Be Smart About Taxes

January 31, 2007

Irving Blackman is a partner in Blackman Kallick Bartelstein and specializes in estate and tax planning issues. He got my attention through a column he writes in Contractor Magazine. Right after he got my attention we had a great phone conversation and he is a wealth of knowledge.

Recently he put all his past columns (35 years worth) online at www.taxsecretsofthewealthy.com - definitely worth checking out.

Project Management Weaknesses

FMI's 2006 Project Management Survey ranked the top three skills lacking in Project Managers as:

1. Lack of proactive planning

2. Lack of effective communication

3. Weak financial / business acumen

Electrical Construction & Maintenance (EC&M) recently ran a short excerpt about the study and the full study is available through FMI by contacting Phil Warner at pwarner@fminet.com

Problem Solving Flowchart

January 30, 2007

Last week I was visiting a client that we have been working with to help streamline their project management processes. I guess my constant nagging about flowcharts and efficiency got to them because one of the PM's took me into his office and was very excited to show me their latest "flowchart" for a "very important process."

View in full-screen

Turns out it was a joke e-mail. I had seen it a long time ago but it is still very funny. Just had to share...

On a serious note, flowcharting of a process across all functions really can make a huge difference in the organization. Learn more about workflow improvement and process documentation for contractors.

Customer Service - Blocking & Tackling

Paul Cardis of NRS Corp writes a great article in the December 2006 edition of Professional Builder that focuses on customer service. His main point is that real data should be studied to find the true root cause of the problem before trying to implement a solution.

Data is hard to argue with and can be used to find and fix so many problems in a company, not just customer service issues. Our approach has always been about using data to highlight problems and then, once people recognize the problem and root cause fixing it is much, much easier.

Lasting Legacy - Shea Homes, Builder of the Year

January 29, 2007

There are a lot of lessons to be learned from looking at best practices at other companies both inside and outside the construction industry.

Shea Homes is the 2007 builder of the year and this article in Professional Builder magazine highlights some of the cultural and strategic things Shea has done to consistently grow for 125 years.

Take special note of the use of the Dashboard to rapidly display critical metrics from across the company. Any contractor can benefit from such systems and with today's accounting, project management, estimating and CRM systems all migrating towards common database backends these dashboards are relatively easy to create whether you are running on a combination of Excel and QuickBooks or larger enterprise systems such as Forefront, Timberline or Maxwell.

Best View So Far

January 28, 2007

Last week I was at the offices of Ralco Electric. They had a fantastic team and the view from their upstairs conference room is the best I've seen from a contractors office so far.

Revenue Cures Most Problems!

January 27, 2007

This was a quote from a long-term Wal*Mart executive and could not be more true for any business. I would only add a little to the quote:

"Quality, profitable revenue cures most problems."

Our focus as a company is about helping contractors improve operational processes, all of which can be cured if there is a steady stream of quality revenue coming into the company.

If a business lacks a good revenue generator then there is nothing operationally you can do to "fix" things.

This month in Contractor Magazine, Robert P. Mader brings us some great tips in his article "How to find weaknesses of sales candidates."

Why We Buy - Stretch Your Mind!

January 26, 2007

This book completely and thoroughly describes all the factors that cause people to buy (or not buy) in the retail environment.

What does this have to do with contractors?

Well, it's a stretch but not a big one. What you learn from the book is that there are not these "big swing" things that cause people to buy (or not). What it really comes down to is attention to detail. When to arrange things neatly. When to mess them up a little. When to provide just a little entertainment. When to provide just a little more room. How high on the shelf to place items.

Contracting is very similar. There are thousands of little interactions that a customer goes through each and every day that determine whether they will buy from you, how they feel about the purchase, will they "buy" the next change order, will they "buy" the next billing, etc.

Looking at it another way there are also just as many little transactions that determine productivity in the field which is where money is made (or lost) for contractors.

