t feel like you can spare the time, but I would point out that if you want things to be different, it’s going to require you to do some things differently.”

Gene thought about this for a few minutes, “I get excited about the possibilities for my future every time we talk about this. Let’s do it. How does next Saturday sound, same time and place work for you?

“If I don’t commit to doing something different, nothing will change.”

John smiled wide and remembered when he had made this same decision. He was encouraged about Gene’s future and excited to be a part of it. “Remember when you called me a few weeks back and how frustrated you were? And then in the next call we discussed the possibilities for your future? Think on these things and your why as you study the pages from today. When we get together next week, I want to hear about your why, and we’ll go deeper into the Building a Better Proposal system.

“As you go through these pages write down any questions you have, and we’ll discuss them next week.”

If you’re interested in the Building A Better Proposal system that John and Gene are working on, check out Solution Building’s Business BUILDing Toolbox. To discuss how the proposal system could help your construction company, you can schedule a meeting with me here. As always, feel free to post any questions you have in the comments!

Better Communication Often Leads to a Shift in Our Thinking

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It’s Really Not That Hard…It Just Requires a Change of Perspective

I’ve written about communication more times than probably any other topic. This is because I think it is as big or bigger than any other issue out there.

Miscommunication or no communication is due mostly to the fact that we get stuck in our own heads. It only makes sense that we would view things from our own perspective. Add to this that we’re all so busy that we rarely slow down long enough to listen and think.

Just a few weeks ago I wrote about how tricky communication can be (link to 9/27 post) and how a word like wonky can have multiple meanings. If I hadn’t asked some questions and done some research, I would never have realized there were other meanings beyond my own perspective.

I needed a paradigm shift.

A paradigm is a pattern, a model, or representation of the mental image you have in your mind. I first became aware of the term “paradigm shift” through a story in Steven Covey’s book Seven Habits of Highly Effective People.

“I was on a subway in a very large metropolitan city. It was Sunday morning, quiet, sedate. When a bunch of young kids came running into the subway car and their father followed. He sat near me and the kids went crazy on that subway, running up and down, turning people’s papers aside, just raucous and rude. I’m sitting there thinking, ‘I can’t believe this, their father does nothing!’

After a few minutes…, ‘Sir, do you think you could control your children a little? They are very upsetting to people.’

‘Oh yeah.’ He lifted his head as if to come to an awareness of what was happening. ‘Yeah, I don’t know. I just guess I should. We just left the hospital. Their mother died just about an hour ago and I guess they don’t know how to take it and frankly I don’t either.’”

Can you say paradigm shift?

In Acts 10:9-15, Peter was up on a roof at noon praying and was getting very hungry. While the food was being prepared, he fell asleep and had a vision. He saw heaven open, and something came down like a huge sheet held up by its four corners. In it were all kinds of animals, reptiles, and birds. A voice said to him, “Peter, get up! Kill these and eat them.” But Peter said, “Lord, I can’t do that! I’ve never eaten anything that is unclean and not fit to eat. The voice spoke to him again, “When God says that something can be used for food, don’t say it isn’t fit to eat.”

Peter had to shift his thinking from what he had been taught and what he had always believed to be right. He pushed back and God told him three times. It’s more important to listen to what God tells us than what man tells us.

Peter just had a paradigm shift.

We need to be careful to not get too stuck in our own heads and be open to what God is telling us. At the same time, we need to be careful not to take everything we’re told by people at face value. We need to weigh it against what God says.

Like Peter, we need to be willing to shift our thinking if it’s from God. Acts 10:34-48

Clear Communication Can be a Tricky Thing to Get Right

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There’s a Reason We Have Two Ears and One Mouth

Too often we think we know what some is saying without bothering to even listen. Good communication takes twice as much listening. This is why we have two ears and only one mouth.

We’ve seen a lot of miscommunication in Luke and Acts over the past several weeks as we’ve been going through these books. This was a problem between the Jewish leaders and Jesus then, and this is still a problem for many church leaders today.

A good example of how miscommunication can cause problems happened in Sunday School this past week. We were talking about the new book The Great Dechurching. Bradley Gamber has started reading it, and he described it as “wonky”.

I asked him what he meant by “wonky”. His definition of wonky is something that has a lot of detail and statistics.

I told him that’s not what wonky means to me. It means that something is out of whack, leaning, or crooked.

