Budgets Part Du: Understand the Process

Remember, Remember, Remember budgets, and understanding budgets are the most important skills a contractor or a homeowner can have. How well the budget is controlled, and understood dictates the level of happiness, peace of mind, and exceptional customer service that can be achieved on a construction project.

Out of the three crucial elements of the building process, budget, quality, schedule, the most difficult one to recover from is the budget. You see if the quality is poor, it can be fixed and improved. And if the schedule is off, its not the end of the world, now although schedules are important its not the end of the world of you loose a couple of days; things can be done to get the project back on track. But! if the budget if off, well then its a whole 'nother ball game.

For most people money doesn't grow on trees. It is hard to come by and even harder to part with. When a contractor comes back to a client and says, "Oh and by the way, we found the dead remains of a human in your basement concrete," it creates a level of anxiety in the client, not from the dead body, but from the amount of money it will cost to remove the remains. You see they only care about one thing.....what will it do to my bottom line.

The client is now playing defense. They are not on the team anymore, their sole focus is now protecting the basket of money. When this happens, the joy of building is gone. Feelings of frustration enter, and you will be lucky to get the client back on your team. Am I right, or am I right?

So whether you are the client, the general contractor, or owner builder, the first thing that needs to be done to protect yourself from budget destruction is to start off with the right budget from the beginning. You need to understand the process:

1. The first part of the budget process is understanding the scope of work. Do you even know what the scope of work entails? Ya, you know that you want to remodel you master bedroom but do you know what it really takes to do it? And do you know what finishes you want? How do you expect a contractor to get the price right without all the details.
2. Take the time to walk through your project on paper. Make lists, make material lists, make tool lists, make potential problem lists, make all the lists necessary to make sure you have not missed any details that may cause budgets to change.
3. Walk through the lists with competent contractors. I really mean competent contractors. Not your brother who worked one summer on a landscape crew, not your grandpa who has been retired for 20 years, but contractors who are in the field working everyday, and who come highly recommended. They will be able to add to your lists and help you understand the full spectrum of work, tools, material, and time needed to accomplish the task.
4. Use those competent contractors to get estimates, as well as using those lists you've made to help you get multiple estimates from other contractors. The more you get the better. It will help you understand the wide range of prices that will accomplish the same task, because all contractors charge different prices for things.
5. Once you have a healthy pile of estimates you can then start to put together your budget.
6. The one thing you will find is that this process of walking through the project several times on site and on paper will help you refine your wants and needs. It will help you narrow in on the best approach to take on a certain scope of work, and the most important thing it will help you do is get very intimate and acquainted with your plans. You will start to feel comfortable about the project and how it will come together.
7. Make sure and address the unknowns. On every job there is an unknown price for a certain scope of work. Whether it is a remodel and you will be moving pipes that you cannot see, or you are excavating and you don't exactly know what soil you will be digging into, make sure and use the best historical data you can get your hands to help estimate the cost of the unknown scope of work.

These steps are crucial in obtaining a workable budget. Most people don't take enough time because they are too worried about a schedule, or are just anxious to get started. They take the first estimate and think its good enough. They don't take time to walk through the job and they don't take the time to really think things through. Please don't be one of those people. Take the time, lock in the budget and from the starting line you will have a great experience.

Good Luck!

Budgets: Its what it all comes down too.

OK, let's be honest with ourselves. When going out and buying a home, or building a home or remodeling a home, or.....did I cover my bases, OK lets continue, all that matters in the end is the price. We can get all excited about what features the home has or will have but in the end we look at the savings account, or our lender and ask, "Can we afford this?" To which the answer is more then likely "NO!"

Come on, how many times have you gone out there and even on small purchases, if you had to be honest with yourself, when you get that item with all the extras and you look at the price tag, you have that pit in your stomach because your emotional side is saying, "YeS, yEs" while your logical more practical side is saying with an accountant like voice,"Nope, you can't afford this."