If you can see the relationship between gang box placement and productivty then you will gain a lot from this book. It will spark dozens of good ideas.

Seth Godin who I think is a great marketing mind and who has a lot to offer the contracting business also had great things to say about Paco Underhill and "Why We Buy"

Fantastic Construction Marketing Example!

January 14, 2007

There could not be a better example of how a contractor / developer used some of the great marketing ideas oulined by Seth Godin that this.

Learn how to sell a $140M project via web, e-mail and permission-based events!

Read the post for more details - it outlines 9 basic steps to success and could not be more clear.

Chris - thanks for putting this example out there and trying something new when it comes to marketing in the construction industry.

Seth - thanks for being such a great influence and putting these ideas out there.

I was hooked since I read the book Idea Virus which was followed by Permission Marketing. Both of these books can generate a ton of ideas about how a contractor can utilize the web, e-mail and standard marketing means to create a cohesive marketing package that delivers results.

When I look at most contractor web pages all they have are pictures of their projects and some relatively boring text. They are not taking full advantage of what the web can offer for their businesses. It is about educating people, building relationships and interacting with them in a way that helps drive them to buy.

What if you were a service contractor and started putting a series of how-to articles on your website? What if you started really using it to educate your potential customers about their plumbing, HVAC, electrical or home maintenance? What if you had a sign-up for a newsletter with each article where they could get additional information? What if this additional information was geared to educate them, not just glossy sales material?

The first thing I hear when talking about something like this:

"That will just attract people who want to suck information from me and then go to Home Depot and do it themselves!"

Yes, this is true for a percentage of the people but, what if this whole process were automated so that whether there were 10 people or 10,000 looking at your site it didn't matter to you?

That is the advantage of the web and e-mail. The cost of distribution is near zero after the content is created. With this in mind you are better off using your website as a central place where people can learn about your services. Your website should position your company as an expert and whether the person uses your services or goes the DIY route they will still remember where they got the information from.

Now, picture that DIY person who installed their own ceiling fan last year thanks to the information on your website. Now they have been getting your newsletter with electrical tips each month including safety tips, enhancing home value with outdoor lighting and highlighting pictures with low-voltages spot lights.

They decide they want to do some of these things but they will need a new service panel - now you get a call from a customer who already loves your company. This minimizes haggling over price or even needing to sell them on your company.

Again, if your website looks like your company brochure then you need are missing out on huge opportunities!

Why Employees Are Sick

January 13, 2007

CCH recently conducted a study showing the growing problem of people calling in sick when they really aren't and the reverse of the problem - presenteeism - where people come to work when they are actually sick and their production suffers.

If you are involved in HR or manpower management in any way this is a quick survey that will give you some insight that can be helpful.

For more information see http://www.cch.com/absenteeism2006/

Do The Math!

January 11, 2007

Just do the math - why is this so hard for people to understand?

Quality Digest magazine has a regular column called "Do The Math" and in December they make some great points about how widespread the mis-use of numbers and statistics really are.

The problem is that most people do not ever take the time to do some simple, back-of-the-napkin math to determine if what someone is saying is BS or not!

When someone can not read we have a word for it and talk widely about it as being a problem - why don't we feel the same way about the problem of Innumeracy (when people can't do basic math!) John Allen Paulos makes some great points in this book.

So, what does this have to do with construction?

Well, if you are asking this question then you should definitely go out and buy this book and read it 3-4 times!

Most contractors place large bets on assumptions (estimates) about how long it will take a field crew to build something.

Huge losses occur when these assumptions are wrong and often this is not known until the job is mostly complete and the PM realizes the job has used 120% of the man hours and still has another 2 months to go!

On the other hand huge, windfall profits are often realized when the field crew sees a different way of building the project that results in a substantially lower cost.

If field foremen, superintendents and crew leaders all understood the math of production a little better they would be able to "Do the Math" prior to starting work and during the process to see if their assumptions were really correct.

Is it really cheaper to consolidate homeruns?

