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Out of the Mouths of Babes

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Little boy sitting on the ground surrounded by the question, "Why?"

 

 

 

 

If We Could Just Get Adults to Be More Curious Like Young People

 

 

Nine months ago, I met with a fine group of Scouts on a job site to answer their questions about construction and business. If adults would ask more questions like this…there would be less confusion between customer and contractor.


Too often as adults we don’t ask questions for fear that we will appear dumb. It’s like we think we should know everything about everything. As I answered their questions, I thought…


If more people asked questions like these , more dream projects would be a dream come true.


Here’s the questions they asked:

  • How much does building a new house cost?
  • How much wood does a new house take?
  • How long does it take to build a new house?
  • How many permits do you need to build a new house?
  • Do you build specially for earthquakes?
  • What equipment do you use most often?
  • How do you dig a foundation?
  • Did you go to college? Trade school?
  • What schooling do you need?
  • What made you want to start your business?
  • What was the first thing you built?
  • What was your first job ever?
  • How much steel goes into a house?
  • Have you ever built a tiny house?
  • Where are the dangerous places in a construction site?
  • Do you do more commercial or residential work?
  • Do you prefer/use more manual or electrical equipment?
  • Do you do more renovations or new building projects?
  • Have you ever broken a hard hat?
  • How often do injuries happen?
  • Do you hire out the electrical/plumbing or does the owner?

 


I thought I should share the answers to their questions with you. Due to the length of the list, I will it break down in future posts by category. Maybe these will inspire more questions to be asked. At the very least you will have these answers.


Check back next week to see the answers.


Communication is the biggest problem for construction customers and contractors. That’s why I have written extensively about it in the past. Here are links to some of those posts:

 

 

If you or someone you know have a construction question, please post it in the comments below and I will answer it too.

 

The Conclusion of The Construction Proposal Is the Contract

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Two men in suits shaking hands

 

 

 

Putting A Period at The End of The Proposal Communication

 

The discussion of “Building a Better Proposal” began with the problems that arise from poor communication. We talked about this being the responsibility of the contractor and some of the reasons this is a problem.


Over the last several weeks we laid out the “Blueprint for Building a Better Proposal” going over the different parts of the system, an explanation of the system, gathering of information, writing a scope of work, putting a price to the project and finally how to put all of the pieces together into a proposal ready to present to the customer.

 

Once you have a signed Proposal, conclude with a Contract.

 

 

 

 


The Contract completes the Proposal process and covers things beyond construction. Things like funding, additional documents, property boundaries, time within which the project will be started and terms and conditions.

  • Construction Funds – This isn’t something that is relevant to every project but will be to some. If it is, the information would be included in this section of the contract.

 

  • Description of the Work – A complete and full Scope of Work could be included here but not needed if the customer has been presented a Proposal. If so then a brief description of the project can be inserted and a reference to the specific Proposal and any other additional documentation, i.e. blueprints, drawings, spec sheets, governing body documents, etc.

 

  • Property Lines – This is another category that isn’t relevant to every project but certainly can be. If working inside of city limits, normally there are set back requirements and easements, this makes it critical to know where the property boundaries are or to have a licensed surveyor make this determination.

 

  • Payment – Like the description of work above, this should be in the Proposal. If no Proposal was given to the customer, then this should be specified here. If a Proposal was given repeat it again here.

 

  • Time for the Completion of Work – The duration of the work from start to finish is typically expressed in the Proposal. Due to the varying number of Proposals prepared and presented to customers, there’s no way of knowing what order they will be signed and returned. With the Proposal being signed and returned prior to the preparation of the Contract, the start date of the project can be determined and specified here.

 

  • Terms and Conditions – An in-depth explanation of specifications, descriptions, expectations, insurance, warranty, media permissions, etc. These will be specific to your company, type of work and location.


I would recommend that to have a legal expert or attorney review your Proposal and Contract templates as well as any other agreement document to make sure they meet your specific needs.


