Broken Buildings, Busted Budgets

May 24, 2008

  

"Imagine an automobile assembly line where each step along the line is undertaken by a different company with its own financial interest and separate labor union!"

 Moshe Safdie, internationally renowned architect

Broken Buildings, Busted Budgets - How To Fix America's Trillion-Dollar Construction Industry By Barry B. Lepatner

I can't think of a more valid description of the way a typical construction project goes together than the one described above.  Anyone who has spent more than a few weeks in the construction trades has plainly seen this dysfunction but because it seems to be everywhere in the industry we tend to just say...

"It is what it is..."

...and move on with building the project. 

Is this really the only way?  This book goes a long ways into studying the problem and providing some real-world solutions.  It is a must-read for anyone in the industry from crew-leader to executive to project owner. 

Making this book a mandatory read for the submittal process would go a long ways towards helping fix some of the problems we experience on projects! 

Broken Building, Busted Budgets - By:  Barry LePatner

  

More Information About Barry LePatner

 

Barry B. LePatner & Associates LLP
600 Lexington Avenue, 21st Floor
New York, NY 10022

Tel: 212-935-4400
Fax: 212-935-4404
E-mail: mail@lepatner.com

 

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Estimating Cost Data

December 01, 2007

Having some good standard references when it comes to cost data will help you develop and evaluate estimates, conceptual budgets and change orders. Every construction professional should have a set of these books that are relevant to their discipline.

RS Means just released their 2008 cost data books:

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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"

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Which Project To Bid?

January 01, 2007

I just got a chance to start reading Matt Stevens' new book "Managing a Construction Firm on just 24 Hours a Day" and it is full of great advice.

It's impossible to point out all the good details - you simply need to buy the book! One thing to make note of is the section on calculating ROI on a project starting on page 117. Too many contractors are more technically than financially savvy and that leads to problems including failure.

Revenue and gross profit are HORRIBLE financial measures yet they are the numbers people talk about the most. They are the numbers most easily measured in accounting systems. They are the easiest to understand.

Taking a good look at a project from an ROI perspective is considerably different.

I'm a huge advocate of looking at ROI (Return on Investment), ROA (Return on Assets) if you are an equipment intensive contractor and rewarding project managers on cash flow. These are a little more difficult to measure and teach people how to use but the rewards are worth it.

Using Matt's example of calculating projected ROI before you bid and knowing how much working capital the project will take can help you make the best use of your money. Focusing just on revenue or gross profit can and has put many contractors out of business.

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