It’s been almost two years since I’ve seen any sign of normal construction around my home town. Over the last few weeks, I’ve seen a handful of sites being cleared, pads being prepared, steel going up.
Finally.
Non-residential construction was off by 43% in 2011 in my home town of Kansas City. Total construction spending in 2010 had held fairly well by contract value due to a large federal contract that had been budgeted prior to the 2009 downturn. We also had several highway projects that were continuing to roll along as they were funded as multi-year projects.
What that means is the health of the construction economy was somewhat misleading. Driving around town was a much better indicator of the implosion of work. Several sites were laying dormant after their initial site work had been completed.
Finally, signs of regular commercial construction have begun to spring up. Let’s hope this is the beginning of a long uptrend.
You’ve just gotta love those insurance companies. A few years ago a hail storm blew through my neighborhood. Most of the houses received new roofs. My insurance company told me mine was fine. Well, not really fine. It wasn’t damaged enough to qualify for much repair. However, bless their sweet hearts, they did decide I would need to replace it by the beginning of this year or they were going to drop my coverage.
That set off a round of meeting roofers, checking them out, selecting one, and working with him to arrive at the right choice of shingles. The company did an amazing job. Sent out two large crews and knocked out my house in a touch over one day.
The crew was very well organized, took the roof off in a manner that avoided any damage to our gutters and landscaping. And that brings me to my point. The owner who sold the job, was great at explaining all the roof’s features, etc. What he didn’t mention, or at least stress, were the items my wife and I were most concerned about such as the yard, landscaping, and speed of installation. Frankly, we wouldn’t let any contractor work on the house if we weren’t convinced they knew how to install the roof properly to avoid water damage over the long haul.
Guy and I see this sales behavior frequently. Salesmen not being in touch with their client’s true concerns and priorities. If you want to close more sales at higher margins, figure out what fears rattle your customers the most and explain how you are going to prevent those issues from arising. It is a sure fire formula for sales success.
The United States Commercial Trade Contractors Association’s doors are officially open!
The site can be seen at www.USCTA.com. Let us know what you think.
With it’s unveiling, we are laying our cards on the table. We have always been aligned with commercial trade (sub) contractors. We’ve always written that developers, building owners, and general contractors stack the deck against them.
The association has one simpler mission: Teach trade contractors how to take control of their future by building strong businesses.
Only through the creation of strong businesses can trade contractors free themselves from being at the mercy of general contractors and building owners. Only by creating cost advantage via efficiently run field crews, by conservative financial management, and by superior sales and marketing systems can a trade contractor position himself to work exclusively for good, fair clients.
We’ve already been accused by more than one general contractor of drawing the line in the sand. We didn’t draw the line. The hundreds of general contractors who hold money, refuse to pay fair prices for change orders, and fail to run their job sites efficiently drew the line the sand. We’re just the messengers.
We know not all general contractors are a problem. I can name several that are professionally run and treat their subcontractors fairly. These are not the ones who spoil the pond. It’s the others who are the problem.
Unfortunately, their impact is far reaching. An association was needed to help offset that impact.
Finding skilled, creative, affordable web designers borders on the impossible.
We’ve been searching for a graphic designer who could create a couple of dozen minor images for our website. The design needed to be consistent with the color scheme of our new logo and banner. Most of the images were identical except for text.
My normal, incredibly talented and fun, designer was swamped remodeling her house and couldn’t get to us any time soon. So we had to branch out and find a substitute designer. Who would of thought it would take us three months to find one that was (1) qualified (2) available and (3) interested. We’ve got our fingers crossed he will work out well for us.
We will not bore you with the dozens of stories we’ve heard from contractors who have ended up being held hostage by their web programmer. Suffice it to say it happens more often than not. So if you have been suffering these types of problems, don’t feel like you’re special. You a member of a very, very large group.
We’re pleased to announce that the discussion board on our membership site is now active.
Members can introduce themselves, ask questions, seek opinions, and compare notes. We have created sections for each major business function to keep conversations focused and organized. The board contains all the usual discussion board features with one notable exception: in this case only contractors committed to growing their business will be posting. That’s quite a change from most discussion boards.
If you’ve ever ventured over to a free discussion board, you’ve probably noticed the discussions often devolve into petty little cat fights. We will not allow that to happen on the club’s board.
Guy and I will be monitoring everything and clarifying suggestions that we believe violate sound business practice. That feature is missing from most forum dialogues.
Maintenance Bonds are another key cog in the world of Contract Bonds.
They’re also an essential, typically mandatory method of risk management for project owners, municipalities and others.
How They Work
These surety bonds come into play upon the completion of a construction project or some other job requiring legitimate bonding. Maintenance Bonds guarantee that the work performed is up to code, follows the contract and is otherwise without defect or problem. These bonds generally provide protection for project owners against design defects, workmanship faults and other problems that can occur during the construction term.
Project owners, governmental authorities and others with a financial stake can file a claim against the Maintenance Bond in the unlikely event that there’s a problem. At that point, the company that issued the surety bond is responsible for ensuring the issues are corrected or the parties are financially compensated.
