I don’t want to hijack my own thread since I believe that some are finally starting to understand my goals..
Hence the reason for the new thread and what I was gonna get to ultimately…
There is a developer in the twin cities who builds some of his houses with a little brick facade in front.
trying to add a little class to what would otherwise be an entry level starter home neighborhood.
If you look critically at the brickwork you quickly understand that design had nothing to do with it.. rather the perception of brick work so it must be a better home..
It doesn’t stop right under the front window or along any design line so it’s purely a “here’s brick, see this means it’s quality”,
About a year ago I asked him why..
why not go higher for some kind of design treatment or stop under the windows or something logical.
His answer surprised me.
It was based on pure costs..
He found that since it was easy ground level work that could be done in one day that he had all kinds of masons stumbling all over themselves to get the work.. They felt it was the start of their company..
Instead if they stayed after it they quickly found out that they couldn’t bid the work high enough to get a decent return for their efforts (many of them told me afterwards that figuring added costs of running a busines they would have been better off staying in the union and just doing their job) It seems there is an endless supply of start up masons eager to get a start. willing to outbid the next guy just for the chance to get started..
One day was the Key,
Do the work, collect the check, and race to the bank to beat the payment for the truck they’d just bought or the equipment they needed to get started..
So if you needed about 100 sq.ft. (don’t remember the exact amount) of brick work done you could get it done almost below costs..
I noticed that all of his houses could be framed within a week, I also noticed that the electricians were in each house two days..
The guy builds a lot of entry level houses in The twin cities so he must be doing something right..
ARE THERE RULES LIKE THAT?
Replies
"ARE THERE RULES LIKE THAT?"
OK, you lost me- rules like "what"? That there are tons of startup masons who are too stupid to realize that they need to charge more than wages to run a business? There's plenty of those geniuses here in NJ- more each day- and the number usually increases after a large company lays off workers (like the Ford plant that just closed in the next town over from me).
So, the devious developers get these wonder-children to bid their work, and usually most of them fold up their business after losing money on the first few houses. Meanwhile, the developers keep on hiring the next rocket scientist who comes along with a rate that equates to the same wage he was making at Ford. Care to guess who makes out in this situation????
Bob
where are you trying to go with this, Frenchy?
It sounds to be an interesting conversation, but your point seems fuzzy, as if you have not fully considered it yet.
ARE THERE RULES LIKE THAT?
YES. A thousand of them, but they are all made up by individuals according to their own personal needs and ethics.
The guy you described, was looking for max return for the money on what is basically an esthetical issue.
The esthetics incouraged potential customers to think "quality" and added perceived value so he could raise his selling price or sell faster. More than one days labor from the masons cost him more than the added value earned him.
This is an example of a situational rule. It fits his situation, but may not apply elsewhere.
SamT
Yes it s a pity, our industry is sometimes the last one working and I hear it all of the time.. well if the plant closes I can always go work construction..
I see others trying to get everyone to play by solid business rules. ( cost, overhead and profit) but to a guy who doesn't have a job or hasn't had one in a while the only question is, will I be able to meet my expenses?
Luckily I sell to framers who simply cannot compete without the proper equipment, that means nail guns and compressors, generators and most likely a forklift.. The buy in is too high for the causal laborer to get in and mess it up.. Instead they go into muscle jobs like sheet rock or cement work.. those take the hit..
I guess that I'm with these guys so far.
You started a thread named "Value Management" and then cite an item that only adds a perception of value or is a selling point without adding any real value. Gioven the way it is bid and completed, it may even take away from value in the long run, say for instance, if they don't leave weep holes and the houses become more amoung the hundreds that are festering mold havens.
But if you want to talk about value, I would point out some other things related to the quality of a home, like putting PEX in a concrete slab for heat. Measuring the cost of a roof on a sq ft per year cost is another. If a fourty year roof only costs 40% more than a twenty year roof, that's value. If you are in a northern cold climate and codes require that you place a footing down four feet and you go another couple of feet and createan entire basement, that's value.
Excellence is its own reward!
Piffin,
I agree those things are real value adders. To bad that isn't the way the vast majority of new homes are sold.. I see these "town houses" going up that are built as cheaply as possible and shudder.. there is the future ghettos.
The plastic siding that is so popular now will be the joke of the future. I cannnot see "engineered wood" as being something that future generations cherish and find worthy of saving and recycling..
But back to the main theme of my original post, one "rule" that I can think of is using multiples of 4 to eliminate waste..
I'll go for that. Four nails per shingle
Carry up four bundles at a time
Pay the men four dollars an hour. After four years give a raise to eight. Another four years and they get twelve
LOL
Here's a rule for value workmanship.
Use local materials and methods.
Here in Maine we have a lot of Pine and Cedar but not any redwood so you don't see much redwood fascia or decks.