Now hopefully you have experienced both sides of the purchasing experience. The times when you have made the purchase emotionally, and you feel awesome until you get the credit card statement and ask yourself how you are going to pay for it, or the times when you were disciplined, smart, logical and turned down the urge to purchase. If you have experience both of these, then you are ready to build, buy or remodel your home. If not, then go out, experience it, and lets talk later. There needs to be an even balance of emotional excitement and logical reasoning to end up with the right project, done the right way, with the right price.

Here are some things that will help you as you are trying to set budgets for your next project.

1. Understand the Budget Process: Know what you comes next. There is no sense in trying to set a budget before you know how much the work will actually cost you. And there is no sense in asking a contractor for a bid if there is no plan, or complete understanding of the scope of work. Make sure you follow a logical path to find out what your budget should be.
2. Understand how to correctly analyse your budget. Make sure you have dotted your i's and crossed your t's. To correctly analyse your budget you need to know how to read the contractors bids. Did they forget something. You better hope not, if they did, your budget has just been compromised.
3. Find the right budget forms to use so it helps you throughout the entire building process. The right forms will help you at every stage of the project.

In the end, it comes down to really understanding what baggage that price tag comes with. It can be overwhelming but if you take it step by step, you should be OK......Good Luck.

Tools of the Trade

Plain and simple, "the right tool is worth it's weight in gold."

That statement rings true with any construction project you try to trump. If you use the right tool you find the job to be fluid, effortless and almost fun, (if projects like demolishing a concrete deck can be fun.)

As for us and our Wyoming deck adventure, we found that we had some of the right tools and also some that did not work so well. These three tools you see are awesome for the demolition of a stapled or nailed lath deck. I thought we would be spending a day and a half on the demolition but instead with the right tools it only took us 5 hours.

On the other hand when we sheeted the deck with half inch plywood, we used cordless drills to screw it down. Big mistake!!!! We had a lot of down time when batteries needed recharging, and just the constant bending over while screwing in each screw was nauseating. It took two guys two days to screw off the entire 1200 square foot deck. I felt like an idiot because I left our self-feeding screw gun at home. That would have cut the work down to one guy and about 4 hours.

So let me enlighten those that need to find the right tools. Here is what you need to know.

1. Any job that you are going to do, whether it be setting tile or running wiring for your theater room, there are tools that have been invented to help make your job easier. Honestly, whatever it is, they have the tool for you. My goodness, in Dubai they have machines called Trailing Suction Hopper Dredgers which build islands out in the middle of the ocean. So if you are in the middle of a project and saying to yourself, "this is taking forever," or your breaking your back trying to get the job done, you are probably using the wrong tool.
2. Talk to the professionals. Contractors for the most part know the tools for their trade. They know what works and what doesn't. Most contractors would be happy to help a Saturday Warrior. Talk to several contractors who do that particular task on a regular basis, odds are they have figured out the fastest way to get the job done.
3. Don't be afraid to use the right tool. We tend to get nervous to use pneumatic tools, or power tools because they seem like too much to handle, or we are nervous we might break the tool or maybe we think the tool is too involved and we won't know how to use it. We resort to cavemen tactics to complete the scope of work which cause us to hate life when you are tying to build a shed and you are using a hammer and nails instead of a pneumatic nail gun. Well let me enlighten you......most of the tools that you would even consider using for any household project are really very simple to use. Once you rent or buy the tool and read up on the instructions, you find out that taking proper care of the tool is more involved then actually using the tool.

In the end you will either look back and say, " man that was worth doing," or you will have tried to kill yourself with the very tools you are using to do the job.

Getting the Right People on the Bus

Ok, so a little off the subject of Construction Management Checklists here for a second. I wanted to just take a week and report on a cool backwoods adventure my deck and concrete overlay crew took this past week. I sent them to the backwoods of Afton, Wyoming to demolish and re due a concrete decking system that had failed.

We did not do the original system which had failed but we were sent up to fix the problem. It was a lot of hard work, and at times we wondered why we agreed to do the project, but when it was all done, it was worth the experience. We learned tons, and hopefully I can share some of the management systems we used to help us get the job done right. As well as some of the mistakes we made, so when you do a project you don't make them.