 

We’ve now gone through the process of meeting with a customer all the way to getting a signed Contract. Now it’s time to do the “construction” part of the project.

 


Communication will be needed in this part too.


Just because you have a signed Proposal and Contract don’t think the communication is done. In most construction project changes occur. These changes need to be treated like separate, sub-projects of the original with Change Orders.


This is a topic of discussion for a different day and one that we’ll have in the future.


If you know anyone in a construction trade or related industry that you think would benefit from learning the “Blueprint for Building a Better Proposal” share a link to this Weekly Solution or the to the Solution Building website. 

 

 

Don’t forget to check back in the next couple of weeks for the upcoming announcement.

 

How To Price A Construction Project Proposal

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Now It’s Time to Give the Project A Dollar Amount

 

The next step in the “Blueprint for Building a Better Proposal” is to determine the price for the project. We’ve talked a lot about the importance of communication to provide a clear description of the work to be performed. Now we’ll go through the process of determining consistent and accurate prices.


Poor communication will cause heartache, poor pricing will cost you money.


We’ve gathered the necessary information and prepared the Scope of Work so let’s put some numbers to the project.


 

Here we’ll combine the next two steps in the process; determining what pricing is needed for each specific construction tasks to be performed and quantities pertaining to each.

 

 

STEP 3 – PRICING THE PROJECT


This process uses two different Excel spreadsheets:


The Worksheet –
An Excel spreadsheet with all the construction sections and tasks listed out with optional overhead and profit markup formulas inserted in the appropriate locations.

The Data Base –
An Excel spreadsheet with prices for material and labor for a wide variety of specific construction tasks.


Based on the descriptions on the Bid Sheet, content from the Data Base will be copied and pasted into the correlating cells on the Worksheet.

EXAMPLE PROJECT:


Using Jane Smith’s Scope of Work for her laundry/sewing room addition we’ll determine the right information that needs to be copied from the Data Base and pasted to the Worksheet. Reference the Smith, Scope of Work here. 


Questions need to be answered like:


Which tasks need to be inserted into the Worksheet? Many of the tasks have options; which to use, will depend on the specifics of the project.


For example; How is the excavation, trenching and landscaping going to be done…with a skid loader, mini excavator, by hand or a combination?

Smith, Addition – Scope of Work, Sitework Section:

 

Data Base:
Copy pertinent cells to be pasted to the worksheet. (highlighted cells)

 

Smith Addition – Worksheet, Sitework Section:
Paste copied cells in worksheet template. (highlighted cells)

 


More questions that need to be answered:
Is the footing going to be formed with wood or poured in the ditch without any forms?

 

Smith, Addition – Scope of Work, Foundation Section:

 

Data Base:
Copy pertinent cells to be pasted to the worksheet. (highlighted cells)

 

Smith Addition – Worksheet, Foundation Section:

Paste copied cells in worksheet template. (highlighted cells)

 

 

After the pertinent information from the Data Base has been placed on the Worksheet it’s time to fill in the specific quantities. This will then provide the prices for the work to be done.

 


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 or numbers of pieces. Once this is completed you will now have prices for the Proposal.

 

Notice the highlighted cells in this spreadsheet. These are adjustments made due to the attributes of specific tasks on specific projects. In the case of this project the small size and location of the work in the back yard require some additional work and therefore additional cost.


I know this is a lot of content and information but it’s not as scary as it appears at first glance. The question that you need to ask yourself…


Do I want to be intentional at serving the customer’s needs at a profit or just guess and take a chance?

 


The next step is to bring all the pieces together in a thorough and accurate proposal that will give the customer a clear picture of what they’re getting and how much it’s going to cost. Check back next week for this part of the process.

 

 

How To Price A Construction Project Proposal

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Now It’s Time to Give the Project A Dollar Amount

 

The next step in the “Blueprint for Building a Better Proposal” is to determine the price for the project. We’ve talked a lot about the importance of communication to provide a clear description of the work to be performed. Now we’ll go through the process of determining consistent and accurate prices.