If you build in an area where there are few block walls done, use poured crete for foundations like everybody else, the few mason's available will be busy bulding chimney's but if you are building where everyone uses blocks - like South Carolina, you will pay a premium to find a contractor with forms to pour it..
Excellence is its own reward!
You pointed out a very good one, I forgot that myself..
Here in Minnesota we have a fair amount of great hardwood.. Pine/ cedar is more expensive than Oak or Ash..
That's why I can have a black walnut timberframe without breaking the bank!
I'm not so sure I'd agree the builder did anything so wrong ...
my Dad would call that ... "a free education"!
That builder was providing a very useful service ... showing those mason's it takes more than one trowel to have a real business.
aka ... the school of hard knocks ....
like Dad has told me many times ... as long as you learn each time you lose money ... it's not money wasted.
JeffBuck Construction Pittsburgh,PA
Artistry in Carpentry
I sold one of my first construction forklifts to him.. He's the kind of guy who you'd shake hands with and then count your fingers, but he paid near list price for the fork lift after using it all summer.. Since he still has the forklift (and four others from me) we both laugh at what's happened to the forklift market in the last 12 years...
Like I said the first one I sold I made nearly 30 percent profit and was almost ashamed to bring the deal into the office (nobody told me that i could discount a used forklift, I just took it upon myself and being new worried that I'd goofed),
Now the competition for them is so fierce that He tells me what he'll pay.
What I don't understand is all of the subcontractors who want to work for him.. other than They all say he pays promptly. On the other hand I'm certain he still owns the shine of the first penny he earned.. both sides!
Some experianced framers started with him and more than a few still work for him..
I've worked for builders like that; prompt-pay cheapskates. Glad not to be doing that anymore. One in particular no longer had the first dollar he'd ever earned, but he did know the name and address of the second owner.Andy Engel, The Former Accidental Moderator
lotsa subs everywhere are happy to make rent and beer money.
all the good mechanical subs refuse to work for my old employeer ...
but he's still got a new sub willing to try each job.
Must be a list a mile lond of guys waiting to get shafted ...
Probably the same deal everywhere.
This guy pays low ... but promptly .... in the beginning .....
ind the end ya gotta wait in line to get paid low!
JeffBuck Construction Pittsburgh,PA
Artistry in Carpentry
Two comments from me:
1. Frenchy said: “I see others trying to get everyone to play by solid business rules. â€
2. Andy referred to this builder as a: “prompt-pay cheapskateâ€.
First of all, this builder did use “value management.†Just as it is not the “business†for a customer to make sure I’ve charged him enough to cover my overhead, net profit and take a decent salary - before he signs my contract, nor is it my “business†to assure these people who think they are “businessmen†( Michael Gerber would love them) are charging me enough. I don’t chisel my subs, but if one wants to work for $20/hr, that’s his business. I am only “buying†his services, not acting as his personal business consultant.
So what would I have to do to not be called a “prompt-pay cheapskateâ€, offer to double his rates?
This builder’s responsibility to his customers is to give them “perceived†value. If what he, the builder gives to them, is in deed perceived as a good “value†in their eyes, then it’s a win/win situation for both, as long as the bricks were laid properly, air space, proper wall membrane, weep holes and flashing where mandated. If he got a $500 job for $250, so be it. If as a GC I fall into a good deal, and not one I had to chisel to get, why should I feel guilty?
I think you miss the point of my post.
It wasn't a condemnation of the contractor just an observation of the ease which others can enter the contractor pool. Since it is so very easy to enter, it will always be difficult, if not impossible, for the smart contractor to use proper business management approaches towards business..
It follows that any reasonably smart developer will use that ready pool of contractors, and the spiral will continue..
(thread hijacking warning)
the sole exception here is someone who puts so much of their talent and skill into their work as to command a premium.. That person will always be busy and capable of earning an above average living..
Sorry Frenchy, you're right. That's also why, like the restaurant industry, we have an 85% plus failure rate during the first 5 years of starting a business.
Tradesmen think that just because they know a "skill", that they can successfully run a business that utilizes that skill. They're two different animals.
I don't see the problem on the brickwork... a guy just starting out isn't going to be able to charge the same as the "known quanity" the contractor is give'n the guy a chance to "be his own boss" (no such thing if you have a customer) if the guy does well he can point to jobs he's done to get more work... and not every guy has the same overhead... not every guy needs a new truck or a new mixer or a trailer full of tools to get a job done... I've seen great work from guys who carried everything they needed in the trunk of a compact car including their help... it all comes down to MIP at the end of the job... (MIP=money in pocket) i know i'll hear about insurance and whatever... but this is still america and if a guy wants to put his butt on the line and jump out there and try to do his own thing... God bless him at least he's tried...
Value added... I like creative use of materials... it doesn't take a ton of "extra" trim to make something appear & be custom, I like wider doors when they fit... and i like a standard garage thats even an extra 4 ft deep... 8ft if you can swing it...
pony
you can tell it's rain'n and i'm waiting on plans to be approved if i'm spend'n too much time here
This industry is plagued/ blessed with an infinate number of new guys.. Guys who get into it for the short term and charge what they need to pay their bills.. That makes it hard for a guy who's in it for the long haul to run a real businesslike business..