The picture you see is of my Superintendent Chris Abney standing on the log rail looking over the vast wilderness which is Afton. The cabin we went too was about 10 miles west of Afton. The cabin is so hidden by pine trees that you can't see the structure until you are about 500 yards away from it. Once we arrived we powered up the generator which ran on propane and then all of sudden it was like we were in the city again. The house lit up, and as we entered we found every luxury of life. Big screen TV, walk in showers, soft beds and plenty of room for relaxing after a long hard day of back breaking work.

In my Opinion it is worth making sure your living conditions are amazing. It made the difference for my guys as we ended up working about 14 hour days. When they were done, it was awesome for them to just be able to relax and unwind in a comfortable setting. Good food was also essential. It is amazing what good food can do for the moral of 3 hungry men.

Now who were the 3 hungry guys? They are one of the best crews I have been able to put together. From left to right you have Thomas Unga, a Construction Management Major at Brigham Young University. He is amazing with management systems and has been a great addition to the team. Next is Chris Abney, a Business Management Major at Utah Valley University. He also has several years of painting experience under his belt which has given him the eye for detail to make sure every job is done with perfection. And lastly is Tyler Nelson, he is a senior in high school. He is a great utility man. They are each over 6 feet tall and strong. Their brute strength was crucial in getting the job done.

These guys worked 14 hour days. The sun was out and bright, and even though the temperatures were only in the upper 80s, the deck surface got much hotter then that. We were reaching temperatures of 95 degrees plus on the deck. They didn't complain, they didn't make excuses, they just got to work, and with every challenge they met, they put a plan together and saw it through.

So here is the lesson for the day. There is no substitute for the right crew. They will make or break your project. Whether you are looking at hiring a general contractor, managing the project yourself, or doing the work yourself, make sure you hire the right man for the job. Don't let price get in the way of picking the right guy. If you let price take precedent, you may pay countless times more in headache and frustration from missed deadlines and unmet expectations with quality and service, not to mention warranty.

So to emphasize, I take the liberty of stealing a line from one of the greatest books written on building a business, Good to Great.........."Get the right people on the bus."

Iron Clad Contracts: Better for Everyone

Ok, so have you ever heard of a friend or a friend of a friend tell their daunting tale of being taken to the bank by some contractor who did some work on their house and then came back and asked for more money. Or did the contractor not perform the work to their satisfaction and they had to settle?

I got so tired of hearing these stories. It seems that 90% of all the construction projects end with unsatisfied clients and frustrated contractors. Ya that's right, the contractors are frustrated too. Even though it may seem in these situations that the contractor is at fault, the blame sits with both sides. The problem...undefined responsibility and accountability.

In any business venture between partners you better bet there is an iron clad contract. The contract defines who is responsible for overseeing certain actions, and who is accountable if something goes wrong. And who makes what money.

Why would you go into a project of any scale without having a contract, or clear understanding of what is expected and who will make sure it happens. Having a contract will help everyone sleep peaceful at night and allow the job to turn out right. Here are three points that should be addressed when putting together any construction contract:

1. Define who the deal is between. Clearly define the relationship between client and contractor. Whomever is defined as the client will be responsible to sign off on all decisions, and the contractor will be responsible to oversee the implementation of those decisions.
2. Define the Scope of Work. What work is actually being done? During a sales pitch a contractor can make is seem like he is giving you the whole world. Well if he is, then have it in writing before the job starts. That way there is no confusion between the warm and cozy sales pitch and the actual work that he performs.
3. Define payment method and payment schedule. Don't make the mistake of not defining how payment is handled. You don't want the contractor coming to you at the end of the job bringing a huge change order to the table leaving you opened mouthed and speechless. Nor do you want the contractor demanding final payment when the job is not 100% complete to your satisfaction.

DO NOT go into any construction project without a well constructed contract. If you do you are just asking for headaches and bad karma. While working in construction for the past ten years I have consistently used contracts. Some have been good and some have been......well lets just say costly. When they have been costly, it was due to a lack of consideration for the details. Remember success is all in the details.