Poor communication will cause heartache, poor pricing will cost you money.


We’ve gathered the necessary information and prepared the Scope of Work so let’s put some numbers to the project.


Best Price

 

Here we’ll combine the next two steps in the process; determining what pricing is needed for each specific construction tasks to be performed and quantities pertaining to each.

 

 

STEP 3 – PRICING THE PROJECT


This process uses two different Excel spreadsheets:


The Worksheet –
An Excel spreadsheet with all the construction sections and tasks listed out with optional overhead and profit markup formulas inserted in the appropriate locations.

The Data Base –
An Excel spreadsheet with prices for material and labor for a wide variety of specific construction tasks.


Based on the descriptions on the Bid Sheet, content from the Data Base will be copied and pasted into the correlating cells on the Worksheet.

EXAMPLE PROJECT:


Using Jane Smith’s Scope of Work for her laundry/sewing room addition we’ll determine the right information that needs to be copied from the Data Base and pasted to the Worksheet. Reference the Smith, Scope of Work here. 


Questions need to be answered like:


Which tasks need to be inserted into the Worksheet? Many of the tasks have options; which to use, will depend on the specifics of the project.


For example; How is the excavation, trenching and landscaping going to be done…with a skid loader, mini excavator, by hand or a combination?

Smith, Addition – Scope of Work, Sitework Section:

 

Data Base:
Copy pertinent cells to be pasted to the worksheet. (highlighted cells)

 

Smith Addition – Worksheet, Sitework Section:
Paste copied cells in worksheet template. (highlighted cells)

 


More questions that need to be answered:
Is the footing going to be formed with wood or poured in the ditch without any forms?

 

Smith, Addition – Scope of Work, Foundation Section:

 

Data Base:
Copy pertinent cells to be pasted to the worksheet. (highlighted cells)

 

Smith Addition – Worksheet, Foundation Section:

Paste copied cells in worksheet template. (highlighted cells)

 

 

After the pertinent information from the Data Base has been placed on the Worksheet it’s time to fill in the specific quantities. This will then provide the prices for the work to be done.

 


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 or numbers of pieces. Once this is completed you will now have prices for the Proposal.

 

Notice the highlighted cells in this spreadsheet. These are adjustments made due to the attributes of specific tasks on specific projects. In the case of this project the small size and location of the work in the back yard require some additional work and therefore additional cost.


I know this is a lot of content and information but it’s not as scary as it appears at first glance. The question that you need to ask yourself…


Do I want to be intentional at serving the customer’s needs at a profit or just guess and take a chance?

 


The next step is to bring all the pieces together in a thorough and accurate proposal that will give the customer a clear picture of what they’re getting and how much it’s going to cost. Check back next week for this part of the process.

 

 

How To Prepare A Scope Of Work For A Construction Proposal

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This Is A Critical Part of Clear Communication

 

We began this “Blueprint for Building a Better Proposal” series with communication and the problems that occur when it’s done poorly or not at all. This is without a doubt the area where most contractors struggle. It doesn’t have to be this way.


Communication is the most important part of the proposal process.


Things that are unfamiliar seem overwhelming. This is true for both the customer and the contractor. The customer when not understanding what the contractor is talking about and contractor when not having a system for preparing proposals.


 

Our “Blueprint for Building a Better Proposal” system has specific pieces and steps for simplifying the process.

 


Last week we went through Step 1 – Gathering Information. This is where the customer’s why is uncovered, and the physical information is gathered and recorded. Here, we’ll breakdown Step 2 – Preparing the Scope of Work.


What is a Scope of Work?


