Posted by Matt Stevens at 9:49 AM | Comments (2)
The Stimulus is Here. Searchable Spreadsheet of 18,000 + Infrastructure Projects
stimuluswatch_data(1).xlsxPosted by Matt Stevens at 8:35 PM | Comments (0)
The Best Industry in the United States
My child is in college. She is starting to ask about industries and careers. Olivia has made me think further about what construction contracting has to offer her. I have concluded it is the best career a young person could choose. You may not believe it, but the facts will show our business is unmatched. It offers participants long term tangible benefits. However, many people will argue that point. Let me show you the many virtues our industry has. You be the judge.
The Industry is Not Going Away - Construction is a basic necessity to human life (shelter, food, clothing, and water). Contrastingly, most manufacturing will be leaving this country over the next few years. Construction cannot be exported. It must be "insitu" or occurring where it produces the end product. This is unlike service center, computer programming or engineering where other countries provide it from afar and then send it back to the United States. Construction and its sister, demolition are captive to the site.
Merit Based - the construction industry rewards hard work. There is no substitute. We are all dissatisfied with the work ethic today. When we find it, we reward it. Let me give you an example - a person comes to you (male / female) doesn't speak English well, but has promised to work hard and keep their nose clean. You give them a chance and 1 year later, you are glad you did. They kept their promise. Now, what will you do? Ignore them? Cut their pay? Of course not! You will increase their wages and give them more responsibility. Construction contractors reward merit. We are an equal opportunity employer.
In a few years, that same person, having earned the technical understanding and crew following might start their own business. It is almost expected. After working in the field, interacting with clients and managing labor, it is normal and rational for this person to at least attempt it.
Additionally, the industry is also merit based. Question: What is the best advertising in the construction business? A completed project that is on-time and on-budget. It speaks volumes of a contractor's savvy and diligence. There are a minority of good contractors. Word of mouth will travel fast. Excellent contractors have more opportunities for work than their lesser competitors.
Continue reading "The Best Industry in the United States"
Posted by Matt Stevens at 4:18 AM | Comments (7)
Construction Estimating Software Study
Go to any national convention and you can't miss seeing dozens of software vendors. It is a big business and there is high value to construction firms. The product has made estimating a less clerical and more automated. Also, it has made estimating more efficient. Due to its power, counting and measuring is less of a task; taking hours instead of days. For those of us who don't looking forward to the job of estimating, computers and software has made it bearable.
We feel that most estimating software is very useful for contractors. However, I have personally witnessed software purchased one day and then never used. The salesman did his job. The rub is the time it takes to be proficient. The contractor's busy schedule doesn't allow for training. In several cases I know of, thousands of dollars has been invested and no payoff. The software sits in its shrink wrap still unopened.
I am raising a red flag. Take a look at all the risk in construction, some of it we choose. Buying estimating software (decreasing our cash) and never benefiting should not be one of our risk factors.
We recommend looking hard at Microsoft. (See our writing on "Computers".) If you use a computer, you can use the Microsoft Office Suite (90% of users do) and especially Excel. For any one just starting to use computers, the advent of the point and click system also known as Windows, makes it all the more easy.
As proof of our conclusion, The American Society of Professional Estimators released a survey in 2005. Here is the background and the results:
Respondents were asked if their satisfaction level with their current estimating software.
Satisfied 80%
Fairly Satisfied 14%
Dissatisfied/Plan to Change 3%
Other/n/a 2%
Respondents were asked if they anticipate change soon (one year or less)
No change planned 93%
Plan to change soon 7%
Respondents were asked the major factor in the purchase of their estimating software.
Ease of use 30%
Customization 30%
Features 25%
Price 4%
Other/n/a 11%
Average time in use
1-5 years 32%
5-10 years 47%
10+ years 21%
Continue reading "Construction Estimating Software Study"
Posted by Matt Stevens at 2:57 AM | Comments (1)
Being a Leader in a Construction Firm
The era of leadership is past its peak. The surge has worked and we now have a very settled definition of leadership. There is little mystery of the right approach to leading a combat brigade, a religious organization or a construction firm. We have filtered through many significant works from some very accomplished men and women. Each of who have proven leadership skills and have written their approach to it. They have contributed to our management thinking in a great way. It was the missing link to improving productivity, strategic thinking and socially responsible behavior.
Leadership has become a teachable skill. Rather than be captive to situational leadership, managers and supervisor are now able to direct their staffs to optimal places for the long term benefit of all. Organizations can now say they have several thought leaders as well as formal leaders suggesting, debating, and deciding the big and little facets of a firm.
Public and private firms have greatly gained management and leadership muscle with the same people they employ. There was no need to turn over line and staff managers. Each organization patiently trained and instructed their supervisors to develop new skills with their existing talents.
Continue reading "Being a Leader in a Construction Firm"
Posted by Matt Stevens at 8:59 AM | Comments (0)
Our 75 E-Learning Courses are Available for Construction Professionals
We have created a robust online learning system of 75 classes to help construction professionals continue their learning without the expense of travel and the convenience of an anytime schedule. These courses are from the author of McGraw Hill's new book, Managing a Construction Firm on Just 24 Hours a Day.
Whether on the weekend or weeknight, we are ready for your needs. No need to fill up the truck or carve out time from your busy schedule. This is one way to continue to work smarter. Click on the link below to register and to review our offering for construction companies.
2 sample case studies and 2 sample concept courses are available for your review
Posted by Matt Stevens at 6:11 AM | Comments (0)
30+ Book Reviews of McGraw Hill's new book, Managing a Construction Firm on Just 24 Hours a Day
Book reviews.pdfPosted by Matt Stevens at 5:57 AM | Comments (0)
Establishing a ROI for a Construction Firm
What is the appropriate compensation for an owner of a contracting firm? How much is the right number? Isn't just a salary with expenses enough?
These are good questions for all construction contractors. People have different answers. Thus, it is reflected in the bid results on any given day. Some contractors want to make a living while others are trying to build wealth for themselves. To be sure, if you compete with those who just want to make a living, you will have to be satisfied with just that. There is no profit margin in their bids therefore; there can't be any margin in yours.
If you want to build wealth, compete against those contractors who want to do the same. Their prices are higher and so, your bids can be higher. Great news for anybody in business.
Continue reading "Establishing a ROI for a Construction Firm"
Posted by Matt Stevens at 2:08 PM | Comments (0)
Audio - Part One of "The Profile of a Profitable Contractor"
Profile Profitable Contractor editedMP3.mp3Posted by Matt Stevens at 8:48 AM | Comments (0)
Overhead Question and Answer
Question:
Hello Matt;
After reading your book, I have a question regarding dual overhead percentage and Total Mark-up percentages. My mark-up percentage calculates to 35%. For my dual overhead calculations I am using a 8% profit, 7% material/sub-contractor & 20% Labor and equipment. This totals to 35%. The thing that I have noticed is that if I take my raw labor/equipment, materials/sub-contract costs, & take them x 1.35 this total number is higher than if I accumulate the percentages separately on my spreadsheet. Is my process correct? Is this the benefit of the dual overhead and still covering my required overhead?
I continue to enjoy the Digest.
Hope this finds you & your family with things going well.
Answer:
Good morning.
Certainly. Your math is correct. As you know, you are placing parts of the total percentage number on smaller numbers. Therefore, the result is less than taking the total percentage and multiplying it by total (larger) number.
The dual rate is the only way to arrive at a true cost or breakeven for the job. From breakeven, we add the profit margin we believe we can get or at least gain entry into a negotiation.
Many contractors have fat or contingency on each part of the total number. This is good in a steady economy but, can be a business mistake in a poor economy. Said another way, if a negotiator knows his breakeven or "walk away number" he can play the poker game with confidence whatever the economic conditions.
Further discussion and examples in the book (as you know).
Hope all continues to go very well.
Sincerely,
Matt
Continue reading "Overhead Question and Answer"
Posted by Matt Stevens at 10:08 AM | Comments (0)
Cash Flow - Keep Water Out of the Bottom of the Ship
A cash flow problem is a drag on the performance of a construction firm. Just as a foot of water in the bottom of a ship would cause it to ride lower, move slower and be a foot closer to sinking, it is problematic. Cash flow is a primary economic factor whether a contractor does well or not. Understanding this issue can keep your company profitable and thus, make your management easier.
How important is understanding cash flow? It is a top five issue. Why? Negative cash flow is the leading predictor of construction contractor bankruptcy.
Continue reading "Cash Flow - Keep Water Out of the Bottom of the Ship"
Posted by Matt Stevens at 9:13 AM | Comments (2) | TrackBack (0)
Taking Off the Toolbelt - Foreman as Manager
The field is where a construction contractor makes a profit. The quality of the foreman is directly linked to the level of gross profit a contractor enjoys. The field supervisor is a resource manager, taking the demands of the job and matching them with limited resources. At the end of a project, the foreman who thinks more as a manager will win. To win more often, this supervisor must psychologically take off his tool belt and assume the role of business owner. The business is the construction project. The average construction project in the United States is about the same as the revenue of a small business. The foremen is responsible for it as small business owner is.
Continue reading "Taking Off the Toolbelt - Foreman as Manager"
Posted by Matt Stevens at 3:48 AM | Comments (0)
Construction Retainage
Retainage costs everyone in the construction industry from the owner to the contractors and to the suppliers on any project. The "holdback" of 10% in most cases is a drag on cashflow and thus, keeps cost higher for the job than it should be.
The question is "what is a smarter way for a contractor to approach retention?". Here is our answer: Approach it like a creditor. If you do, then you realize may be a bargainin chip with the client.
First, let's ascertain the cost of retention -
1) Cost of money
2) Opportunty Cost
3) Risk of not getting paid
Continue reading "Construction Retainage"
Posted by Matt Stevens at 9:11 PM | Comments (0)
Construction Chart of Accounts
For a complete chart of accounts for construction contractors, buy our book, Managing a Construction Firm on Just 24 Hours a Day (McGraw Hill, 2007, 406 pages). It is available in all major bookstores including ours. To order the book, go to Stevensci.com, Amazon, Borders, Barnes and Noble, Browns Stationer's (UK), Reiters, Walden Books and other fine book retailers. You will find a section in the book outlining "Contractor Chart of Accounts" . Remember, Stevensci.com bundles the book with 60 Excel Templates and an On-Line Course, a solid value.
Continue reading "Construction Chart of Accounts"
Posted by Matt Stevens at 10:33 AM | Comments (3)
Project Manager's Job Description
Given the many different types of contractors, type of work, regional differences, thus the need for flexible job responsibilities in construction, we could never write a definite job description for project managers.
Outlined below is a summary of general responsibilities of the project manager in managing the client, project, subcontractors and vendors. It is important for the project manager to understand his or her role and how these duties and responsibilities relate to other personnel on the project. These duties outlined below may be typically assigned to the project manager in one company while they may be performed by the field supervisor in a different organization. The point is these responsibilities must be performed. The project manager is ultimately responsible for accomplishing these tasks.
Continue reading "Project Manager's Job Description"
Posted by Matt Stevens at 12:28 AM | Comments (0)
Natural Conflict in Construction
There is some old news in construction: Conflict is natural. I t has been going on for some time and we don't see it fading anytime soon.
It is the result of time, cost, quality and safety all being demanded by no less than four distincly different parties involved in a project.
Think of the four parties typically involved in a construction job.
1) Owner / Developer
2) General Contractor / Construction Manager
3) Specialty Contractor / Subcontractor
4) Supplier / Service Provider
Continue reading "Natural Conflict in Construction"
Posted by Matt Stevens at 4:03 PM | Comments (0)
NSPE Feature Article on Virtual Construction Contracting by Matt Stevens
We are in the age of Virtual Construction
PE+7-08-COMM-CON.pdfPosted by Matt Stevens at 4:54 PM | Comments (0)
References for Stevens Construction Institute, Inc. - 30+
Please find below a link to our firm's references:
Firm References.pdfPosted by Matt Stevens at 4:02 AM | Comments (0)
Effective Construction Project Cost Reporting
As construction has become more complex and demanding, the importance of timely and accurate information has increased. 20 years ago, contractors had to be convinced of the benefit of job cost reports. The investment was substantial and the value was unclear. Many contractors trusted their "gut feel". It was a simpler time and the approach worked.
Now, any sizable contractor would be foolish to not utilize a cost report methodology.
Still in this century, the standard job cost reports in several software packages lack the practical approach to construction. It is surprising that we have to further customize our reports to make them effective predictors of job cost of a construction project.
Not naming software names, quite a few were created to serve more than the construction industry. We, by our nature, haven't deserved a dedicated approach by a software developer. We are too fragmented and each fragment does not have enough buying power to justify a sole approach. The two most common markets that these companies target are real estate and engineering. These businesses bear scant resemblance to a contractor's enterprise.
What 2 areas are the biggest risks for cost overrun?
1) Labor
2) Time (which translates into general conditions cost)
If you are a general contractor or a specialty contractor, either (or both) of these have been a culprit in 90% of the projects that have broken the budget.
How do we predict this earlier in the cycle? In our opinion, that is why some software packages' reports have to be rewritten.
Continue reading "Effective Construction Project Cost Reporting"
Posted by Matt Stevens at 11:47 AM | Comments (1) | TrackBack (0)
Our New 6-1/2 Hour CD Set - Turn Your Truck Into a Classroom
Our 6+ Hour Audio Series, The Business of Construction Contracting is perfect for busy construction professionals who have "Windshield Time"
These inclusive CD's contain management insights and worksmart thinking in the areas of 1) The Business of Construction Contracting - Business, Strategic and Economic Issues and Insights 2) Work Acquisition - Estimating, Bidding, Priciing, and Selling 3) Building Work - Project Control, Project Management and Labor Productivity 4) Keeping Track - Financial and Adminstrative Practices 5) People - Management, Recruitment and Training of Your Most Valuable Asset 6) Miscellaneous Managment Topics - Firing a Client, Green Building, Virtual Construction and the like. Turn your truck into a classroom.
45 subject areas read by Management advisor Matt Stevens
Hear the introduction
Intro Mp3.mp3
Clck here for more information and purchase options:
http://stevensci.com/Merchant2/merchant.mvc?Screen=CTGY&Store_Code=SCII&Category_Code=6CDSET
Posted by Matt Stevens at 9:16 PM | Comments (0)
Our CD Set for Managers and Executives with "Windshield Time" - 6+ Hours
DVD sleeve with bodycopy.pdfWe have recorded 6+ hours of instructional audio for Managers and Executives Who Have "Windshield Time" in their travels. This audio is created from our library of Seminars, Webinars and Books. These inclusive CD's contain management insights and worksmart thinking in the areas of 1) The Business of Construction Contracting - Business, Strategic and Economic Issues and Insights 2) Work Acquisition - Bidding, Priciing, Bidding and Selling 3) Building Work - Project Control, Project Management and Labor Productivity 4) Keeping Track - Financial and Monetary Practices 5) People - Management, Recruitment and Training of Your Most Valuable Asset 6) Miscellaneous Managment Topics - Firing a Client, Green Building, Virtual Construction and the like. Turn your truck into a classroom. Click on the link below.http://stevensci.com/Merchant2/merchant.mvc?Screen=CTGY&Store_Code=SCII&Category_Code=6CDSET
Posted by Matt Stevens at 8:17 PM | Comments (0)
Book Reviews for McGraw Hill's Managing a Construction Firm on Just 24 Hours a Day
Book reviews.pdfFinally a book for all contractors to understand the business of construction contracting.
Posted by Matt Stevens at 8:38 AM | Comments (0)
Part 1 of 2 - Storm Season / Emergency Preparedness For Contractors
I am born and raised in a state (Florida) which has had it share of emergencies - tornados, hurricanes, wildfires etc.
- 65% of all construction contractors have 10 employees or less according to Risk Management Associates. There are currently 2.7 million construction firms in total - that's 1.7 million small firms. Construction is a huge small business industry.
- Minimum three contact methods of all employees - phone, cell, email and of course, physical location - one would go by their house to check on them
- Emergency cash is essential - $300 for each employee - to be paid back later.
- Generators are great in certain situations such as IT operations
- Designate a rally point or meeting place outside of a building or in a location so as to count missing persons.
- Back up computer systems are best if located another state. (I use Carbonite)
- Have syncing software that will keep laptops current with desktops. Laptops are much easier to use after a storm with Broadband capability and electrical charging via truck / car.
- Cars / trucks have electrical generating power for cell phones, laptops etc. make sure they have the adapter plug ins to be used.
- Batteries kept in their wrappers until needed in flash lights.
- Take pictures of all work completed before storm hits for any potential insurance claims.
- Get statistical data from your insurance company about weather related delays. Have this at the ready in case the client starts claims for delay after the storm.
- Wind and Flood are two different damages - know the difference in your insurance policy and adjust accordingly.
- People (your employees) will take unneccesary risks for their pets - consider sheltering them in your building.
- Run practice drills once a year during early storm season.
- Check on emergency rental rates for area hotels - some offer greatly reduced rates during after a storm. During 2004's Hurricane Charley, my daughter and I stayed at the Rosen Hotel - Orlando for $42 a night for 8 days. In hindsight, it was a very lucky we did some planning.
- Better to have a higher deductible and a higher maximum coverage than a lower deductible and a lower maximum coverage.
- Most insurance claims needing a contractor quote. Think about charging for quotes after a storm. Others have done so and homeowners / building owners don't object as long as you tell them upfront.
Continue reading "Part 1 of 2 - Storm Season / Emergency Preparedness For Contractors"
Posted by Matt Stevens at 7:31 PM | Comments (0)
Effective Pre-Construction Processes
During the pre-construction phase, it is the project manager's responsibility to plan and execute preliminary activities. As you look at any construction segment, every specialty or general contractor performs better when they accomplish these beginning activities immediately after the project award.
A important pre-construction task is the review of contract documents by the project manager and superintendent. To understand the contract is to protect the budget. Also, the mobilization plan must be developed by both these managers. The PM is responsible for creating a construction schedule, a schedule of values, project files and job logs. He must facilitate setting up the project in the company's project management system (Paper Based, Expedition, ProLog, Constructware, etc.)
Continue reading "Effective Pre-Construction Processes"
Posted by Matt Stevens at 3:03 AM | Comments (0) | TrackBack (0)
Public Seminar Schedule for Spring, 2008 - Stevens Construction Institute, Inc.
Public Seminar Schedule.pdfPosted by Matt Stevens at 7:01 PM | Comments (0)
What is the Lean Approach in Construction Contracting?
In a phrase, we define it as asset productivity. (Current and fixed assets along with people) Productive assets means higher ROI. Healthy financial results bode well for construction contractors and their staffs. As you know, cash in the bank can determine whether your business future will be a) troubled b) robust or c) extinct. The bank does not have an opinion about your balance; it is not debatable. That balance allows you to take a long-term view or forces you focus only on the short term. Greater asset productivity is what most contractors desire. It beats the alternatives.
Continue reading "What is the Lean Approach in Construction Contracting?"
Posted by Matt Stevens at 7:33 AM | Comments (0)
The Lighter Side
Contractor's Definitions:
Government Contractor: A gambler who never gets to cut, shuffle or deal the cards.
Bid Opening: A poker game in which the losing hand wins
Low Bidder: A contractor who wonders what he or she left out of their bid
Engineer's Estimate: The cost of construction in Heaven
Project Manager: The conductor of an orchestra in which every muscian is in a different union
Critical Path Method Scheduling: A managment technique for losing your shirt under perfect control
Strike: An effort to increase golden egg production by strangling the goose.
Delayed Payment: a tourniquet applied at the pockets
Completion Date: The day before liquidate damages are assessed.
Liquidated Damages: The penalty for failing to acheive the impossible
Lawyer: People who go in after the war's lost and bayonet the wounded
IRS: The next people after the lawyers who strip the bodies of any valuables
Posted by Matt Stevens at 11:14 PM | Comments (0)
Benford's Law
A practical law also called the first digit law, first digit phenomenon, or leading digit phenomenon. Benford's law states that in listings, tables of statistics, etc., the digit 1 tends to occur with probability, much greater than the expected 11.1% (i.e., one digit out of 9). Benford's law can be observed, for instance, by examining tables of logarithms and noting that the first pages are much more worn and smudged than later pages (Newcomb 1881). While Benford's law unquestionably applies to many situations in the real world, a satisfactory explanation has been given only recently through the work of Hill (1996).
Where does this apply to the construction industry? There is limited application but, where it applies is powerful.
Before any discussion, let me make it clear that any fair treatment of this application is based on a statistically significant set of data points. That is, many invoices, cost codes, or expense reports must be a large sample size. For a construction company, hundreds if not thousands should be examined if this principal is to be used effectively and not be a dead end.
We see it as a security and anti embezzlement application. Take the first and / or last digit of invoices or purchase orders and see if they appear more than 11.1% of the time. If so, further investigation is needed.
Continue reading "Benford's Law"
Posted by Matt Stevens at 11:55 PM | Comments (0)
Making Your Own Luck
How is it possible to make your own luck? Making you own luck sounds almost agnostic. Isn't it only that someone is either lucky or unlucky? How can someone help themselves with their own good fortune? Let me explain.
I think we can all agree that Las Vegas has an edge on making its own luck. The odds in that town favor the house. They (and other gambling organizations) created the games that people play. Often, people pay the casinos in the end.
You see when you are in a game of chance; you can win or lose every day, week or month. It is good if you are winning. You wish it wouldn't stop, but it will. Conversely, if you are losing continuously, you wish it would stop and by the same law, it will.
Doesn't construction have a chance of failure and a chance of success? Certainly, it does. There are no guarantees of winning or making a fortune in contracting. Interestingly, you are only guaranteed of losing if you don't work smarter. The business is that competitive (and risky)
Luck has a lot to do with hard work and honest dealing. It certainly improves your chances against your lesser competitors. Sadly, there will be times that you will wonder what is going wrong with the world.
Continue reading "Making Your Own Luck"
Posted by Matt Stevens at 10:31 PM | Comments (0)
Hey Stupid! It's a $13 Trillion Economy
A small portion of Americans are taking council of their fears. The talk of recession started even before a confirmed report of 2 quarters of economic contraction. This emotion is fed by the:
1) Housing lobby looking for help.
2) Politicians looking for power or re-election (or both)
3) Americans looking for external help for their stupidity
4) Others who continuously spend time on a couch or barstool.
We are all in this together - the good and the bad. However, Americans are mostly individualists. We produce great works of art, science, literature etc than any other country. See Nobel, Hollywood, NASA and other places that clearly denote American citizens as leaders.
We have a $13 trillion economy. There is plenty of room for everyone. No one will go hungry. We have great individuals living within our borders. If you want to participate in the recession, be my guest. However, a majority of Americans are silently improving their productivity, saving more, spending less and generally figuring out ways to take market share from Asian, South American, European etc nations. That is the America I adore.
Continue reading "Hey Stupid! It's a $13 Trillion Economy"
Posted by Matt Stevens at 12:30 PM | Comments (0)
Virtual Construction - Part 1
We are at the age of Virtual Construction. If you are younger, you are not surprised. You suspected that computers were a "solution looking for a problem" for many years. Why shouldn't you have seen and believed this. Computers work at the speed of light. They can process billions of pieces of information and the cost of this is more reasonable than ever.
It is interesting to note that Virtual Construction marries one of the oldest businesses with one of the newest business trends. This marriage has the possibility to minimize life-long problems.
If you are older, you sense that the probability is there that technology could give contracting a real boost. However, you remember how poorly managed most technology companies were in the last two decades. They busted the most important rules of business and went away (bankruptcy). Also, "Ghostware" was an accurate term for promised new versions of software. The lack of software upgrades disappointed many contractors several times a year as promises remained unfilled. These are fair criticisms.
Just as significant were the poor financial management practices that technology companies exhibited.
Confidence in tech companies in and out of the construction industry has decreased not increased. Many contractors feel a "wait and see" attitude is appropriate.
Continue reading "Virtual Construction - Part 1"
Posted by Matt Stevens at 12:36 PM | Comments (0)
Provocateurs Abound
Provocateurs abound. To sell books in the United States these days, you can take one of two paths. The first one is to write as thoughtfully as your God-given talent allows you to. The second path is to cause as much controversy as you can. (See Michael Moore and Ann Coulter). Clearly, Broken Buildings, Busted Budgets: How to Fix America's Trillion Dollar Construction Industry by Barry LePatner is the of the second sort. His book has little redeeming value as a contribution to construction and contracting.
He is guilty of litigating in the pages. Not building or thinking through a better approach. He is a second guesser of the first sort. Mr LePatner certainly will attract attention from owners who are looking for someone to sue. His billings should be very high this year. He might even make partner in his firm, if he hasn't already. Maybe managing partner, if billings are high enough.
Hank Harris of FMI Corporation wrote a 5 page condemnation of the the book. I am sure Mr. LePatner thought it was too long. I think it was too short.
A man must choose between two options at one point in his professional life. Shall I strive for riches or significance? Sadly, Mr. LaPatner will certainly be financially wealthy from his work. His significance is to be determined. He can certainly point out what others have identified previously as problems. Good for him. However, his contribution to fixing those problems of construction are minimal.
Continue reading "Provocateurs Abound"
Posted by Matt Stevens at 12:31 PM | Comments (0)
Our Approach to Management Consulting
Explaining a complex issue in a straight forward way is a management advisor's value. Making the complex more so is not. Sometimes we see this. Additionally, taking something simple and making it a Gordian knot is what our politicians do, certainly a management advisor should not.
The goal of our firm is to keep its owner (me) mentally engaged in assisting contractors while providing for my loved ones. It is our informal mission statement. Not complex but then again, see the first paragraph.
What Stevens Construction Institute, Inc. does is not a mystery, it shouldn't be. We are not "cool" advisors. We are "good" advisors. Our heart is in this business for the correct reasons. We love it and we like to be helpful.
What is interesting is that all our clients are people of good character. We don't work with anyone who is continuously angry, contemptuous or is a detriment to people around them. As you know, I don't choose the clients, but I think the (point of the) previous paragraph helps (Yes, I have fired a couple over the years). However, all of our clients are good contractors and people.
What is also interesting, I don't know why this is so, all of the construction firms we work with are first generation contractors. These established firms are not ones started by a previous generation and now are controlled by another one. Don't ask me why but, I find it interesting.
One of our services is process improvment. Our consulting and subsequent documentation of process re-engineering is based on the Lean Approach. Again, no mystery. Lean works well when contractors and their staffs try to improve their business operations. As I don't work as a technical building advisor, I strongly believe any business benefits from Lean. As in all models, it doesn't fit our industry exactly, but it is the best. I don't know of an equal.
If you have read any writings on Lean and you have read my book, Managing a Construction Firm on Just 24 Hours a Day, (McGraw Hill, 2007), you can see the parallels. When I wrote the book in 2005-2006, it was more intuitive and observation based from my years in construction. A few friends have suggested that the book "is the practical Lean approach to construction contracting". Once I read all I could on Lean, I agree.
You are probably curious about one question: Yes, I bought a 2008 Toyota Tundra. How can you not be a fan of the company after you have read about Lean? I don't sell for Toyota, I just love the truck. To appreciate this fully, you have to also know that both my grandfather and great grandfather were plant managers for General Motors. Yes, I believe in Lean.
More tangibly will be my 2009 book that will be my interpretation of Lean for construction contracting. Accordingly, we use established and well accepted tools in our consulting work. Effective ones such as Moveable Type, Tool Book, WebEx, Zoomerang, Constant Contact, DISC, Media Temple, Lombardi Blue Print, SecureWebs and the like. Less mystery for my clents. Remember, it is the content or knowledge that makes a consulting firm a value, not the presentation (sizzle). Addtionally, if (and when) I die, my clients can pick up where I left off. This is the spirit of Lean.
So look seriously at the Lean Approach, read all you can. You will find this is a tenured and established method. It has been vetted by some of the great business people in the world. It is decades old and it is effective. You can confidently apply it to your construction company as dozens of others successfully have before you. But, if you are looking for something new and cool, Lean is not for you.
More to the point, if you want to talk with a management advisor who can help apply it, I am a candidate. I hope you will appreciate my focus on making things less complex and less mysterious. Helpful but not cool.
Posted by Matt Stevens at 9:01 PM | Comments (0)
10 Years
Client after client has shared this little known fact. Although anecdotal in nature, it has been repeated enough to me that some statistical significance should be assigned to it. Stronger still, I am statistically confident this is true.
This little known fact is "10 years". That is, it takes 10 years to figure out this business called construction contracting. We have such a complex challenge in building work that it takes many years to understand and then act on the true drivers of profitability, safety, quality, speed and people.
As an aside, comedian / actor / writer Steve Martin said the same in his latest book. It took him 10 years to understand what he was doing and then to bring crowds to their feet. Most professions are not instantaneous events. Much like an athlete, it takes thinking, nurturing and faith. Even the most talented, have to go through a period of modest, inconsistent results. If you know Mr. Martin, ask him about performing at the Steak & Ale in Gainesville, Florida. That kind of humble beginning is not what show business is all about however, it is a critical step while keeping the insincere and weakest from earning fame and fortune.
In construction contracting, I do not work with start ups. My books are for established contractors and their staffs to understand more and different things about the construction business. Once in a while I will be asked to help someone in their new business. After I quietly tell them I don't do that kind of work, I usually offer up some quick advice to leave them on an encouraging note. I always bring up the concept of "10 years". Silence from the other party usually ensues.
There are two immediate benefits from mentioning this little known fact. 1) I don't get another inquiry about their new business 2) It keeps the weakest and insincere from competing against the existing contractors.
Doing something because you want to versus doing it because it is cool or profitable is a classic conflict in construction. Obviously, having more contractors building our habitat and our infrastructure who want to be in the business benefits society and our profession. Contrast this with all the "house flippers" of just a couple of years ago.
As you can tell, I vote for the people who are long term and sincere in their professional goals.