This led to quite the discussion about the word “wonky”, and we discovered that there were a variety of thoughts on this. I’m glad that I asked the question because otherwise I would have assumed that Bradley didn’t like the book, but this isn’t what he was saying.

What’s even more interesting is that after doing some research…both definitions are correct.

Wonky according to the Cambridge Dictionary means “knowing or showing that you know a lot of details about something, especially politics or science”. This sounds like the way Bradley was using the word.

Wonky also is defined as “askew, cockeyed, lopsided, rickety, shaky or wobbly”.

It’s no wonder that there’s such a problem with communication.

This brings me back to the Scripture in Acts 5-7 and Pastor Lisa’s message this week. The focus was on Stephen and his arrest and stoning. This story is full of miscommunication.

As followers of Jesus were gaining more and more popularity among the people, the Sadducees were becoming jealous and had some of them arrested. Then after the apostles were released by an angel, they went back to the temple and were teaching. Then the apostles were called before the council and again told to stop speaking about Jesus. (Acts 5:17-28)

Stephen was a man of great faith and was filled with the Holy Spirit. He was one of the men chosen by the apostles to help spread God’s message to many more people. (Act 6:1-7)

Then Stephen is arrested because there were men who started arguing with him and accusing him of saying terrible things against Moses and God. These lies turned more church leaders against Stephen. Stephen begins to give the church leaders a history lesson about Abraham, his descendants, Joesph, and Moses bringing the slaves out of Egypt. (Acts 7:1-47)

The church leaders didn’t like what Stephen was saying so they covered their ears and started shouting.

Doesn’t this sound like a child who’s not getting their way.

The members of the church council get so mad that they attack him, drag him out of the city, and stone him to death. In order to throw the stones, the men that brought the charges give their coats to Saul to take care of. (Acts 7:54-58)

Check back next week to see what becomes of Saul, the coat keeper.

As Stephen is dying, he calls out to Jesus to welcome him home and asks Him to not blame the men throwing the stones because they don’t know what they’re doing. (Act 7:59-60)

There was no question what Stephen was saying as he spoke to the leaders of the church. He didn’t mince words, he said what he believed. This took boldness and courage in his willingness to stay true to what he believed.

We need to be willing to speak what we believe in love. We need to open our ears and listen. We need to discuss and learn.

Stephen was clear on what he believed and was willing to die for it.

A faith worth living for, is a faith worth dying for.

Are you clear about what you believe and is it a faith worth dying for?

On a side note – My amazing personal assistant, Dori, recently shared a link with me of Dr. Albert Mohler, President of The Southern Baptist Theological Seminary speaking at a recent chapel at Cedarville University. In addition to the great message presented by Dr. Mohler, I was impressed with the number of students and their focused intensity.

Maybe there is hope for the future of our country and our world.

Poor Communication is the Number One Reason for Disagreements, Part 2

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Written Communication is Really the Only Way to Avoid This Problem

I have written multiple times about communication and the problems that come from the lack of communication. Most of the time this has been focused on communication between construction contractors and customers. This is certainly a problem, but can also be a problem between general contractors and subs.

Whether it’s subcontractors or customers, the communication responsibility lies with the general contractor.

Verbal communication leaves too many things open to interpretation.

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

He asked if this was a problem. My partner told him that it wasn’t a problem. Guess what…

It was a problem.

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

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

My partner’s response in reality was, “we can dig the additional 100’, but it will cost you three times as much as the 50’ allowance in the proposal”. But this isn’t what was said.

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

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

Understanding is the tricky part.

Over the past few weeks, I’ve been reminded of the importance of communication with subcontractors as well as customers. When I had a situation where I hired a sub to do a bathroom remodel that I had never used.

He came with a couple of positive recommendations.

After talking with him on the phone, I sent him a scope of work and before and after drawings. He gave me a verbal price range over the phone. The high end of his price was in line with my budget.

I asked him if he would get me something in writing.

We met at the job site later that week on Friday and physically looked at the project. It so happened that he had a crew that could start the following Monday and have the job done ahead of schedule. This was important because the bathroom that was getting remodeled was the only one they had. Again, I asked for something in writing. Again, he assured me that his price was still good.

He showed up on time and things progressed on schedule. They got the demo done quickly and got the customer a shower back within a few days. Things were going well.

There also was some moisture damage that was unknown when we started. This meant I needed to give the customer a change order for this additional work. I called the sub to get a price. He said the way things were going, it should still be close to the high-end price he had given me previously.