7 Habits of Highly Effective Scheduling

Scheduling is the most important part of a project. Before anything is done, a schedule should be put together. Working around a timeline helps everyone stay on track and focused toward a deadline.

Proper scheduling is the number one tool to help create a clear expectation with everyone involved.

I know a lady who decided to build her own home. She started with a "lick my finger and stick it in the air to see which way the wind is blowing" scheduling technique and needless to say, two years later she is still waiting for things to get done in her home so she can move in. The home at the most should have taken 12 months.

So where do you start when trying to put together a schedule?

1. Well first you need to consider the scope of work you are undertaking. Is it a remodel, addition, new construction, small renovation? is it a landscaping project? or are you just refurbishing a bathroom? If the project is small enough, you probably don't need to use a construction scheduling software but if the project is going to take more then a month and involves more then 5 decisions then you should definitely consider using scheduling software.
2. The scheduling software you choose can range from a simple calender found on My Yahoo, or iGoogle to more large project oriented scheduling software such as Fast track, Surtrak or Microsoft Project. The reason a computer based calender or scheduling software should be used as opposed to the old school paper calender is because you can enable certain features within these calenders such as daily, weekly, and 3-2-1 Outlook updates. These updates help remind you what is coming next.
3. Once you have chosen your mode of scheduling you need to create a critical path. A critical path is a set of tasks that need to happen in sequence. One thing cannot happen before the next. In this respect the critical path really dictates the timeline of a project. You can't poop in a toilet before it is installed. The sequential events from installing plumbing, installing the wax ring, to installing the toilet and using the toilet would be considered a critical path. One thing can't happen before the other without disastrous consequences.
4. Once you put this critical path together you can then schedule in all those other tasks that can happen at anytime during he project. By following this process you can really get a big picture of what is pushing the schedule, and what will hold up your project if decisions are not made. This is key as many rookies and do-it-yourselfers can get caught in the thick of thin things that really don't matter, while they ignore the tasks that will really hold up the schedule.
5. OK you have your schedule, now make sure that everyone agrees with that schedule. Get trade contractor/supplier feedback from those that will be doing the work. Make sure they feel they can accomplish the scope of work or deliver the material needed under the time frame you have allotted. If they don't feel they can, then work with them, but make sure that you are in control. If you have a crucial timeline to meet, make sure and find someone who can get the job done in the time frame you have set. Any schedule can be met, it just means you have to get more people or work harder, or both. Don't be afraid to get aggressive with the schedule.
6. Once you have a solid schedule you can start, but remember a key to making a schedule succeed is follow-up. We call this follow up 3-2-1 Outlook. 3-2-1 Outlook is the process of looking down the road 3 weeks into the future. Based on the schedule you put together you should know who will be on the job and what material needs to be on the job 1 week, 2 weeks, and 3 weeks down the road. Phone calls and arrangements should be made to insure that it will happen. Each week this 3-2-1 Outlook should take place, preferably on a Friday or sometime at the end of the week. Don't back down for a second, even if you feel it is redundant to call that person 3 weeks in a row, its not and I will tell you from experience that subcontractors and suppliers love the communication and they do not get bugged. If you do the 321 religiously you will succeed and be happy with the progress of your job.
7. Remember to always make scheduling a priority. It is so easy to let the schedule get pushed to the back of the bus when other issues come up like decision making, accounting or trade contractor/supplier management. Don't let it happen; the success of the project and your stability of your sanity will depend on how well the schedule is maintained.

If you or your hired general contractor are not using these principles of scheduling stop right now, re-read, understand and apply these simple steps. You will be happy you did. Til next time be safe and good luck.

The Pre-Con Checklist

All right, so you have decided its time to start this . Are you sure you want to do this? You know, they say that outside of getting married, the most difficult thing to get right is building a custom home.

I don't know how many home owners, and potential clients that I have talked to have said,"I have heard so many bad things about building a custom home, we aren't quite sure we want to do this."