A Scope of Work, …clearly defines the project requirements, milestones, deliverables, end products, documents and reports that are expected to be provided by the vendor. It helps in the smooth functioning of a project/work contract wherein both parties can avoid ambiguities and situations leading to dispute. It is the first step to building a mutually beneficial collaboration between a vendor and his customer. From a Udemy blog post written by Richa


According to Juan Rodriguez’s The Balance Small Business article, “Must-Have Items on a Construction Scope of Work”, the basic elements…of a scope of work document describes all of 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.


 

Communication needs be simple and direct while explaining clearly and thoroughly.

 


Writing out the description of work to be done in terminology that both the customer and the contractor understand is key to clarity. It needs to include enough specifics to be thorough without being too technical. Communication isn’t any good if it’s confusing.

 


EXAMPLE PROJECT:


When meeting with customer Jane Smith we found out that she wanted to add on a laundry/sewing room. She loved to sew and did a lot of it. Currently she used the table in the main floor dining room and the sewing machine in the basement. Her washer and dryer were in two separate closets in the master bathroom. This made for an inconvenience when sewing or doing laundry.


Once we’ve determined the why and gathered the pertinent information…

 

…it’s time to prepare the scope of the work.

 

 

Once this process has been finished for the complete project, we’ll have a Scope of Work ready to be transferred to the Proposal template.

 


Next, we’ll start figuring out the prices for individual items using the Worksheet and Data Base.

 

How To Prepare A Scope Of Work For A Construction Proposal

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This Is A Critical Part of Clear Communication

 

We began this “Blueprint for Building a Better Proposal” series with communication and the problems that occur when it’s done poorly or not at all. This is without a doubt the area where most contractors struggle. It doesn’t have to be this way.


Communication is the most important part of the proposal process.


Things that are unfamiliar seem overwhelming. This is true for both the customer and the contractor. The customer when not understanding what the contractor is talking about and contractor when not having a system for preparing proposals.


 

Our “Blueprint for Building a Better Proposal” system has specific pieces and steps for simplifying the process.

 


Last week we went through Step 1 – Gathering Information. This is where the customer’s why is uncovered, and the physical information is gathered and recorded. Here, we’ll breakdown Step 2 – Preparing the Scope of Work.


What is a Scope of Work?


A Scope of Work, …clearly defines the project requirements, milestones, deliverables, end products, documents and reports that are expected to be provided by the vendor. It helps in the smooth functioning of a project/work contract wherein both parties can avoid ambiguities and situations leading to dispute. It is the first step to building a mutually beneficial collaboration between a vendor and his customer. From a Udemy blog post written by Richa


According to Juan Rodriguez’s The Balance Small Business article, “Must-Have Items on a Construction Scope of Work”, the basic elements…of a scope of work document describes all of 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.


 

Communication needs be simple and direct while explaining clearly and thoroughly.

 


Writing out the description of work to be done in terminology that both the customer and the contractor understand is key to clarity. It needs to include enough specifics to be thorough without being too technical. Communication isn’t any good if it’s confusing.

 


EXAMPLE PROJECT:


When meeting with customer Jane Smith we found out that she wanted to add on a laundry/sewing room. She loved to sew and did a lot of it. Currently she used the table in the main floor dining room and the sewing machine in the basement. Her washer and dryer were in two separate closets in the master bathroom. This made for an inconvenience when sewing or doing laundry.


Once we’ve determined the why and gathered the pertinent information…

 

…it’s time to prepare the scope of the work.

 

 

Once this process has been finished for the complete project, we’ll have a Scope of Work ready to be transferred to the Proposal template.

 


Next, we’ll start figuring out the prices for individual items using the Worksheet and Data Base.

 

How To Build A Better Proposal

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One of The Foundational Building Blocks of a Successful Company

 

Small and medium size construction companies struggle with preparing detailed and accurate proposals. This problem isn’t restricted only to small companies. It begins there, but only gets worse until they either get big enough to absorb the costs of guessing at project costs or give up trying and quit.


When I started doing construction forty plus years ago, I had no clue how to prepare proposals and like every other small construction company…I guessed. I used a common method called, trial and error. Doing proposals this way is a real crap shoot and doesn’t leave much room for mistakes.