Your point about adding value with intelligent use of trim etc. to give stock plans a custom look is well noted..
I guess you can't beat talent or an artistic eye..
"If he got a $500 job for $250, so be it. If as a GC I fall into a good deal, and not one I had to chisel to get, why should I feel guilty?"
Guilty? It's not about guilt, it's about business. I don't know about you, but I'm in it for the long term and I need those subs to be happy, stay in business, do good work, pay their guys, pay their suppliers, deal with warranty and callbacks if there are any, and wave to me as we pass each other on the road. There's a limited pool of good subs out there and you gotta take care of them even if they sometimes can't do it themselves. Usually they can. But if I see a guy come in with a price that feels low to me, I make a mental note of it and try to keep some room in the budget for when he realizes he's too tight. I have paid subs more than their proposal price many times, after watching them struggle more than they expected.
The GC above who hires the disposable brickies is a good example of why I never go near anything remotely related to production construction.
Amen, David. Well said, and my sentiments exactly.
Bob
Well put, and much more tactful than I would have been.
I agree but got tired of, as my Ma would say: "Breaking my teeth."
The last guys I gave up with was a painter and an electrician. He was basing his price on $25/hr. I told him that was way too low, and especially if he wanted to cover himself with worker comp and have medical, holdidays paid, vacation pay, etc.. So I sat him down and we figured out his overhead, expected net profit can came up with about $43/hr for him to charge. I then told him to figure his current estimate for me at that rate, and he did, and I paid it.
Then a couple of weeks later he stopped by and said he was going back to $25/hr cause he was losing jobs.
We had another talk about salesmanship, production, marketing, PR, etc. - the entire gamut - all to no avail.
Then another guy, and electrician and I went thru the same thing, and he went back to his old pricing structure.
I too wanted these guys to succeed because they were good, worked well with our customers, cleaned up after themselves, showed up when they said they would - just choice guys. Besides, their success contributed to my success. It was a win/win relationship.
But, I simply cannot fight ignorance nor the absence of a desire to sell "their" prices as opposed to "buying" the prices of others. Typical they were as much in that their mindsets were that of a "tradesmen mentality" as opposed to a "businessman mentality."
I now use a guy who was working by himself, for him self, charging between $30 and $35 per hour. I use him as a sub and pay him at $45/hr. He's damn good, worth it, and I still charge $82/hr for what he does as I do for myself.
For legitimate regular subs who just give me a fixed price, I am now like that builder. I took Ma's advice.
Sonny, good post,
you can lead a horse to water but you can't make him drink.. Yet a good craftsman who sells his work too cheap should be pitied rather than scorned..
I'm a pro, I earn a good living selling but I've spent my life learning how to do it well. I doubt I'd be any good if I were a part time guy just dabbing at it..That is what the trouble with the average tradesman is, they learn their trade and think that's how they should run a business. Forgetting that there is an almost inexhaustable supply of new start ups available..
I have another thread where I'm trying to point out to others a little basic salesmanship..
what I constantly get is, "that's not how it's done in this trade/industry/ craft."
Yet basic rules are basic rules..
Marketing is a requirement of any good business. yet at most I see an add in the yellow pages. I can't tell you how many guys that I've seen who use the phrase, my work is my advertizement..
Well untill I see a set of steps with a trade make that competes as effectively as the golden arches or a brick work by masons with a name as familar as Disney's etc.. there isn't any marketing done or it's so ineffective as to be nonsense.
Just seems everyone wants to have it both ways... who says it's a $500 job? if you are going to complain about it... then you should never question the price of a new car or truck... pay what is on the sticker and be happy regardless of what you buy and from whom... don't shop your bids for material, supplies, insurance, ect... I guess since i wear many hats i see all the sides... I never argue a mans price... I ask for the best price on the front end... and figure if he tries to lower it later without a good reason (ie: i counted this twice... i figured a way to do it better) then i just figured he lied about giving me his "best price"... I will.... like several others have said, tell someone when they have quoted too low...
I guess it's like the Sprinkler System I just had quoted to me... there was a 60k range for meeting the same specs... 37k upto 102k I didn't go with the cheapest guy but went with one that was inline with his price and one i liked, and liked the way he spelled out his bid... i didn't tell him someone else was cheaper... i just told him one of my buds said he was good... plus i liked his building and they'd been in it for over 50yrs... says something..
his price was within my budget and thats a good thing.... I don't believe in taking advantage of anyone and I hate to use or waste anyones time... I called the guys who gave me bids and thanked them for their time... I didn't go into too much detail unless they asked... if they asked I told them... about all of em said the guy i got was "good people"....
pony
we can also calll that a value added attitude.
Excellence is its own reward!