The Construction Contractor's Digest

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.

]]> 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 link.

Matt Stevens is a management advisor who works only with construction contractors. He has been practicing since 1994. His new book, Managing a Construction Firm on Just 24 Hours a Day, is available from McGraw Hill and his firm's website. Stevens Construction Institute is located at www.stevensci.com. Matt may be reached at mstevens@stevensci.com.

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 new 400+ page book published by McGraw-Hill Inc. "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.

The book is available for immediate shipment. We do take international orders.

See our secure Miva / EarthLink / Card Services International E-Store: http://stevensci.com/Merchant2/merchant.mvc?Screen=SFNT&Store_Code=SCII

Look for our new book, "The New Business Model of Construction Contracting" in 2007..

Matt Stevens is a management advisor who works only with construction contractors. He has performed training and business advising for the contracting community since 1994. Matt can be reached at mstevens@stevensci.com.">mstevens@stevensci.com.

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100+ Ways to Cut Costs Out of Your Construction Firm

Email us at clientservices@stevensci.com for a listing of 100+ ways to cut costs out of your construction firm. We will send to you the list within 2 working days.

US Army Corps of Engineers Project Listing

Following is a listing of Civil Works projects to be funded by the American Recovery and Reinvestment Act of 2009.

The legislation, signed into law by President Barack Obama on February 17, appropriated $4.6 billion to the Corps for its Civil Works program. The $4.6 billion is distributed in the following program accounts:

Please send to us a note titled "USACofE" Project listing to clientservices@stevensci.com and you will recieve the list within three working days.

Ideas 6 - 10 of Top Ten Tips for 2010 for Fighting Unfair Competition

Numbers 6 -10 of Top Ten Tips for 2010.pdf Email us - clientservices@stevensci.com for the entire list of ideas 1 through 10. It is complimentary.

40+ Book Reviews of McGraw Hill's Book, "Managing a Construction Firm on Just 24 Hours a Day"

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.

The Stimulus is Here. Searchable Spreadsheet of 18,000 + Infrastructure Projects

Please send to us a note "18,000 Projects" to clientservices@stevensci.com and we will send to you the listing in Excel in three working days.

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%

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.

The book is available for immediate shipment. We do take international orders.

See our secure Miva / EarthLink / Card Services International E-Store: http://stevensci.com/Merchant2/merchant.mvc?Screen=SFNT&Store_Code=SCII

Look for our new book, "The New Business Model of Construction Contracting" in 2007..

Matt Stevens is a management advisor who works only with construction contractors. He has performed training and business consultation for the contracting community since 1994. Matt can be reached at mstevens@stevensci.com.">mstevens@stevensci.com.

search terms: Pre-construction, post-mortem, lessons learned, Construction Estimating Software, Estimate Costs, Pricing, Bidding Work, Market

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.

Our 84 E-Learning Courses are Available for Construction Professionals

We have created a robust online learning system of 84 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

constructioncbt.com

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.

The book is available for immediate shipment. We do take international orders.

See our secure Miva / EarthLink / Card Services International E-Store: http://stevensci.com/Merchant2/merchant.mvc?Screen=SFNT&Store_Code=SCII

Look for our new book, "The New Business Model of Construction Contracting" in 2007..

search terms: Pre-construction, post-mortem, lessons learned, Fiinancial Management, Accounting, Chart of Accounts, Return on Investment, Market Price, Bidding,

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

]]> For more information such as this, 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.

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.

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 Free CD of 60 Excel Templates when you buy the book from our website. We also include our library of forms.

The book is available for immediate shipment. We do take international orders.

See our secure Miva / EarthLink / Card Services International E-Store: http://stevensci.com/Merchant2/merchant.mvc?Screen=SFNT&Store_Code=SCII

Look for our new book, "The New Business Model of Construction Contracting" in 2007..

Take our Free Sample E-learning course for construction. Go to constructioncbt.com

Matt Stevens is a management consultant who works only with construction contractors. He has performed training and business consultation for the contracting community since 1994. Matt can be reached at mstevens@stevensci.com.

search terms: Pre-construction, post-mortem, lessons learned, Financial Managment, Accounting, Cashflow, payment, recievables, Return on Investment

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.

This and other management information are part of our 400+ page book - published by McGraw-Hill this fall "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 a book from our website. We also include our library of forms and 5 online courses.

See our secure Miva / EarthLink / Card Services International bookstore: http://stevensci.com/Merchant2/merchant.mvc?Screen=CTGY&Store_Code=SCII&Category_Code=BCF24

Take our Free Sample E-learning course for construction. Go to constructioncbt.com

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

]]> The complete article is contained in our new book published by McGraw Hill, Managing a Construction Firm on Just 24 Hours a Day (406 pages).

This and other management information are part of our 400+ page book published by McGraw-Hill Inc. "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 10 online courses.

See our secure Miva / EarthLink bookstore: http://stevensci.com/Merchant2/merchant.mvc?Screen=CTGY&Store_Code=SCII&Category_Code=BCF24

Go to any major bookstore for a copy or see our website above.

Take our Free Sample E-learning course for construction. Go to constructioncbt.com

search terms: Pre-construction, post-mortem, lessons learned, Managing a Construction Firm, Profit Strateg, Estimating, Project Manage, Accounting, Bidding, Pricing, Labor Rates, Financ, Retention