Posted by Matt Stevens at 8:12 PM | Comments (0)
The Velveteen Rabbit
This may be a sign of my age but, not a sign of my ignorance. I am often reminded of the parable of the velveteen rabbit. It is a classic that should be (must be) retold by future parents. Without stories such as this, no standard language can be established between the older generation (wiser) and the younger generation (inexperienced). I will go so far as to say without these transcending parables, less transfer of wisdom will occur leaving the youth of our world less prepared.
Established societies use these tales to tell and teach their youngsters life's principles. These societies have made a choice. It is better to teach experience before someone needs it. Contrast this to letting people experience the lesson first hand. Scar tissue is not a bad thing, but it is inefficient in growing leadership. Mentoring is largely based on this principal.
What is the parable of the velveteen rabbit? I will let you look it up. Google is a great invention. The lessons are many. However, this is what I see: Don't be afraid of life's lessons. Its ups and downs, it makes you real. Take anyone who has met a payroll, raised children, built an invention or run a construction company. I can confidently state they are real people. Ones whose opinion matters.
Conversely, those have not done much in their lives, they cannot be considered a source of much. Whether through laziness or fear, (it doesn't matter the reason), these kinds of people should not be sought as counsel or as a mentor. They just don't know much of the detail of life. Detail is where life happens.
The 30,000 foot view is the same as the theoretical view. A solid starting point for action and discussion, afterward little is accomplished. The ball does not reach the end zone. Theory does not make it happen.
Continue reading "The Velveteen Rabbit"
Posted by Matt Stevens at 7:51 PM | Comments (0)
I am an A10
Much like the A-10 Wart Hog Airplane is the management consulting work that I do. Close in and ugly. I am a contractor at heart. That is why I do what I do. I love it. It's fun, stimulating and rewarding. Many construction firms are family owned. Helping families is work that gives back to your professional soul.
I am an A10 is not a designation of my good looks or my performance in school. If it was, the letter would be toward the "c" side and the number would not be double digits, it would be in single digits.
I don't think at 30,000 feet. I certainly know we have to be in the right battlefield if we are going to win. I do think at the global level but, not for very long. I do think at a low or close level to the battlefield (job site). More of my time is spent at the treetops.
One of my attitudes is "If you are in a fair fight, you didn't plan well enough". Suggest that at your next strategic planning session.
You may or may not appreciate the approach but, it is a detailed, knowledge driven one. One that is missing in the consulting industry. Since I am a fee based advisor (versus commission based), it is risky. I have to "dance for my dinner" or deliver real value. I don't benefit from clients buying products. Solutions and specific process is the product. Hard but, fun and very challenging.
"What is the right thing to do" is a lot easier if you are not commissioned based. The client and I benefit in many ways by answering only that question.
Continue reading "I am an A10"
Posted by Matt Stevens at 2:01 PM | Comments (0)
Welcome
Thank you for visiting the Construction Contractor's Digest. We are pleased that you have joined us. This site is for the express purpose of being a resource for construction leaders. We work as management advisors with construction firms. We are Stevens Construction Institute.Management Advisors to Construction Contractors.
Presently, we have written over 190 articles ranging in subjects such as managing people & processes to financial management & computers. Enter your key word (use American English) and I am certain we will have some information for you. As you read these articles, please let us know your thoughts. This adds to the quality of our digest. I am the author of an "old world book" McGraw Hill's Managing A Construction Firm On Just 24 Hours A Day by Matt Stevens. It's 406 pages describe issues, trends and "work smart" processes / tactics for construction contracting. We include over 100 illustrations with 130 Best Practices.
Posted by Matt Stevens at 10:57 PM | Comments (0)
Estimating is Mostly Science
You may or may not believe that successful bidding (winning projects) is mostly science, not luck. Somehow, young construction professional somehow an innate gut feel allows a construction company to win work. That is, to know what the price on bid day should be to be low or in the running. That is absolutely not true.
We first have to agree that the work costs something based on logic. The first driver of cost is quantity or count. How much product to install tells us the first piece of a logic chain that extends to labor pricing and subsequently, all the way to the summary sheet. From opening the plans to proposing the work, there is little room for luck. It is largely based on science. On any project, the truth is not told on bid day but at project close out. Connecting the two is hard for the unsuccessful bidder. He or she does not know the outcome or the final result. The successful construction contractor does.
Only from a conversation with that company (or a former employee) can the estimator be confident that he or she had the right number. Being low is not success, being right is. Since the quantity takeoff or count is the driver of the final cost, you can see why we strongly conclude that estimating is largely a scientific or logical exercise. No voodoo needed.
Continue reading "Estimating is Mostly Science"
Posted by Matt Stevens at 7:49 PM | Comments (0)
It is a 50 Year Career
All professionals are in a long swim as they pursue their career while providing for themselves and others. As we can work longer with better health, it is a longer swim than our father's (my mother was not allowed to work outside the house). So, whatever we choose we will be at it for a while. Even if our "ship comes in", we still have to do something in a serious way, otherwise the person we will become is not worth much.
Choose carefully. We have concluded that construction is the best industry. You'll have to read my book to understand the analysis and to determine if the conclusion is valid. However, I have not been challenged by another person about this professional opinion. Silence must mean agreement.
Know that moderation in all things is a wise path. Certainly, we can become enamored with being rich or famous (or both) Good for you if that is a goal. Just remember, it is a long swim. To reach your goals with carefulness would be my advice here. People can reach their goals by acting in all manner of ways. Only to find out that it is the little things that really matter. Also, they will discover that to celebrate the achievement of a dream alone is no celebration.
It is truly a long swim. By my reasoning, 50 years. You have time to fail and restart but, there is no time to quit.
To never try to reach your dreams is regret. So, let's be aware that there is a middle ground here as in all things. Go forward, go for it, and do the right thing on the way. Then, you can have a true celebration when you arrive at your goal.
Continue reading "It is a 50 Year Career"
Posted by Matt Stevens at 2:51 PM | Comments (0)
Growth is Good?
Construction is different. We don't know of another industry with all the good and bad that construction has to offer. Several business characteristics are unique. A general approach can help in some areas but, hurts in others.
Growth of all types is not good. In certain areas, it is desired and growing other parts is not. What am I talking about? Growth of your employees as professionals is important. It allows benefits past a more efficient staff. Intellectual growth is important, that is, always searching and finding better ways to conduct your business. These reasons for growth are not hard to fathom.
Contrastingly, growth of revenue can be a disaster in construction contracting. To raise revenue profitably in a management intensive business is hard. Our trusted staff can only work so hard and then we have to hire unproven and untrusted new people.
Added to this, we cannot get a premium of even 5% over a like competitor. To sell more in the short term is to have to cut price to gain agreement from new customers. Cost will be the same and probably more due to overworked staff and new hires.
We are in cost side business and the greater the distance of cost from revenue, the more secure the business. Said another way, if these two business numbers are close together then the company may have one bad event and cost can quickly become more than revenue (a loss).
As Denis Waitley said, "If you are growing you are green, if you are ripe, you rot". True in most cases and most industries, but not construction contracting.
Continue reading "Growth is Good?"
Posted by Matt Stevens at 5:40 AM | Comments (0)
The Learning Curve
Most people's work quality does improve with age. The exceptions tend to be in clothes modeling and sports. However, each of us can probably say we make more money than we did 20 years ago. This is of course driven by being better at our profession. Knowledge increases with age for most our lives. It affords us the efficacy (efficiency and effectiveness) to be rated from "very good" to "excellent" at what we have chosen to do.
As we look at our subordinates, we know this applies to them as well. Our people have grown in their skills and it has allowed us more time to work at the important / urgent tasks that drive the profit dollars. Our subordinates of tenure, in turn, earn a higher wage than average.
All this works to our benefit in the construction industry. However, how do we increase this phenomenon to our advantage? How do we speed up this learning curve?
Certainly, this is why all the industry focus on training. Taking some of the curve out of the learning curve is the object of training. To be clear about the construction industry, we are unique. Some of the training concepts that are well accepted in other industries don't fit us. If we are make training a strategic advantage over our competitors, we must see insights most others don't.
For my part, I have several observations and some conclusions. As a double check on my work, I can look to the industry for proof although somewhat anecdotal. To be fair, our industry is so fragmented and also mostly privately held, deep research is hard to come by much less conduct.
On other posts, we will examine some of the generally accepted rules for training, and why/why not they drive the result we want.
Continue reading "The Learning Curve"
Posted by Matt Stevens at 4:07 AM | Comments (0)
Construction Training Basics - Part 1
As we look to grow our present workforce to assume more responsibility (and authority), a training approach has to be option 1A or 1B. It has to be the first option.
Another option is "let the cream rise" or your best people will just naturally earn more responsibly and authority. I don't think it is a second option, that is, let all your people make mistakes and learn. Darwin would understand this approach. The fittest become rulers and the rest of us work. As you know, this approach is inefficient, costly and takes a long time.
I have been actively training for many years as a construction supervisor during the 70's 80's and early 90's. Since that time, I have trained many groups as a management advisor. From both tenures, I can tell you some basics that may help you as you try to speed up the learning curve with your subordinates.
- Train your people to task / skill just before they need to use it. This means one task is trained and acquired. It may sound strange but, it is true. As a result, it takes weeks to train someone who does a myriad of tasks. Not what most construction companies want. However, "drinking from the fire hose of knowledge" leads to poor results. People can only absorb so much.
- Adult learners like new or interesting information. This causes mental engagement. It makes the whole experience deeper and less boring.
- We have to get past the first 7 minutes of training. People will become focused deeply after 20 minutes. Psychologically, we should take a break at 1 hour and 15 minutes. Getting past that first 7 minutes is critical.
- Adult learners like interactivity. This also causes mental engagement and makes that 1 hour and 15 minutes seem brief.
Continue reading "Construction Training Basics - Part 1"
Posted by Matt Stevens at 10:24 AM | Comments (0)
The New Generation
To paraphrase, "They are reckless, ill-mannered and disrespectful of adults". Sounds like today's young people. You're right. However, Socrates said this over 2,000 years ago about the youth of his day.
We can be awfully harsh on the next generation. Most of it is undeserved. They are just young and inexperienced, full of emotion and ideals. No scar tissue. They just don't know some basic truths about what can happen to them. How fragile life is and how fickle it can be. Lastly, that God has a sense of humor.
Some of our criticism is deserved. We have a generation that ( most of) hasn't experience three basic emotions:
- Hunger
- Financial Distress
- Loss of a loved one's life
The first two are part of the great abundance of the United States. The last is only grace or luck depending on your religious outlook. The first two is where we are frustrated. Too much consumption and not enough investment by us as parents, uncles, aunts, neighbors and the like. We don't want our young people to go through the awful time most of us went through.
Now, we can all share stories about our first car, our first job, our first month on our own etc. The older generations didn't have as much given to them as the latter ones. It is a fact we cannot control. The 20- and 30- somethings as a group aren't as circumspect about their lives as we are.
All this means to me as a management advisor is that the pool of strong management talent has gotten weaker. We have to ignore this trend and focus on finding those who have touched by harsh reality. They are out there.
Continue reading "The New Generation"
Posted by Matt Stevens at 6:36 AM | Comments (0)
16 / 3 Rule
Over the years, general contractors have consistently taken small gambles on young or unproven subcontractors. Time and again, the ratio I used to see was 16 / 3. That is, if a GC had 16 subcontractors on a project, he or she was using 3 who were not proven or simply cheap. As you know, this is a rational gamble as the building owner was asking for price first and then asking for speed second.
In my experience, this ratio has changed to 16 / 2 or 16 / 1. It seems since the turn of the millenium, GC's have led the charge for insisting for quality subcontractors and passing on the additional cost. It is to their credit.
Additionally, the drive for speed has risen has been matched by the GC's determination to change the economics of constructing work. Certainly, we all take a gamble. However, proven subs are 90+% of the equation and it is to the credit to the 700,000 builders along with the AGC, HBA and other contractor representatives.
Continue reading "16 / 3 Rule"
Posted by Matt Stevens at 8:01 PM | Comments (0)
Frustrated by Your Construction Software?
Your computer system can be a blessing and a curse. We know when it is blessing because it has sped up the collection and reporting of information. This makes our analysis of those reports much timelier. Important in our risky, superheated race to completion on construction projects.
However, when it is a curse, we know that as well. The system sometimes won't produce reports that we must have. Certainly, a good report writing software on the back end helps here. To name a name, Crystal Reports has a following among contractors.
Another alternative is to use a download of your information resident in your software and report / analyze it in a spreadsheet. Machine language is also known as ASCII. ASCII Stands for American Standard for Information Interchange. It is a type of file format. All software will read these files. All contractors should know how to download data from an accounting, project management, or estimating software package into an easy to use spreadsheet such as Microsoft Excel. From here, we can analyze the data extensively.
This should untie the software knot some contractors may be experiencing.
Continue reading "Frustrated by Your Construction Software?"
Posted by Matt Stevens at 2:41 AM | Comments (0)
ConsensusDOCS Have Arrived
After three years of hard work, several construction industry associations and related outside parties have created 70+ documents that are a real effort to standardize practices in our industry. Standardization allows for professionalism and fairness. This is a long term value to 4 parties:
- Funders (owners, developers, etc)
- Users (owners, tenants, etc.)
- Designers (engineers, architects, etc)
- Builders (contractors)
- The Construction Users Roundtable
- Construction Owners Association of America
- Association of General Contractors
- Associated Builders and Contractors
- National Roofing Contractors Association
- National Electrical Contractors Association
- National Subcontractors Alliance
- National Plumbing - Heating - Cooling Contractors Association
- Mechanical Contractors Association of America
- American Subcontractors Association
- Painting and Decorating Contractors Association of America
- Lean Construction Institute
- Construction Industry Round Table
- National Insulation Association
- Finishing Contractors Association
The American Institute of Architects (AIA) is notably missing. Long term, this prestigious organization will hurt itself in many ways by not joining the rest of the industry - Owners, Engineers and Contractors - in standardizing the business of construction. From a PR standpoint, it is hard for the average person to understand their lack of community. Several reasonable but negative perceptions will evolve from that.
Posted by Matt Stevens at 2:29 AM | Comments (0)
Opportunity Cost in Construction - Simply Put
Opportunity cost is a term that many of us have struggled to understand completely. I was unsure of the definition and how it applied to the "real world" when I first heard it. It is seemed a little abstract or not concrete, more of an academic concept. However, all these smart people believed it was real and so there was something there I should understand.
We know that opportunity cost revolves around of the idea of lost profit when you do something that is not billable. As an example, if my crew is doing rework on the first floor, I am losing the opportunity to install work on the second floor and bill it. As we know, rework is non-billable. There was an opportunity cost to us because we were performing rework. Fair enough.
However, some see mistakes, lost productivity, meetings as part of the business. So, they may not fully grasp the importance of this concept.
Here is another way to look at it. You have business bills due each month. Personally, each of us has costs to live. These expenses don't suspend because we can't invoice the client. Just because we have less revenue this month doesn't affect the demand payments from vendors, landlords and the like.
Opportunity cost is real to those of us who have experienced "too much month". We know we can't be unproductive whether it is from rework, unproductive meetings or laziness. There is a real opportunity cost (emotional, academic and practical) when we are behind on our bills.
Continue reading "Opportunity Cost in Construction - Simply Put"
Posted by Matt Stevens at 2:20 AM | Comments (0)
Question and Answer About ROI
ROI is not profit, ROI is based on cash to cash cycle and profit dollars
Read my book and buy the templates, They will calculate your numbers
Good luck
Matt Stevens
Sent from my Verizon Wireless BlackBerry
____________________________________________________________________________________
Date: Wed, 23 Jan 2008 02:06:37
To:mstevens@stevensci.com
Subject: RE: Question
Matt,
Thanks for the reply. So the job with all the subs, permits, etc. looks to be over 12 million dollars. 30% is 3.6 million. Doesn't that seem extremely high?? I would love to do the job and were going up against three other contractors.
Thank you in advance.
____________________________________________________________________________________
>Date: Wed, 23 Jan 2008 02:02:37
To:mstevens@stevensci.com
Subject: RE: Question
Look at the ROI to set price and profit
Somewhere around 30% ROI is appropriate. It is up to you whether you want to go higher or lower. There is no right or wrong. It is a business decision. My book has the complete calculation.
Best of luck
Matt Stevens
Sent from my Verizon Wireless BlackBerry
____________________________________________________________________________________
Date: Wed, 23 Jan 2008 01:40:53
To :
Subject: Question
Matt
Thanks for taking the time to read this e-mail. I have a quick question for you. My friend (who is a carpenter) and I (an electrical contractor) have started a general contracting business. So far we have done some houses and some smaller commercial buildings. We have recently been offered to submit a bid on a 114 unit town home project that looks to be 12 million plus. Does the standard 10% apply on that scale?? If so it would be over 1.2 million dollars... or does the markup change based upon the price associated with a big job??
Thanks for any info,
Posted by Matt Stevens at 3:13 AM | Comments (0)
Process Improvement - The Second Most Important Thing
Any construction firm seeking a faster or more accurate business process must start at a reservoir of best practices. For a quicker achievement of its goal, a library of best practices allows a contractor to sort, discard and pare down dozens of ideas in a single day to the strongest ones which will help him or her reach schedule, financial, safety and quality goals. Once a good set of practices are destined for adoption, the next step is not so obvious.
It is the concept of "discrete tasks go to the lowest possible level, functional tasks go to the highest possible". Said differently, project duties should be done by the people closest to the tasks, corporate duties should be done by folks who are higher in the hierarchy. Why? We make more money on projects than by corporate strategies. The executives should help push the infrastructure and systems along while the field and administration managers keep projects on-time and on-budget while keeping safety and quality excellent.
As an example, Job Estimates and Project Planning (discrete duties) are best done by the middle managers. Hiring people and buying software (functional duties) are more effectively done by Senior Managers. Both sets of managers are tasked with decisions that allow for them to effectively drive the cost equation.
Continue reading "Process Improvement - The Second Most Important Thing"
Posted by Matt Stevens at 9:06 PM | Comments (0)
Integration in Construction Contracting
There are three business activities every construction contractor must perform.
1. Acquiring Work
2. Building that Work
3. Tracking it All
Doing these with accuracy and speed assures a certain future.
Clients, Service Providers, Subcontractors, Material Suppliers and others affect the quality of these three critical functions. Each of these project partners must be communicated with if the three functions are to be done well thus, provide a competitive advantage.
Acquiring work means building work. That is where the real risk starts. This is no place for fumbled information or unclear processes. Tracking it all doesn't come easy. Speed in these processes is a competitive advantage. People have to be helped when trying to gain speed. Hardwiring these critical pieces only helps with tracking. Leaving this to chance can endanger the financial health and reputation of a contractor.
Said differently, integration is the coordination of these moving parts. Good integration management is guiding all of these functions and partners to a profitable conclusion.
Our integration presentation explains:
• Integration and its purpose
• Why integration is critical to the future to a construction company
• The process of integration
• Integration traps
• What integration cannot deliver
Continue reading "Integration in Construction Contracting"
Posted by Matt Stevens at 4:19 AM | Comments (0)
Promotional Video for McGraw Hill's New Book, Managing a Construction Firm on Just 24 Hours a Day
Click on this link.
http://mudpuddlenews.com/programs/flash/buymybook.html
Thank you for your interest.
Sincerely,
Matt Stevens
Posted by Matt Stevens at 4:52 PM | Comments (0)
Construction Contracting by the People Numbers
Construction Contracting by the Numbers
- 2,770,888 Number of U.S. firms
- 7 percent are female-owned
- 83 percent are male-owned
- 10 percent equally male/female owned
- 7.7 percent owned by Hispanics
- 2.7 percent owned by African Americans
- 1.5 percent owned by Asians
What does this mean to you? What impact does it have on the industry?
Certainly, any fairhanded treatment has to point out positives and negatives. An unfair analysis would not include one side. So with the belief in that, let me point out the good and the "needs improvement" sides of the ledger.
Good -
- We have seen improvement in the industry in race and gender representation.
- Without hesitation, we can also assume a greater mix of religious, agnostic and aethesists. Although, a lighthearted comment might be "how can you not believe in God in our difficult and dangerous business".
- On the same vein, we should be confident that a greater range of national origins exists today than decades ago.
- Same with sexual orientation, political beliefs and the like
Needs Improvement -
- The numbers are not close to the population census of the United States. We would think any profession should strive to have a representative mix of the country it is situated in.
- As some races are known for certain affinities i.e. Asians tend to be less athletic but, more studious. We can certainly have some forgiveness as a cultural component can creep into these numbers. Women tend to still want to have children, a family and choose when and how they want a career.
- We see shades of good and not so good in these numbers. You can certainly take a hard view on either side. However, we wish to point out that the construction industry is still a merit based business. Hard, hard work installs construction work. You can't fake it. Owners, the ones who fund projects, only reward completed work and not the promise to perform. Hard work and smart work does keep one's cost lower than lazier competitors.
The answer here is to continue the conversation. Be open to talking about it. If you are dissatisfied with the numbers, the only way to change them long term and permanently is to continue to keep communication alive. In the United States, that is the proper and legal way we solve our problems.
Continue reading "Construction Contracting by the People Numbers"
Posted by Matt Stevens at 10:27 PM | Comments (0)
References of Our Annual Boot Camp
Matt,
I wanted to write to express my appreciation for the Business Management Boot Camp seminar you put on through the Southeastern Pennsylvania Associated Builders and Contractors from 4-23-07 through 4-27-07
My personal experience in our industry has been one of coming up through the ranks of a carpentry company, from Apprentice, to Carpenter, to Superintendent and now into management. This is not an uncommon path for many managers in the construction business; however the shift in paradigms from the field to a management position was a struggle for me as I am sure it continues to be for many others.
Your course was excellent in bringing to light many of the issues I have had to struggle through as well as several of the necessary points of focus for new managers in the industry. Your passion for your topic is evident in your delivery of the course as well as in the text and tools you provide to the participants.
I found the course to be very informative and valuable, not only for small business owners, but new Project Managers, and Superintendents looking to take the next step as well. I anticipate sending others from our firm to attend your next offering of the course in October.
Thanks Again and I hope all is well,
Christian Kalbach
Manager of Field Personnel, Safety and Training
E. Allen Reeves Inc.
____________________________________________________________________________________
Matt: Thanks for sending the information. I just got time to get to go over
what I may have not completed due to other scheduled events Friday PM and
Saturday. Your Boot Camp was well worth the time we had to dedicate to it and I
know we will get a great deal out of it. Your presentation was
professional, personable and encouraging. I am sure glad I made the
decision to attend. I look forward putting to use the tools you taught.
Hope to see and hear from you in the future.
Regards,
Joe McColgan, Vice President
Wescott Electric Company
________________________________________________________________________________
Hi Matt,
Hope you have recovered from a long week of teaching the Boot Camp!
Thanks for the info, found the entire week to be tailor made for me. Found many areas in which my business can improve in, and I am looking forward to implementing the new ideas and moving beyond average. I am one of those guys who have a tendency to focus on growth, so I think I received a wakeup call on watching cost last week.
I was hoping you could send me a copy of the overly complete check list that you mentioned in class, and the list of best practices.
Thanks again for all your effort; I look forward to going to one of your classes in the future!
Curtis Wray
_____________________________________________________
Matt,
The boot camp format was excellent by taking repeated breaks on time I found myself paying very much attention while in the class. Being able to have a break every hour put me at ease. I was able to put my cell on vibrate and if a call did come up decide weather to leave the room to deal with it or wait for a timely break. I also was appreciative that you realized everyone there had business to take care and you did not take affront to anyone having to leave the class to take care of it. Maybe there could be some way you could communicate to potential clients although they will be away from work they will not be out of touch. It was the best format for a teaching situation that I ever attended. I was alert, interested and wanted to participate. I thought you had a very friendly and engaging personality. You clearly had a grasp of your subject matter. I felt you made the class at ease. We were a class and not a group of individuals sitting back and getting lectured all week and listening to old war stories. Sometimes when I go to these types of classes the moderator stands up on a soapbox bragging about there accomplishments. I felt you were very flexible to listen to others opinions and your comment about starting points for conversations for all you analytic info was great.
My favorite part of the seminar was the exercise with the critical path method. It taught me a great tool and it helped foster camaraderie with some of my class mates. Drawing on others experiences and expertise was a tremendous benefit. I love networking with people. My rule of thumb is that if I attend a class I have a goal to hopefully bring back one or two ideas that may help me in my own work situation. There were more than ten off the chart suggestions that I am going to try and introduce. If one or two actually take hold in my organization I will be thrilled.
Interacting with the others in the class gave me some insights that I may take home. For example one of my classmates suggested that doing a credit check on an individual could give you an idea about someone's character. His comment was that if you pay your bills usually you are a conscientious, serious candidate for employment. Feedback like this you just can't measure and is a tremendous side benefit of the class. I think because you set the tone of the class everyone contributed. I could go on and on with positive comments but I do have to get back to work sometime.
I want to mention that the setting at our association was great and John Judge's effort and hospitality was appreciated.
Tom Collinson
Collinson, Inc.
Uwchland, Pennsylvania
_____________________________________________________________________________________
Matt,
I was telling our estimator that we as project managers must take off the job a second time immediately after we are given it. In this way we can confirm the accuracy and know the quantities before we begin. This is well worth the effort and it will give us more time to address any mistakes and to develop a schedule that will allow us to beat the estimate. I have already used a number of your lessons learned to the benefit of our company!
Thanks for the training
Russ Reithmeyer
Project Manager
Blair Concrete Services
____________________________________________________________________________________
Matt,
I wanted to let you know that my brother Victor and I have been using
several of the techniques for negotiating contracts that you spoke of both
in your book and at the class I attended last year. Over the course of that
time we have had several customers take us up on the offer of a discount for
not holding retainage and likewise a discount for paying net 10 days. Last
week we had a customer take advantage of both the net 10 discount and the
retainage discount as a result this job has completely funded itself
increasing our net profit margins and likewise our ability to accept
additional work for that work period. The most important part is that our
customers our looking at our company much differently, we are no longer just
a group of carpenters but instead we are savy business professionals.
Thank you for your insight and knoweledge your book and class work have
helped us to develop our strategies and techniques to further our success in
the construction industry.
Tammi Talese
Vice President
V-Talese Inc.
Posted by Matt Stevens at 1:29 PM | Comments (0)
2008 boot camp flyer.pdfPosted by Matt Stevens at 12:55 PM | Comments (0)
Firing a Client
It is a tough emotional day when you have to fire a client. When we started in this business, we had one or no customers. It was scary. I can remember waking up in the middle of the night and asking myself why I ever left my regular job to go out on my own. No clients means no income. A truly humbling but, electric experience. Small victories mean more when you have little.
So, we all remember that time. As we mature as business owners, we soon discover an ugly fact. There are clients who aren't partners. They see us as a resource to be managed. There is no warmth or well wish from them. They use us for our service and nothing more. Add to that late pay or payment that is often disputed and you really see the effect of keeping this client as a customer. Hours taken up discussing on non-billable issues. When the problems are not your fault, reality collides with that emotion cited above. You know you must take action.
Firing a client is not natural. It is conflict and most people shy away from conflict. People seek positive environments and skirt unfriendly ones. Ask anyone who has married the wrong person and subsequently divorced. They weren't consistently home on time. There were other places they went to before going into that unwelcome home environment.
Some of us must struggle with the ultimately difficult conversation of placing a client on our "do not call, do not answer" list. Here are some steps:
• Meet them in their office - go to their place so, you may leave as you wish. Meeting in a restaurant allows outside interruption and detail to creep in as wait staff, food, check, and privacy are not in your control. Going to their office is a small sign of respect. Certainly, president's of client firms can close their door.
Continue reading "Firing a Client"
Posted by Matt Stevens at 9:50 AM | Comments (0)
Strategic Planning for Construction Contractors - Unwound
I have witnessed several strategic planning attempts which have resulted in many successes and a few failures. From afar and with discussions with construction contractors (some of which are clients of mine), I have summarized my observations and subsequent analysis of strategic planning efforts in construction contracting companies below.
1) If a advisor is utilized to facilitate this effort, make certain he or she has the following characteristics:
a. Construction specific experience. Generalists will use overall business models and concepts that may guide you to an inefficient and ineffective plan. Our construction contracting business is unique.
b. Not a recent ex-contractor. He or she may be too close to and have to much experience in the construction industry to be objective.
2) Make certain past efforts are considered in the process. A contractor's failures as well as successes show where a company should concentrate their efforts.
3) Give the potential directions time to air out in between meetings. Enthusiasm is great in the implementation of the plan but, can lead to errors in the creation of the plan.
4) All strategic directions have to be vetted against potential financial performance. Be conservative in your projections as money is the only barrier here between you and bankruptcy.
5) Always consider what reactions your competitors will have. Competitive moves against you have to be planned for as your peers will react against your preliminary directions. As a side note, the most fun you can have in strategic planning is watching your competitors react, squirm and generally blink at your moves.
Continue reading "Strategic Planning for Construction Contractors - Unwound"
Posted by Matt Stevens at 8:31 AM | Comments (0)
The "F" Words to Managing a Construction Contracting Firm
Friendliness - Relationships and People grow in a friendly atmosphere. All people do seek friendly atmospheres and turn away from unfriendly ones. Let your place of business have the air of positiveness and not the tension of negativity.
Your managers and supervisors will certainly look forward to coming to work. They are half-way to wanting to do a good job for you. See the other four "F"'s below.
Continue reading "The "F" Words to Managing a Construction Contracting Firm"
Posted by Matt Stevens at 1:35 PM | Comments (0)
Mark Up vs. Margin in Construction - Podcast
Hear the beginning of our article:
For the rest of this chapter, read my book, Managing a Construction Firm on Just 24 Hours a Day (McGraw Hill, 2007, 406 pages). To order our book, go to any major outlet i.e. Amazon, Walden Books, Barnes and Noble, Reiter's. Brown's Stationers (UK), Borders, Booktopia (AUS) and other fine book retailers. You may order the bundle of book, 50 MS Excel Templates (featured in the book) and 55 e-classes at www.stevensci.com - click on the book image.