My response to them and to all of you who have the same sentiment is this, "Building a custom home is the art of bringing together a thousand different details. If you go into it without a plan you plan to fail, but if you have a plan centered around details that allow you to see the end from the beginning then you will have a good experience."

That is where we are going to start. We are going to break this home building experience down to the very core and find out what makes a successful project flow from concept to conception.

Lets get started.

Below you will find a Pre-Construction Checklist. A useful tool that I used as a general contractor to help make sure everything was in place before we started a project. I will present it in its entirety.  Then over the next few months I will break it down so that you can understand the details behind the checklist.

Now there are other details before this like where to build, house plans, and the bidding process, but I have decided to start here at the Pre-Construction Checklist, because this is where trouble can start if you are not prepared.

I. MANAGEMENT DOCUMENTS

1. Schedule
2. Contracts
3. Budget
4. Complete Architectural/Mechanical Plans
5. Specifications
6. Building Permits
7. Change Order procedures and fees
8. Back Charge procedures and fees
9. Transmittal/Submittal
10. Purchase Order 
11. Quality Control 
    
12. Daily report
13. Warranty and Service procedures 

II. ON SITE and GENERAL ITEMS

1. Home Base
2. Office Supplies
3. Information Binder
4. Communication plan
5. State Notification
6. Builders Risk Insurance Policy
7. Relationship strategies
8. Trade Contractor/Supplier selection
9. Project Goals: individual, team, financial
10. Holiday/Vacation schedule
11. Construction Meetings
12. Site Cleanliness, Protection, and Security Plans
13. Site Signage Plan
14. Long lead items
15. Project Funding
16. Manpower
17. Travel arrangements-vehicle, housing, subsistence
18. Out of town payroll
19. EEO/Affirmative Action
20. Inspections
21. Budgets and Cost Codes in place
22. Equipment mobilization
23. Supply Drop off/Pick up plan
24. Utility Sources
25. Construction waste disposal
26. Human wast disposal
27. Official land survey
28. Seasonal implications

III.  SAFETY

1. Safety Plan
2. Crisis Management Plan
3. Safety Challenges
4. Job Site Safety Meeting
5. Job Site Safety Report
6. Fire Prevention Plan
7. Emergency Evacuation Plan
8. Job Hazard Analysis
9. MSDS Book
10. Asbestos Survey copy
    
11. Special clothing requirements
12. Special training
13. First Aid Kits
14. Fire Extinguishers
15. Hospital/Instacare facilities
16. Hard Hats
17. Safety Glasses
18. Gloves
19. Noise protection
20. Dust protection
21. Rebar caps
22. Safety signage
23. Fall protection/exposed openings
24. Drinking water
25. Special hazards
26. Traffic/Pedestrian routing and protection
27. Storm/Waste Water Plan (SWPP)
28. Site/Project Dust Control (Air quality permit required)
29. Certified Equipment Operators
30. Tools and equipment needed

If you have any questions before I start breaking this down feel free to leave a comment and I will help you out.  Until next time good luck and keep swinging.

In the Beginning there was LIGHT!

In the beginning there was light!  Couldn't have said it better myself.  That simple little phrase packs such a huge punch.  You see when God decided to create the earth he didn't create candy first or Britney Spears (Although I am sure if you asked her she would think differently).....He consciously created light first.  But not just "light" as in the source of energy that helps us see in darkness, but "light" in terms of clarity, vision.  He created a clear vision, a plan of action to be followed.  

God didn't wing-it, He had a clear plan, that was followed, and out of it came the perfect creation.....the earth.

Now isn't that what you want to create as you are getting ready to build your custom home....the perfect creation?  Yes and I am going to give you the tools that you need whether you are going at it yourself or whether you are going to hire a contractor.  My guess is that you don't have the tools you need nor does your contractor (even if he says he does).  Just wait I'll show you what I mean.

So my next post will have a Pre-Construciton Checklist of things that you need to get started....so lets create that clear vision and get started on that perfect creation.

Oh and feel free to ask me questions before hand, don't wait, I've got answers to anything you need to know about managing your custom home project, or managing your general contractor.