A Short-Term Solution
Project owners need to remember that a maintenance bond is a short-term solution. They are only effective for a limited time to cover any problems that may stem from faulty work. Once they expire, any problems or defects are the responsibility of the owner. These are not a substitute for insurance or some other type of property or site maintenance plan.
How to get a Maintenance Bond
Getting a maintenance bond is very similar to getting a bid bond. In case you missed that post here’s a little refresher.
It very is beneficial to find a agent who specializes in construction bonds as they will be able to help streamline the process for you. You will also be expected to give the same information required of bid bonds, including the application, owner’s resume, business financial statements, and the owner’s personal financial statements. The contractor will also have to sign an indemnity agreement so the surety won’t have to worry about financial loss, so any claims from the bond will eventually be repaid by the contractor.
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The contract bonds series is courtesy of SuretyBonds.com, a nationwide surety bond agency.
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Kevin Kaiser is a principal with Surety Bonds.com, a nationwide surety bond agency. Please visit surety bonds to learn more about contract bonds or request a quote.
The last few weeks I’ve been cramming for the LEED Commercial Interiors AP exam. It’s a bear of material to memorize. It’s also turning out to be information well worth knowing.
Rest assured, over the next few years green building construction as defined by the LEED certification process is going to be a Tsunami of change crashing upon the construction industry.
A huge chunk of public work is going to require LEED construction techniques. I’ve been hearing rumors about pressure being applied to Fortune 500 companies who receive government contracts. Don’t be surprised if several of the techniques work their way into building codes.
No trade is going to be left untouched. My former trade is one that is suffering some of the most dramatic impact.
Prior to jumping sides, I was a consulting mechanical engineer who designed, commmissioned, and retro-commissioned many a mechanical system. I often went into the field to take performance data on existing sytems, designed retro-fits, verified system start-up, tested control systems, and tuned control loops. Many of the services our select manufacturing clients valued – and no commercial clients ever were willing to pay for – are now being required by LEED.
To say that I am shocked and delighted would be a grand understatement. The positive impact on mechanical engineers, mechanical contractors, test and balance contractors, and operations and maintenance staffs is almost mind-boggling. Finally, buildings and their occupants will receive mechanical systems that operate as they should to maintain comfort and health with minimal energy consumption.
Your trade will be touched. Bank on it.
Your costs will rise as productivity drops, materials cost more. material handing consumes more time and the volume of paperwork sky rockets.
My recommendation is:
1. Learn the LEED requirements that apply to you.
2. Take on a couple of small LEED projects to get a feel for the change in job costs.
3. Build your strategy to take advantage of competitors who fail to respond to the rapidly changing landscape.
While visiting with a contractor the other day, he mentioned sharing one of our recommendations for improving field performance to a friend and fellow contractor.
His friend shook his head and replied “I would never do that. Share the budgeted time with the crews? I’d never do that. If they realize they’re moving faster than the allowed time, they’ll slow down. I want them working as hard as they can.”
Wow.
I had forgotten how common that belief was among owners and project managers.
These people simply do not understand human behavior. A worker is FAR more likely to miss a deadline or budget because he was left in the dark than he is to dial it back when he’s ahead of the budget.
Heck, which hurts worse? Hitting the budget when we MIGHT have beat it by 10% or running 10% over budget?
If you only take one piece of advice from Guy and I make it this:
Tell your employees EXACTLY
what their performance targets are.
That one action alone will reduce costs, improve on-time performance, increase customer satisfaction and – believe it or not – improve employee satisfaction.
Never, ever keep your employees in the dark about the outcomes you need them to deliver.
Moving our blog to www.ContractorsBusinessCoach.com is the first domino that had to fall in order for us to activate the new site under www.FilthyRichContractor.com.
We will leave the old blog posts up on FilthyRichContractor.com until we replace its content with the membership site platform.
If you have bookmarked specific pages on the other site, the content is exactly the same on this site so just go find the pages you bookmarked and re-tag them.
For future reference, this site will be used to market our contractor coaching services. www.FilthyRichContractor.com will be used to market and host our online how-to solutions, systems, tips, etc.
www.GrowConsulting.net will be used to market our non-contractor services such as keynote speaking, assistance for manufacturers and distributors, etc.
Well, gotta run. Back to setting up the new content site.
In a future newsletter we are going to address three phases of business. Every day tasks, crisis management and strategy. You probably spend most of your time on the first two. Don’t neglect strategy! It is the important road map of where you want your business to be in the future. It is often underrated. Just ask contractors who have plans for good times and not so good times.
We are interested in hearing from all of you contractors out in there in cyber world about how you use strategy to create advantages in your marketplace. What works best for you? How do you monitor and revise your strategic direction? Share some success stories.
For those of you who have not really done much planning we’d like to hear from you too. Why haven’t you created a strategic plan? What would you need help with if you decided to create one? Let us know so we can help you!
Don’t hold back!!! I expect a lot of feed back over the next few weeks. Let’s hear from everyone!
Blog posts are published by Guy Gruenberg and Ron Roberts, co-founders of the Contractor's Business Coach coaching service and the United States Commercial Trade Contractors Association.