Continue reading "Mark Up vs. Margin in Construction - Podcast"
Posted by Matt Stevens at 1:53 PM | Comments (0)
Immigrant 101 in Construction
Immigrants have always been a part of the fabric of construction. When we started to gather around city centers and built infrastructure such as roads, buildings, subways, and the like, construction contractors starting looking for people to work in a dirty and dangerous environment. Second generation Americans looked to work in other places. However, immigrants were interested as construction pay was better and the hours more civil than the farm industry where picking, plowing, and bending over during the daylight hours was the norm.
This scenario has continued to today. I don't think it will change much as long as we have legal immigration in this country. (I am hopeful the illegal kind will soon cease).
A couple of contractors I know are still wrestling with the idea of using first generation immigrants in their construction business. They are hopeful to find a way to attract and retain native workers. This is a worthy but, difficult goal. They continue to experience frustration.
The current number of illegal immigrants will not change downward in this country. Our political system will not allow for deportation. The American people are forgiving. I can see a day where our borders are secure and we start talking about a path to citizenship. We certainly won't do that when we cannot secure the borders. We are not that forgiving as a people. However, we won't lose our workers to immigration reform. It is not in the political cards.
For the contractor, if you are seeking more "ready to work" people in you field staffs, immigrants are the only place to start. Most come from farms and know what hard work is. They also, are not afraid of long hours. Don't be shy about recruiting this group. You have a couple hundred years of American Construction History behind you. Said another way, it is quite normal to have those who have not realized the American Dream (yet) to work in construction.
Continue reading "Immigrant 101 in Construction"
Posted by Matt Stevens at 8:45 PM | Comments (0)
My Visit to Clemson University
I recently was invited to speak before two Project Management Sections at Clemson University. As they had adopted my book for the course, this was a very easy decision to make. I made time and arrived to that beautiful campus in Clemson, SC. in the month of October.
As you may have wondered about the next generation, I found them to be a smart and interesting group. Especially those who sit in the middle rows of the class. Of course, I am assuming that all college seniors in construction management are like this. I hope I am right, but then again, Clemson's curriculm has some rigor and practicality.Also. it is well known they are demanding of their students.
I discussed with them two case studies from my workbook I recently published. One was based on a general contractor and one on a specialty contractor. Both concerned financial management.
I worked fairly hard to make this an interesting topic. All I can say is that I tried. Let's face it, finance is a staid subject. If you don't tell a couple of jokes and state some interesting facts about construction firms, you will bore anyone to tears. Later, the professor told me that I did make it interesting. Whew!
One of the interesting topics we discussed was revenue growth. As most older contractors know, growth has to be carefully controlled. If not, it will cost you. You will end up paying to finish projects. So, I did my level best to tell this curious group that half the business is about people. If we hire the wrong person to take on a 1 million dollars of cost, that cost obligation can grow very fast to 1.5 or 2 million dollars. Again, you will end up paying to complete the project at the end.
A lesson that was not lost on this group.
Purchase a copy of my McGraw-Hill book, Managing a Construction Firm on Just 24 Hours a Day. We offer a bundle with Excel templates that are featured in the book and 5 on-line courses to help teach construction business concepts. Go to www.stevensci.com and click on the book link
Our workbook companion with 10 case studies is titled, The Business Management Workbook for Construction with Case Studies is now available.This text is focused as an assist for Colleges, Associations and Contractor Training Programs that teach the business of construction.
My next book, The New Business Model of Construction Contracting is planned for December 2007. Its focus concerns the changing construction environment and what processes address those changes.
Matt Stevens is President of Stevens Construction Institute, Inc. A management consulting firm which works only with construction contractors. Learn more at www.stevensci.com. Take a free course at www.constructioncbt.com and sign in as a new student. For a seminar schedule, email us at mstevens@stevensci.com
Posted by Matt Stevens at 10:02 PM | Comments (0)
What the Top 25% of Construction Foreman Do
The field is where a construction contractor makes a profit. The quality of the foreman is directly linked to the level of gross profit a contractor enjoys. The field supervisor is a resource manager, taking the demands of the job and matching them with limited resources. At the end of a project, the foreman who thinks more as a manager will win. To win more often, this supervisor must psychologically take off his tool belt and assume the role of business owner. The business is the construction project. The average construction project in the United States is about the same as the revenue of a small business. The foreman is responsible for it as a small business owner is.
1. People are fragile. Deep down inside, your workers want to be taken seriously. It is the number one human need - respect. Take them seriously. As a starting point:
a: Take time with each member of your crew to teach and understand them.
b: Never use their nickname. People will never be offended by using their given name or a shortened version of it.
c: Paychecks should be handed out with a "thank you for your work this week".
d: Always assume that people are trying to do a good job until proven differently.
e: Make sure your people have what they need or, at least, fight to get it.
Continue reading "What the Top 25% of Construction Foreman Do"
Posted by Matt Stevens at 10:54 AM | Comments (0)
Cash Flow - Keep Water Out of Your Ship - Podcast
Hear the beginning of our article on Cash Flow in Construction.
For the rest of this chapter, read my book, Managing a Construction Firm on Just 24 Hours a Day (McGraw Hill, 2007, 406 pages). To order our book, go to any major outlet i.e. Amazon, Walden Books, Barnes and Noble, Reiter's. Brown's Stationers (UK), Borders, Booktopia (AUS) and other fine book retailers. You may order the bundle of book, 50 MS Excel Templates (featured in the book) and 55 e-classes at www.stevensci.com - click on the book image.
Continue reading "Cash Flow - Keep Water Out of Your Ship - Podcast"
Posted by Matt Stevens at 1:38 PM | Comments (0)
Are There Too Many White Collars in the Construction Process?
It is our observation that there are too many "white collars" in the building of a construction project. Have you ever looked at the total numbers? We count over 10 different people involved who are in a "profession"
It begs the questions, "Who is doing all the heavy lifting?", "Who is taking the most risk?", and "Who is delivering the most value?"
Here is a sample listing of the people wearing a necktie involved in a typical construction project.
Before the project is started:
1) Developer
2) Real Estate Broker and Agent
3) Architect(s)
4) Engineer(s)
5) Government Official(s)
During construction:
1) Inspector(s)
2) Government Official(s)
3) Insurance Representative
4) Lawyer(s)
Continue reading "Are There Too Many White Collars in the Construction Process?"
Posted by Matt Stevens at 1:28 PM | Comments (0)
Construction Estimator's Job Description
Estimators are becoming more of the project team. This is in contrast to years ago where the take off and pricing was done in a relative vacuum and then, presented to a senior manager usually the Chief Estimator or President for review and discussion. With the advent of increased competition and the design build concept, companies are making the estimator more a part of their on-going business process. Their tasks are more varied, such as helping to sell projects and interacting with the field including verifying effective construction techniques at the time of bid.
The role of the estimator is a critical one. Your ability to predict the direct and indirect cost of work is paramount to being a successful. As an Estimator, you are responsible for:
• Communication all business and technical aspects to the project manager and the field staff.
• The Quantity Survey of the Work
• The Unit Pricing of that Work.
• The General Conditions Cost Managing that Work
• The Application of the Overhead (office cost) Recovery to Support That Work
• Assist Your Supervisor in Setting the Profit for That Work.
• Setting the Proposal Language or "Terms and Conditions" for Building that Work.
Continue reading "Construction Estimator's Job Description"
Posted by Matt Stevens at 5:23 AM | Comments (0)
Engineering News Record (ENR) Book Review of "Managing a Construction Firm on Just 24 Hours a Day
At the risk of being a little self-promotional, I'd like to tell you about my new book, recently published by McGraw Hill, Managing a Construction Firm on Just 24 Hours a Day. It's gotten a good response and I firmly believe it can be a help to better run a construction contracting business.
Here's what Richard Korman, Senior Business Editor, ENR.com writes "If you want to clear your head about something in construction contracting, just pick up advisor Matt Stevens' new book, "Managing a Construction Firm on Just 24 Hours a Day". It is like talking to your older brother who has clamped a hand on your shoulder and is telling you the blunt honest truth about the costs associated with schedule compression or rightsizing your overhead. Yes, this book is full of takeaways and sample equipment forecasts. But where it really shines is in discussions of resource allocations and the uses and significance of CPM schedules. Stevens makes them simple. It is in essence the ultimate, easy-to-digest book about the financial management of contracting for an industry where the younger people have college degrees and the older set don't exactly want to focus on finance. I've never seen anything more accessible on getting and managing work profitably."
If you would like to read other reviews by industry professionals, click on the link here:
http://www.contractorsblog.com/archives/2006/01/book_reviews_of_1.html
Go to our secure E-store and order the book by itself or with 60 Excel Templates and five on-line course package. Click on this link:
http://stevensci.com/Merchant2/merchant.mvc?Screen=CTGY&Store_Code=SCII&Category_Code=BCF24
Posted by Matt Stevens at 9:53 PM | Comments (0)
Managing Construction People
Managing people well is half the battle in contracting. Some people say it is more. The business, as we have said, consists of people and processes. In managing people, older contractors make fewer mistakes in working with others. They have the experience (or scar tissue) to know how to do this better than their younger brethren. As might have guessed, this was written from conversations with dozens of experienced contractors over the years.
This article applies to everyone in your firm. If you are executive, some of these guidelines you already know. The stakes involved are all your projects worth many times more than a single job.
If you are a project manager, you typically control more than one project. Your leverage is not as great as the executives', but more than the project field supervisor or foreman.
If you are a foreman, people are important to your success. Good disciplined craftsmen who like your management style can make your professional life easier. It has been said that the quality of the foreman is directly linked to the level of gross profit a contractor enjoys. The field supervisor is a resource manager, taking the demands of the job and matching them with limited resources. At the end of a project, the foreman who thinks more as a manager will win more often.
For any construction professional to win more often, he or she must psychologically take off his tool belt and assume the role of business owner. The business is the construction project. The average construction project in the United States is about the same as the revenue of a small business. The foreman is responsible for it as small business owner is.
Continue reading "Managing Construction People"
Posted by Matt Stevens at 3:56 AM | Comments (3)
Unwinding the Green Building Market for Construction Contractors
The Leadership in Energy and Environmental Design (LEED) or Green Building effort is past due in this country. In the future, we may be second guessed by our grandchildren about our generation's wisdom. Slow as we may be, we certainly are trying to catch up and forestall man's effect on our living space, of which there is no replacement habitat for our 6 billion fellow beings.
Some contractors are progressively acting on the green building movement. They are showing real leadership on LEED. Everyone should be pleased as everyone wins. However, not all contractors, designers and owners are investing themselves in the effort. On a positive note, certainly more of them will each year.
I can only speak about the contracting community as it is where I spend my professional time.
Contractors sense there is irrationality in this new market. Many people are suddenly involved claiming to have real expertise in a movement which is less than a decade old. Construction firms are not sure who the experts are. That is, those to trust in stewarding contractor's on a efficient and effective path to building green work. Although, it is exciting that everyone predicts LEED will only increase in volume long term. Soberly, construction companies have been burned by popular business trends in the past when outsiders have not been as helpful as advertised but, certainly made sure professional billing was collected.
Most contractors are small. 65% are ten employees or less and 90+% have 100 employees and less. These companies very sensitive to big investments even though they (contractors) may be noble and forward thinking. Most professionals are solving for their financial security. Any national plan has to include addressing the financial focus and potential fiscal strain that LEED may require.
Here is one way to look at the Green Building Effort. This is the start of conversation that will never end in our lifetimes.
1. The first principle is to be local. When in the forest build from trees' wood. When an area of clay, use the ground as your building material. Contrast this common sense with moving materials hundreds miles and the resulting energy expense.
Continue reading "Unwinding the Green Building Market for Construction Contractors"
Posted by Matt Stevens at 9:42 PM | Comments (0)
ENR's Business Forum 2007
I participated in ENR's Business Forum 2007 and was part of a panel discussion It was a very humbling experience. I think I was at the wrong end of the bell curve. However, I did show up and sit on that panel with several astute professionals from different parts of the construction industry.
The forum was conducted by Richard Korman, Senior Editor at ENR and he made sure there was plenty of questions. Keeping up to speed in front the audience of well respected firms such as Disney, Southern Company, Midwest Mechanical, Balfour Beaty and the like is not easy. Everything is amplified. With practice, I can see where people can become very comfortable.
The good news was ENR handed out my new book to all attendees. When I first walked into the conference, a stack of dozens of my books were next to the registrar. All this was luck and I like to be lucky. It doesn't take as much work. Certainly, ENR has helped greatly to get the word out. I am grateful for their kind actions.
Even a couple of people requested me to sign a book. That was flattering.
Posted by Matt Stevens at 4:38 AM | Comments (0)
Construction Productivity
Construction Productivity continues to be flat. From government data on Employment and Put-In-Place Construction, our industry's trailing 10 year trend has risen little and in the last two years has reversed itself. All other major sectors of the United States business community have increased their productive output in constant dollar terms.
It is a frustrating business fact that needs to be addressed. Smart contractors have ignored this national problem and focused on their individual company productivity. As a result, competitive gains have been made by contractors and the reward is theirs to keep. Although, this is on an individual company basis, it is sign that construction productivity is something that can affected.
Both General Contractors and Specialty Contractors win when the output / input ratio is high. Projects get built, clients seek you out, and profits increase.
In our presentation on Construction Productivity, we will explain and you will understand:
• The Construction Contractor's Business Cycle
• The Risk - Reward Curve for Construction Contracting
• What processes drive productivity
• The measures that confirm construction productivity
• Feedback allows contractors to continue to constantly improve.
The business is about construction. We will show you how to start the process of improving your company's productivity.
Continue reading "Construction Productivity"
Posted by Matt Stevens at 10:42 PM | Comments (0)
What the Top 25% of Construction Estimators Do
Estimating is more science than art. Estimates come from counting and price information. General conditions is a checklist of information filled out with project details. Overhead application is a formula calculated with the cost of running the construction organization. Bid pricing is based on competitor information as well as your internal company business demands.
The art is woven into the above science. Gut feel has to be used about construction methods and how they will impact costs. Can we trust our capability to get the job done in the contract time? What are the uncontollable issues in this project? Lastly, what cut / adds do we need to make as bid time approaches. As you know, we sometimes have to make a guess about extra costs, risk or opportunity.Unscienftic and as a word of counsel, be conservative when doing this
However, a bid begins with science. It will and never should be a majority of guesses.
Here is what the Top 25% of all Estimators Do:
Continue reading "What the Top 25% of Construction Estimators Do"
Posted by Matt Stevens at 10:42 AM | Comments (2)
Amazon.Com Sales Rank for "Managing a Construction Firm on Just 24 Hours a Day"
Amazon.com Sales Rank: #21,965 in Books as of September 2007
Popular in these categories:
#3 in Books > Professional & Technical > Engineering > Civil > Construction > Management
#20 in Books > Business & Investing > Management & Leadership > Industrial
#31 in Books > Home & Garden > Home Design > Buildings & Construction
Posted by Matt Stevens at 8:12 PM | Comments (0)
DuPont Chart - Free
A DuPont Chart is a way to show how finances work in a construction firm. It is a graphic that looks somewhat like the NCAA Basketball Tournament Playoff system. Many brackets on the left reducing to only one on the right. Since construction people are visually attuned, this is an effective way to show how several different variables affect the wealth of the firm.
Said another way, many financial factors determine the Return on Net Worth (or Investment). Understanding how many and which ones allow your managers to positively affect them.
If you would like an example of a Dupont Chart, please email us at clientservices@stevensci.com
We have a fully customizable template with MS Excel formulas that is offered as part of our Templates package (60 in all) at
http://stevensci.com/Merchant2/merchant.mvc?Screen=CTGY&Store_Code=SCII&Category_Code=MSEXL60
This form will help explan quickly the financial equation of a construction firm. We also have an Application for Payment, RFI, Change Order and the like.
Continue reading "DuPont Chart - Free"
Posted by Matt Stevens at 9:05 PM | Comments (0)
Join Us for our Business Management Bootcamp For Construction
We offer a 5 day intense bootcamp on the business of Construction October 15th - 19th, 2007. Read the reviews below.
_________________________________________________________________________________________
Recent Reviews of our 5 Day Bootcamp:
Matt,
I wanted to write to express my appreciation for the Business Management Boot Camp seminar you put on through the Southeastern Pennsylvania Associated Builders and Contractors from 4-23-07 through 4-27-07
My personal experience in our industry has been one of coming up through the ranks of a carpentry company, from Apprentice, to Carpenter, to Superintendent and now into management. This is not an uncommon path for many managers in the construction business; however the shift in paradigms from the field to a management position was a struggle for me as I am sure it continues to be for many others.
Your course was excellent in bringing to light many of the issues I have had to struggle through as well as several of the necessary points of focus for new managers in the industry. Your passion for your topic is evident in your delivery of the course as well as in the text and tools you provide to the participants.
I found the course to be very informative and valuable, not only for small business owners, but new Project Managers, and Superintendents looking to take the next step as well. I anticipate sending others from our firm to attend your next offering of the course in October.
Thanks Again and I hope all is well,
Christian Kalbach
Manager of Field Personnel, Safety and Training
E. Allen Reeves Inc.
__________________________________________________________________________________________
Matt,
The boot camp format was excellent by taking repeated breaks on time I found myself paying very much attention while in the class. Being able to have a break every hour put me at ease. I was able to put my cell on vibrate and if a call did come up decide weather to leave the room to deal with it or wait for a timely break. I also was appreciative that you realized everyone there had business to take care and you did not take affront to anyone having to leave the class to take care of it. Maybe there could be some way you could communicate to potential clients although they will be away from work they will not be out of touch. It was the best format for a teaching situation that I ever attended. I was alert, interested and wanted to participate. I thought you had a very friendly and engaging personality. You clearly had a grasp of your subject matter. I felt you made the class at ease. We were a class and not a group of individuals sitting back and getting lectured all week and listening to old war stories. Sometimes when I go to these types of classes the moderator stands up on a soapbox bragging about there accomplishments. I felt you were very flexible to listen to others opinions and your comment about starting points for conversations for all you analytic info was great.
My favorite part of the seminar was the exercise with the critical path method. It taught me a great tool and it helped foster camaraderie with some of my class mates. Drawing on others experiences and expertise was a tremendous benefit. I love networking with people. My rule of thumb is that if I attend a class I have a goal to hopefully bring back one or two ideas that may help me in my own work situation. There were more than ten off the chart suggestions that I am going to try and introduce. If one or two actually take hold in my organization I will be thrilled.
Interacting with the others in the class gave me some insights that I may take home. For example one of my classmates suggested that doing a credit check on an individual could give you an idea about someone's character. His comment was that if you pay your bills usually you are a conscientious, serious candidate for employment. Feedback like this you just can't measure and is a tremendous side benefit of the class. I think because you set the tone of the class everyone contributed. I could go on and on with positive comments but I do have to get back to work sometime.
I want to mention that the setting at our association was great and John Judge's effort and hospitality was appreciated.
Tom Collinson
Collinson, Inc.
Contact us for more information at mstevens@stevensci.com.
Posted by Matt Stevens at 12:42 AM | Comments (0)
Partial Business Management Boot Camp Class - October, 2007
Posted by Matt Stevens at 9:20 AM | Comments (0)
Matt Stevens Will Participate in an ENR Panel Discussion About Project Profitability in Washington D.C.
Download attached flyer for information.
Posted by Matt Stevens at 2:14 PM | Comments (0)
MS Excel for Construction
Spreadsheets have been around since the 1980's. They have been the first software most of us were exposed. Not much has changed to the look of spreadsheets since those years but the power has risen dramatically. Today, the uses are many. They are the base calculator for several software packages today. Spreadsheets are as common as cell phones in construction offices. They are simple in their layout of rows and columns, but powerful in the use of functions, commands, etc. Professionals in the construction industry use them from basic tasks such as number calculation to more advanced features such as database functions.
Excel® is an easy-to-use yet powerful spreadsheet program from the Microsoft Office® software group. It shares many of the features of Office applications with which you might be more familiar, i.e. MS Word®
In our Excel Class for Construction, we will look at some of those shared features and learn to navigate and compute in an Excel worksheet. We will also learn the buttons and toolbars in the software. Lastly, we will create formulas and thus spreadsheets that can be used in the construction industry.
Names of commonly used ones are Quattro Pro, Lotus and Microsoft Excel.
The proper use of a spreadsheet will produce a fast and accurate result.
Continue reading "MS Excel for Construction"
Posted by Matt Stevens at 3:57 PM | Comments (0)
Labor is the Greatest Opportunity
Labor is the greatest risk factor and the greatest profit opportunity for construction contractors.
Specialty contractors (also known as subcontractors) will tell you it is the single greatest opportunity for them to make or lose the most money. None of the other cost items compare, not material buyout, or subcontracting or equipment utilization. It all starts with labor productivity.
Studies for several years have pointed out that wasted labor time on an average project is over 30%. Multiply that percentage by a payroll of $1 million dollars and you will see why it is such a huge issue. 90% of projects that have cost overruns do so because of the labor cost of the job.
Analyze an average labor intensive contractor's profit and loss statement. Calculate a 5% Increase in labor productivity (the labor cost reduces 5%) and the labor savings go directly to the bottom line. Conversely, decrease the labor productivity, the labor costs increases and you might breakeven or worse. This is an opportunity or a problem depending on how you look at it.
Both specialty and general contractors benefit from a focus on labor. The reason is obvious for specialty contractors. They have a large part of their costs of a project contained in it. General Contractors
benefit as they receive better pricing from specialty contractors as the fear of loss is lessened to these
contractors.
Continue reading "Labor is the Greatest Opportunity"
Posted by Matt Stevens at 4:24 AM | Comments (2)
ENR Book Review of Managing a Construction Firm on Just 24 Hours a Day
Posted by Matt Stevens at 1:40 PM | Comments (0)
There Are No Windfalls Left
We know our business is a tough one. However, it has not always been that way. A time or two ago, material prices were stable, people wanted to work, the economy was steady and legal/political issues were a minor concern.
We all have worked as labor in the field. Some of us remember how fun it was. Loud music playing on the radio, our shirts off, and after work time was ours. What happened? In the decades since, we have moved up in our responsibilities thus less fun. However more to the point, the business has changed.
Our industry has tightened up in the demands it places on us to make a profit. There are no windfalls left. We don't have the luxury of naive competitors since more information is available than ever before. Addtionally, the clients, subcontractors, and suppliers have become more sophisticated leaving us with less opportunity to make a profit.
Lets' look at the changes that have occur in the last 30 years or so. These points are compiled from several groups of contractors at different times. They were asked what has changed in the last 3 decades?
Continue reading "There Are No Windfalls Left"
Posted by Matt Stevens at 5:51 AM | Comments (0) | TrackBack (0)
Closing Out a Construction Project - Bringing It Home
The close-out phase of the project is one the most important factors in determining how a project ends. Does it end with a strong finish and the owner is delighted at how quickly they received the finished project? Or did the last 10% of the job drag on forever and it seemed as though you would never finish? Customers remember most vividly the last 10% of the project. How you close-out a project will leave a lasting impression in the owner’s mind. Unfortunately, they won’t remember all the hoops you jumped through to get the job started in the dead of winter, but they will remember that it took three weeks longer than expected to patch the drywall or to broom rocks.
For the rest of the article, email us at mstevens@stevensci.com. with the title of the article. Limit 1 article per month
Continue reading "Closing Out a Construction Project - Bringing It Home"
Posted by Matt Stevens at 9:51 AM | Comments (0) | TrackBack (0)
Construction Contracting is a Tennis Match!
In the 1960's the name of the game for construction firms was to "get it done", deliver the project and then hash out the financial issues with the client. Contractors were comfortable doing this. Clients understood the ethic and appreciated the extra work this involved.
Since that time, owners have slowly changed but, change they have. They view construction firms as a resource which is to be managed. Owners understand more about the construction process than ever before. They involve themselves deeper in projects. It is their right; however, if they manage the details closer, we should expect a responsive and reliable partner. If not, we should reasonably expect to hold them accountable.
For the rest of the article, email us at mstevens@stevensci.com. with the title of the article. Limit 1 article per month
Continue reading "Construction Contracting is a Tennis Match!"
Posted by Matt Stevens at 12:40 PM | Comments (3) | TrackBack (0)
The Rule of 72 in Construction
Which is more? $5 million or a penny doubled every day for a month? Surprisingly, the answer is the penny. This illustrates the power of the rule of 72. This is a simple financial rule that dramatically shows the power of doubling. It demonstrates the power of time with interest to produce large outcomes.
This solidly points to the importance of expense discipline and financial management for construction firms. Done with frugality, the reward is substantial wealth at a relatively early age. Done poorly and we work longer than we want to.
The math of this rule is simple. It should be the first question when interviewing your next company financial officer or personal investment advisor.
The rule of 72's gives us a standard to determine the doubling period for a given interest rate. For example, if a principal sum is earning a fixed rate of interest of 6%, that sum will double in value in approximately 12 years (72 divided by 6 equals 12). If the principal sum is earning interest at a rate of 12%, it will take only 6 years for the principal sum to double in value (72 divided by 12 equals 6). Divide other interest rates into 72 and observe the time required to double your initial principal.
Using the same logic for expenses provides us an insight about business costs. Let's review the example of a common tax write off; the 6000+ pound vehicle used in a company's business. This is a significant incentive for making a new vehicle purchase of this size.
For the rest of the article, email us at mstevens@stevensci.com. with the title of the article. Limit 1 article per month
Continue reading "The Rule of 72 in Construction"
Posted by Matt Stevens at 4:35 AM | Comments (0)
Business Management Workbook for Construction with Case Studies
The Business Management Workbook for Construction with Case Studies has questions, exercises and case studies about how to work smarter, improve performance, and increase profits
Now, the work guide companion to Managing a Construction Firm on Just 24 Hours a Day gives you the tools and insights you need to run your construction projects and contracting business more efficiently, with less risk and increased profitability. everything you need to know about the make-or-break areas of estimating, pricing, bidding, and project management.
This in-depth, hands-on guide to the day-to-day business of contracting delivers an invaluable collection of best practices, timesaving business tactics, forms to help you stay organized, and real-world examples of effective reports and other vital management information. From acquiring work and keeping projects on track to managing your people and dealing with common problems, Stevens draws upon his extensive experience and industry observations to show you the smarter way to run your construction business in today’s competitive markets.
This workbook companion to Managing a Construction Firm on Just 24 Hours a Day contains:
• Over 200 questions and exercises with 10 case studies showing insights and solutions to today's pressing issues.
• 25+ time- and cost-saving forms and checklists for estimating, pricing, bidding, marketing, pre-construction planning, scheduling, budgeting, short interval planning, close out, financial management, accounting, administration, and more
• 10 Case Studies that reflect real world challenges, issues and solutions for today's construction firms and projects.
Further information about the workbook is contained below:
http://stevensci.com/Merchant2/merchant.mvc?Screen=CTGY&Store_Code=SCII&Category_Code=WBMCFCases
Posted by Matt Stevens at 4:53 PM | Comments (0)
Better Coordination through Resource Forecasting - A Practical Approach
Day to day, contractors constantly put out fires. They are very good at it. However, this reactive type of management is not profitable nor healthy. Howvever, it is something to behold how a construction company owner can keep dozens of balls in the air. No other business has such a constantly changing set of challenges.
A common contractor's complaint is the lack of coordination inside and outside of his office. The issue revolves around that labor and equipment always are at the wrong place each day.
Part of this problem may be that field management takes and hordes these resources causing a shortage on other jobs. Other days, it may be that your project managers are not communicating with the field well. Everyone is trying to do a good job so, what is the problem? It is the process.
Continue reading "Better Coordination through Resource Forecasting - A Practical Approach"
Posted by Matt Stevens at 6:33 PM | Comments (0)
Best Practices Ranking - Sample Edition
Rank our Sample Best Practices in Construction Contracting. Learn what other regions of the country are doing. Link is below:
http://www.zoomerang.com/survey.zgi?p=WEB224TKS5EL2X
Continue reading "Best Practices Ranking - Sample Edition"
Posted by Matt Stevens at 2:04 PM | Comments (0)
Request for Information (RFI) Form - Free
We have a sample Request for Information Form that is free for the asking. Please email us at clientservices@stevensci.com and write RFI form and we will return to you this form in 2 business days.
We have a fully customizable template with MS Excel formulas that is offered as part of our Templates package (60 in all) at
http://stevensci.com/Merchant2/merchant.mvc?Screen=CTGY&Store_Code=SCII&Category_Code=MSEXL60
This form takes hours of trouble and hassle over the life of a project. We include Application for Payment, RFI, Change Order and the like.
Posted by Matt Stevens at 9:12 AM | Comments (0)
Post Project Review Form for Specialty Contractors - Free
We offer a free post job review form for specialty contrractors. It is free for the asking. We deliver it to you in Adobe Acrobat via email. Please send to us a note at clientservices@stevensci.com and we will send it to you within four working days.
We have a fully customizable template with MS Excel formulas that is offered as part of our Templates package (60 in all) at
http://stevensci.com/Merchant2/merchant.mvc?Screen=CTGY&Store_Code=SCII&Category_Code=MSEXL60
This form your post job review discussion thus making it more efficent. We also have an Application for Payment, RFI, Change Order and the like.
Posted by Matt Stevens at 8:41 PM | Comments (0)
Construction Productivity Driver Analysis - Quick Start
Take our 10 item Construction Productivity Driver Analysis - Quick Start. This is a sample of our 160 item Construction Productivity Driver Analysis - Master
http://www.zoomerang.com/survey.zgi?p=WEB226JL4EZDCU
Once you complete this sample, we will send to you an executive summary within 4 working days.
Posted by Matt Stevens at 12:42 PM | Comments (0)
How Much Redundancy Is There In The Construction Process?
Cost continues to be a major concern to all construction professionals. New sources of escalation have surfaced in the last 10 years. Direct cost items such as material and non-directs such as insurance. All these are difficult to control.
