39 Years of Learning the Hard Way. Mark A Etrheim, Mastercraft Homes Inc

Transcription

1

2 39 Years of Learning the Hard Way Mark A Etrheim, Mastercraft Homes Inc

3 Clear and compelling marketing Finding good customers Well designed homes Accurate estimating system Best carpenters to frame Highly productive trim carpenters Great system to keep the jobs organized Competitive and reliable trades contractors Accurate accounting system

4 1. Finding good customers 2. Accurate estimating system 3. Accurate accounting system 4. Competitive and reliable trades contractors 5. Great system to keep the jobs organized Clear and compelling marketing Well designed homes Best carpenters to frame Highly productive trim carpenters HAPPY CUSTOMERS MAKE YOU MORE MONEY!

5 Sales- Find good customers! You must be able to tell a compelling story and be able to convey you are worthy of being trusted with the customer s largest investment. Estimator- This either is right, too high to get the job or even worse- too low, you get the job and pay your customer to work! This must be accomplished with accuracy.

6 Accountant- If you don t understand accounting you will have a difficult time in any business, but in building you must be able to estimate the price and then compare that estimate with what it actually costs. How do you figure your indirect costs (Overhead)? Purchasing agent- Ordering the right thing at the right time from the right vendor for the right price Scheduling- Putting the right resources in the right place at the right time Architect- You need to know how to interpret drawings and plans into reality Marketing- You need to tell the world how good you are! Clear and consistent message. What makes you unique?

7 Designer- Most customers will look to you for guidance in making the many decisions involved in building a home Engineer- You need to understand how a building works including structural, HVAC, Plumbing, Electrical, concrete, glazings, etc Employer- Employees are your greatest asset, but can be a source of great difficulty if you are not fair or lack the ability to keep them productive.

8 Safety Coordinator- Do it right, do it safely, a single injury can cost you your business if you are at fault. Figure out the OSHA rules that apply and then comply with them. Lawyer- Pay one to get a good contract or use the WBA one. It must meet the letter of the law, file your lien notices on time, write clear change orders, get your licenses, insurance, get your Employer ID number, workman s compensation, liability insurance, unemployment insurance, sales tax certificate, etc.

9 1) Square Footage- This can work but it needs to be broken down into separate categories 2) Unit costs, or Assemblies- Square Footage (SF) of Floor deck by type, Lineal Foot (LF) of exterior wall by type, Interior wall LF, SF of Roof by type, Cubic footage of dirt to be moved, etc 3) Detail- Here the goal is to predict or bid each invoice so you can make a direct comparison between estimate and actual

10 Square Footage estimating is adequate for getting the customer in the right price range, if it is broken down into multiple categories. Main Floor Upper Floor Basement level Garage Porches & Decks Interior- Fireplace, Whirlpool, ceilings, etc Site work- driveway, well, septic, trees, etc.. Worksheet Review

11 Guestimate based on Square Footages

12 Start just as you would build the structure Plans, permits, lot prep, dig, foundation, waterproofing, drain tile, back fill, lower level walls & beams, Sill plates and Floor deck, exterior walls, interior walls, roof, shingles, etc Look at past costs by categories and calculate the assembly cost by SF, LF, or unit Look at each cost and see if you can figure out a way to calculate the next jobs cost based on those numbers.

13

14 Do a complete material take off and get bids for every aspect of the project. Tree removal, permits, excavation, foundation, framing lumber, labor, plumbing, heating, electrical, insulation, drywall, painting, trim and doors, cabinets and tops, trim labor, flooring, cleaning, landscaping, contingencies, etc.. Use a spreadsheet to tally up the costs, include your overhead and your profit. This could be used to do your job costing as well. Hybrid system works well for us

15

16 Easy to buy, takes a lot of time to implement Make sure it is reasonably close to the way you think about how to do an estimate, other wise you are going to have to relearn what you already know. The real cost is in the time to set it up 184 different software companies in a google search IntelliBid, PreBuildML, B2W Estimate, Qucik Bid, the Edge, Stack, Estimator, Clear Estimates, etc

17 Incomplete plans and specifications No Site visit Interruptions while doing the estimate No system, checklists No Scope of work for the Trade Contractors Mistakes in the plans are not caught Unaware of local special requirements Don t know the customer well Not Double checking the work, math errors Failure to state clearly what is not included Compare actual against estimate

18 Understand how to Calculate Square footage Lineal footages Roof slopes Cubic footages Let Excel Spreadsheets do the math for you Use tools built for the purpose like the 6135 Scale Master PRO XE Buy basic Construction Calculator Calculated Industries Project Calc Plux Mx 8526

19 ESTIMATING accurately is as critical for a Change order as it is for the original bid. What is changing, how much it will cost, how much longer it will take. Include the date it must be signed by for the price to be valid. Be specific and clear as possible. Don t forget all the secondary effects the change will make. Get it signed before you do the work or don t do the work! NO EXCUSES. No verbal changes. s work great but remember all of the details above. When they return the with a go ahead, print it out and put it in the job folder. Adjust your Budget in QBP to reflect the increase in costs. Charge for them, most of the mistakes on a construction job is a result of not remembering everything the change will affect. Mistakes are where you will lose money.

20 Change Order Pricing 1. Cost of materials 2. Cost of Labor 3. Cost to schedule- adds to completion time 4. Your time in estimating 5. Your time to implement the change on the fly 6. Overhead 7. Profit

21 Basic Square Footage Spreadsheet Good for Guestimates only, Quick and easy Unit cost/assemblies pricing Good if lots of data behind numbers, takes a lot of preparation time, but fast at the time of estimating Detail bid Best way but takes a lot of time and is time the customer is waiting. Not much control over how fast you can get the price together.

22 Add up everything that you send money on to keep your company operating that cannot be job costed directly to an individual job. That includes a reasonable salary for your self and anyone who works in the business for you. Then take that number and divide by your total revenue for the year. Do that for at least 3 past years. Then look at each year and create a prediction of what this years overhead expenses are going to be and then add onto the estimate your prediction of Overhead costs for that job. If you spent $300,000 and your revenue was $3,000,000, then your overhead was 10%. Any changes this year? Make the change and divide the total of the estimate by.90, do not multiple by 1.10

23 If you want a 5% profit when the job is complete, you cannot just add it all up and multiply by 1.05, you need to divide by.95 JOB COSTING Now what do we do with all of this pricing? Put the numbers into a summary spreadsheet then compare what you estimated with what really happened. Cost codes work good for this, develop the ones that make sense to you. Then compare, what did you get right, what did you miss? Fix your next estimate with the new information, then do it all over again. Pay attention to the odd one offs and add them to your spreadsheet so you see them and be reminded of them and add them as needed!

24 Cost codes example

25 Develop Systems, forms, standardize as many things as you can. As you grow you want consistent quality. Forgetting is expensive! Assign primary responsibility for each aspect of the job to someone. Checklist for talking with Customers, good and bad Professional services agreements for preliminary work Checklist for complete plans Checklist for Complete Estimates Checklist for a complete Permit applications Selection check List with final commitment dates Construction schedule w Field reports Purchase order forms? Warranty request forms The goal is to create a smooth running company that creates consistent profits, happy employees and trade partners, and Satisfied Customers without losing your hair. Spend less than you make and you will be successful.

26 Build Your Home With Confidence

27 Get organized, tell your customer the good and bad of what is going to happen during their home building experience with you Document what you are going to do for them and make sure they understand what that includes and does not include. Keep them on budget by finding out what they are expecting and pricing it right. Give them what you promised. Take care of the problems

28 Contact Info: Mark Etrheim, M