I prepared a change order for the customer based on the extra work and felt that should be sufficient to cover the subcontractor.

When it was all said and done the subcontractor’s bill was almost $4,000 more than he told me or what I had budgeted. On top of that he was unwilling to negotiate a settlement somewhere in the middle.

Surprise! I should have gotten something in writing.

Looking back, I should have pushed back more and gotten something in writing. But I was looking out for the customers and the subs availability. The speed with which they said they could do the work swayed me to move forward without anything written down.

I know that small and midsized contractors don’t like to spend the time and effort to do paperwork.

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?

I understand that details and information take time, but I think it’s essential to good communication.

I knew better and can’t blame anyone but myself for being in this situation.

Even though I had the tools I needed to avoid this situation I didn’t use them. If you don’t open the toolbox and get the tools out, they can’t help you build your company.

Most construction contractors don’t have the tools they need for building a better business. That’s why we’re in the process of filling up a toolbox with tools to help you build the construction company of your dreams.

Whether it’s proposals, contracts, change orders, progress payments, or having money to pay your taxes, there’s a tool for it. We also plan to offer instructions, coaching, and consulting to help you learn to use these tools.

If you have questions and would like to find out if these tools would be a good fit for you, you can schedule a free consultation here.

Poor communication is the number one reason for disagreements. Avoid disagreements by taking the time to get the tools needed to avoid costly miscommunication.

The Time Spent on Clear Communication is Worth Every Second

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So, if it’s Worth It…Why is it Not Done?

You probably guessed it already; this week’s topic is COMMUNICATION and the all-too-common lack of it. Because poor communication is such a big issue, I’ve written about it a lot.

In a production meeting with a customer yesterday I was once again reminded of the importance of clear communication and…the lack of it. The conversation revolved around how the subcontractors were doing.

The customers were very happy with their work and pleased with the effort to put plastic over door openings and to cover furniture in the work area. But she said, “We’ve never had an interior construction project done before.

I wish I had known how much dust was created, and I would have covered some additional things.”

Keep in mind that after forty plus years of doing construction, I knew that this was a very clean job site. The point is this…she didn’t know what to expect, and I should have let her know.

I should have communicated better.

Let’s look at reasons, results, and remedies for…

  • Misunderstandings due to poor or no communication
  • Being blindsided by cost overruns or hidden costs
  • Completed projects not being what you wanted or expected
  • Not understanding construction terminology

What is communication?

According to the Britannica Dictionary, communication is:

            “…the act or process of using words, sounds, signs, or behaviors to express or exchange information or to express your ideas, thoughts, feelings, etc., to someone else”

We all have our own perceptions and understanding of words, phrases, and gestures. I presume I know what you mean, and you do the same thing. This happens with spouses, family, close friends, and people we know well. If it happens in these relationships, it only makes sense that it will be more common with strangers.

Reasons people don’t communicate:

  • Takes time – People now expect things instantaneously. We have high speed internet at the tips of our fingers. Photos are developed the moment they’re taken and can be printed instantly via a wireless connection to a printer. We don’t have time to prepare or read through a multi-page document explaining a construction project.
  • Overwhelming – Reading through pages and pages of descriptions and explanations of construction legalese is a daunting task. As a customer, I probably won’t understand half of it. It’ll be easier to just go ahead and start. We’ll figure out the details as we go. I know what I want and I’m sure the contractor does too…NOT!
  • Lost skill – Communication is a two-way process. It requires both giving and receiving, speaking and hearing, writing and reading, expressing and understanding. If we don’t know how to use these skills, we can’t communicate effectively. Good communication requires more than emojis and hashtags.
  • Don’t like conflict – Most people don’t like conflict, but it can be positive. Conflict is always difficult but can lead to growth and change. It indicates commitment and can lead to better outcomes. It allows us to see the other side’s position. We should be willing to discuss disagreements without our feelings being hurt.