What is controllable is the amount of redundancy in the design and construction process. Take our 30 second survey about these wasteful work steps. Let us know your opinion about the percentage amount. Results are immediate.
http://www.zoomerang.com/survey.zgi?p=WEB225PBGFCKXW
Posted by Matt Stevens at 3:14 PM | Comments (0)
Application for Payment Form - Free
We have an Application for Payment Form that is free for the asking. Just send to us an email to clientservices@stevensci.com and write Application for Payment. We will send to you this adobe acrobat form in two business days.
We have a fully customizable template with MS Excel formulas that is offered as part of our Templates package (60 in all) at
http://stevensci.com/Merchant2/merchant.mvc?Screen=CTGY&Store_Code=SCII&Category_Code=MSEXL60
This form takes hours of trouble and hassle in making monthly payment applications over the life of a project.
Posted by Matt Stevens at 9:20 AM | Comments (0)
Project Control and Labor Productivity Seminar in Construction
For seminar information, send a request to clientservices@stevensci.com
Posted by Matt Stevens at 1:38 PM | Comments (0)
Finance for Non-Financial Managers Seminar in Construction
For seminar information, send a request to clientservices@stevensci.com
Posted by Matt Stevens at 1:37 PM | Comments (0)
Construction Bid Tracking Form - Free
It is critical that construction contractors track competitor's bid prices. They must know what the trends and characteristics for each peer if they are to beat them and at the same time "leaving less money on the table".We have a Bid Tracking Form for your review and use. It is free for the asking. Just send to us an email re: Bid Tracking Form and we will send it to you within 3 working days. Our contact email is clientservices@stevensci.com
We have a fully customizable template with MS Excel formulas that is offered as part of our Templates package (60 in all) at
http://stevensci.com/Merchant2/merchant.mvc?Screen=CTGY&Store_Code=SCII&Category_Code=MSEXL60
This form takes hours of trouble and hassle over the life of a project. We include Application for Payment, RFI, Change Order and the like.
Posted by Matt Stevens at 2:29 PM | Comments (0)
Unbalanced Bidding in Construction
We believe strongly that a contractor makes the most money in the field. Building work on time and on budget is the hallmark of great contractors and also, profitable ones
However, it is not the only place that a construction firm makes money. The bid table is also. There are many ways that a contractor adds margin to his bottom line by using “work smart” strategies when proposing profitable work.
Examples such as the use of the Gates Model, Dual Overhead Rate Recovery, and Job Sizing are winning methods to keep risk lower and profit higher while estimating, pricing and bidding work.
Unbalanced Bidding is another process that helps construction firms make extra margin on certain types of bids.
With the advent of Job Order Contracts and other Unit Price Contracting Methods, opportunities arise. Owners have attempted to further control costs by creating these contract terms. Business minded contractors know that for every change, there is some chance to profit from it.
For the rest of the article, email us at mstevens@stevensci.com. with the title of the article. Limit 1 article per month
Continue reading "Unbalanced Bidding in Construction"
Posted by Matt Stevens at 2:42 AM | Comments (0)
An Important Strategic Question for Construction Contracting
We have not seen a recession since 1992. It is a gilded time. We should be thankful and many contractors are.
The previous extended economic expansion was in the 1980’s. At the time, many believed the Reagan era was a rare occurrence. To be sure, it was rare and predictably, it did end. Hence, present day contractors may be looking through rose colored glasses; especially those construction firms who were formed after that last difficult time in our industry.
A shakeout is coming. There will be less construction contractors than now. This will happen at some point in the future and will be considered healthy by outsiders.
It will be a surprise to some. Contractors would be smart to ask this kind of question at the beginning of every business year. "Will there be a shakeout in the next 12 months?"
If the answer is no, then it will be business as usual. However, if the answer is yes then special measures must be taken by each contractor to assure continued operations.
For the rest of the article, email us at mstevens@stevensci.com. with the title of the article. Limit 1 article per month
Continue reading "An Important Strategic Question for Construction Contracting"
Posted by Matt Stevens at 4:21 PM | Comments (0)
Project Executive Letter of Instruction - Podcast
For a free sample for your review and use, please send an email to us at clientservices@stevensci.com
We have a fully customizable template with MS Excel formulas that is offered as part of our Templates package (60 in all) at
http://stevensci.com/Merchant2/merchant.mvc?Screen=CTGY&Store_Code=SCII&Category_Code=MSEXL60
This form takes hours of trouble and hassle over the life of a project. We include Application for Payment, RFI, Change Order and the like.
Continue reading "Project Executive Letter of Instruction - Podcast"
Posted by Matt Stevens at 4:04 PM | Comments (0)
Our Public Seminar Schedule - Management Training and Education
Posted by Matt Stevens at 2:09 AM | Comments (0)
Recent October 19th Appearance on Image Home Improvement
Listen to an hour long radio show where Matt Stevens appeared as the guest expert on Selecting the Best Construction Contractor.
http://www.achieveradio.com/~home/
Steve Duebel and I chatted over many subjects. Steve is a licensed and practicing contractor in the state of Arizona.
Continue reading "Recent October 19th Appearance on Image Home Improvement"
Posted by Matt Stevens at 2:41 PM | Comments (0)
It's All in the Picture in Construction
We, by our nature in the construction industry, are visually attuned. We don't care to read as much as the average person. We like to see a picture of what we are talking about. It helps us understand quickly. Our senses like graphics.
Give anyone, construction person or not, a picture and he or she sees and understands.
It is no secret that construction invites immigrants to do its work. The history of construction has been consistent. Newcomers are attracted to our business due to its pay. The hard work required keeps second generation Americans away. With the newly arrived is the language problem. They typically don't speak English. Although they want to assimilate into our country, our language is complicated and hard to learn. Most times, new immigrants cannot read the technical words even in their native language. It is simply something they were not taught.
Pictures, graphics, charts and so forth solve that problem. We would be smart to use them more in our business.
What are the ways that we display needed information?
Top of mind are the most common such as bar charts and line graphs. These quick pictures are easy to create in any spreadsheet program. They reflect numbers such as job cost, error rates, emergency phone calls, and the like. Great for getting people to understand critical measures efficiently. Once understood, they are on their way to acting on the problem.
Regardless of the person, all people understand a picture more quickly than a written report. This is your key to keep people focused on installing quality work, on schedule and within budget.
Send to us an email at mstevens@stevensci.com if you would like to see some samples of charts and graphs including an unusual one called a DuPont chart.
Continue reading "It's All in the Picture in Construction"
Posted by Matt Stevens at 8:39 PM | Comments (0)
References
Richard Korman, Senior Business Editor, Engineering New Record and ENR.com writes:
If you want to clear your head about something in construction contracting, just pick up advisor Matt Stevens' new book, Managing a Construction Firm on Just 24 Hours a Day. It is like talking to your older brother who has clamped a hand on your shoulder and is telling you the blunt honest truth about the costs associated with schedule compression or right-sizing your overhead. Yes, this book is full of takeaways and sample equipment forecasts. But where it really shines is in discussions of resource allocations and the uses and significance of CPM schedules. Stevens makes them simple. It is in essence the ultimate, easy-to-digest book about the financial management of contracting for an industry where the younger people have college degrees and the older set don't exactly want to focus on finance. I've never seen anything more accessible on getting and managing work profitably.
There's also a fascinating and tightly narrated chapter called "The Business of Contracting" on the changing nature of the construction industry. In it, Stevens discusses, among other subjects, how most young construction professionals "do not [and did not] go through the 'field' because they don't want to work" in the dirty and dangerous environment of the jobsite. They have "turned construction into a business" in which "craftsmanship is now assumed to be the same from contractor to contractor."
Matt, I wanted to write to express my appreciation for the Business Management Boot Camp seminar you put on through the Southeastern Pennsylvania Associated Builders and Contractors.
My personal experience in our industry has been one of coming up through the ranks of a carpentry company, from Apprentice, to Carpenter, to Superintendent and now into management. This is not an uncommon path for many managers in the construction business; however the shift in paradigms from the field to a management position was a struggle for me as I am sure it continues to be for many others.
Your course was excellent in bringing to light many of the issues I have had to struggle through as well as several of the necessary points of focus for new managers in the industry. Your passion for your topic is evident in your delivery of the course as well as in the text and tools you provide to the participants.
I found the course to be very informative and valuable, not only for small business owners, but new Project Managers, and Superintendents looking to take the next step as well. I anticipate sending others from our firm to attend your next offering of the course in October.
Thanks Again and I hope all is well,
Christian Kalbach
Manager of Field Personnel, Safety and Training
E. Allen Reeves Inc.
This book by far the best available in the market. Trust me because I have read them all! It is in your face truth and facts. So many other books try to puff up the author versus addressing the issues that are a must to know. Experience contractors and inexperienced contractors regardless of tenure should be required to read this book to their company president. There is a lot of documentation, bookkeeping, codes and regulations, HR issues, financial management, and people skills that are part of day to day construction activity. This book covers them truthfully, informatively, and in great detail. Thanks for producing such a quality book!!!!!
Mike Martin
Construction 2000, Inc.
Matt: Thanks for sending the information. I just got time to get to go over what I may have not completed due to other scheduled events Friday PM and Saturday. Your Boot Camp was well worth the time we had to dedicate to it and I know we will get a great deal out of it. Your presentation was professional, personable and encouraging. I am sure glad I made the decision to attend. I look forward putting to use the tools you taught.
Hope to see and hear from you in the future.
Regards,
Joe McColgan, Vice President
Wescott Electric Company
Matt, I found the seminar to be very helpful and provided me some tools we actually put in place at SJ Louis. Your emphasis on establishing an overhead budget, which to some may seem unrelated to the estimating process, I found especially appropriate. I truly believe most estimators just add on an arbitrary percentage to their bids for overhead and hope for the best. The relationship between volume and overhead was also pertinent.
Not only at my current employer but at previous employment as well, we continually struggled with overhead allocations when we bid on jobs with substantially different cost components. Your presentation provided a methodology and evidence of how the successful companies actually accomplished this task. I think any true competitor only needs a level playing field and will let the chips fall where they fall. Your seminar enabled me to understand the field much better.
Moving the estimator to a true businessperson is really what companies who want to be in business long term want. Much of the link between the basic estimating process and the actual contracting business was revealed. Thank you.
Mike Swanhorst, CFO
SJ Louis
Minnesota
Matt, I wanted to let you know that my brother Victor and I have been using
several of the techniques for negotiating contracts that you spoke of both
in your book and at the class I attended last year. Over the course of that
time we have had several customers take us up on the offer of a discount for
not holding retainage and likewise a discount for paying net 10 days. Last
week we had a customer take advantage of both the net 10 discount and the
retainage discount as a result this job has completely funded itself
increasing our net profit margins and likewise our ability to accept
additional work for that work period. The most important part is that our
customers our looking at our company much differently, we are no longer just
a group of carpenters but instead we are savvy business professionals.
Thank you for your insight and knowledge your book and class work have
helped us to develop our strategies and techniques to further our success in
the construction industry.
Tammi Talese
Vice President
V-Talese Inc.
Matt, I found your recent article "Almost Virtual" very interesting and
inspiring. Thank you for keeping us informed.
I also finished reviewing your book: "Managing a Construction Firm on
Just 24 Hours a Day" and find it to be very practical and useful. It's
format is suitable for day-to-day use by the constructional
professionals in the field, including the "Business of Contracting"
portion. I highly recommend this book to be used as a practical guide
in doing business in today's highly complex construction industry and
practice.
Dr. V.B. Burk, Director
Construction Management Program
Florida Atlantic University
Matt, Thank you for the excellent estimating presentation you did this week in Rocky Hill. You touched upon many different ideas and suggestions that will help me become a better estimator. I purchased your book and CD and look forward to setting up check lists and expanding upon my assemblies in my HCSS estimating system.
Thanks again for inspiring me to be a better estimator.
Keith Sullivan
Guerra Construction
Connecticut
I have read Mr.Stevens' book, managing a construction firm and it has been extremely helpful to my company.
Christian Brown
Wayne Brown Design/Build
Morne Fortune, Castries, St.Lucia
I just wanted to let you that the seminar on project management had a very positive impact on my field superintendent. He came away with a new understanding and appreciation of project control. I highly recommend these seminars for anyone that is in charge of scheduling manpower and material for any construction project.
Rick Bosanquet / Construction Manager
Mason-Florida LLC
In writing this book (Managing a Construction Firm On Just 24 Hours a Day), Matt has done an exceptional job focusing on the fundamentals of operating a PROFITABLE construction firm. Matt's book is a reminder that construction companies deserve to be rewarded for taking on risk and such risk requires intense control at every stage. Any firm, no matter its size, will prove successful and profitable by following these principals and logical approach."
Les Snyder
Senior Vice President
Barton Malow Company
Matt, Hope you have recovered from a long week of teaching the Boot Camp!
Thanks for the info, found the entire week to be tailor made for me. Found many areas in which my business can improve in, and I am looking forward to implementing the new ideas and moving beyond average. I am one of those guys who have a tendency to focus on growth, so I think I received a wakeup call on watching cost last week.
I was hoping you could send me a copy of the overly complete check list that you mentioned in class, and the list of best practices.
Thanks again for all your effort; I look forward to going to one of your classes in the future!
Curtis Wray
Matt, You completely caught me off guard by answering my email personally. Here goes. I work in the mud, the blood, and the beer. The people I work with must take their meds so they can work without killing each other. We laid 36 inch storm sewer in -2 degrees last week in Monee, Illinois. The boss is called "Little Hitler" he works hard not smart. He did not want me to run electrical power to the tank hole to pump water. Three 20,000 gallon Fiber Glass tanks floated. 10 days from now I will be removing three 12,000 gallon UST's and wrecking an old building in Indianapolis, Indiana, on my own. I borrowed the book from the Indianapolis library now I am going to purchase the book and Keep it in my old F350 and use it everyday to work smarter. I am 65 years old and have not been able to keep money; now that will change. Thank you for clearly communicating your ideas, research and experience to guys like me. Also, I am the qualifier for Highway and Utilities All for a construction license in North Carolina. I insisted that the owner read your book and emailed the title to her.
Robbie Dalton
ECC, Inc.
Mr. Stevens, I and my partners have recently started out our firm; we are refuges of the great production builder purge. The knowledge that you have in your book and on your web site has been tremendously helpful and I believe to be quite accurate. Thanks for putting you knowledge in writing.
Eric Dille President
B & D Professional Builders
Thanks again for a great seminar! FYI I am a board member at ABC Keystone and will report to the board how good this seminar was!
Eric P. Unger, VP.
Vision Mechanical Inc.
West Reading, Pa.
Matt, I finished my first run through of your book. I think it is very well done and touches on good sound principles that we as Business Owners, Presidents, CEOs, etc. need to make sure our companies are adhering to. There are chapters that will be great tools for project managers and estimators to read.
There are some sections that are perhaps a little more tailored for the GC rather than a specialty sub such as myself, i.e. Schedule sections, although certainly describe the principals of developing a schedule, perhaps for a sub there are challenges in knowing all the variables outside of the subcontractor control and knowledge that are hard to build into the in house sub schedule until the GC has developed the master schedule.
Again, I am impressed with the book and will be purchasing more to share with my staff.
Thanks
Ian Blair
Blair Concrete
As a seasoned PM I have found some truly useful items within your guides and downloads. Working oversea is an adventure but, even here we find some insightful information that is relevant and useful to our group. Great stuff.
RJF, Green Zone,
Baghdad, Iraq
Matt, The boot camp format was excellent by taking repeated breaks on time I found myself paying very much attention while in the class. Being able to have a break every hour put me at ease. I was able to put my cell on vibrate and if a call did come up decide weather to leave the room to deal with it or wait for a timely break. I also was appreciative that you realized everyone there had business to take care and you did not take affront to anyone having to leave the class to take care of it. Maybe there could be some way you could communicate to potential clients although they will be away from work they will not be out of touch. It was the best format for a teaching situation that I ever attended. I was alert, interested and wanted to participate. I thought you had a very friendly and engaging personality. You clearly had a grasp of your subject matter. I felt you made the class at ease. We were a class and not a group of individuals sitting back and getting lectured all week and listening to old war stories. Sometimes when I go to these types of classes the moderator stands up on a soapbox bragging about there accomplishments. I felt you were very flexible to listen to others opinions and your comment about starting points for conversations for all you analytic info was great.
My favorite part of the seminar was the exercise with the critical path method. It taught me a great tool and it helped foster camaraderie with some of my class mates. Drawing on others experiences and expertise was a tremendous benefit. I love networking with people. My rule of thumb is that if I attend a class I have a goal to hopefully bring back one or two ideas that may help me in my own work situation. There were more than ten off the chart suggestions that I am going to try and introduce. If one or two actually take hold in my organization I will be thrilled.
Interacting with the others in the class gave me some insights that I may take home. For example one of my classmates suggested that doing a credit check on an individual could give you an idea about someone's character. His comment was that if you pay your bills usually you are a conscientious, serious candidate for employment. Feedback like this you just can't measure and is a tremendous side benefit of the class. I think because you set the tone of the class everyone contributed. I could go on and on with positive comments but I do have to get back to work sometime.
I want to mention that the setting at our association was great and John Judge's effort and hospitality was appreciated.
Tom Collinson
Collinson, Inc.
Uwchland, Pennsylvania
Matt, My wife and I own an Interior Design Company. Not willing to ignore rehab,
and more recently construction opportunities any longer, we became
Contractors. Yes, I have a Management degree and extensive computer
experience, but my career as a DJ never prepared me for what I would
experience in the Construction business. I took a $25 gamble on your book.
It is the cornerstone of my education and I just wanted to thank you.
As a matter of fact, I never wanted to be rich and/or famous; I just want to be awesome. Thanks for helping me, and you can quote me on that.
All the best to you, your family and all that you do.
Bill Cox
Manager
The Giving Tree Designs
Matt, The book is excellent. It really rings true for me as I am a third generation carpenter who learned from the ground up working with my dad since I was nine.
Now that I am in business I can see why I am so frustrated by the résumé's that come across my desk from guys that learn the trade out of the book.
I just got into it and already it is very helpful.
Thank you for the follow-up,
Karl Orth
Middlesex, New Jersey
Dear Matt Stevens - I've just finished reading your book "...on just 24 hours..." and found it both informative and sprightly, an excellent combination. Congrats on the good work.
Sam Florman
Kreisler Borg Florman
Scarsdale, NY
Matt, I am halfway through your book and even though I am President of a large national mechanical contractor, your book is both a great refresher and a wonderful primer for people entering construction.
Easy to comprehend, well organized and addresses the key issues of construction.
Mike Kotubey
President
Midwest Mechanical Contractors
Matt - Thank you. I am, as you say in your book, "a mud on the boots guy". In the beginning stages of a start up commercial contracting business. I have been working my way through your book. It has been a great help in the knowledge gap I have between running a site and running a construction company. It has demystified many of the procedures and added to my confidence in my decision to go out on my own, and I'm only half way through it. Thanks again
Chris Lowes
CLIC Construction
Canada
Hello from sunny Mississippi, I hope that you and yours are doing well, and that the weather down there is better than here.
Just wanted to let you know that I won my first MILLION dollar bid yesterday and it felt good. Thank you for the classes and your book, now it's time for me to get down to the hard work of scheduling and making a profit on the project.
It was funny, our last quote came in just after the 0900 hour, and the bid was at 1000 hour. We were at a motel and had to turn in a copy of the original so I head down to the office to get some copies made, at 0930. The copier was a home fax machine and it was slow. I had to jump from the truck in front of City Hall make a mad dash into the building, run up stairs with just two minutes to spear, you really just had to be there, and it was a true Kodak moment. Wining the bid just made it just too cool.
Joe W. Oswalt Jr.
Proj Mngr/HR/Estm/Prhg/Off Mngr
WMP Construction, Inc.
Matt showed my how organizing time and people go hand-in-hand to have optimum productivity on the jobsite.
Joe Reichendollar
Brubacher Excavating, Inc.
Hi Matt, Want to let you know I thoroughly enjoy your newsletter. Several years ago, I took a class from you and automatically began receiving your newsletter. Much of the information you present is beneficial to us in Facilities since we rely on the construction industry and associative processes for executing our major projects, as well as self perform smaller projects and maintenance of our existing facilities. Keep up the good work! I look forward to attending another one of your classes in the future.
Steven M. Quickel, Director
Brevard County Facilities Department
Thanks Matt, I really enjoyed your seminar yesterday. The group of us from Barton Sand & Gravel got together in Rockville for a short spell after class and everyone agreed that it was time well spent. It's not everyday that I get a response like that from this group of foremen.
Peter Olson, Area Manager
Barton Sand & Gravel
Matt, thanks for everything. I really enjoyed the course yesterday and I look forward to future endeavors.
Mark Kendrick
Vice President
CMSI
Managing a Construction Firm on Just 24 Hours a Day by Matt Stevens is one of the finest that I have read in my 78 years.
Oliver Semmes
Semmes Inc
Matt,
Thank you again for sharing your information with us yesterday. We enjoyed the session very much and found it extremely informative. Good luck with your new book. Thanks for signing me up for the newsletter. Have a great day.
Dirk Heller
Preconstruction Manager
Creative Contractors
Clearwater, Florida
Matt, Our electrical contracting business is going through a transformation. We had a couple of rocky years but I believe that we are back on track to be a market leader. I am committed to being a total business education sponge. Your book is great! It was referred to me by a friend. I only wish that I bought the book directly from your website because I would've gotten the Excel spreadsheets and the course. I am particularly interested in the ROI spreadsheet that you show in the book. Is that available on your site anywhere? Are the 60 spreadsheets available on your site anywhere? Thank you for your time. I look forward to hearing from you.
Brian T. Vardiman
BEC Electric, Inc.
Matt, just wanted do drop you a line to let you know how much I enjoyed your class. It was nice to see that what IM doing in my estimating is pretty much in line with the industry. I picked up a few items and changes that I wanted to make and having the discussions gave me the boost to get them started. The biggest impact was the discussion on getting computerized, you will be happy to know my software and digitizer will be arriving this week. Thank you for the up to date information, and I will be seeing you later this week at your next seminar on finances
Dave Conto
Heichel Plumbing
Florida
________________________________________________________________________
Hi Matt: It was fun going to a class I didn't have to test in. We really enjoyed it and you KNOW your stuff. Good practical stuff. Hope we see you again at another time. Georgia really is beautiful and has great weather.
Best regards,
Laurel Hughes
Hughes Homes - Georgia
________________________________________________________________________
Thanks Matt, but we are all set for now. We just took a few courses at the Orlando trade show and are pretty caught up on CEU's. Just for your info, the courses at the Trade show didn't even compare to your courses. We'll keep a lookout for you when it is time for some more classes.
Jay Krieger
Vice President
AKC Inc.
Florida
________________________________________________________________________
Matt, after attending your class in April, I left feeling very informed. Many of the topics covered in the class were never discussed prior. Many of these topics are discussed on a daily basis now. I found the class easy to follow and very informative. I would recommend this class to other sub-contractors that we work along side on a daily basis.
Sincerely,
Andy Dickey
Accu-Crete, Inc.
________________________________________________________________________
Matt: I spoke with Lois this morning in regard to upgrading my license to CGC. While on the phone I shared with her that the class this weekend past was the best I've attended to date. The subject material was well organized and professionally presented. The delivery was of interest and applicable to my business. I also shared that you represented Palm in a professional manner and were a credit to their organization. I look forward to sitting in another of your classes when the opportunity presents itself.
Thank you for the Loss Revenue Chart. It, along with other topics you presented, will be used as we review our progress.
Thanks, Matt, for a great weekend!
Yours truly,
Kip Bruner
Southwest Services
________________________________________________________________________
Dear Matt, Thank you for your excellent presentation at Tuesday's 12th annual DSF advisors Conference. Including a nationally known presenter really adds to the value of the day's program. A quick look at the evaluations indicated your program's content and presentation were highly regarded by the engineers and architects attending the session. Again thank you for working with ACEC Wisconsin
Carol Godiksen
Executive Director
ACEC Wisconsin
________________________________________________________________________
Hi Matt, Good lesson learned from chapter 1 "The High Cost of Rework". Using the charts on pages 37 & 304 at are monthly meeting got every ones attention, and efficiency is improving. Thank You! Have a Great Day!
Mercer Haight
President
Maitland - Winter Park Plumbing
Maitland, Florida
________________________________________________________________________
Dear Matt: You conducted a very educational and informative session this weekend. To be honest, it was THE most interesting seminar for CE that Palm has conducted
since 1998... Touché to you and Palm.
I would most definitely be interested in attending your training sessions
for bid strategies, estimating and whatever curriculum you offer for
construction. Please send your syllabus and schedules when they are available.
Mary Lou Norris
Jacksonville, Fl
________________________________________________________________________
I just wanted to thank you for the information. Your website has been a very
informative source of information for me. I look forward to the release of
your book. Thanks.
Zubair
CadCon Incorporated
________________________________________________________________________
Matt, Congratulations with the publishing of your new book! Unfortunately I have to decline the invitation for the signing ceremony due to other commitments, but I hope it will be a joyous occasion for you. I always read your newsletters with great interest; you are a advisor who is in touch with the reality of our industry. Happy Holidays,
Bob Wind
Manager of Preconstruction
American Bridge
________________________________________________________________________
Matt, I was telling our estimator that we as project managers must take off the job a second time immediately after we are given it. In this way we can confirm the accuracy and know the quantities before we begin. This is well worth the effort and it will give us more time to address any mistakes and to develop a schedule that will allow us to beat the estimate. I have already used a number of your lessons learned to the benefit of our company! Thanks for the training
Russ Reithmeyer
Project Manager
Blair Concrete Services
¬¬_______________________________________________________________________
Hi Matt, The review made on ENR. com are all true. Am already starting and felt the advantage of the "book".
Best wishes,
Eduardo G. Ente
President of Knowledge Plus Academy
Knowledge Plus Academy
Manila, Philippines
________________________________________________________________________
I am enjoying your "24 Hours" book immensely, well done!
Thanks,
Kim Robinson
Optimum Wall & Ceiling Systems Ltd.
Canada
________________________________________________________________________
Matt, I can't say enough positive things about your organization. I am presently partnered with an individual who has become a partner and a Christian brother. His company did $550 million last year in the construction field. I continually talk about the importance of processes, people skills, structure, disciplines an most of all investing in our people through ongoing training. People want to believe they are important and a part of the company. Thank so much for putting the programs together to help the entire group of general contractors and subcontractors who really need a how to guide such as yours. You, your love one's, and your organization have a safe and blessed holiday weekend.
Mike Marin
____________________________________________________________________________________
Matt, Thank you so much for signing me up for the newsletter. I enjoyed the class today. The subject matter was very informational and I can see where I can employ a lot of the templates in my day to day activities.
I look forward to taking one of the other classes you instruct.
Danny Chadwick
Sr. Preconstruction Specialist
Welbro Building Corporation
__________________________________________________________________________________
Matt, Being that we are a new company, Noble Plumbing has found that the practices taught in your Estimating, Pricing, and Bidding class to be a very useful in our attempt to procure our first work. In particular the five rules to remember every bid day were very instrumental in all of our bids that we have put out so far. For us it was very important to not come in to low just so we could get some work and cash flow going. We have recently gotten our first job (the contract is over 3 million dollars) and we have the field and project management teams working in concert to make sure that all aspects of the job handoff will go smoothly with everyone involved. We are also looking forward to use the tracking procedures learned in class, this will allow us to know how the job is doing financially during the job's entire duration. Thank you for all your help.
Rick Elder
Estimating Manager
Noble Plumbing, LLC
Virginia
________________________________________________________________________
Matt, I attended your Estimating Class, and came away with valuable information that I had not even thought about. As a small subcontractor, I have done things certain ways, based upon experience and evolution of processes. Yet, as I have utilized some of the things you presented, not only has it reinforced my estimating procedures, it has confirmed my competitiveness in the marketplace. Of course, all negotiation is a poker game. At best, you have plenty to work with. At a minimum, you know where you stand during the game.
Best Wishes,
Tim Phillips
Metro Framing LLC
Alexandria, Virginia
__________________________________________________________________________________
It's a great pleasure to communicate with you again. I do not know if you remember me but I spoke with you on the phone three years ago, when I got your book on managing construction. It is a great book.
At the time I got your book I did not have any experience in construction. With the combination of the knowledge I acquired from your book and my previous fifteen years of experience in the accounting/finance field, I was confidence of my job performance. I was able to manage all business transactions and enhance new strategies. I consider your book a real business based training. You explained all business aspects & procedures as they need to be follow.
Luz Polanco
CFO - Vice President
R.L. Gordon & Company
Florida
Matt, I've listened to the CD and am in the process of reading your book. I'm in the HV power line construction contracting business and have found this info very useful. I own and operate my own business and I very much appreciate your insight to the business. When listening to your CD series I thought you had been studying my business for years(grin).
Although I thought I knew many of the practices, it's very helpful to listen to them explained. I really liked the info you provided on the bidding process. And as you mentioned our company has basically developed our own bidding Exel Spreadsheet-which works for us. Thanks Again,
Willie Pyette
Great Falls, Montana
___________________________________________________________________________________
I bought extra copies of your book to have my sons read. Good job.
Sonny Lindner
Johnson River Enterprises
Fairbanks, AK
__________________________________________________________________________________
Thanks Matt!!!,
I am looking forward to the publishing of your next book "The Practical Construction MBA"..... as well as your excellently written White Papers, in the near future.
Thanks for caring enough about our industry/profession to have dedicated yourself to it so completely... I no longer feel so alone.
Best Regards,
MJ
Marv Johnson
Principal Emjay Building & Design Ltd.
Grass Valley, CA
Posted by Matt Stevens at 3:54 AM | Comments (1)
Using A Work Breakdown Structure (WBS)
It's amazing how often people ask questions like: "How many tasks should this project have?"
or, "How much detail should I have in the project plan?" They look to use the Work Breakdown Structure (WBS) to guide them in these decisions. Subsequently, a typical WBS will have more detail than it should.