How much cheaper?

Are we installing pipe at the same cost as what was in the estimate?

Are we better off working overtime to finish this phase today or to come back tomorrow?

We've been digging for 2 hours - what is our cost per foot and how does it compare to the estimate?

What if we added a full-time material handler to the crew?

Sometimes these questsions are not asked at all. Other times these questions are answered by "Experience and Gut" which may or may not be correct. These questions can all be answered simply by "Doing The Math" which is what the best performers do.

When you are planning your construction jobs focus on teaching your team how to do the math and ask the right questions rather than just giving them some minimum production level or worse yet, just telling them to work as fast as they can. We focus heavily on teaching people to think about production during our Project Pre-Planning facilitation. This approach starts slower but eventually builds a project team and company that is virtually immune to losing money.

Yellow Pages Advertising

January 10, 2007

Adams Hudson writes another good column for Contractor Magazine regarding the use of Yellow Pages advertising. The response rate for advertising is not driven by size of the ad alone. If you are planning to spend a few thousand dollars on the ad then you may want to think about shifting more of the budget to design.

A well-designed, well-targeted marketing piece will produce the best ROI for your marketing dollars. Spending money on size and quantity will not always translate into revenue dollars.

Read more at - Change your Yellow Pages ad and Budget. Visit Adams' website at www.hudsonink.com for more articles on marketing for contractors. Remember that if you boost your service business it will help protect you from the volitility of the project market. It is better to have nickles trickling in from all over the city than it is to have a million dollars coming from a single source.

E-Mail Communications & Contractors

January 08, 2007

This is a very, very critical subject and you should read everything you can on it. You should be putting policies and procedures in place for dealing with electronic communications and making sure that you are legally in compliance with your contract.

Susan Linden McGreevy makes some excellent points on this issue in Contractor Magazine.

Herding Cats

January 06, 2007

The larger a team or company gets the more the job of leading feels like herding cats. This is an incredibly funny ad from EDS about technology but is just as applicable to anything else. Nothing too deep but anyone who manages people or projects for a living will laugh out loud at this!

Click the Play button below:

Link to Video

"One Night Brand"

Alain Thys does a great job of telling a funny story about the difference between how a customer perceives your company when you are selling to them versus when they are actually doing business with you.

Contractors will all find this story very funny - but probably hitting close to home. Does everyone in your company treat the customer the same way throughout the sales and installation process? When you are doing submittals is your project engineer treating them as if they are a proposal to a very important potential customer? When you are turning out a bill are you paying the same attention to detail and customer service that you did when you presented them the initial proposal?

E-Mail Marketing

Joe Dysart wrote a great article for Contractor Magazine that applies to any contractor who uses e-mail as part of their marketing campaign.

The article is titled "The Spam Filter Gauntlet" and is a must-read for anyone using or thinking of using e-mail.

FYI - if you are not using e-mail as part of your marketing campaign then you are missing out on a lot of opportunities.

Project Audits

January 05, 2007

While the article by Michael Stanleigh in Quality Digest magazine called Project Audits Work is geared towards keeping quality control projects on track it is just as applicable for a construction project.

The sad fact is that construction project managers have almost no controls in place other than the end result. This often creates situations where large losses occur before the company realizes it.

The truth is that simple audits throughout the project can minimize problems and maximize profits. Think about doing a simple audit checklist:

Is there a current punch list for the job that is of sufficient detail?

Is the RFI log current?

Are all change orders being priced and negotiated quickly?

Are the project files in the office, on the computer network and in the field in order?

Has the schedule been updated?

Are accounts receivable current?

What is the status of over/under billings?

When was the last projection done?

Create a simple checklist to audit your projects and randomly select 2-3 projects per week to audit. You will be amazed at how much better things are kept on track.

Classroom Training & The Construction Industry

As part of our consulting business we provide a lot of training classes because it is something the industry desperately needs.