Preparing accurate proposals that communicate clearly doesn’t have to be a roll of the dice.


Early on I began working on a proposal system that worked for me. It has gone through years of experimenting and tweaking to become what it is now. Over the last fifteen or twenty years I’ve been asked multiple times by other contractors who saw my proposals how I did them. I just assumed that everybody else was doing something similar.


Several years ago, it hit me that this wasn’t the case after being hired by other contractors to do proposals for them. This is when it became apparent that there was a real need for a proposal system. I kept pushing this down the road until God hit me upside the head with a board and pointed out that my system could help other contractors.


I’ve been busy with construction projects and life in general and continued to procrastinate developing a system that other companies could use. Earlier this year I decided I better get to work on this before I get hit in the head again.


I’m happy to announce that we are currently in the final stages of preparing a proposal system that will be made available for other contractors to use. It’s currently being tested by independent contractors. We are rebuilding the Solution Building website to allow for downloading the proposal documents. It’s not just for general contractors either, it will work for any of the construction trades.


This proposal system will include templates for:

 

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

 

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

 

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

 

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

 

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

 

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

 

It also will include a data base for material and labor costs:

 

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

Clear communication between contactor and customer is difficult, especially when there isn’t any. Last week I wrote about the importance of communicating clearly through proposals and reasons contractors avoid doing them. 


Next week I will break down the proposal process even more.

 

 

The Bulk of The Communication Responsibility Lies on The Contractor

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How To Build A Better Proposal

 

 

Every contractor, at some time, has had an unhappy customer. This is almost always due to poor communication and/or a lack of understanding. It may have been some small misunderstanding or might have been major enough to result in being fired or going to court.


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 no, 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 allowance in the proposal”. This isn’t what was said.


Neither individual 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.

Why is it that contractors don’t communicate clearly through concise written proposals to customers? Here are the four main reasons for this:


First is time – It takes more time to prepare a detailed written proposal. We’re already so busy that we can’t keep up and with the limited time we have, we aren’t going to spend it on preparing a proposal.


Second is comfort – I started this company because I loved to build, plumb, wire, pour concrete, roof, etc., etc. The trade is what I know, and I don’t like doing paperwork, I want to go swing a hammer.


Third is knowledge – It’s hard to know how long something is going to take or how much material is going to cost. If I give the customer an approximate price or even better if I can just get paid for time and material, I know I won’t lose any money.


Fourth is no system – When we started the company, no one ever explained the importance of having a business system in place. A business system is the blueprint for building your business. Detailed proposals are one of the foundational pieces needed to keep it from collapsing.


These are four valid reasons for avoiding doing proposals, but…


The cost of not preparing detailed proposals, is far more expensive.


The customer also has some responsibility in preventing construction projects from falling apart and the high cost of poor communication. This whole construction process is overwhelming to most customers and they need to know what should be included in the communication. 


But the customer isn’t an experienced contractor that does this for a living.


If only there was a process for doing proposals that:

  • Saved time.
  • Could be done by office staff.
  • Didn’t require a four-year degree or twenty years of on the job training.
  • Included all the necessary parts and pieces


What if I told you that there is such a system and you could have it? There is and it’s going to become available in the next few months. Over the next several weeks we are going to breakdown the system, go through the different documents and processes in detail and explain how it works.


Remember that we are the professionals and the bulk of the communication responsibility lies on us.

The Most Positive Communication Can Be Negative

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An Honest No Is Better Than A Yes That’s Really A Maybe

 

Why is it that we say yes to more than we can possibly do? This trying to spin too many plates is a common problem. It’s a problem that’s thousands of years old. In Exodus 18:13-23 Moses’s father-in-law tells him to stop trying to do everything by himself.


Being too busy is no one’s fault but our own. I do think that overscheduling can push us to accomplish more than we would otherwise, but we take it way too far. There are too many puzzle pieces to fit in our puzzle no matter how hard we push. So many important things that need done, but…

 


We can’t DO everything.