The usual mistake project managers make is to lay out too many tasks; subdividing the major achievements into smaller and smaller subtasks until the work breakdown structure (WBS) is a "to do" list of one-hour chores. It's easy to get caught up in the idea that a project plan should detail everything everybody is going to do on the project. This springs from the mistaken belief that a project manager's job is to walk around with a 100 page checklist and tick each item off as journeymen complete them. This view is usually linked with another fallacy. Namely, that the project plan should be a step-by-step procedure for doing everything in the project in case we have to do it again. If the PM is managing the wrong things, we can certainly see the fault in a written form. However, that should not be the reason for this minutely detailed approach.
Continue reading "Using A Work Breakdown Structure (WBS)"
Posted by Matt Stevens at 2:12 AM | Comments (1) | TrackBack (0)
A Picture is Worth More than a Thousand Words in Construction - Podcast
Listen to the Podcast above about the use of graphics and charts to help better manage.
Emai us at mstevens@stevensci.com for a sample DuPont Chart.
Continue reading "A Picture is Worth More than a Thousand Words in Construction - Podcast"
Posted by Matt Stevens at 8:45 PM | Comments (0)
Old versus New - A Surprising Answer.
Who is trusted more in the construction industry - the older firm or young firm? In times of recession or uncertainty, this is a doubly important question.
Another question; who has more assets, more disposable income and / or more budgetary authority, the older person or the younger one.
These are surprisingly basic questions that some people don't realize the impact. We have observed that there are many new construction contracting changes in the last thirty years. I have lived through a majority of them. But the above questions haven't changed in the last 30 (or 300) years.
As an example, some construction companies have formed under an LLC business structure. Perfectly fine but, but it tells older folks that you are recently formed hence lack of corporate experience. More definitely, your firm almost without exception has not managed through a recession. If you don't remember. The last one was 1990-91.
I will not comment on the company names used in the Industry. However, some are clearly denoting a trendy or recent formation.
To be fair, if you are a well respected contractor who has a large client following, it doesn't matter. But if you aren't, I am suggesting not putting any potential negatives into your marketing and selling process. Again, look at the two questions posed at the beginning.
Continue reading "Old versus New - A Surprising Answer."
Posted by Matt Stevens at 10:42 AM | Comments (0)
CIP Concrete Pricing Factors for LNG's and Other StructureS
Please email us for this presentation in a PDF. We will sent it to you within three working days.
Continue reading "CIP Concrete Pricing Factors for LNG's and Other StructureS"
Posted by Matt Stevens at 4:58 PM | Comments (0)
The Benefits of Defining and Documenting Your Management Processes
All construction professionals want to do a great job. Their goals are to make more money, garner a promotion, earn respect of their peers, be the “go-to” person, and generally enjoy a better work environment. It should follow that most construction contractors would be better off than they are now. So why does this not happen in all cases? Certainly, 95% of construction supervisors give the necessary effort, working hard every week and contractors want to be successful.
The answer: it is the process. Casual and assumed processes are in every construction company. That is, there is no clear and written set of procedures. It not obvious what is to be performed and what behaviors are expected. Only through months of working with a company, does one understand all the major processes.
It would be micro-managing to commit to writing all processes. However, clearly the crucial ones have to be.
Some companies have no process documentation. No standard procedures manual. Subsequently, there are many processes left unstated and thus not communicated. Equipment has a reference book. Why not business processes?
Continue reading "The Benefits of Defining and Documenting Your Management Processes"
Posted by Matt Stevens at 8:27 AM | Comments (1) | TrackBack (0)
Free Sample E-Learning Course For Construction
Take our Free Sample E-learning Course, go to constructioncbt.com">constructioncbt.com
It is a modest course that numbers 20 pages, 10 questions and should only take 15 minutes at most.
Sign in as a new student.
Posted by Matt Stevens at 6:46 PM | Comments (0)
Indianapolis Business Journal Article - Colts Stadium
See the recent article. We were quoted by the Indianapolis Business Journal
http://nl.newsbank.com/nl-search/we/Archives?p_action=doc&p_docid=11454FB0DDCBDA78&p_docnum=3
Continue reading "Indianapolis Business Journal Article - Colts Stadium"
Posted by Matt Stevens at 12:03 PM | Comments (0)
Negotiating Skills for Contractors
Negotiating is the best use of any construction professional's time. We make or save the most amount of money in the shortest period of time. In our experience, everyone has said "yes" or "no" at the right time and made a $1,000 in twenty minutes. If we could do this on an hourly basis, we would retire early. The construction business would be our hobby.
These are basic rules that must be observed if you are to have an above average negotiation. Do these things and you will reap benefits. Guard against the gambits that others will use against you. Remember, what you deserve is what you negotiate. Here is the list of rules with some of the tactics to be wary:
Continue reading "Negotiating Skills for Contractors"
Posted by Matt Stevens at 8:45 PM | Comments (0) | TrackBack (0)
The Construction Industry is Broken (or is it?)
There is a school of thought that suggests that the Construction Industry is broken. Several times lately I have heard or read such an assertion. People point to labor, material, design, software and many other areas where there is chaos in the marketplace. Yes, it is true. I agree with many of these things.
Material prices are unpredictable to put it charitably. If they are predicable, it is that they go up, not down. The unpredictable part is by how much. The big dragon in China still eats and does not look as if it will slow down any time soon.
Labor is scarce. No one wants to be in our profession. We are lucky to have a loose immigration policy. Hungry immigrants who grew up farming make for good field people. To have an American (second generation) pursue a construction career is a rare thing. Not withstanding, one who wants to work.
Others say the contracts are flawed. They shift more risk to the contractor(s) than ever before. Current contracts are written by increasingly cunning lawyers who number more than ever.
Design drawings are less complete than ten years ago. Architects and engineers are under the same price pressure thus, costs must be cut and experienced people are spread thin. Plan creation suffers and details are left out, leaving room for interpretation, conflict and eventually, litigation.
Again, some insiders and outsiders to our industry state loudly that we need to overhaul our industry.
There is a population of people who don't agree and I am one of them.
.
Continue reading "The Construction Industry is Broken (or is it?)"
Posted by Matt Stevens at 12:52 PM | Comments (0)
Effective CPM Scheduling
Critical Path Scheduling in laymen's terms is Planning, Measuring and Controlling.
This describes one of the essential tools of project management - The Project Schedule. It is what most people think of when they hear the term project management. It is a dedicated course in any Construction Management curriculm. It is the basis for a majority of construction claims. Lastly, it is only way to show the complicated realationship betwen tasks, time, manpower, equipment production, material delivery, delay, weather, and all the other inputs of a construction project. In summary, it is a large calculation that is displayed in graphic and numerical form.
For these reasons, it is important to put scheduling techniques in the proper context of the essential roles of project management wherever it occurs.
Typcially, Planning and Controlling are performed by the Project Manager. Measuring is done by others. So for our discussion will not include the latter.
When related to construction processes, the responsibility for directing the project occurs at several levels, is performed at various times, and is typically the responsibility of multiple entities throughout the life cycle of a project. However, regardless of whether we are discussing the subject with a construction management firm, a general contractor, or a subcontractor there is a commonality in the methods and practices used by each of these organizations in contracting.
Continue reading "Effective CPM Scheduling"
Posted by Matt Stevens at 4:22 AM | Comments (0) | TrackBack (0)
Construction Statistics / Productivity
Current Statistics are pointing to a robust construction economy. It is a 1.1 trillion dollar industry. Subsets and their volume are as follows:
1) Private construction: $856 billion
2) Public construction: $247 billion
Residential construction is $614 billion
Non-Residential construction is $242 billion
Educational construction is $64 billion.
Highway construction is $65 billion
Employment stands at 7.1 million persons
Continue reading "Construction Statistics / Productivity"
Posted by Matt Stevens at 5:29 PM | Comments (0) | TrackBack (0)
Successful Contracting Organizations Know Finance
Construction companies have long neglected the idea that their employees should understand financial management. This is madness. Owners trying to create personal wealth with employees who do not know money management fundamentals. If they don’t know financial concepts, how can they deliberately influence it?
Furthermore, if an employee is causing profit losses for the firm, owners are quick to dismiss them. Simply put, finances are critical to any business’ success. Why don't we do more to further its understanding?
Finances make or break a construction firm. Superior financial management is a keystone to continued success for each organization. Conversely, the loss of money erodes a company’s ability to perform and then kills it.
For the rest of the article, email us at mstevens@stevensci.com. with the title of the article. Limit 1 article per month
Continue reading "Successful Contracting Organizations Know Finance"
Posted by Matt Stevens at 4:24 AM | Comments (0)
Change Order Release Form - Free
As we all know, change orders are a way to recover the cost of a changed condition, a change directed by the owner, a conflict in the set of plans or a latent condition in the work area. We, as contractors are due to receive reimbursement of our direct costs and reasonable overhead and profit. Change orders have been around for centuries such as in Egyptian times however, slaves didn't have the rights that we do to file a change order request.
We have a fully customizable template with MS Excel formulas that is offered as part of our Templates package (60 in all) at
http://stevensci.com/Merchant2/merchant.mvc?Screen=CTGY&Store_Code=SCII&Category_Code=MSEXL60
This form takes hours of trouble and hassle over the life of a project. We include Application for Payment, RFI, Change Order and the like.
Continue reading "Change Order Release Form - Free"
Posted by Matt Stevens at 10:55 AM | Comments (0) | TrackBack (0)
The Construction Industry is Less Productive
We track several metrics that indicate the general health of our industry, its workforce and its practices. Our on-going tracking of productivity has indicated a stagnant state for some time.
Our consulting firm reviews the constant dollar value of construction put in place and divides it by the number of people who work in the industry.
What we have found is unsettling. The overall trend is flat. That is with all the computer technology, efforts made to improve the industry practices and other directions, we still have not improved the productive rate of work installed each year as an industry.
Continue reading "The Construction Industry is Less Productive"
Posted by Matt Stevens at 4:56 PM | Comments (0) | TrackBack (0)
Estimating Assemblies
Estimating has gone from an ardous counting and measuring exercise to a less stressful, more global function. The advent of computer technology and software transformed this position in the late 80's and it has continued to change today.
Digitizers and estimating software are creations of our country's technology expertise. The construction industry benefits from this everyday. Hours of poring over plans is no longer necessary. Our quantity take-off work can be accomplished in less than an hour.(for most specialty contractors)
Has the industry been slow to capitalize on technology's dramatic advances? In a word, yes. Some reasons are compelling. A main reason is accuracy. We agree that all contractors should use tools in which we have high confidence.
Some argue that tools such as scaled rulers, measuring wheels and the like are trusted. We have been successful in the past with these and should be successful in the future. Point well taken, the construction industry is brutal to those who are careless and inexact.
Continue reading "Estimating Assemblies"
Posted by Matt Stevens at 1:23 PM | Comments (0) | TrackBack (0)
Supervisory Hours Trending in the Wrong Direction
Recently released information by the Bureau of Labor Startistics shows a negative trend for construction supervisors and their crews. In the period from 1979 to 2003, supervisor hours are at almost a 1:1 ratio with a worker's hours. Meaning that supervisors are less of a leverage point for production.
The source document is titled "Ratios of Average Weekly Hours of Supervisory (non-prodictuction) time to Non-supervisory (production) worker by NAICS Supersector 1979 - 2003". The NAICS code is 0770.
Continue reading "Supervisory Hours Trending in the Wrong Direction"
Posted by Matt Stevens at 4:15 AM | Comments (0) | TrackBack (0)
Little Surpise - Highway Contractors are More Productive
Over the past decade, highway contractors have become better in all phases of their business. There are many reasons for this.
• Advances in equipment technology.
• Computer aided processes allowing companies to operate with less people and more speed.
• Owner's processes re-engineered.
• The consolidation efforts that have brought about some economies of scale
• Working smarter
Our productivity measure consists of U.S. Highway Spending in constant dollars (1996) divided by the number of people employed in that industry. As a trend, we have seen over a 70% rise in productivity.
Continue reading "Little Surpise - Highway Contractors are More Productive"
Posted by Matt Stevens at 12:30 AM | Comments (0) | TrackBack (0)
Construction Submittal Log - Free
We have a basic Construction Submittal Log that is free for the asking. Email us at clientservices@stevensci.com and we will send it to you within 3 working days.
Posted by Matt Stevens at 3:31 PM | Comments (0)
The New Business Model in Construction Contracting.
There is a new business model in Construction Contracting. It has been the culmination of years of changes in the construction industry. Some of these changes are fair and some unfair. However, there are conditions under which contractors work.
To a normal person, the construction industry is not a rational place. There are hundreds of market segments. Huge risk. Many uncontrollable factors. This business is an acquired taste.
No two contractors are the same. Business practices vary. Building codes and customers seem to change their demands. Specialized trade skills define most contractors. (That skill is what contractors trade with clients to receive income. )
Each market segment is defined by the geography. Individual counties where work is put in place have their own codes, inspectors, political issues, etc that cause frustration when an outside construction company enters it.
Each contracting firm is unique. The owner usually has grown the business from zero revenue to its present day volume. He or she along the way has made thousands of decisions of how the work will be built, how it will be estimated and how it will be tracked. These series of decisions gives the construction firm a unique way of conducting its business.
The construction industry has a million moving parts. There are thousands of steps to build one project. They can be done in any sequence. The outcome will be a disaster but, steps are not ordered. It is only the project team that determines the order.
For the contractor's part, he or she has hundreds of steps to execute on an individual project. Again, they can be done in any order, however the above average contractor insists on mapping the major steps in a good sequence and the execution of those steps. Discipline has to be part of the new business model in Construction Contracting.
Continue reading "The New Business Model in Construction Contracting."
Posted by Matt Stevens at 3:08 AM | Comments (0)
Marketing for Contractors
Contractors should understand marketing's rules to make certain their operations are not wasting scarce expense dollars. Marketing to new customers is expensive. Keep these basic laws in mind and you won't make major mistakes.
Most marketing people are well meaning however, sometimes enthusiasm overtakes their objectivity. Some believe that they are infallible. It is a great attitude to have for the sales business, but a dangerous one in construction contracting.
As a contractor, you know how razor thin our margins are. This business is harsh on those who are not careful and logical in their approach. Just look at the bankruptcy statistics for our industry.
Here are common rules in marketing for a contractor:
1) People either accept or reject you after 2 years or 27 exposures. Said in a sentence, after some period of time they have made up their mind about you. Several studies confirm this. Furthermore, we as buyers of materials and services can see this behavior in ourselves.
Be aware that if you want to pursue indifferent prospects still, change your message or your messenger. As a last resort, you can always cut your price. However, it is not marketing. That requires no talent or process. .
Continue reading "Marketing for Contractors"
Posted by Matt Stevens at 7:56 PM | Comments (0)
Computer Spreadsheets in Construction
The Stuff of Spreadsheets
Excel is a great organizer of items whether they are numbers, text, formulas or the like. It helps us do less redundant work and do more thinking. Because of its power, sometimes we use it excessively. However, that is not a topic for this article.
We utilize excel in the construction industry in most of the following areas.
Bidding Work (Estimating)
Building Work (Project Management)
Keeping track of the money (Accounting)
These are the total substance of what a contractor does. To be successful, he or she must perform these tasks better than the competitor.
You say worksheets, I say spreadsheet, you say tomato, I say......Spreadsheets describe the software and the page we see above. Worksheets describe only the page above, not the software.
A spreadsheet is the computer equivalent of a paper ledger sheet. It consists of a grid made from columns and rows. It is an environment that can make number manipulation easy and painless.
The math that goes on behind the scenes on the paper ledger can be overwhelming. If you change the amount, you will have to start the math all over again (from scratch).
The nice thing about using a computer and spreadsheet is that you can experiment with numbers without having to RE-DO all the calculations. If we change an interest rate and then the number of months as an example, we can let the computer do the calculations! Once we have the formulas setup, we can change the variables that are called from the formula and watch the changes. Do that on paper and you better get your calculator back out and get an Eraser and hope you punched all the right keys and in the right order. Spreadsheets are instantly updated if one of the entries is changed. No erasers! No new formulas! No calculators!
Spreadsheets can be very valuable tools in business. They are often used to play out a series of what-if scenarios!
Continue reading "Computer Spreadsheets in Construction"
Posted by Matt Stevens at 4:05 PM | Comments (0)
Strategic Value Index: Sample
Increasing the value of a construction contracting firm is one of the primary roles of executive management. The people, structure, market position, cost structure, management processes and many other attributes all determine the worth of the business. Part of the value of a construction firm is its ability to make a profit in good markets and bad. Companies who make money only when the economy is above average are common.
Our Strategic Value Index distills the best contracting firm’s characteristics into a 175 item analysis. In our sample, - link is below - we share with you 15 of those.
http://www.zoomerang.com/survey.zgi?p=WEB225DJKZDJQ3
In exchange for your participation, we will send to you our Strategic Value Index Guide. It outlines the major areas that determine the relative business strength of a construction contracting firm.
Continue reading "Strategic Value Index: Sample"
Posted by Matt Stevens at 5:15 PM | Comments (0)
Using Excel Spreadsheets in Construction
Spreadsheets have been around since the 1980’s. They were the first software to which most of us were exposed. I used VisiCalc back then. Since those years, not much has changed to the look of spreadsheets, but the power has risen dramatically. Today, the uses are many and far reaching. From simple estimating to data analysis of thousands of labor codes. Furthermore, they are the base calculator for several software packages. Presently, spreadsheets have grown with our industry and are as common as cell phones in a contractor's office.
They are simple in their layout of rows and columns but powerful in their use of functions, commands, etc. Professionals in the construction industry use them from basic tasks such as number calculation to more advanced features such as database functions and goal seeking. The proper use of a spreadsheet will produce a fast and accurate result.
Names of commonly used ones are Quattro Pro, Lotus and Microsoft Excel.
A spreadsheet is the computer equivalent of a paper ledger. It consists of a grid made from columns and rows. It is an environment that can make number manipulation easy and painless. The math required with the paper ledger can be overwhelming. If you change the amount, you will have to start the math all over again (from scratch).
Continue reading "Using Excel Spreadsheets in Construction"
Posted by Matt Stevens at 8:37 AM | Comments (1)
The Old Business Model
It was hard to start and harder to keep your construction company going. The late nights and the early mornings were without a break. The customer surprises and the supplier frustrations were a daily occurrence. How did we manage? All we know if that we got through it and are still in business today.
No one understands. The lessons learned are branded into our souls. Scar tissue kept us from making the same mistakes twice. To speak of the intense and scary times would be to cheapen it. Only other contractors understand. Scratch that, only contractors your age and older understand.
Payroll was always the worst. If there is no draw from a client then, you had to draw on your credit line. That is against everything you learned. To go into debt and owe someone else was uncomfortable.
Continue reading "The Old Business Model"
Posted by Matt Stevens at 11:45 AM | Comments (0)
The Next Field Manager
Wanted: Field Manager for Labor Intensive Construction Company. Also known as Specialty Contractor or Subcontractor. Curious or unemployed need not apply.
If you shake a field manager tree looking for someone to manage your field people, you would be lucky to have one fall out. They are rare.
As a field manager, If you like the idea of being paid well without your name on the personal guarantee, you have a job that will be in demand for some time to come.
America is being "white collared". All parents want their children to be in a profession. That is, being underpaid while subject to office politics and then, transfering every couple of years to another location. .
As an owner, once you find a good field manager, your stress will be cut in half. You can focus more on the business of construction contracting.
Continue reading "The Next Field Manager"
Posted by Matt Stevens at 11:43 AM | Comments (0)
Basic Overhead Checklist - Free
Overhead is a neccessary cost to support construction projects. Without it, the field staff is on their own. They would be on the proverbial island. Overhead is less of an issue now than it was in the 1980's. Contractors are as skinny as they dare. Certainly, the less office support, the more likely that something will fall through the cracks. So, be careful. Here is a basic checklist of overhead items that might proved helpful in analyzing your particular situation. We are manangement advisors who help contractors work smarter. Stevens Construction Institute provides data, analysis tools and consulting to help in this area.
Continue reading "Basic Overhead Checklist - Free"
Posted by Matt Stevens at 1:34 AM | Comments (0) | TrackBack (0)
Contractor Magazine Article - June 2006
See the June, 2006 Article in Contractor Magazine:
http://www.contractormag.com/articles/column.cfm?columnid=527
Continue reading "Contractor Magazine Article - June 2006"
Posted by Matt Stevens at 7:53 PM | Comments (0)
Profile of a Profitable Contractor
Many contractors entered the construction business without much capital, trained people or management expertise. Today, many of these same contractors are leaders in building infrastructure, residences, office buildings, schools and the like. They are the "go to" people if you want to construct with quality and safety at a fair price and in a timely fashion. Personally, these same contractors have attained financial security and a professional reputation without superior.
NASA has quantified many of the qualities needed to be an astronaut. To be accepted in the space program, candidates must have the “right stuff”.
What is the “right stuff” to be a successful contractor? We can think of all the successful contractors and it seems they have little in common. Some perform commercial work while other focus on residential and still others work in the industrial field. One is union, another is not. Some prosper in metropolitan areas and some in a rural location. Some have autocratic styles of management while others use a participatory style.
To be frank, there is no personality or professional profile and I would wrong if I suggested one. However, successful contractors are better than average at one thing:
Continue reading "Profile of a Profitable Contractor"
Posted by Matt Stevens at 8:02 PM | Comments (0)
Contract Types
The contractor's working relationship with the client is greatly influenced by the contract. Certain type encourage more openess and patience while other's do not. Understanding these contracts, the rights and responsibilities afforded and the potential consequences cannot be overstated.
Here are the basic types of contract agreements:
Fixed Price/Lump Sum – This contracts stipulates that the contractor must build the project for a fixed price. In theory, this type of contract minimizes the owner’s financial risk.
Continue reading "Contract Types"
Posted by Matt Stevens at 5:03 AM | Comments (0)
Project Management
Superior Project Management is the use of the right processes by the right people. Study after study concludes this. Highly successful companies "work smart", that is, they do things which are efficient and effective. Project Managers work hard enough. They cannot increase their effort.
Continue reading "Project Management"
Posted by Matt Stevens at 4:59 AM | Comments (0)
Contractors Have to Win Twice to Win a Project
Construction is one of the few industries that require demanding qualification work. Since, high risk is part of the fabric of construction; owners make contractors go through hoops to prove their mettle and capability. Owners make the word caution take on a whole new meaning.
Construction Contractors have to win twice to win most projects.
1) Pre-qualification to gain access to bid the project. A contractor has to prove that he or she has the right to sit at the table with other contractors of like stature. A checklist of information must be submitted before a contractor can sit at the table. Such as:
• Past projects
• Financial statements.
• Insurance coverages
• Bonding capacity
• Other important factors
2) Giving the client specific value that match the specific need the client is looking for. Some clients want only price. Others want service and high quality with a competitive price.
• Capability to do this particular project such as experienced superintendents and PM who are available.
• The ability to identify client wants and critical success factors about the project.
• Specific project experience in upcoming job type
• Past work with the client
• Price and / or fees
The concept is simple but works hard. Strong and seasoned contractors do well on the first test and almost as well on the second one.
Continue reading "Contractors Have to Win Twice to Win a Project"
Posted by Matt Stevens at 1:31 PM | Comments (0)
OCIP or Wrap Up Insurance
An Owner Controlled Insurance Program is not a new phenomenon. The insurance industry states that it has been around for over 40 years. However as the construction economy has changed (and heated up), the emphasis on this type of insurance program has grown.
Several reasons are given:
• More large capital projects are being built.
• The cost savings offered by such a program
• States are more flexible in insurance regulations
• Insurers are competing more for market share and profits.
OCIP is the idea that there are economies of scale concerning contractor insurance on a single large project
As most large projects have dozens of contractors - mostly subcontractors - there is an opportunity to save the project money if one insurance company writes all the insurance for the people building the project.
For contractors and owners, the cost savings for the project can be great. However, the cost to the contractor can be greater. We firmly advise our clients to tread carefully when sharing insurance cost numbers with others.
OCIP is the idea that there are economies of scale concerning contractor insurance on a single large project
As your parents told you, "There is no free lunch", we are here to tell you the same.
As a practical matter, the rule of thumb is that a project approaching $100 million dollars in contract cost benefits from this approach to insurance. (Some say it is substantially less).
Contractor controlled Insurance is a related type of insurance with most of the same mechanisms but, is the general contractor’s program for his / her subcontractors on a large project.
Continue reading "OCIP or Wrap Up Insurance"
Posted by Matt Stevens at 9:46 PM | Comments (0)
Action Plan Template - Free
Do you ever feel frustrated with follow up by other people? Especially after meetings when you had strong agreement on a the course of action only to have people forget their commitments to you.
Several phone calls later, your time is wasted reminding people to complete their tasks. It is not productive nor is it profitable.
We have found an effective technique to keep others (and yourself) focused on the tasks that need to be done.
Continue reading "Action Plan Template - Free"
Posted by Matt Stevens at 3:57 AM | Comments (0) | TrackBack (0)
Negotiating Overview for Contractors
We offer these points of view to help contractors negotiate more effectively with clients, peers, and others. This summary list coupled with another article found elsewhere in this work, will give construction professionals better understanding of how other contractors negotiate more effectively.
Negotiating is the highest and best use of any contractors time. They make or save themselves hundreds or even thousands of dollars every time they negotiate. Whether it is an equipment lease, material buy or an employee salary negotiation.
Continue reading "Negotiating Overview for Contractors"
Posted by Matt Stevens at 3:52 AM | Comments (0) | TrackBack (0)
Marginal Contribution
What is the first question about any potential strategic move? It is not about marketing, sales, or other potential benefit. The first question to ask is: "Does it make financial sense?"
As long as there are contracting businesses, there will be the harsh reality of profit and loss. It is the primary score card for any business and construction is no different. Whether you have continuous losses or one big one, you will be working for someone else. Not a great prospect for a contractor. We all cherish working for ourselves.
On the other hand, consistent profits reward you with numerous personal and professional options. They give a contractor access to several roads he or she might take.
How does one go about making a strategic decision and vetting the potential financial problems or gains. Part of the discussion must encompass marginal contribution.
Continue reading "Marginal Contribution"
Posted by Matt Stevens at 11:19 PM | Comments (0) | TrackBack (0)
Construction is a Tennis Match - Podcast
Hear the beginning of our article:
Email us at clientservices@stevensci.com for the remainder of the article. We will send it to you in three working days.
Order our book published by McGraw - Hill, Managing a Construction Firm on Just 24 Hours a Day by going to stevensci.com
Continue reading "Construction is a Tennis Match - Podcast"
Posted by Matt Stevens at 2:07 PM | Comments (0)
Construction Schedule Compression Cost Form
The construction industry used to use the term "fast track" in the 80's to describe a pace in building a project. That term has not been utilized in a while. Now it is state of mind. It is assumed that all construction will be done quickly. In other words, quicker than construction work was done in the 70's.....and the 80's and the 90's.
The new term is "flash track". This is my phrase. To be clear, this is not the term being used, but it is the attitude on a majority of jobsites. Craftmanship and safety is considered constant. In the owner's eyes, speed has no effect on the level of quality or safe working conditions and habits. This is a dangerous and foolish assumption.
Continue reading "Construction Schedule Compression Cost Form"
Posted by Matt Stevens at 3:09 AM | Comments (0) | TrackBack (0)
Computer Vocabulary In Construction
ASCII
Stands for American Standard of Computer Information Interchange. It is a type of file format. All software will read these files. Contractors should download data peridically from their accounting software package, open the file in common and flexible spreadsheet such as Microsoft Excel and analyze the data extensively. At the end of the day, this cost analysis will produce what the contractor is installing work for (versus what he “should” be installing work for). If unit cost of work that is bid is not the same as the what the cost is installed, there is a problem. If the bid unit cost is higher then the contractor is losing work. If the bid unit cost is too low, then he is paying to complete the work out of gross profit.
Continue reading "Computer Vocabulary In Construction"
Posted by Matt Stevens at 4:40 AM | Comments (1) | TrackBack (0)
Excel Formula Flub Ups in Construction
Formula Flub Ups
#DIV/0! – Appears when the formula calls for division by a cell that contains “0” or is empty
#NAME? - Appears when the formula refers to a range name that doesn’t exist. (Example ZZ2900392)
#NULL – Appears most often when you insert a space to separate cell references used as arguments in functions.
#NUM – Appears when Excel encounters a problem with a number in a formula. (such as two decimal places in single number)
Continue reading "Excel Formula Flub Ups in Construction"
Posted by Matt Stevens at 4:18 PM | Comments (0)
Construction Breakeven Revenue
How do we proactively plan our business if we are changing our cost structure dramatically?
How do we judge whether an additional cost or investment has been a financial success?
There are various methods in the general business environment, however in construction contracting, we must use breakeven analysis.
Continue reading "Construction Breakeven Revenue"
Posted by Matt Stevens at 2:03 AM | Comments (0) | TrackBack (0)
Publication 1926 is not a Safety Program
Contractors are fighting the increasing cost of safety. From Worker’s Compensation to General Liability to OSHA fines, construction firms are constantly feeling this headache.
Some contractors cannot find private worker’s compensation insurance and are forced to resort to governmental pools. This is the harsh reality of contracting.
There are some ways to improve the cost and availability of insurance. First, it must be realized that OSHA Publication 1926 is not a safety program. It is the law or the absolute minimum of what is expected of a contractor. In other words, if you are using 1926 as your safety program you are not distinguishing yourself as an above average contractor. As as the insurance industry is concerned, you are losing on two fronts.
Continue reading "Publication 1926 is not a Safety Program"
Posted by Matt Stevens at 12:04 AM | Comments (0) | TrackBack (0)
Dedication
Our digest is dedicated to my two children. They are the ones who show me the importance of the little things.