There is some structured training during an apprenticeship but many people want to bypass even that level of classroom learning. Want to become a foreman, superintendent or PM? There is very little training and people are just thrown into it.

When we do provide training we often end up with low attendance levels and even end up cancelling classes sometimes. Why? People simply do not believe that they need to be proactive in learning - they believe that everything can be learned "Hands-On, On-The-Job" which is only partially true.

Georgian Lussier, an Industry Educator makes some great points in a recent article from Contractor Magazine called "We Don't Need No Stinkin' Books!"

The other thing I find amazing is the difference between contractors in how they view education. Some companies send their whole crew and others want to save a few pennies by only sending one person. What is the ROI on training? It's hard to pin a specific number but here's one example of training ROI that I just saw last week with one of our clients:

We did some Project Management training for one of our retainer clients who was on the Construction Company Development (CCD) program. Part of the training was on Change Order Negotiation. One of the PM's just told me that he was able to build a case for lost productivity into a change order and would have never even thought to do that before the training. Even if they settle for 50 cents on the dollar this one little tip will pay for this year's retainer fees plus some!

Great Marketing Idea For Service Contractors

January 04, 2007

I just saw an ad for NeighborMail which is a program offered by Armstrong Air for their dealers. It looks like what they do is send out a targeted direct mail piece for 20-30 houses immediately surrounding an installation you have already done.

This is geared towards HVAC and they manage the program for you but what if you tweaked it a little to use it for your own service business...

Imagine building a system so that everytime you did a service call or small project you logged into Sales Genie (www.salesgenie.com) or a similar database and got 20-30 contacts from neighboring businesses or homes.

Create a template mail-merge letter that includes a description of your services and highlights a project that you have just done, or are doing right in the neighborhood along with contact information to get an instant referral from your customer. Of course you would have to check with the customer for permission to use them as a referral but most customers will say yes.

This mailer goes out within 48 hours of you completing every job or service call. Many times people have a need to have work done and they are just procrastinating - just like many people would like to stop by and check in on a neighbor.

You can kill two birds with one stone - you are giving a neighbor a chance to stop by or call a friend and you are also getting your name in front of people.

Use a tagline on the outside of your envelope that says something like "Checkout The Project We Just Did For ______" or something along those lines.

I bet if you made this a habit after every service call or small project you would end up doubling your work in a matter of a couple years just by enhancing the word-of-mouth marketing that good service already generates.

You would then send out this letter to all the surrounding homes or businesses.

10 Ways to Motivate Your Employees

January 03, 2007

Jacki Bradbury-Guerrero gives us some great tips on how to motivate employees based on Maslow's Heirarchy of Needs theory.

Maslow's pyramid of needs is a great way to look at human motivations. I would suggest making a list of ALL programs and services your company offers from training to retirement to health benefits and see which one of the needs on the pyramid it meets.

Are there any gaps? As a company trying to compete with today's limited workforce those that provide programs to help employees at all levels of the pyramid will thrive because they will be the employers of choice.

What do you offer near the top of the pyramid?

Getting Paid - A Quick Financial Primer

January 02, 2007

There are some basic metrics that every contractor should look at and one of them is DSO - Days Sales Outstanding which is a good indicator of accounts receivable performance. Scott Smith does a good job of explaining this along with some good ways to improve cash flow in a recent article from Contracting Business magazine.

Get Paid Upon Delivery . . . A New Concept?

Quick Advice for Anyone Marketing on the Internet

January 01, 2007

Seth Godin put together a quick one-page list of things that can be done to help non-profit organizations market themselves on the internet.

This list is just as good for any contrator seeking to improve their internet marketing. We talk to a lot of contractors and most are still stuck thinking about the internet the same way they think about print advertising. The internet is a lot different and if you don't learn that you will just be wasting money and time on a "pretty" website.

This one-page summary gives you some places to start learning about the web.

Also see our conference summary on SEO (Search Engine Optomization) for more details.

Which Project To Bid?