Results of poor communication:

  • Project wasn’t what you expected – You have a vision of how your finished project is going to look. You can see it in your mind. When you come home one evening, excited to see what has been done and then…it doesn’t look anything like the picture in your mind. What happened?
  • Cost overruns – You’ve saved and/or borrowed the money you think you’ll need to do the upcoming construction project. You get an estimate of what it’s going to cost. Sure, it’s more than you expected, but that’s alright; it will be worth it in the end, right. Then you get the final bill, and it’s a lot more than expected. Now what? Where are you going to find the additional money?
  • Time overruns – The contractor says, “Your project will be done in no time.” “This won’t take too long.” “We’ll be finished by the end of the month.” “This project will only take a few weeks.” This sounds great, but how long is too long, by the end of which month, how many weeks is a few? Trust me, your contractor’s definition of time idea is most likely different than yours.
  • Not knowing what’s going on – As you’re talking with your contractor, he’s telling you how this thingamajig is going to support that doohickey. We use the newest and best gadget to build our gizmos. All the while you are nodding your head as if you know exactly what he’s talking about. When, in reality, you have no clue. Wouldn’t it be worth it to ask some questions?

Poor communication can be solved with time and effort.

Trust me, clear communication is worth every second spent so just do it.

Updated post from 9/23/19

How Using the Payment Application Tool Communicates Clearly with Construction Customers

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Learning About Business Tools Isn’t Necessarily Fun, but it is Necessary for Business Success

I know that the topic of the Payment Application over the past couple of weeks hasn’t been one of the most exciting topics. Learning about any tool, how it works, and how to use it isn’t one of those things that scores high on our “fun meter”.

This is true for most men. Just think about Christmas time and how most of us guys just want to dive in and put that new toy together without bothering with the instructions. We don’t need any stinking instructions!

This, “get ‘er done” attitude gets amped up even more for those of us in construction. Afterall…building things is what we do.

However, you know as well as I do that, more times than not, this doesn’t turn out so well.

That’s why years ago as I struggled trying to put my business together, I decided I needed to read the instructions. The problem was…I couldn’t find the tools or the instructions. So that’s why I decided to make my own Business BUILDing Tools, complete with instructions. 😊

One of those tools is the Payment Application.

Last week we went through the process of getting started with a blank Payment Application and getting it filled out so that it is ready for the customer’s first payment. Now let’s look at preparing the Payment Application for recurring progress payments.

Preparing for the next progress payment –

Step 1 – Updating the application information – In the application information box, change the application number to the next sequential number i.e., from 1 to 2. Change the date from the previous date to the date through which this application includes. This consists of the material provided or ordered and work done by this date.

Step 2 – Moving dollar amounts from work completed to previously billed – On the previous Payment Application you have dollar amounts in one or both columns D (materials presently stored or ordered) and E (work completed this period). The numbers in these columns need to be added together and added to the number, if any, already in column F (previously billed).

Step 3 – Clear dollar amounts from Work Completed columns – After completing the previous step you need to clear the dollar amounts from both columns D and E.

Step 4 – Confirm the dollar amounts – After clearing the dollar amounts from columns D and E you need to check the dollar amounts in columns F (previously billed) and G (total completed and stored to date). These numbers should be the same. Also compare these numbers to column G on the previous Payment Application to confirm that these numbers are correct.

Step 5 – Entering dollar amounts – Now you can start entering new dollar amounts for Material Presently Stored or Ordered (column D) and Work Completed this Period (column E). These numbers will be determined by the material provided and the work done since the last application.

Step 6 – Figure and enter sales tax – Depending on the jurisdiction and the state in which you are doing the work, determine what your tax rate is and whether it is on material only or both material and labor. We use a bookkeeping program on our computer to provide the sales tax based on the jurisdiction. Then, depending on whether it is material only or both material and labor, enter the sales tax amount(s) in the row marked Sales Tax and in the appropriate columns D, E, or both.

Now you have the next Payment Application ready to be given to the customer, in conjunction with the invoice.

Miscommunication happens too often when dollar amounts are left floating around in the customer’s head due to making multiple payments strung out over the duration a large project.

Most customers don’t bother to write invoice amounts down and/or keep a running total. They’re just writing checks periodically with at vague running balance and then are surprised that the final invoice is more than they expected.

The Payment Application lets the customer see –

  • What the original contract amount was
  • What is included in this current invoice
  • What they have paid for previously
  • The total of what they have paid for previously and the current invoice
  • The percentage of the job that they have been invoiced for at this point
  • The balance of what they have left to pay

They get this updated information with each invoice and can easily see where they started, where they are, and what is left to pay.

This is how the Payment Application provides clear communication for the construction customer.

Having this business tool and learning to use it will not only make your customers happy…it will also help you to BUILD a successful construction business.