Olivia Kathleen - one of the true great people that this country has produced. We are not without leadership for the future.
David Matthew - a brilliant and capable young man who will do well in a critical endeavor. He won't spend his time on minor things.
Writing Notes:
1) The use of "his", "him" etc. is for convenience. It replaces the ackward "he / she","him / her".
2) We do not include graphs, charts or other illustrations. We use them only in consulting and training situations.
3) Misspelllings will occur. The author does proofread his work and does catch erFors. However, he does not use an editor/proofreader or other second set of eyes.
4) Please note: We send articles to company domains and not public ones. As an example: mstevens@stevensci.com is appropriate and mstevens@hotmail.com is not. We are vigilant about copyright abuses of our information.
See our 150+ Best Practice Analysis and Library. It is an assessment for contractors seeking better ways of managing their contracting business. See our E-Store link below. 50+ page report and listing of 150+ Best Practices is included.
Read McGraw Hill's 400+ page book . "Managing a Construction Firm on Just 24 Hours a Day”. It includes 170 best Practices Used in Construction Contracting with over 100 illustrations and examples. We include a CD of 60 Excel Templates when you buy the book from our website. We also include our library of forms and 5 online courses.
Go to our Website at stevensci.com
Posted by Matt Stevens at 10:33 AM | Comments (0)
Scheduling Computation Form
How does a superintendent begin the planning and scheduling of a new project? For planning, it is wise to use paper, pencil and a cell phone. For CPM scheduling, software running on a computer is needed. Field Supervisors do not typically have laptops at their side. Without a computer, they cannot run scheduling software. Therefore the question becomes how do they create a rough draft of the beginning CPM Schedule to see if they can build the project in normal time?
For average and smaller contractors who need to work smart, there are several techniques to help them quickly produce needed project information. We have attached a scheduling computation form that assists contractors to determine basic schedule information before they pull out their laptops and P3.
Continue reading "Scheduling Computation Form"
Posted by Matt Stevens at 4:57 PM | Comments (1) | TrackBack (0)
Project Risk in Construction
Some young construction contractors dispute the risk factors that banks, sureties and others assign to construction projects. He just doesn't believe that the risk is there. The confidence which the youthful contractor shows is needed if he is to weather all the ups and downs of this business. However, risk in construction is a given. In any town in the United States, there is a local story of a bankrupt contractor.
A Contractor's Risk on a project is caused by two potential events.
1) Unaccepted work by the client
2) Higher than estimated project costs
Most contractor's project defaults generate from these two sources. Sureties, banks and investors know these risks and take conservative financial approaches to manage them.
Continue reading "Project Risk in Construction"
Posted by Matt Stevens at 2:32 AM | Comments (1) | TrackBack (0)
OSHA is Your Ally
The Occupational and Health Administration (OSHA) is a help to Construction Contractors. They are an ally to people who build work. Most contractors would disagree with me on that point. However, let me share with you some insights and conclusions that strengthen this argument.
What are some of the largest cost categories to contractor’s today? Worker’s compensation and general liability insurance. Certainly, there are others but these still major expenses whether you are a specialty or general contractor.
Continue reading "OSHA is Your Ally"
Posted by Matt Stevens at 10:59 PM | Comments (0) | TrackBack (0)
Construction Estimating Forms
It is critical that construction contractors use standard take off and pricing forms to ensure consistency of bids. We offer 4 standard estimating forms for your review and use. They are free for the asking. Just send to us an email re: Estimating Forms and we will send it to you within 3 working days. Our contact email is clientservices@stevensci.com
Posted by Matt Stevens at 2:34 PM | Comments (0)
Change Order Management
Changed Conditions and / or changing project demands lead to schedule and financial impacts. Both cost the same thing: money. To an owner, general contractor, subcontractor, supplier or service provider, there is a cost of change. Either increasing or decreasing, both have to be formally managed and documented. Without a process, chaos would consume all project stakeholders.
Continue reading "Change Order Management"
Posted by Matt Stevens at 12:30 PM | Comments (0) | TrackBack (0)
Construction Submittals - Approval means Installation
A free market society benefits from innovation. Products that perform better or cost less (or both) give projects benefits during construction and many years after. Communicating these types of products is one function of the submital process. There are several other reasons such as dimmension coordination and color selection.
Clearly, a majority of building and road projects require product submittals. Making this a quicker process than your competitors leads to a competitive edge. Allowing others to slow it down leads to schedule impacts which cannot be recovered without cost.
Most project management software allows the creation of a submittal log with relative ease. In it, submittals and submittal packages can be added as needed. The project manager must be familiar with the owner's contract as it relates to submittals. They must be reviewed against the plans and specifications and any corrections should be recorded and reported appropriately. A submittal schedule must be submitted to the architect based upon the requirements in the specifications for submittal of shop drawings, product information and samples. The submittal log is set-up during the start-up phase of construction and contains every part of what is to be included in the project.
Continue reading "Construction Submittals - Approval means Installation"
Posted by Matt Stevens at 3:44 AM | Comments (1) | TrackBack (0)
Cost of Mistakes, Loss and Theft
What is the cost of rework, mistakes or theft to a construction contractor? Some in your organization may think it is minimal, view our chart to show the cost in revenue dollars. This is dramatic way to show a foreman, project manager or estimator a calculation he or she can appreciate. The average contractor profit before tax in the United States is approximately 3%. The revenue cost is 33 times the loss.
A $100 loss is, of course, an impact on $100 of profit. However, the typical field or office employee may not appreciate this. To emphasize the loss more dramatically, show them the needed revenue dollars to break even from that loss. In this case, $3300.00.
Continue reading "Cost of Mistakes, Loss and Theft"
Posted by Matt Stevens at 2:45 AM | Comments (0) | TrackBack (0)
Painting Estimate Form - Free
Painting is a detailed-oriented trade. As in most specialty construction work, it requires a unique approach which is learned after many years of business and field experience. We have included a basic estimating form for painting contractors who may be looking for a different way to accomplish a common goal: profitable operations.
We have a fully customizable template with MS Excel formulas that is offered as part of our Templates package (60 in all) at
http://stevensci.com/Merchant2/merchant.mvc?Screen=CTGY&Store_Code=SCII&Category_Code=MSEXL60
This form takes hours of trouble and hassle over the life of a project. We include Application for Payment, RFI, Change Order and the like.
Continue reading "Painting Estimate Form - Free"
Posted by Matt Stevens at 2:35 AM | Comments (0) | TrackBack (0)
Baseline Schedule
As the old saying goes, “Time is money.” Nowhere is this more evident than on a construction project. In the world of the project manager the schedule is your tool for controlling time, resources and money.
Continue reading "Baseline Schedule"
Posted by Matt Stevens at 3:02 AM | Comments (0) | TrackBack (0)
Construction Financial Management for Contractors
Financial management is not an exciting subject, except when your are in financial trouble then your blood pressure and heart race will skyrocket. To the unknowing, this is not the time to study the subject. As sure as the sun will rise tomorrow, lack of financial knowledge leads to financial distress.
Continue reading "Construction Financial Management for Contractors"
Posted by Matt Stevens at 3:46 AM | Comments (1) | TrackBack (0)
Construction Project Budgeting - Setting the Financial Stage
The proper management of a project involves more than just getting the project built. Financial Management is a critical part of the overall project management process. If a project is managed well financially, it is more likely to be successful and profitable. If your organization has the appropriate resources, such as reports, documents, and checks and balances, there should be no surprises. Remember to use all of your available resources to help you manage the financial aspects of your project. A well-built quality project that loses money is still a losing situation.
Continue reading "Construction Project Budgeting - Setting the Financial Stage"
Posted by Matt Stevens at 9:05 AM | Comments (0) | TrackBack (0)
The Construction Estimating Process
Estimating is part of the big three critical activities of all contractors. Be they large, small, from the north, the south, left coast or right, construction contractors have to do these three functions as well or better than average to stay in business. To receive a failing grade in any of the three is certain to spell doom for a construction firm.
The three functions that a contractor must perform well are:
1) Acquire Work
2) Construction Work
3) Track That Work
The secret is to perform each of these faster than your competition. If you do, you have the edge.
Estimating is a large part of acquiring work. Also, a contractor must use bid strategy and selling skills if he or she will consistently acquire profitable work. We define Estimating in the follow way:
"Determining the accurate cost of proposed work through reviewing, analyzing construction documents, economic conditions, the physical location of the work and the parties involved"
Continue reading "The Construction Estimating Process"
Posted by Matt Stevens at 11:08 PM | Comments (0) | TrackBack (0)
Work Breakdown Structure - Free
Work Breakdown Strucure is one way to classify activities on a schedule, organize an estimate, classify labor codes and the like. WBS coding is being used more as owners become increasingly sophisticated. Private companies and public entities are finding that construction is not an interruption to their opertations but a neccesary part. Having a way to categorize the building process not only lets owners participate actively but also, gives them some historical information for the next time they build. Contractors should become familiar with the list and how their work would be classified and treated under this system.
Continue reading "Work Breakdown Structure - Free"
Posted by Matt Stevens at 6:51 PM | Comments (0)
Focus on the Construction Labor
Labor is the greatest risk factor and the greatest reward opportunity for construction contractors. 90% of projects that have cost overruns do so because of the labor cost of the job.
Specialty contractors will tell you it is the single greatest opportunity for them to make the most money. None of the other cost items compare, not material buyout, or subcontracting or equipment utilitization. It all starts with labor productivity.
Analyse an average labor intensive contractors profit and loss statement. Increase the labor productivity, the labor cost reduces and the labor savings go directly to the bottom line. Decrease the labor productivity, the labor costs increases and you might breakeven or worse.
Both specialty and general contractors benefit from a focus on labor. The reason is obvious for specialty contractors. They have a large part of there costs of any project dedicated to it. General Contractors benefit in that with good labor management practices they can reduce the prices of specialty contractors pricing as the fear of loss is lessen by these contractors.
Continue reading "Focus on the Construction Labor"
Posted by Matt Stevens at 2:39 AM | Comments (0) | TrackBack (0)
Improving Your Contracting Firm
The Construction Industry demands that contractors constantly improve. If a contractor chooses not to, he or she will be penalized with less work and more headaches to build that work.
Any improvement program is based on change. That is, where we are now we like to leave behind. We currently are point A and would like to go to point B. A current productivity level is point A. This is what we expect, this what we know, it is dependable. Some people in your organization have the attitude that this is all that is possible, there is really no great leap we can make without extra people, expensive technology or to use an outsource (at a cost). They feel there are no real opportunities to make thing run faster with the same amount of accuracy.
Continue reading "Improving Your Contracting Firm"
Posted by Matt Stevens at 2:56 AM | Comments (1) | TrackBack (0)
Construction Budgeting
Recently, I was presenting to several contractors and their executives. In starting a seminar, I ask several questions to understand the group and its composition. Then I ask "what part of contracting you enjoy most". In this session, the following results were:(these are common)
Building Projects More than 50%
Acquiring Work Less than 40%
Accounting / Finances Less than 10%
Not a surprising result for most people. However, a for-profit business must pay 100% attention to its finances. This is not an option. The ability to pay its bills determines solvency. Money is like oxygen to a business.
Continue reading "Construction Budgeting"
Posted by Matt Stevens at 3:20 AM | Comments (0) | TrackBack (0)
Typical Transactions and Their Effects on a Contractor's Financial Condition
As part of any soon-to-be-contractor’s education is the topic of Financial Management. Since the inability to pay bills is the fundamental reason for bankruptcy, it tops the list of all high value seminars for construction firms.
Knowledgeable middle managers in finance make a difference in large firm’s success. Again, this should be a primary area of focus for most firms.
Review the following transactions and see the effect on the financial health of a contractor. We assume a cash basis of accounting and cash transactions
Continue reading "Typical Transactions and Their Effects on a Contractor's Financial Condition"
Posted by Matt Stevens at 2:04 PM | Comments (0)
Notification of Contract Change or Delay Form
Formal and written notification of contract change or delay has assisted many construction contractors in recouping direct and overhead costs of events caused by other project parties.
We have a free sample form to share. This can be a good start to a proper notification process.
Continue reading "Notification of Contract Change or Delay Form"
Posted by Matt Stevens at 9:57 PM | Comments (0)
Successful Construction Bidder Management
You win a job at 2 p.m., you have many new friends at 2:15 p.m. That is the Successful Bidder's Syndrome. He or she wins work then spends the next two days answering phone calls from suppliers, subcontractors, service providers and other interested parties.
Let me say what others have said. the critical time to pre-job plan is before the job starts. Especially, the hours after the job has been estimated, bid and won. As you and I know, estimators are clearest immediately after the bid. They understand the facts, the complexities, and other parties without confusion.
After a week, they have gone onto another project to estimate and start to mix data in their head. If you have a download session at this time, the field supervisors and project managers suffer. They don't get the unadulterated facts and therefore they don't have complete information about the job. Remember, the estimator is the only on who has slept with this job and possesses the command of the facts.
Continue reading "Successful Construction Bidder Management"
Posted by Matt Stevens at 3:07 PM | Comments (0)
Risk versus Reward in Construction Contracting
We know that the general business environment is governed by a specific risk / reward equation. Otherwise known as a "curve". This line is generally 1 to 1 and is a straightline. For every increased risk factor there is an increased reward. The normal risk vs. reward curve is linear. It states that for every risk factors taken there should be a reward. High risk propositions successfully overcome should pay a handsome sum.
Strangely, the construction industry is different. For high risk situations, there is less reward. For lower risk situations, there is more reward. The curve is perpendicular to the general business one.
Continue reading "Risk versus Reward in Construction Contracting"
Posted by Matt Stevens at 12:55 PM | Comments (0) | TrackBack (0)
Construction Bidding Strategy for Contractors
Can we make any sense out of bidding results? Is there a way to use it to our advantage? Would it be a worthwhile (meaning profitable) endeavor? The answers to all these is "yes"
From Marvin Gates' breakthrough work in the 60's to now, bidding smart has evolved from mostly art to mostly science. As we know, science is teachable.
Continue reading "Construction Bidding Strategy for Contractors"
Posted by Matt Stevens at 2:35 AM | Comments (0) | TrackBack (0)
Overhead Rightsizing
Overhead will always be a hot topic among contractors. Being too fat in your office support of projects is a constant concern. It takes away from our profitability. Additionally, it is natural. We grew up in a hard bid world where being low was important.
Overhead in unnecessary expenses is a sin. Keeping the non-production related costs reasonable is a worthy goal. Items such as cell phone expenses, copy costs, software investment, travel and the like typically don't add to the on-time and on-budget production of projects. This seems to be an evil and drag to our business. Conversely, having enough people to manage the details of a job can make money for a contractor.
Different types of contractors have different office / support needs, therefore different overhead cost percentages. Getting right sized is neccessary for profitable operations.
Continue reading "Overhead Rightsizing"
Posted by Matt Stevens at 2:17 AM | Comments (0) | TrackBack (0)
Time Management Ideas for Contractors
- Use a fax to email service such as EFAX. This is a great piece of technology that coverts your incoming faxes to an email. No more running to the fax machine. Just wait until the email comes through. Additionally, you don't have to waste toner on unwanted parts of the fax. Just print out those desired pages from your computer.
Continue reading "Time Management Ideas for Contractors"
Posted by Matt Stevens at 12:11 AM | Comments (0)
Reading a Construction Bid Tab
The competitive bidding process is alive and well in the United States. With something short of 900 billion dollars in total construction permits, there is a lot of pricing going on. Few owners say “take as long as you need, work when you want and bill us what your work is worth”.
Competition is still a respected activity in our business community. Contractors compete with others every day. We hope that these contractors compete only with their qualified peers. To compete against an unqualified firm will certainly result in financial and reputational injury.
We compete mostly on price. Our peers are as qualified as we; they have the same cost structure and the same quality level. Clients look at us all and see only a difference in price.
So, it comes down the financial proposal. The comparison of fees against each other, it is the only difference. Fair or unfair, a relationship will carry you far. But competitive pricing will carry you as far if not farther.
Bid Tabs are the result of the completive process in the public arena. Disclosure of prices is required by our public work process.
To bid effectively, we need to know the bid tab information. Why? It allows us to predict with higher certainity what other contractors will price. Put another way, there is an old saying that states "once is luck, twice is habit, three times is a trend, and four times is a characteristic". After several bids, we should know meaningful characteristics of our compeitior's proposal process.
Other information is needed to effectively bid against others (meaning consistently receive your share of the work and leave less money on the table)
Samantha 177,000
Jefferies 165,000
Portland 172,000
Honalee 170,000
Your Bid 175,000
These bid prices mean nothing when taken on a single job. So the first rule of reading a bid tab is:
Bid Information has to be collected on several instances.
Collecting a dozen of bid tabs of your competitors will indicate many characteristics of your peers. Characteristics don’t change hardly, if ever.
To further refine the information you collect, you will need to compare your cost against other's bid prices. Since your competitors don’t (and won’t)
Continue reading "Reading a Construction Bid Tab"
Posted by Matt Stevens at 12:22 AM | Comments (0)
Project Manager's Job Description
Your project managers run the risk of getting burned out. The demands of the job may have evolved and become more complex. The enthusiasm wears thin. Their responsibilities have changed from a straightforward "keep the project on schedule and on budget" to include numerous technical and business aspects of a construction contractor's overall business.
Burning out and losing a capable project manager is hazardous. Where would you find a replacement? If you shook a "project manager tree", how many would fall out? One if you are lucky. (ask any headhunter)
Project managers who work for smaller companies seem to be happier. Their jobs are smaller, simpler and of limited duration. Their office atmosphere is less formal.
Management intensity is one of the key determining factors of success on a project. Diluting that intensity guarantees that less proactive behaviors and essential double checks are performed. This is playing with fire. Keep the responsibilities defined to produce critical outcomes.
Take a look at your responsibility creep for your P.M.s. Over time, an overly ambitious contractor may add responsibilities that endanger this basic tenet. A project manager should focus mostly on schedule (including planning) and budget adherence with safety.
If projects are profitable then, a contractor's business is profitable. The field supervisor and project manager are critical to achieve this. 80%+ of a contractor's cost are project related. This is where focus must reside.
Continue reading "Project Manager's Job Description"
Posted by Matt Stevens at 12:08 PM | Comments (0)
What is Project Management in Construction
A project manager is that individual assigned to carry out and be responsible for construction of all or specified portions of a project; also a representative of the owner supervising such work.
Definition according to the Construction Dictionary author Arizona Chapter #98 of the National Association of Women in Construction. - 8th edition.
Superior Project Management is the use of the right processes by the right people. Study after study concludes this. Highly successful companies "work smart", that is, they do things, which are efficient and effective. Project Managers work hard enough. They cannot increase their effort.
Processes are key. Following the correct steps in the proper sequence improves effectiveness. Average project managers have improved not by going back to school but by following a disciplined approach to managing the construction process.
Construction is a business. Positive financial results give companies the fuel to grow. Conversely, negative financial results can kill a company. A business approach to project management differentiates one contractor from his less profitable brethren.
Continue reading "What is Project Management in Construction"
Posted by Matt Stevens at 11:12 AM | Comments (0)
Monthly Progress Billing Form - Free
If you don't bill it, you can't collect it.
For a free basic billing form, To order the book, go to Stevensci.com, Amazon, Borders, Barnes and Noble, Browns Stationer's (UK), Reiters, Walden Books and other fine book retailers. You will find a section in the book outlining "billing form" . Remember, Stevensci.com bundles the book with 60 Excel Templates and an On-Line Course, a solid value.
We have a fully customizable template with MS Excel formulas that is offered as part of our Templates package (60 in all) at
http://stevensci.com/Merchant2/merchant.mvc?Screen=CTGY&Store_Code=SCII&Category_Code=MSEXL60
This form takes hours of trouble and hassle over the life of a project. We include Application for Payment, RFI, Change Order and the like.
Continue reading "Monthly Progress Billing Form - Free"
Posted by Matt Stevens at 11:11 AM | Comments (0)
Job Estimate Log
For a free basic job estimate log, To order the book, go to Stevensci.com, Amazon, Borders, Barnes and Noble, Browns Stationer's (UK), Reiters, Walden Books and other fine book retailers. You will find a section in the book outlining "estimate log" . Remember, Stevensci.com bundles the book with 60 Excel Templates and an On-Line Course, a solid value.
Continue reading "Job Estimate Log"
Posted by Matt Stevens at 11:09 AM | Comments (0)
Estimate Detail Form
For a free basic estimate detail form, email us at clientservices@stevensci.com. To order the book, go to Stevensci.com, Amazon, Borders, Barnes and Noble, Browns Stationer's (UK), Reiters, Walden Books and other fine book retailers. You will find a section in the book outlining "Estimate Detail Form" . Remember, Stevensci.com bundles the book with 60 Excel Templates and an On-Line Course, a solid value.
File is in Adobe Acrobat
Continue reading "Estimate Detail Form"
Posted by Matt Stevens at 11:08 AM | Comments (0)
Budget Template Example
For a free basic budget template example, To order the book, go to Stevensci.com, Amazon, Borders, Barnes and Noble, Browns Stationer's (UK), Reiters, Walden Books and other fine book retailers. You will find a section in the book outlining "basic budget template" . Remember, Stevensci.com bundles the book with 60 Excel Templates and an On-Line Course, a solid value.
File is in Adobe Acrobat
Continue reading "Budget Template Example"
Posted by Matt Stevens at 11:02 AM | Comments (0)
Change Order Worksheet
For free basic change order worksheet, To order the book, go to Stevensci.com, Amazon, Borders, Barnes and Noble, Browns Stationer's (UK), Reiters, Walden Books and other fine book retailers. You will find a section in the book outlining "change order worksheet" . Remember, Stevensci.com bundles the book with 60 Excel Templates and an On-Line Course, a solid value.
File is in Adobe Acrobat
Continue reading "Change Order Worksheet"
Posted by Matt Stevens at 1:03 AM | Comments (0)
Change Order Log
For a free basic change order log, To order the book, go to Stevensci.com, Amazon, Borders, Barnes and Noble, Browns Stationer's (UK), Reiters, Walden Books and other fine book retailers. You will find a section in the book outlining "change order log" . Remember, Stevensci.com bundles the book with 60 Excel Templates and an On-Line Course, a solid value.
File is in Adobe Acrobat
Continue reading "Change Order Log"
Posted by Matt Stevens at 1:02 AM | Comments (0)
Change Order Estimate Summary
For a free change order estimate summary form, To order the book, go to Stevensci.com, Amazon, Borders, Barnes and Noble, Browns Stationer's (UK), Reiters, Walden Books and other fine book retailers. You will find a section in the book outlining "change order summary" . Remember, Stevensci.com bundles the book with 60 Excel Templates and an On-Line Course, a solid value.
File is in Adobe Acrobat
Continue reading "Change Order Estimate Summary"
Posted by Matt Stevens at 1:01 AM | Comments (0)
Building Repair Estimate Form
Hurricanes, earthquakes and other natural disasters need quick and organized repair bids and work for contractors and their clients.
The attached file is a basic bid form for keeping costs of repair and thus pricing organized.
Continue reading "Building Repair Estimate Form"
Posted by Matt Stevens at 1:00 AM | Comments (0)
Bid History Tracking Form
Part of bidding smart is knowing the bidding patterns of your competition. The free form assists contractors in keeping track of competitors recent bids against your firm. Relate the proposal pricing to your costs as a percentage and you have one of the basic pieces of information needed for the Gates Model.
If you are to use this information with confidence, you must accept two principals:
1) Bidding History is only useful when competiting against fair-minded competition. We cannot compete against people who don't know their cost or lack ethical standards.
2) Your competitors do not change their approach drastically. They do have a method that has been successful in the past and do use it consistently.
Continue reading "Bid History Tracking Form"
Posted by Matt Stevens at 12:58 AM | Comments (0)
Construction Short Interval Planner for Field Managers
Field Managers are the key to building any project. They install the work so contractors can get paid. They know the job better after the first week than anyone in the office. So, why shouldn't they do the planning for the job on a weekly basis?
Construction contractors have devised some effective field scheduling techniques. From the basic to high tech, the goal of each of these is assist the person who knows the most about the project to look ahead next week.
The process of planning is more important. Actually doing it so the job runs smoother next week than usual.
Monitoring by the senior executive assures compliance.
Continue reading "Construction Short Interval Planner for Field Managers"
Posted by Matt Stevens at 12:56 AM | Comments (0)
Recruiting Ideas
Ask any senior contractor about how they recruited their good crews and great supervisors and they will tell you the secret in one word, “Years”. It is no mystery. We have to go through a several people who look good on paper (their resume) to discover the one who has the "right stuff". Only after mostly trial and erFor, do we find that one professional who is the right person for us. Unless you are paying well above market salaries, this reiterative process is the realistic way to find quality people who want to work. There is some luck involved, but, it is mostly patience on the contractor’s part.
With drug testing, criminal records and background checks disqualifying a high percentage of potential hires, we need to increase the number of applicants. Finding more people who could potentially work for us gives to us a choice of people. Always having one more prospect gives to us a plan “B” in an emergency.
In growing companies, this is doubly problematic. I am certain that it takes more one hire to fill a new position, say a Safety Manager or General Foreman. As a company grows, it will likely add these kinds of positions. The business is more complex at higher numbers of people so, additional specialties are needed. I have seen one situation where four people were hired over a couple of years (3 people fired) before a satisfactory manager was found.
So, what is a key of building a great set of crews and managers? Finding sources of prospects.
We have listed 20 ways to find more people who could be your next employee. Take a look and see if any of these ideas will help you with your human resource. There is never a danger in having too many applicants.
Finding and hiring good people can make the contracting business much easier. Having the wrong kind of people will certainly bankrupt even the best contractor. First let’s list ways to find and / or recruit people in ways you might not have thought of.
Did you know 45% of people who start college don't finish? Think of that Civil Engineering or Construction Management student who doesn't care for the classroom. He or she may be your next field superintendent. Certainly, their education level is higher than average. Get to know the dean of your local college(s). That person may be able to direct or refer you to a soon to be ex-student.
Continue reading "Recruiting Ideas"
Posted by Matt Stevens at 2:53 AM | Comments (1)
Aspects of Scheduling
Complication in the world of construction continues to mount. As in society, we have more chaos. In essence, there are more people involved, different material, and countries of manufacture. No doubt, an average project has more obstacles to overcome than a decade ago.
To addresss this, we have seen the initiatives take hold concerning construction projects. No longer is the name of the game "to build the project”. These days "its read the specifications, know the plans and address the issues one at a time". In other words, we must balance our contracting risk with the potential for gain.
How do contractors dependably coordinate these demands and then communicate our direction in an effecient and effective manner. We do this through a CPM schedule. This picture is worth more than a thousand words.
To be clear, every project manager should focus on schedule management and financial management. These two areas done well or poorly, decide a project's fate. This article addresses scheduling.
Excellent scheduling process and techniques have value to the contractor. They graphically and numerically display a complicated process. From this data sets, an outsider can understand the process of building work. For the owner, it gives him or her the road map and the path taken in building a project. However, Construction schedule are a double-edged sword.
Continue reading "Aspects of Scheduling"
Posted by Matt Stevens at 1:54 AM | Comments (0)
The Secret to Profitability
I have been honored to look at dozens of companies and work with the finest management consulting firm in the country for 5 years. I believe I am qualified to offer an opinion about what makes a profitable construction company. I have seen each company from the balance sheet and profit & loss statment and more. It is clear to me of the "important few" factors that all contractors cannot neglect. To do so would profoundly affect their financial health.
Continue reading "The Secret to Profitability"
Posted by Matt Stevens at 1:49 AM | Comments (0) | TrackBack (0)
The Eichleay Formula in Construction Contracting
The Eichleay formula has three basic steps to ascertain the cost of Home Office Overhead in delay, rework and work around situations.
First, the home office overhead allocable to the contract is determined by multiplying the total home office overhead by a ratio of the contract billings to the total billings of the contractor for the contract period.
Second, a daily overhead rate is computed by dividing the overhead allocable to the contract by the number of days of contract performance.
Third, the total overhead recoverable is determined by multiplying the daily overhead rate by the number of days of compensable delay. This formula may be schematically summarized as follows:
STEP ONE:
(Contract Billings / Total Billing for Damaged Firm) X Total Overhead for Subject Period = Total Allocable Overhead for Contract
STEP TWO:
Overhead Allocable To Contract / Actual Days of Contract Performance = Daily Contract Overhead Rate.
STEP THREE:
Daily Contract Overhead Rate X Number of Days of Compensable Delay = Amount Recoverable
This formula is used in a high percentage of construction claims in United States Courts. Contractors who are interested in determining damages for themselves and others should consult their trusted legal counsel.
Continue reading "The Eichleay Formula in Construction Contracting"
Posted by Matt Stevens at 11:32 AM | Comments (1)
General Construction Lien Law Questions
We have compiled a general lien questionairre that may be an assist to those pursuing liens on construction projects.
Please consult a qualified attorney in your locale to pursue any legal action.
For the questionairre, email us at mstevens@stevensci.com and write "Lien Questionairre"
Continue reading "General Construction Lien Law Questions"
Posted by Matt Stevens at 6:38 PM | Comments (0)
Writing a Construction Change Order
We believe that if all contractors collected their rightful change order compensation, their net profit would double. I know most of you agree.Discounted and ignored change orders by clients are accepted as normal. It is frustrating. Contractors fight this attitude and seem to be holding their own. It is a fight. This means we will have good days and bad ones. However, as a client from Texas has said, "Don't let them wear you down".
Changed Conditions and / or changing project demands lead to schedule and financial impacts. Both cost the same thing: money. To an owner, general contractor, specialty contractor, supplier or service provider, there is a cost of change. Either increasing or decreasing, both have to be formally managed and documented. Without a process, chaos would consume all project stakeholders.
There are two (2) ever-present axioms in construction:
1) There will be directed changes on engineering and building construction projects.