Our natural desire to help others is a big driving force behind too many yes’s. There are so many people with so many needs. A servant’s heart leads us to over promise. This can be controlled, but it requires intentional actions. Especially in business, we don’t want to say no to any potential opportunity. Too many yes’s is not a good way to treat customers. Trying to be everything to everybody isn’t a good business plan.


We can’t BE everything to everybody.


Trying to DO EVERYTHING for EVERYBODY has been something that I have always struggled with. There’s just so many great things to be done and someone needs to do them. It never works any time anybody tries it. We have to learn to say no.

 


The big question is how do I know what to say yes to?


This is definitely a big question and one that’s hard to answer. As we begin to approach the end of 2019, I’m beginning to think about 2020 and all the things I want to do. As I think through the list it becomes clear that clarity is needed.


Focusing on the right yes’s is going to be my goal for 2020. After all, 2020 is perfect vision. It isn’t going to be easy, but it can be done. It will require a clear plan of what the highest priorities are and removing things from the list that don’t qualify.

 


There are a lot of good yes’s but only one best yes.


I’ve been thinking forward through the long list of things that I want to do. All things that are good and important, but there are too many to do them all. With God as the Chairman of my Board of Directors, I’m confident that we can get a clear vision for 2020.


There are some new and exciting things on the horizon for this next year. I’m excited and ready to get started.

 

Lack of Quality, Honesty and Integrity

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The Remainder of the Construction Complaint List

 

 

This is the fourth and final post in this series of building solutions on how to avoid construction project nightmares. Previously I wrote about the most common reasons construction projects fall apart. The next two posts dealt with the high cost of poor communication and what contractor communication should include. This week we’ll focus on the character portion of the list.


We’ve all have had experiences where things didn’t turn out like we had envisioned. This is true in everything, especially construction. Lower standards have become accepted and normal.


The low bar of expectation has become the construction industry standard.


I believe this to be attributed mainly to the focus on price. We should be conscious of what things cost, but when it is the determining factor above everything else, something will give. Most likely that will be quality and service.

 


The second factor is that we’ve become a fast-paced drive-through people. We expect everything to be instantaneous. The cost for this lightning fast speed is the same as price…quality and service.


Raising the bar is simple really.


It starts with an awareness of how low the bar is. It has been moving down in small increments for years. It’s happened so slowly that most don’t even realize how low it is. Raising it up will be a slow process as well.


The remainder of the list of reasons construction projects fall apart is as follows:

 

  • Poor quality
  • Cluttered and unorganized job site
  • Left hanging part way through an unfinished project
  • Lack of scheduling or poor time management

 

Quality, honesty and integrity cover this part of the list. These are character issues. They are about choosing to give as much importance to someone else’s needs as I do my own.

 


Quality – is the degree to which something is produced correctly. It can be somewhat subjective, but the higher the bar is raised, the higher the quality standard becomes.


Honesty – is moral character that is trustworthy, loyal, fair and sincere. It is absent of lying, cheating and stealing. Thomas Jefferson is attributed with having said, “Honesty is the first chapter in the book of wisdom.”


Integrity – is adherence to strong moral and ethical principles and values. One has integrity to the extent that they act according to the values, beliefs and principles they claim to hold.


Poor quality and a disorganized job site are part of the physical construction skill set. These things are skills that should be taught through apprenticeship and mentoring.


The same is true for lack of scheduling and poor time management. These things can be taught. Learning and applying these skills is more difficult, in that they are more directly connected to specific personality traits.


Leaving a job hanging partially finished, however is strictly a moral issue and unacceptable, short of some life altering emergency.


The entire issue of construction projects falling apart is unnecessary and unacceptable.

 


It doesn’t have to be this way!

 


You can choose what you want, it’s up to you. Learn more, expect more. Raise the bar as high as you can reach.