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.

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.

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%

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.

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

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.

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

How important is understanding cash flow? It is a top five issue. Why? Negative cash flow is the leading predictor of construction contractor bankruptcy.

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