2) There will be arguments about the effect of the directed changes on the cost and schedule of these projects.
What is a Change Order?
A directed change is an event initiated by an owner which results in a modification of the project work and affects the planned schedule and/or cost.
A directed change can be:
An increase or decrease in the type or scope of work already being incorporated, or
Work for which there was no originally defined scope.
A directed change can also be a delay, compression, or acceleration of existing work with no new work being added or deleted.
Continue reading "Writing a Construction Change Order"
Posted by Matt Stevens at 2:37 AM | Comments (0) | TrackBack (0)
Computers and Managing Construction
We live in an age when we actually can work smarter and don't have to work harder. That is, if we use current construction related software, hardware and service providers, we don't have do as much clerical work (collecting data, compiling information). This allows us more time to do management work (analysing, planning, thinking). If you are not taking advantage of this phenomenon, it might be an oversight. Your competitors will show you technology's power at one time or another. You will see it in the way they bid/sell or build work against you.
As you know, electricity travels at 187,000 miles a second and can certainly speed up the information gathering, analysis and transfer functions that are a substantial part of a manager's duty.
Some software programs have been around for more than thirty years. They contain many "worksmart" functions learned over the past three decades..Again, the power of technology in construction is indisputable.
Continue reading "Computers and Managing Construction"
Posted by Matt Stevens at 12:42 AM | Comments (1) | TrackBack (0)
Overhead Costing
The right application of costs can make a contractor’s financial picture improve greatly. Not knowing one's costs has serious business consequences.
Too much costs in the bid and he won't win the project. He might not win any projects. This can be "slow death" as he uses his personal wealth to keep his company in business.
Too little cost in his bid, he pays to finish the job. The contractor might even be bankrupted on the way to complete the project. This may be "sudden death."
With an average net profit before tax of 2 to 5% for most construction contractors, the need for accuracy is high. Said another way, the difference between reward and punishment is slim.
Part of getting work is to know the final costs of the project. If we know our final cost, then the “poker game” starts. In a negotiation or bidding situation, good contractors play a great game if they are certain. Without certainty of our total costs, then we are in a weak position in this game of cards.
How do we arrive at an accurate cost? Two crucial steps among several are 1) The proper application of overhead costs for this project 2) Job sizing to proportion overhead and profit the volume of the job.
Continue reading "Overhead Costing"
Posted by Matt Stevens at 3:25 PM | Comments (1) | TrackBack (0)
Condition Your Construction Bids
The increase in the number of Lawyers and Construction Management Degrees in the United States has created the advent of new terms and conditions in contracts. “Paid When Paid”, “Paid If Paid”, “Notify and Proceed”, “Hold Harmless”, “Personal Guarantee” and the like. This kind of language makes it difficult to trust most people in the industry. However to be fair, it only reflects society's attitude. Let the other guy take the brunt of what can go wrong.
The first step in managing the terms of any contract is to condition your bid. There are several ways to do this. One example is to use a standard bid proposal i.e. one written by a major construction association. Along with that, attach an insurance certificate, and a schedule of values.
Bids should say “acceptance is expressly limited to the terms of this offer” to prevent other terms from creeping in.
Continue reading "Condition Your Construction Bids"
Posted by Matt Stevens at 8:33 PM | Comments (0)
Construction Project Planning Form
It is critical that construction contractors plan each project. To use an unstructured process leaves people to their own devices. To structure it is more efficent. Using a standard form helps structure it and gives people a place to start. We have a project planning form for your review and use. It is free for the asking. Just send to us an email re: Project Planning Form and we will send it to you within 3 working days. Our contact email is clientservices@stevensci.com
Posted by Matt Stevens at 2:26 PM | Comments (0)
Book Reviews of "Managing a Construction Firm on Just 24 Hours a Day"
Richard Korman, Senior Business Editor, Engineering News Record and ENR.com writes:
If you want to clear your head about something in construction contracting, just pick up advisor Matt Stevens' new book, Managing a Construction Firm on Just 24 Hours a Day. It is like talking to your older brother who has clamped a hand on your shoulder and is telling you the blunt honest truth about the costs associated with schedule compression or right-sizing your overhead. Yes, this book is full of takeaways and sample equipment forecasts. But where it really shines is in discussions of resource allocations and the uses and significance of CPM schedules. Stevens makes them simple. It is in essence the ultimate, easy-to-digest book about the financial management of contracting for an industry where the younger people have college degrees and the older set don't exactly want to focus on finance. I've never seen anything more accessible on getting and managing work profitably.
There's also a fascinating and tightly narrated chapter called "The Business of Contracting" on the changing nature of the construction industry. In it, Stevens discusses, among other subjects, how most young construction professionals "do not [and did not] go through the 'field' because they don't want to work" in the dirty and dangerous environment of the jobsite. They have "turned construction into a business" in which "craftsmanship is now assumed to be the same from contractor to contractor."
_____________________________________________________________________________________
Matt,
My management team and I wanted to thank you for writing such a great book!
On a personal note, I wanted to thank you as your book has helped me
identify and focus on those absolutely vital processes and procedures that
those before me overlooked, dismissed or feared. Never before have we been
so on point with what direction our company should take.
We have made great progress implementing the processes detailed in your
book. The bulk of our energy has been invested in increasing our "Speed of
Process". It's a hell of a challenge but the results we are yielding are
well worth it. After much discussion we came to the conclusion that we
would be irresponsible if we did not ask you if you have converted your book
into an overall Policy and Procedures Manual, or another similar format. If
so, can we purchase that manual?
I look forward to hearing from you. Additionally, please let me know if
there is anything we can do for you on our side of the Country.
Thanks again
Michael A. Smith "Jr"
Vice-President
Argonaut Constructors
Santa Rosa, California
_____________________________________________________________________________________
In writing this book (Managing a Construction Firm On Just 24 Hours a Day), Matt has done an exceptional job focusing on the fundamentals of operating a PROFITABLE construction firm. Matt's book is a reminder that construction companies deserve to be rewarded for taking on risk and such risk requires intense control at every stage. Any firm, no matter its size, will prove successful and profitable by following these principals and logical approach.
Les Snyder
Senior Vice President
Barton Malow Company
Southfield, MI
_________________________________________________________________________________________
This book by far the best available in the market. Trust me because I have read them all! It is in your face truth and facts. So many other books try to puff up the author versus addressing the issues that are a must to know. Experience contractor's and inexperienced contractors regardless of tenure should be required to read this book to their company president. There is a lot of documentation, bookkeeping, codes and regulations, HR issues, financial management, and people skills that are part of day to day construction activity. This book covers them truthfully, informatively, and in great detail. Thanks for producing such a quality book!!!!!
Mike Martin
Construction 2000, Inc.
_____________________________________________________________________________________________
Matt Stevens,
You completely caught me off guard by answering my email personally. Here goes. I work in the mud, the blood, and the beer. The people I work with must take their meds so they can work without killing each other. We laid 36 inch storm sewer in -2 degrees last week in Monee, Illinois. The boss is called "Little Hitler" he works hard not smart. He did not want me to run electrical power to the tank hole to pump water. Three 20,000 gallon Fiber Glass tanks floated. 10 days from now I will be removing three 12,000 gallon ust's and wrecking an old building in Indianapolis, Indiana, on my own. I borrowed the book from the Indianapolis library now I am going to purchase the book and Keep it in my old F350 and use it everyday to work smarter. I am 65 and have not been able to keep money; now that will change. Thank you for clearly communicating your ideas, research and experience to guys like me. Also, I am the qualifier for Highway and Utilities All for a construction license in North Carolina. I insisted that the owner read your book and emailed the title to her.
Robbie Dalton
_____________________________________________________________________________________
Mr. Stevens provides information that will be useful to the new construction contractor as well as to the seasoned veteran. He discusses a wide variety of construction management problems from an academic viewpoint and then introduces hard practical advice that could only come from long personal experience. He provides solid examples of efficiencies and cost-effective alternatives always providing a path to save time and money and to improve company performance. He encourages understanding and use of tools one may already have rather than suggesting new expenditures - such as practical use of spreadsheets with many examples given.
The author has learned from his own experience, he has consulted for many firms of varying size and position in the industry, he has talked and studied with his students, his clients, his partners and competitors over years and he has developed an organized collection of useful advice about best practices for construction firm management in today's competitive markets.
I liked the book, I learned from it and I recommend it.
Ted Baker
CFO
ProFab Tech
Winter Haven, Florida
__________________________________________________________________________________________
Good news, I hope you sell tons of books, I've enjoyed reading it.
Werner Molzahn
Mar-Will Construction Ltd
Delta, British Columbia
__________________________________________________________________________________________
Matt Stevens' book, Managing a Construction Firm on Just 24 Hours Day, is well worth the read-time for anyone involved with construction contracting. Successful contractors both validate how they currently manage and gain exposure to industry-wide methodologies of best in class. Beginning or expanding your construction firm? Then this book needs to be your first research; you will experience a reliable reference as well. If you're a contractor, or employed by one, this book won't gather dust on your bookshelf. I personally enjoyed Matt's ability to weave the details of sophisticated bidding and financial strategies, risk management, and financial planning with understandable language that I can actually use.
Michael F. Swanhorst, CPA, MBA
CFO S. J. Louis Construction, Inc.
St. Cloud, Minnesota
____________________________________________________________________________________________
I have read Mr.Stevens book, managing a construction firm and it has been extremely helpful to my company.
Christian Brown
Wayne Brown Design/Build
Morne Fortune, Castries, St.Lucia
_________________________________________________________________________________________
I and my partners have recently started out our firm, we are refuges of the great production builder purge. The knowledge that you have in your book and on your web site has been tremendously helpful and I believe to be quite accurate. Thanks for putting you knowledge in writing.
Eric Dille President
B & D Professional Builders
__________________________________________________________________________________________
Hi Matt,
The review made on ENR. com are all true. Am already starting and felt the advantage of the "book".
Best wishes,
Eduardo G. Ente
President of Knowledge Plus Academy
Knowledge Plus Academy
411 Federation Center Bldg., Muelle de Binondo,
Manila 1006, Philippines
Phones: +632 2426304 to 05; Fax: +632 2422498
_________________________________________________________________________________________
I am enjoying your "24 Hours" book immensely, well done!
Thanks,
Kim Robinson
Optimum Wall & Ceiling Systems Ltd.
www.BestDrywall.com
_____________________________________________________________________________________
Matt,
The book is excellent. It really rings true for me as I am a third generation carpenter who learned from the ground up working with my dad since I was nine.
Now that I am in business I can see why I am so frustrated by the résumé's that come across my desk from guys that learn the trade out of the book.
I just got into it and already it is very helpful.
Thank you for the follow-up,
Karl Orth
Middlesex, New Jersey
___________________________________________________________________________________
Dear Matt,
I've just finished reading your book "...on just 24 hours..." and found it both informative and sprightly, an excellent combination.
Congrats on the good work.
Sam Florman
Kreisler Borg Florman
Scarsdale, NY
____________________________________________________________________________________
Matt, I am halfway through your book and even though I am President of a large national mechanical contractor, your book is both a great refresher and a wonderful primer for people entering construction.
Easy to comprehend, well organized and addresses the key issues of construction.
Mike Kotubey
President
Midwest Mechanical Contractors
____________________________________________________________________________________
Matt
Thank you. I am, as you say in your book, "a mud on the boots guy". In the beginning stages of a start up commercial contracting business. I have been working my way through your book. It has been a great help in the knowledge gap I have between running a site and running a construction company. It has demystified many of the procedures and added to my confidence in my decision to go out on my own, and I'm only half way through it.
Thanks again
Chris Lowes
CLIC Construction
Canada
____________________________________________________________________________________
I have and it is great! You and George Hedley are my online mentors. Each of you puts out invaluable information that in my opinion it is a mandatory read. Thanks so much to you and your staff.
Mike Martin
Travis & Michael's Construction Services
____________________________________________________________________________________
Matt:
I get your newslettter every month. Thanks.
Rob
PS: I also ordered your book.
___________________________________________________________________________________
Hi Matt,
Want to let you know I thoroughly enjoy your newsletter. Several years ago, I took a contractor's continuing education class from you and automatically began receiving your newsletter. Much of the information you present is beneficial to us in Facilities since we rely on the construction industry and associative processes for executing our major projects, as well as self perform smaller projects and maintenance of our existing facilities. Keep up the good work! I look forward to attending another one of your classes in the future.
Steve
Steven M. Quickel, Director
Brevard County Facilities Department
2725 Judge Fran Jamieson Way
Viera, FL 32940
_____________________________________________________________________________________
Managing a Construction Firm on Just 24 Hours a Day by Matt Stevens is one of the finest that I have read in my 78 years. TAMPA is my acrosstic for performance...Each person must, in varying degrees, perform well in the areas of Technical, Administrative, Marketing, Personnel, and Attitude.
Oliver Semmes
Semmes Inc
Continue reading "Book Reviews of "Managing a Construction Firm on Just 24 Hours a Day""
Posted by Matt Stevens at 12:28 PM | Comments (0)
Cost of Construction Rework
Rework is the costliest of all field mistakes. There is little doubt. As an example, waiting on material due to an ordering oversight may waste a day, however your people can still work in another area. This is a minor expense compared to rework which costs several times the original installation budget. See our examination below.
Rework emanates from several sources. Below are a few:
Incorrect information from designers / clients
Miscommunication within the contracting firm
Improper products
Lack of training
Out of sequence of work.
Continue reading "Cost of Construction Rework"
Posted by Matt Stevens at 10:21 PM | Comments (1)
Construction Purchase Orders
Purchase Orders are a necessary progression from a small contractor to a larger one. As a contractor grows in size, he or she will see losses due to material logistics (hence money) and unnecessary conflict with Suppliers about past invoices. All this takes away from what a contractor needs to do, work in the present. Minimizing these interruptions is a benefit of simple but, thoughtful purchase order system.
Purchase orders set the conditions of sale. Price is primary in most negotiations but, terms and conditions of that sale are equally important. The "T & C's" answer the question posed by the six wisemen of Rudyard Kipling. Who? What? Where? When? How? Why? Conditions of sale determine payment. Merchants know that these guiding questions make for good business. The Cash-to-Cash Cycle is one of the important metrics in calculating return on investment. The big picture tells us that a poor project ROI makes the the contractor's ROI poor also.
Review your terms and conditions of sale. Standardizing these can keep all your projects on better footing. Homebuilders have seen the power of "pay by purchase order" and its affect on profitability. For Commercial, Industrial and other contractors, there are other terms that are effective. Again, good business practices dictate us being careful with money. Thoughtful purchase order language protects us against waste of that precious resource.
My Scottish heritage has helped me financially. The old joke is "how was the Grand Canyon Built? - a Scotsman lost a nickel and five of his friends helped him look for it."
Scots know terms and conditions are just as powerful a money saving tool as price negotiation. Below we have listed a small sampling of terms and conditions.
Continue reading "Construction Purchase Orders"
Posted by Matt Stevens at 2:24 AM | Comments (0) | TrackBack (0)
Construction Overhead Management Form
We can send to you a basic contractor overhead management form. It is helpful in starting the process of "rightsizng" the overhead to your operations. To be clear, overhead has to constantly watched. There is an old story about a man watching lilly pads grow in a pond. They doubled every day until they covered the entire pond. Overhead expenses are much like that if not watched. They can grow exponentially over time. The important idea is to keep an attitude of "neccessary" not "nice to have" when budgeting and reviewing these costs.
Continue reading "Construction Overhead Management Form"
Posted by Matt Stevens at 1:54 AM | Comments (0) | TrackBack (0)
Team Building for Construction Contractors
Teams are an effective way for companies to solve problems. Both small and large companies have used them. Across the business landscape, these groups have tackled everything from Absenteeism to Zero Tolerance Policies.
Continue reading "Team Building for Construction Contractors"
Posted by Matt Stevens at 3:13 AM | Comments (0)
Good Profit is a Process
Does anyone you know really want to do a bad job? Do they want to be demoted, or worse yet, fired? Would they like to take a cut in pay or lose the respect of their peers? Of course not. Over 90% of people want to do a great job and receive the benefits for doing so.
This begs the question: “Why are we frustrated with performance with our construction staffs? (don’t forget our construction staffs are sometimes frustrated with us)
Continue reading "Good Profit is a Process"
Posted by Matt Stevens at 2:58 AM | Comments (0) | TrackBack (0)
Construction Budgeting for Proft
A clear sign of financial discipline of a construction firm is consistent budgeting. Firms that do this as a matter of course correlate to the most profitable firms. Those that financially plan also financially profit.
Other firms hold this process as one of those things they will get around to. However, they often do not, leaving them with unexpected expenses and cash flow surprises throughout the year. Both drains on gross profit and net profit.
A working contractor cannot be in the office full time to plan and manage finances. Gross profit is made in the field. It is also where all the risk is. There is no truth to the rumor that a construction firm can be managed from email software and fax machines. Boots on the ground are critical to keep projects right side up. That is, the owner's boots.
Budgeting can be based on several sources of information. However, it is the owner(s) who creates the draft and final budgets. Tailoring that source to the construction firm's unique business and market. There is no other authority who can accurately and consistently produce a thoughtful budget.
What are some of these sources? There are several which have varying degrees of quality. One obvious one is the contractor's own records / experience. This is high quality information. It is real and reflects that actual capability of the people and processes the firm employs.
Continue reading "Construction Budgeting for Proft"
Posted by Matt Stevens at 12:19 PM | Comments (0)
We All Love To See, Not Read In The Construction Businesss
By our nature in the construction industry are visually attuned. We don't care to read as much as the average person. We like to see a picture of what we are talking about. It helps us. Our senses like the graphic.
Give anyone a picture and he or she sees and understands.
It is no secret that construction invites immigrants to do its work. The history of construction has been consistent. Newcomers are attracted to our business due to its pay and hard work that second generation Americans don't care for. With the newly arrived is the language problem. They typically don't speak English. Although they want to assimilate into our country, our language is complicated and hard to learn. Most times new immigrants cannot read the technical words in their native language. It is simply something they were not taught.
Pictures, graphics, charts and so forth solve that problem. We would be smart to use them more in our business.
What are the ways that we display needed information?
Top of mind are the most common such as bar charts and line graphs. These quick pictures are easy to form in any spreadsheet program. They reflect numbers such as cost, revenue, erFor rates, emergency phone calls, etc. Great for getting people to understand critical measures efficiently. Once understood, they are on their way to acting on the problem.
Continue reading "We All Love To See, Not Read In The Construction Businesss"
Posted by Matt Stevens at 3:37 AM | Comments (0)
What is a Contractor's Business?
Defining a contractor's business is a challenging exercise. There are so many different types of contractors and types of work. We are hard pressed to try to write a definite explanation without ignoring several segmens of the construction industry.
We observe over 100 market sectors in the construction industry. F.W. Dodge reports in its construction permit data 30-odd categories and that is just the type of projects. Multiply that by the all the different types of contractors. The old CSI classification methodology outlines 16 divisions of work. Each division typically has several construction firm types occupying each of those.
Regardless of the type of work and the type of projects, all contractors must perform the following.
What we see is that all contractors have to do the following.
1) Acquire Projects - estimating, pricing, bidding, marketing and selling.
2) Build Projects - project management, field management, material procurement, and labor productivity.
3) Keep Track - accounting, financial management, administration and tax reporting.
Continue reading "What is a Contractor's Business?"
Posted by Matt Stevens at 2:30 AM | Comments (1) | TrackBack (0)
McGraw Hill's New Book "Managing A Construction Firm on Just 24 Hours A Day
This book presents business insights and profitable practices of construction contracting. Author is a practicing management consultant who works only with construction contractors. Book is over 300 pages and describes trends and gives "Best Practices" about how to make more money in the business with less risk. Learn the Gates Bidding Model, Job Sizing, Dual Overhead Rate Recovery, Best Job Cost Reports, The only true measure of profitability, Construction's Unique Risk / Reward Curve plus much more. We include over 170 best practices, 100+ illustrations and if you order the book from our website, we will include a CD containing over 60 Excel Spreadsheet Templates used in construction contracting for free. If you prefer, send a check for $99 to us at 956 Denton Road, Winter Park, Florida 32792 - Phone: 407-678-0730. We have a 100% money back guarantee. . (CD not included when ordering from other websites)
From Ted Baker, CFO - Pro-Fab Tech, Winter Haven, Florida wrote:
Mr Stevens provides information that will be useful to the new construction contractor as well as to the seasoned veteran. He discusses a wide variety of construction management problems from an academic viewpoint and then introduces hard practical advice that could only come from long personal experience. He provides solid examples of efficiencies and cost-effective alternatives always providing a path to save time and money and to improve company performance. He encourages understanding and use of tools one may already have rather than suggesting new expenditures - such as practical use of spreadsheets with many examples given.
The author has learned from his own experience, he has consulted for many firms of varying size and position in the industry, he has talked and studied with his students, his clients, his partners and competitors over years and he has developed an organized collection of useful advice about best practices for construction firm management in today's competitive markets.
I liked the book, I learned from it and I recommend it.
Continue reading "McGraw Hill's New Book "Managing A Construction Firm on Just 24 Hours A Day"
Posted by Matt Stevens at 6:07 PM | Comments (0)
Construction Daily Report Form - Free
It is critical that construction contractors write each day's construction history in an extemporaneous manner. Meaning capturing the events of the day each day as they happen and placing them into a written form. This keeps contractors from unnecessary claim litigation. We have a standard Daily Report Form for your review and use. It is free for the asking. Just send to us an email re: Daily Report Form and we will send it to you within 3 working days. Our contact email is clientservices@stevensci.com
Continue reading "Construction Daily Report Form - Free"
Posted by Matt Stevens at 5:44 PM | Comments (0)
Quantitative Analysis in Construction Contracting
My new book is being written around the idea that there is a logical and numerical way to manage a construction firm. The book is focused on and marketed to Senior Leaders of the construction contracting industry. The business has evolved into chaos. Never has there been a time that as many forces have come together in our industry, such as:
1) Material Pricing
2) Labor Shortages
3) Political Intrusion
4) Sophisticated Buyers
5) Technology Change
6) New and More Contract Risk
Continue reading "Quantitative Analysis in Construction Contracting"
Posted by Matt Stevens at 9:11 AM | Comments (0)
MS Excel Functions in Construction
Database
DAVERAGE Returns the average of selected database entries
DCOUNT Counts the cells that contain numbers in a database
DCOUNTA Counts nonblank cells in a database
DGET Extracts from a database a single record that matches the specified criteria
DMAX Returns the maximum value from selected database entries
DMIN Returns the minimum value from selected database entries
DPRODUCT Multiplies the values in a particular field of records that match the criteria in a database
DSTDEV Estimates the standard deviation based on a sample of selected database entries
DSTDEVP Calculates the standard deviation based on the entire population of selected database entries
DSUM Adds the numbers in the field column of records in the database that match the criteria
DVAR Estimates variance based on a sample from selected database entries
DVARP Calculates variance based on the entire population of selected database entries
GETPIVOTDATA Returns data stored in a PivotTable
Continue reading "MS Excel Functions in Construction"
Posted by Matt Stevens at 4:22 PM | Comments (0)
Free Construction Daily Report Form - Podcast
For the free form, email us at clientservices@stevensci.com
Continue reading "Free Construction Daily Report Form - Podcast"
Posted by Matt Stevens at 3:50 PM | Comments (0)
Construction Contracting Best Practices
All contractors keep secrets. Most never talk about their business. Their employees have to learn the hard way business techniques that work. That means embarrassment, lost profit and sometimes, a chewing out. Best Practices libraries fill the need, however they are hard to find for construction contractors. Typically, they are part of a larger membership agreement and fee.
The secrets of how to make money at contracting are not easily available to any one starting out. A seasoned contractor benefits from know other business techiques. That is the purpose of our best practices library: tTo fill that void.
What we have done is distilled the best business practices from all the years we have been in the industry. I have been a management consultant since 1994 and have been active in the industry for over 30 years.
Our library is extensive. It contains many processes, methods and tactics that drive risk down and / or profit up. Some are elegant and some are simple, however all have been confirmed in 2 national surveys we have conducted. The content of that work is contained in below. Who better to confirm best practices value than active construction contractors (and not a management consultant).
We feel that this library has value for those of us who want to start their own construction firm and those veteran contractors who want to improve their on-going business.
Construction is people and processes. These practices cover both. How to work better with the professionals you meet and how to manage the business of contracting.
Every contractor has three business choices:
1. Hire great people – don’t need processes, your great people will make it work. However, this might be an expensive payroll cost.
2. Have great processes – don’t need great people, any freshly minted high school graduate could run your business. Essentially, the business runs itself. Not a bad idea however, this level of detail would be impossible in our constantly changing construction industry.
3. Hire above average people and have the major processes defined. This is the most realistic course of action. Best practices have value here. Contractors who seek this have above average returns on their investment.
Continue reading "Construction Contracting Best Practices"
Posted by Matt Stevens at 8:54 AM | Comments (0)
Why Construction Contracting Best Practices are Critical
"Best Practices" is not a vogue term that will soon be replaced by another trendy concept and then another etc. The value is simple for a seasoned contractor or a soon to be one. Learning another way to do the same work makes a person flexible and thus more adaptle to challenges. Profits should follow.
Just as a carpenter or electrician learns another trick of the trade from another like professional, you can learn one more practice that can make your business less stressful and more profitable.
Over the coming years of your career, best practices may be replaced by another name. However, do not stop your search for a better way to do things. In the world of business, making money is one thing that keeps a business in existence. The value of good business practices cannot be overstated to any one who does not want to work for someone else.
We place the importance of best practices on the one secret of construction contracting. It is what drives the business. The secret is that the Risk – Reward Curve in Construction Contracting is unique. To understand is to understand the business.
Continue reading "Why Construction Contracting Best Practices are Critical"
Posted by Matt Stevens at 8:51 AM | Comments (0)
How Construction Professionals Learn Software
Construction personnel are visual and iterative learners. Meaning, we like to see it and then use the tool to understand it.
Our class is built on that concept. We will show the example and then use the laptops to exercise our newfound knowledge.
We know from experience that students will play with the software while on breaks, when we are dealing with a familiar topic, etc. This is normal and expected.
As an aside, please don’t make this a habit. Your fellow students don’t want to be delayed while you catch up.
We don’t believe that any of our attendees are taking the course to be an instructor. Our direction for these hours of instruction is to assist you in becoming an independent user.
Continue reading "How Construction Professionals Learn Software"
Posted by Matt Stevens at 3:58 PM | Comments (0)
Construction Material Suppliers and Their Business
Good Material Suppliers are critical to keep field labor productive. Few contractors can install their work without products. Given that there is 30%+ lost time in the industry and almost 3/4's of it is due to material logistics, you can see why more experienced contractors look for service oriented distributors first and then negotiate hard with them.
Most contractors don't have the time or inclination to interview several suppliers and then thoroughly review their operations and capability. Simply put, we don't actively manage that relationship. To do so, would be using time we don't have.
Rightly, supplier sales people are not a welcome sight in our office. Most take up time with personal banter and have a complicated pricing process that involves getting others to quote a job price. We would like to know the price now and start the negotiation. However, they make us wait for the quote to be delivered. Although well meaning, sales people don't add to our business operations greatly.
Continue reading "Construction Material Suppliers and Their Business"
Posted by Matt Stevens at 5:18 AM | Comments (0)
Turnover Meeting
The purpose of the turnover meeting is to communicate critical information to the project manager and field manager from the estimator. These meetings must happen sooner rather than later as the estimator's memory is fading and / or becoming clouded with the next project to bid.
The turnover meeting should include the following topics:
Continue reading "Turnover Meeting"
Posted by Matt Stevens at 5:04 AM | Comments (0)
The Moral Hazard Problem in Construction
Moral Hazard is simply defined as "having the ability to pay will make it more likely that you will be made to pay"
In common parlance, if someone is very rich, he or she is more likely to get sued. Alternatively, if a doctor has a substantial malpractice insurance policy, he will more likely have a suit brought against him.
The Moral Hazard Problem is a paradox in construction. It follows the same logic, insured contractors are looked to solve a project problem. Those owners who are “additional insured" and those "held harmless" will not (cannot) be sued.
Continue reading "The Moral Hazard Problem in Construction"
Posted by Matt Stevens at 9:31 PM | Comments (0)
Construction Mark-Up vs. Margin
Mark Up and Margin are confusing terms in the construction contracting industry. It seems as though there is a slight bit of difference but the concepts produce widely different results. If you care about profits then, you should be interested.
Let's look at the how they can affect our profit and thus, our wealth building.
Mark-up is profit percentage as a factor of cost. Cost is the basis for the profit calculation. As an illustration, if we have a $100 of cost and want to make a 10% margin then, we multiply .10 by $100 and add the result - $10 - to our cost of $100. Our price to the client is $110.00. we have all have performed the math thousands of times and there is no mystery. Most professionals were taught this as the only way to calculate profit.
Continue reading "Construction Mark-Up vs. Margin"
Posted by Matt Stevens at 2:04 AM | Comments (2) | TrackBack (0)
Construction Generations We Deal With
Each generation differs in attitude. The influences are many. Economic times, heros, world events, family composition and the like.
We see distinctly different demographic groups that most contractors deal with. These people can be a client, employee, subcontractor, supplier or peer.
They approach their responsibilities with a different attitude. The secret to working with people better is to understand what that approach is and then couch your communication in respect to that attitude. If you don't, you can ruin a relationship before it even starts.
Continue reading "Construction Generations We Deal With"
Posted by Matt Stevens at 2:34 AM | Comments (1) | TrackBack (0)
Selling Your Contracting Firm
Owners of contracting firms are faced with the inevitable. They will not be leaving this earth alive and breathing. Only astronauts do that consistently but, then they return. Some day, a contractor's energy and attitude will wane. He or she will see that the business they built needs new leadership. Their body and mind tells them, it is time to take a different role in life.
What do they do about transferring ownership? It is often a difficult intellectual and emotional decision. Fortunately, there are several options.
Sometimes, it is just a matter of some legal paperwork giving ownership to a son or daughter with a family payout agreement. This is a common occurrence in the construction business.
On occasion, employees will step in as the new stockholders. Again, an agreement has to be sworn to and a cash payout schedule accepted by both parties. In this transaction, as long as there is a talented core group who own the majority of stock, it can give the company a new life and a thriving existence for several years.
Continue reading "Selling Your Contracting Firm"
Posted by Matt Stevens at 8:53 AM | Comments (0) | TrackBack (0)
Using DISC to Understand Construction People's Personality
To understand people's personality, we are best served by using a proven system of analysis. There are several ones on the market and available to contractors. However, none is more simple, tenured or defendable than the DISC system. The DISC Profile Methodolgy is a helpful device to understand an individual's behavioral pattern and what emotions they might feel. This system provides labels, definitions and a structure to explain different visible behaviors and internal emotions. This aids contractors so an employee's personality strengths can be directed and weaknesses can be augmented for the benefit of everyone including the employee. Equally as valuable when analysing a prospective employee. Many a contractor has experienced "we hired him on his resume but, fired him based on his behavior!" DISC helps project the future employee's behavior in the job.
In other words, it helps explain the mysteries of people.
Continue reading "Using DISC to Understand Construction People's Personality"
Posted by Matt Stevens at 10:01 PM | Comments (0) | TrackBack (0)
Why Excel is Best for Construction Estimating, Pricing and Bdding
The power of MS Excel has been evident for many years to construction professionals. In a recent American Society of Professional Estimators survey, ASPE found that Microsoft's spreadsheet program is the leading estimating software in the United States.
Reasons for this many. Some are compelling, others are subtle. However, they lead to two results: Accuracy and Speed. As long as we have to count or measure quantities, Excel is all we need.
Our review leads us to list the following reasons:
Structured approach makes costing and pricing more accurate.
Calculations are performed in the “open”
Proper use of “protection” to keep erFors to a minimum.
Easy use of triangulation as double checks
Spend less time on calculations thus more on thinking through the process of construction and the business aspects of the project.
Several Parts of the Estimating and Bidding Process
Structured Review of Terms and Conditions of Job
Structured Review of Project Plans and Specifications
Supplier and Subcontractor Alerts
Constructability / Approach to Project
Quantity Take Off
Unit Pricing
Extensions
Lump Sum Adds
Subcontractor Bids
Value Engineering
Summary
Our Terms and Conditions
Subcontractor Terms and Conditions
Cut / Add Sheet
Final Bid Price
Continue reading "Why Excel is Best for Construction Estimating, Pricing and Bdding"
Posted by Matt Stevens at 4:33 PM | Comments (0)
Construction Labor Productivity
The consistent risk factor in Construction continues to be the unpredicability of the labor cost of a project. Labor can be easily wasted, and hard to limit. As you have probably witnessed, it is the consistent cost code that is exceeded on unprofitable construction jobs. Good labor management continues to be a key factor to financially successful firms.
Continue reading "Construction Labor Productivity"
Posted by Matt Stevens at 4:34 PM | Comments (1) | TrackBack (0)
Creating a Real World CPM Schedule
Interactive CPM Scheduling Process
A practical and constructible schedule is not common in the Construction Industry. Even with all the software and training on CPM scheduling, we still have those that build and those that schedule. They, for the most part, are two different individuals. That is to be expected. However, the superintendent should be creating the schedule and the scheduler should facilitating the process. Here is one way to put the field approach back into a CPM Schedule.
Continue reading "Creating a Real World CPM Schedule"
Posted by Matt Stevens at 12:45 AM | Comments (2)
The Fallacy of Construction Operating Leverage
A fact: Gross profit dollars will increase will increase or decrease with the amount of constuction volume.
This is an example of operating leverage.
Another example is as the volume increases the percentage of gross profit increases. In some industries this is a real business opportunity. Airlines, E-commerce, Restaurants and the others.
However, in construction contracting, the gross profit percentage is inverse to this. The percentage will decrease as volume increases and vice versa. Unless there is an undercapacity issue, this is factually correct.
Why? we are in a variable cost business, not a fixed cost one.
Continue reading "The Fallacy of Construction Operating Leverage"
Posted by Matt Stevens at 11:36 PM | Comments (1) | TrackBack (0)
Short Horizon Planning and Schedulng System
With 32% wasted time in field and office labor, planning represents the greatest financial opportunity for all contractors. Reducing that average amount of unproductive time is a significant competitive edge. However, it takes a belief in planning's power.
A plan is not a plan if it isn’t in writing. In the absence of a document, any one can "paint the target". In other words, shoot the arrow and wherever it lands, we can paint the bulls eye there. This is not planning and we will never build a long term skill.
The field manager is only one who can put together a weekly plan with any detail. He is living and sleeping with the job. This supervisor knows the lay of the land i.e. what material has been delivered, what work is ready or not, the pace of the job etc.
The average foreman looks ahead about 5 hours. It represents one of the great profit opportunities in construction. Looking ahead farther leads to greater efficiency, less stress on everyone and better utilization of labor and equipment.
Industry studies show that an average planning and scheduling effort reduces labor cost by at least 3%. Some people say it is more. We have found that it depends on two factors:
1) The consistency of planning and scheduling with this method.
2) The level of detail.
Continue reading "Short Horizon Planning and Schedulng System"
Posted by Matt Stevens at 4:12 PM | Comments (1) | TrackBack (0)
MS Excel Shortcuts in Construction
Shortcuts
Action Keystrokes Menu Action
New Ctrl+N File / New
Open Ctrl+O File / Open
Save Ctrl+S File / Save
Print Ctrl+P File / Print
Cut Ctrl+X Edit / Cut
Copy Ctrl+C Edit / Copy
Paste Ctrl+V Edit / Paste
Undo Ctrl+Z Edit / Undo
Redo Ctrl+Y Edit / Redo
Insert Hyperlink Ctrl+K Insert / hyperlink
Help F1 Help
Spelling F7 Tools / Spelling
Bold Ctrl+B Format / Cells
Italic Cntrl+I Format / Italic
Underline Ctrl+U Format / Underline
Select All Cells Ctrl+A
Goto Cell A1 Ctrl+Shift+Home
Goto Next Open Workbook Ctrl+Tab
Continue reading "MS Excel Shortcuts in Construction"
Posted by Matt Stevens at 4:08 PM | Comments (0)
Be an Irresistible Force or an Immovable Object
Managing a construction firm well is no mystery. As a starting point, you have to have the character to endure the ups and downs, especially when you first start out. It is not easy and it is not for the meek. Tenured contractors will tell you of hard days and nights but, they had no quit.
If you are contemplating starting a construction firm, don't be discouraged. It is a great business to be in as shown in the articles contained herein. However, it is not for those people who can be distracted or who don't have a strong base of support (i.e. spouse, family or friends). This is not a casual business.
If you are a senior contractor, you know this to be true. It is hard to place into words. However, most business people have never experienced such a challenge no matter how successful they are.
You have to be aggressive about issues with clients and employees. This business makes unresolved issues balloon. I don’t know why that is, but it happens.
Make everything redundant. Have two of everything. Make sure you have two great clients. Have your computer backed up. Always have two good suppliers and / or subcontractors for each type of work. Have the name and address of two great accountants and attorneys.
This is also known as having a plan “A” and a plan “B”. Never get backed into a corner without an ethical option and a little cushion in the bank account.
Continue reading "Be an Irresistible Force or an Immovable Object"
Posted by Matt Stevens at 2:26 PM | Comments (0)
Construction Economics: The Supply - Demand of Contracting
In the study of economics, there are many models used to illustrate key concepts. Some of the models were created to explain real world behavior. One of these practical models, in our opinion, shows the dynamics of the construction industry. The model is the Supply – Demand Curve and it is insightful in explaining the business of contracting.
Once understood, the Supply - Demand Curve shows some difficult realities of contracting. It illustrates the problems and opportunities in the industry. That is, how good and bad contracting can be as a market and a profession.
As a concept, the Supply – Demand Curve for construction services shows how both supply and demand of any industry reacts to a price change. For a construction firm, it means how does the demand for construction services and the supply of contractors react with a change in the cost of construction. In essence, how do clients and contractors behave when price goes up or down. We will use the Supply – Demand Curve Model to explain, some of the economic issues of the construction industry. First, let’s make clear three definitions:
Price is the Owner's Cost – In other words, when contracting prices are high, we mean that the market sees a high cost to build. When cost is low then contractors have dropped their bid prices (and presumably decreased profit margins)
Supply is the Number of Contractors. For simplicity purposes, we will keep our discussion contained to this point. However, please understand that the number of contractors drives capacity. A changing number of contractors affects the amount of construction that can be installed.
Demand is the willingness for people to pay the average price quoted by contractors. Clients want construction services at that cost.
We will not to discuss current prices, their level or future pricing movements. What we will discuss is how a price change affects demand and supply. When we state the word cost, it is not the cost of material or labor to the contractor, it means the cost of our construction services to the market.
The purpose of this article is to take a macro or global view of the industry. For business planning, this is an important item. It answers the question: what will I do if demand drops. What is my plan “B”? Alternatively, how do I take advantage of a price increase thus an opportunity for more profits?
The supply curve is flat. That is the supply or number of contractors does not greatly increase due to an increase in price (profit). Furthermore, it doesn’t decrease due to a drop in price either. People who are contractors will stay in the construction business. They might make their business smaller but they will still own a construction firm.
Continue reading "Construction Economics: The Supply - Demand of Contracting"
Posted by Matt Stevens at 9:26 AM | Comments (1) | TrackBack (0)
What Our Firm Does
Stevens Construction Institute, Inc is a Management Consulting firm, which works only with Construction Contracting Organizations.
Our Consulting and Training Practice assists Contractors in working smarter in the areas of Estimating, Pricing and Bidding, Project Management, Financial Management and Client Management.
Continue reading "What Our Firm Does"
Posted by Matt Stevens at 3:51 PM | Comments (0) | TrackBack (0)
Estimating and Bidding Effectively
Getting work means building work. The ability to acquire profitable work differentiates successful contractors from their unsuccessful counter parts. This is the primary step for turning a profit. Submitting a profitable but competitive price consistently is key to success. If a construction company cannot get work, it must be a pricing service.
Continue reading "Estimating and Bidding Effectively"
Posted by Matt Stevens at 4:57 AM | Comments (3)
Business Planning for Contractors
A business plan is a contractor's road map at the begining of his firm's journey. The business plan is similiar to a pre-job plan. Both documents are essential in keeping wasted time and adverse events to a minimum. The reason for planning is simple, it is foolish to make up your process as you go. In other words, if you don't plan, you don't have a business, you have a job.
Business Planning is not an exciting event. Contractors want to do something now. They are action biased people who like to see something physically built every day. As we said, A business plan is similar to pre-job plan. However, pre-job planning is energizing since there is a new project to build.
Business planning does not make one's heart quiver with excitement. Since, we don't have a project to build, it becomes a very abstract, dull exercise. Hence, we have to sit quietly and think through the details of our new business.
Construction people are visually attuned. They love to see physical progress. A business plan is mostly an invisible thing. It is emotionally hard for a contractor to put one together.
Continue reading "Business Planning for Contractors"
Posted by Matt Stevens at 6:55 AM | Comments (1) | TrackBack (0)
Excel Template for Project ROI in Construction
This tool can be used to evaluate the true return on investment of a job or jobs. It takes into consideration the length of the job, the time it is estimated to get paid on the job, the accounts payable commitment (in days), Labor costs, cash to cash cycle, etc.
Financial return on a project is one of the key criteria.
Other criteria are situational factors, which can be just as important.
Over a year’s time, keeping out of a bad job(s) is the difference between a good year and an average one.
Rule of thumb – takes 4 average profit projects to break even on the bad job.
Most contractors will bid all projects available and they should. The question is which should they spend time following up and selling?
Template uses contractor inputted amounts:
The estimated labor cost
The estimated material cost
Supplier’s dating
Owner’s payment cycle
Working capital
Template calculates
Working capital coverage
Net Investment
Daily rates of investment
Job payback period
nput needed for
Cost of money – we are assuming that you are not overextending past your working capital limits.
Continue reading "Excel Template for Project ROI in Construction"
Posted by Matt Stevens at 4:25 PM | Comments (0)
Construction Retention
The concept of retention has been around since the dawn of time. The Epyptians and the Mayans probably used this business practice. It was successful - their projects were built and are still wonders of the world. However, we guess that there might be a few people still waiting on the final release of retention.
Retention, by definition, is paid sometime after a construction project is completed. The early subcontractors according to phase of the project use more credit facilities such long term debt to fund the wait for retention.. The earlier you are on the construction job site, the longer you wait and the less cash on hand you have. This causes larger borrowing.
Given that predicament, the chart below shows the effect this has on common trades. These statistics indicate different treatment of different trades. The bank’s (or other lender) attitude does change some depending on the type of contractor they are working with.
It should come as no surprise that specialty contractors who work in the (typically) early stages of a project carry (and are allowed) more long term debt. Especially, civil and structural contractors who pay large material and equipment costs at full invoice and then wait for the Owner to release their retention after other later phases have been completed. They wait in line with everyone else only longer in total duration.
Continue reading "Construction Retention"
Posted by Matt Stevens at 10:33 PM | Comments (0) | TrackBack (0)
Managing Construction Meetings
There is an old construction saying that states "meetings will continue until productivty increases". We know and have lived by this saying. Meetings can be time wasters. However, done correctly and with discipline, meetings are the only way to gather and disperse information between two or more persons. Additionally, they force people to give non-verbal hints as to what they really think. In person, more is communicated than in an email.
Most construction people hate meetings. They would rather be building something than talking about it. This is a problem disguised as an opportunity for you. The opportunity is: being good about the time and subject discipline of meetings will make you more popular with others. Hence, your professional reputation will grow.
Meetings are important in the responsibilities of every manager and executive. Meetings are often the vehicles used to communicate information and make important decisions. Obviously, productive meetings are critical to a project‘s success. Poorly run meetings reflect on you and the company with regard to how organized the project seems to be and the degree of importance that is placed on it. As the primary facilitator, you are responsible for providing leadership and direction in the meeting. Below are some guidelines for running effective meetings:
Continue reading "Managing Construction Meetings"
Posted by Matt Stevens at 11:54 AM | Comments (1) | TrackBack (0)
The Practical Approach to Productivity Improvement
We and our staffs are working hard enough to produce quality projects at a profit. We are competing in a changing market place - sometimes fairly and sometimes unfairly.
Furthermore, we have sent our lazy employees (ex-employees) over to the competition. So, how can we improve? How can we make the same profits that we did years ago?
Working harder is not the answer. We are doing that and have the blood pressure to prove it. Working smarter is the only alternative.
Where do we start? How do we make our staffs start to think like we do. There is no easy answer, but there are particular directions you should take and certain milestones you should achieve along the way.
Continue reading "The Practical Approach to Productivity Improvement"
Posted by Matt Stevens at 7:55 PM | Comments (0) | TrackBack (0)
Are You Over Compensated?
Owners of construction companies do worry how much they can pay themselves in benefits, expenses and salary without unduly overcompensating themselves.
According to industry studies, Owners have averaged slightly less than 4% of revenue for their salary and bonus compensation in the last 20 years. This is considered normal. It is a starting benchmark for contractors to consider when determining their rate of pay and other compensation levels.
The highest paid principals as a percentage of revenue are:
1.Glass and Glazing – (highest)
2.Flooring
The lowest paid principals as a percentage of revenue. are:
1.General Contracting – Industrial Buildings (lowest)
2.Bridge Tunnel and Elevated Highway.
Note - total compensation of all principals as a group
The Internal Revenue Service is sensitive to the compensation issue. They especially focus on expense reimbursement.
Banks are vigilant about executive salary compensation in the loan department. They see a red flag if overall compensation is high while a loan is outstanding (or application is currently under review). A further alarm would be significant bonuses if job profits are low.
Bonding companies do look at compensation as well as other things. Since losses are difficult and costly to collect. Extra time is spent trying to stay ahead of financial trouble.
For the rest of the article, email us at mstevens@stevensci.com. with the title of the article. Limit 1 article per month
Continue reading "Are You Over Compensated?"
Posted by Matt Stevens at 3:53 PM | Comments (0) | TrackBack (0)
Most Contractors Don't Need a CPM Schedule, They Need a Coordination Process
Given that there is only one Contractor Ithe general contractor) on each job who creates, publishes, and controls the CPM schedule. All others (specialty contractors) are held to it.
The contracts are thicker and more daunting, written by increasingly smarter lawyers. Once signed there is little wiggle room.
Claims consultant are expensive. As a general rule, a serious claim is not worth pursuing if it is less than $500,000. Given that most claims don't make legal and financial sense to pursue, the large attention given to CPM scheduling by specialty contractors doesn't make sense.
What do specialty contractor need to pay attention to? The coordination for all their jobs. That is, once we committed to contract a job. The question is not if we are going to build the work but when.
Continue reading "Most Contractors Don't Need a CPM Schedule, They Need a Coordination Process"
Posted by Matt Stevens at 9:10 AM | Comments (0)
Managing a Construction Firm
Words to prosper by:
1. Know that time you spend “putting out fires” is not making progress toward your goals. Sadly, firefighters earn less than most other professions and suffer a higher stress level. Additionally, the injury rate is 100% in a given year. Make your people think proactively and you will have time to manage and lead your contracting firm.
Continue reading "Managing a Construction Firm"
Posted by Matt Stevens at 4:47 AM | Comments (1)
Construction Business Planning - Market
A healthy construction industry suggests that its members are fit. Construction health can be gauged by trends in key factors of the supply and demand for the industry’s products and services.
First, if the economy is growing then, construction should be growing. Construction worker employment should be increasing and unemployment should be declining. Housing starts and building permits should be rising at the front end with utility hookups and certificates of occupancy increasing at the backend.
These kinds of statistics, especially the construction payrolls, starts, permits, hookups and certificates of occupancy are monitored closely by and reported frequently in most state and local news media.
Counting potential competitors is literary as easy as downloading business licenses, reading the yellow pages or talking with the local contractor’s association(s)
Continue reading "Construction Business Planning - Market"
Posted by Matt Stevens at 1:25 AM | Comments (0) | TrackBack (0)
Getting on the Right Side of the Risk Curve in Contracting
Risk versus reward is a basic rule of business. It states that for every increased unit of risk, we should receive an extra unit of reward. Typically, it is a one to one ratio. Conversely, when we are take a minor risk then, we cannot expect a large reward.
The construction business is not a minor risk, it is a major one. In terms of percentage of business failures, it is the second riskest. We certainly should ask for a substantial reward for our efforts.
However, the risk curve in contracting is not similar to the general business risk-reward curve. This curve in construction contracting is perpendicular to the normal risk-reward curve.
First, let's define terms. Reward is financial (as opposed to personal). In contracting, financial results are determined by profit % and the cash to cash cycle. This is why it is perpendicular. Risk free projects have better margins and cash flow than risky projects.
Project risk is defined as any factor that causes your profit margin to shrink from the estimated amount. Business risk is any factor that decreases your budgeted profit for the year.
Some of us are on the less risk / high reward side. Some of us are the high risk / low reward side and some of us are in the middle. How do we position ourselves in the appropriate place? Where do we start?
Continue reading "Getting on the Right Side of the Risk Curve in Contracting"
Posted by Matt Stevens at 11:33 PM | Comments (0) | TrackBack (0)
Are You a Success in Construction?
We have studied success in construction over many years. Nightengale, Carnegie, Tracy, Ziegler and others have all written about it extensively, but we feel there is more to add to their work for the construction industry.
We know and have worked with hundreds of construction people. Our clients and their employees make for a small sample size considering that employment is somewhere above 7 million professionals. However, this data set is from over 30 states and dozens of market sectors.
Continue reading "Are You a Success in Construction?"
Posted by Matt Stevens at 3:31 AM | Comments (1) | TrackBack (0)
Pay for Current Performance, Not Past
How much we pay and the process of how we pay our people are equally important in getting superior performance. The formula for fixed and variable compensation in a company can make your staff act more like business people and less like employees.
The construction industry has traditionally paid management personnel a majority of compensation in salary and a minority in bonus. This should be a concern to most contractors.
Salary historically has risen with inflation or because of it. The reason isn't important. There are not many years when compensation hasn't increased. It is expected. If most of your payment to people is in the form of a monthly salary then, it must rise regardless of job or company performance.
It is not a given that fixed compensation has to increase every year. If your compensation plan is more variable then, there is less pressure for salaries to rise.
Bonus or incentive compensation makes employees think and act like owners. A welcome change for some contractors who have an uninspired staff.
Smart contractors know that it better to pay for current performance (bonus) than to pay for past performance (salary). Sports teams would do well to follow this advice.
Continue reading "Pay for Current Performance, Not Past"
Posted by Matt Stevens at 3:27 AM | Comments (0) | TrackBack (0)
The Developer as a Business Partner
Many contractors rely on development companies as a source of work. Most of it privately funded and outside of the some of the onerous red tape of public work. The projects are challenging in their custom nature. Additionally, we might enjoy a trusted advisor role with a private organization. It can be an outstanding market.
As in all business, there is no utopia. There is good and bad to all situations. We as contractors know that as well as anyone. Superior risk management is a relatively new skill contractors have had to acquire. Development companies like anyone else have certain risk factors.
Some (not a majority) developers target certain contractors to work with. They purposely seek the undercapitalized ones. This is for a specific reason. It is for greater control of the construction process.
You see, if there are problems on a project, a contractor who is under funded is more willing to work out the issues even if they are the fault of the developer.
Said another way, a substantial contractor poses a problem to some developers. They are unafraid to pursue change orders and even arbitration if there are problems not of their own making on a project.
Continue reading "The Developer as a Business Partner"
Posted by Matt Stevens at 11:50 AM | Comments (0)
The Construction Books You Read
The type of contractor you become in 5 years depends on the people you work with and the books you read. Work with low cost producers who deliver high value and you will build wealth. Conversely, if you engage with people who are not, then you will probably be another type of contractor.
McGraw Hill's new book, Managing a Construction Firm on Just 24 Hours a Day is one of the books to read. Its insights come from the best of the industry i.e. how to get work, how to build work and how to keep financial track of it all in an efficient manner.
See the link to McGraw-Hill's site featuing this book below.
http://doi.contentdirections.com/mr/mgh.jsp?doi=10.1036/0071479155
Take our Free Sample E-learning course for construction. Go to constructioncbt.com
Posted by Matt Stevens at 12:59 PM | Comments (0)
The Profit Attitude in Construction
Why is it that when you walk into some construction firms, there seems to be a buzz and an energy while others there are not. Some projects have a positive atmosphere while others have a negative one.
You don't have to look at their profit and loss or balance sheet to know that the above average firms have a certain attitude and while others less than average have a different one.
What is this attitude and why does it exist? To answer, please first agree that no one is consistently lucky. Conversely, the world is not out to get a company or person. In the long term, the market rewards and punishes based on merit. If you believe as I do, we have something to share with you.
We know that there is a simple causal effect at work in humans. It is absolute and does not vary.
Thoughts lead to Emotions lead to Attitudes lead to Behaviors
Humans learn their attitude from their environment. Be it a culture, a traumatic event, a social circle, a generation etc. Genetics have nothing to do with attitude. We believe attitude is acquired.
Think about this:
Newly born (fill in a race / nationality) of people are no more likely to be happy than any other (fill in a race / nationality) of infants. (substitute “happy” for conscientious or thoughtful or timely or honest)
Attitudes drive our actions or behaviors. As a simple example, if some young people are extremely ambitious. All they think about is status, money and title. Their attitude is about how to acquire those things. They buy trendy cars., fashionable clothes and go to popular places. They talk and listen for the latest opportunity. Much to the dismay of their spouses, they seek certain things and behave to acquire them.
Continue reading "The Profit Attitude in Construction"
Posted by Matt Stevens at 12:08 PM | Comments (0)
The "F" Words in Managing a Construction Firm - Podcast
Hear the beginning of our article.
Email us at clientservices@stevensci.com for the rest of the article - limit one per month - and we will send it within three working days.
Order our book published by McGraw - Hill, Managing a Construction Firm on Just 24 Hours a Day by going to stevensci.com
Continue reading "The "F" Words in Managing a Construction Firm - Podcast"
Posted by Matt Stevens at 1:27 PM | Comments (0)
We Choose Our Risk Curve
Contractors are on a risk - reward curve that is much different than the general business one. (see our “Get on the Right Side of the Risk-Reward Curve”). There is little similarity of construction to most businesses. Due to its nature, its risk - reward defies some precepts that most other business people hold as fact.
Our business is:
1) Craft driven - it cannot be replicated by machine, only man. Craftsmen are hard to find and are our only means of production.
2) Variable Cost driven (not fixed cost) - we have to make a specific % of profit with little exception on each job.
3) Treated as a commodity - strangely, even though our business lives and dies on the quality of craftsmanship, the customer assumes craftsmanship is constant. Therefore, they focus on price.
4) Natural conflict - people expect a minimal price for above average quality. Add to that time pressure and safety along with uncontrollable weather, Thus, the inexperienced end use is unhappy.
5) No road test - Product samples are non-existent. People don't understand what the final product will look like.
6) High expectations - The earthmoving and structural work gets naive end-users excited and the detail work afterward makes them frustrated.
7) All projects are custom - Even though the project may a cookie cutter it still is on a different site and at a different time. You cannot be at two places at same time hence custom.
These are risk factors that cause us financial harm or reward. Remarkably, the choices we make determine the risk we take.
Continue reading "We Choose Our Risk Curve"
Posted by Matt Stevens at 8:09 PM | Comments (0)
Applying the DISC Personality Profile to Construction
The DISC Personality Profile is an efficient way to uncover people's general perceptions of how they see the construction workplace. DISC is a proven and accepted means to find out more about a person's emotional makeup.
Very important when you are dealing with the high pressure environment of construction. We are veteran users and have seen this tool keep people effectively working together.
We feel strongly that everyone in construction wants to do a great job. It is how they do it that can cause conflict, loss of opportunity and failure when working with others.
Continue reading "Applying the DISC Personality Profile to Construction"
Posted by Matt Stevens at 11:00 AM | Comments (0)
Project Executive Letter of Instruction
Formally or informally, contractors must have answers to most project questions by the time of mobilization. They certainly have to have this information by the time the project close, otherwise the job will conclude slower and retention will be delayed. Not a great prospect for anyone.
The above average contractor aggressively pursues project issues and facts early and often. The project executive letter of instruction is a formal process to gather this information in one document and communicate it to the contractor's project team.
Specialty contractors as well as general contractors can use this methodology. The advantage is that it forces discipline and communication within your project staff.
We have a fully customizable template with MS Excel formulas that is offered as part of our Templates package (60 in all) at
http://stevensci.com/Merchant2/merchant.mvc?Screen=CTGY&Store_Code=SCII&Category_Code=MSEXL60
This form takes hours of trouble and hassle over the life of a project. We include Application for Payment, RFI, Change Order and the like.
Continue reading "Project Executive Letter of Instruction"
Posted by Matt Stevens at 3:18 PM | Comments (0)
Construction Contracting is a Variable Cost Business
Construction Contracting is a variable cost business. We are one of the few industries that have such a cost structure. Many other businesses have a fixed cost basis. The determining factor to classify a business is to look at the % of fixed cost (cost that won't change when a sale is made) and variable cost (cost caused by a sale) of the business. Add these two percentages together, subtract from 100% and what remains is profit.
To define our terms:
Over 50% fixed costs - we consider this a fixed cost business such as airlines, computer software manufacturers, restaurants just to name a few. They have to drive volume to make the economics work. To pay their fixed cost every month, they must have a certain volume.
Under 50% fixed costs - we consider this a variable cost business. As a side note, many service businesses are considered in this category. This means that the most of the cost of the product or service is caused by the sale.
Once a company covers its fixed costs or “nut” ,then the company enjoys greater profits. They grow both as a percentage and total dollars.
Continue reading "Construction Contracting is a Variable Cost Business"
Posted by Matt Stevens at 5:55 AM | Comments (0) | TrackBack (0)
Compensation
“How much should we pay our employees?”. An emotional question whether you are an employer or the employee. As an example, any tenured contractor has gone at least once without a paycheck. This while risking his financial future managing his construction firm.
No man is an island and no man is all powerful. We need employees to build work. People are a neccesary ingredient to construction. However, seldom do contractors see the kind of effort that they, themselves have given. It is easy to be frustrated with anyone on a guaranteed salary. Just ask a sports team owner.
Employees on the other hand are never satisfied with their pay package. Seldom are they justly compensated, their opinion, and thus, feel as if the owner doesn't realize their full value.
Compensation is a age old question that has been answered by local customs, current markets and in the last twenty years, accurate salary surveys. Thus, the question of the amount of pay has been answered. There is little mystery as to what the range is.
Continue reading "Compensation"
Posted by Matt Stevens at 4:05 AM | Comments (0) | TrackBack (0)
Independent Contractor vs. Employee In Construction
Do you have independent contractors working for you who are actually employees? As most construction firms know, this is a huge danger. If determined, you are liable for state and federal employment labor burden or taxes. Additionally, you will be required to pay the worker's compensation of that employee(s) for the period of time in the determination. Your firm might be liable for months or even years of payroll. This is not something to ignore. To do so, is perilous to your contracting business.
"Independent Contractor" is what most construction subcontractors are however, there is some confusion about what attributes determine one.
To decide if one or more of your subcontractors is actually an employee, you will have to use a multi-part test. No one answer conclusively determines the status of a relationship as a contractor or employee.
Understand that this is a substitute for legal advice. Our purpose here is to alert you of a potential, major problem.
The general rules are two:
1) Not subject to the will or the control of the employer
2) The employer does not control the method of construction installation.
Continue reading "Independent Contractor vs. Employee In Construction"
Posted by Matt Stevens at 3:41 AM | Comments (0) | TrackBack (0)