Important Construction Terms We Just Made Up

Construction Terms we just made up.

Important Construction Terms We Just Made Up

Important Construction Terms – the story

There was this email I received which mentioned The Dictionary of Obscure Sorrows and provided a few of the entries. They were:

Adronitis: Frustration with how long it takes to get to know someone.

Rubatosis: The unsettling awareness of your own heartbeat.

Jouska: A hypothetical conversation that you compulsively play out in your head.

I was intrigued . . . especially with that last one, because I practice “Jouska.” All. The. Time.

So, I went looking. And, I found the author, speaking on a Ted Talk.

Hum. What else could I find?

With thanks to John Koenig, author of The Dictionary of Obscure Sorrows for giving me the idea of choosing (OK, like him, making up) words. Words which express succinctly today’s commercial construction subcontractor reality.

Really.

Yeah, they’re fake – but they should be real.

Have fun reading these “important construction terms.”

Important Construction Terms – adjectives

 

distalktuousadjective  causing untold long and short-term damage to company operations and employee morale because there is a Lack of Communication

 

cutturlyfuladjective  causing or apt to cause budgetary cuts and bid constraints when met with the Cost of Labor, Materials, and Supplies

 

blameuthargicadjective  of, relating to, or affected with blamergy; unreasonably rash or (conversely) apathetic to the reality of the part integrity plays in completing projects. Sometimes known as the Not-My-Fault Game

 

treventickyadjective  shocked and dismayed by the seemingly endless line of Unreliable Employees and Subcontractors

 

Important Construction Terms – Verbs

 

intenturafulverb  feeling which comes from having all plans and timelines disrupted by weather, or other sources causing multiple Scheduling Problems

 

exasperlatedverb  feeling you have when you turn down yet another opportunity to bid because you are experiencing a Lack of Skilled Workers

 

disbuckulatedverb  to cause feelings of dread and apprehension due to the inability to take advantage of deals or overcome setbacks because of the Lack of Available Cash

 

filetimizedverb  to make as demanding, laborious, and problematic as possible through the insistence of maintaining disorganized (usually hard-copy) paperwork creating Difficulty with Document Management

 

codeshiftrifiedverb  to overwhelm with a set of constantly emerging rules, laws, and restrictions within the construction industry. Also known as Dealing with Ever-Changing Regulations

 

Important Construction Terms – Nouns

 

irriloosesomenoun  the frustration of knowing the impact of frequent changes to the original contract when others seem oblivious to Change Order Overwhelm

 

Have you thought of some words which should be added to this small compilation? Tell us! We want to know.

 

When you stopped in here, you found an Accounting, and Contract Management Firm which provides Advisory Board Level counsel for small to medium commercial construction subcontractors. Doing what it takes to help them Run With the Big Dogs.

You can find out more by getting in touch here or calling 866-629-7735.

Image by kaboompics on Pixabay

Achievement-Based Bonus Programs That Don’t Stink – Part 2

Achievement-based bonus programs that work.

Achievement-based bonus programs that work.

Win, win, win

Once you’ve decided that embarking on an achievement-based bonus program will be beneficial for your team members as well as your construction business your next move will be determining which bonus initiatives will be most advantageous.

Typically, the considerations fall into two major categories – efficiency and profits. Or, reduced to its base level, time and money. Yet, there are a couple more categories which may help bring this matter into better focus. Retention and satisfaction. Retention of your best employees and the satisfaction level of your clients.

A well-executed achievement-based bonus program will be a win for your clients, a win for your team, and a win for your construction business. Yep, win, win, win.

Set the bar high for employee achievement

You’ve been told in the past to look for your clients’ pain points and determine a way to meet their needs. Good advice. Yet, have you considered your employees may also have pain points which need to be addressed? There will always be the WIIFM (What’s In It For Me) issue to consider. When devising your plan, be sure your employees will be rewarded well for their achievements. The goals you set for them should be easy to understand. They should know both what they’re expected to do and what they stand to gain if they do it.

And, while you’re setting the bar high, don’t set it so high no one could ever hope to jump “clear up there.” Plus (and this is the part that will ease your team’s minds) whenever possible, have graded levels of achievement. “If you reach this milestone, the reward you’ll receive is this.” And, “If you meet this even harder milestone, this reward will be on the table.” Plus, “This really tough to reach target will net you this reward.”

By the way, the rewards don’t necessarily have to be higher and higher amounts of money. But, more on that later.

Give the client more than they asked for

“I would like for this project to last longer than we agreed on and cost significantly more than expected”, said no client ever. Which translates into being done on time and not exceeding the budget is the bare minimum for meeting client expectations. But, what more could they ask?

Listening to your clients translates into detail or specialty applications and may mean improved functionality. Having a pulse on your clients, means you will likely learn of ways your team can perform better to improve the clients’ delight levels. Incorporate what you learn into your achievement-based bonus program.

Bottom line, communication with your clients can, and should be, what pushes your achievement-based bonus process.

How to implement a bonus program

At the highest level of implementation are two considerations:

  1. Motivating your employees to excel beyond their base job descriptions and regular duties.
  2. Exceeding your client’s expectations in both small and big ways.

Thinking of the above two considerations, use the 6 Ds to design your program.

  • Determine the objectives

 

  • Decide who will be eligible to participate (consider team or individual based)

 

  • Develop the achievement criteria

 

  • Devise the reward levels

 

  • Derive the funding formula (Where’s the money coming from to pay for this?)

 

  • Decree the method of payment

*There will be an example of using this method in part 3 of this 3-part series.

You’re not made of cash

You’re a nice person. You’re also a good business owner. You would like to give lots of great stuff to your well-performing employees. There is only so much money in your coffers. You have a dilemma. Or do you?

You may think the only thing your employees want or will respond to is cold hard cash. Yet studies show that isn’t always the case.  The author of an article found at Incentive Concepts states, “The best rewards experience, then, isn’t a matter of presenting the best rewards, but the best mix of reward, recognition, and experience.” It is an enlightening article based on studies conducted by the Incentive Research Foundation (IRF) and the Incentive Marketing Association (IMA).

Which incentives to give

Following is a brief list of possible reward options you can consider.

  • gym membership
  • golf trip
  • training or educational opportunities
  • company-paid family activity events
  • tickets for sporting events
  • additional vacation days
  • paid group meals
  • company branded mugs, hats, shirts, or jackets
  • chair massages
  • job site lunch delivery
  • tools
  • a magazine or audio subscription
  • car wash and detail coupon
  • ice cream socials
  • theater gift cards
  • concert tickets
  • entrance fees for industry related conferences
  • house-cleaning or maid service at their home
  • museum, zoo, or botanical garden memberships
  • gift cards

You’re likely to think of many other options, especially when you pay attention to what your team members are into. What are they talking about before and after meetings, while on the job site, or during lunch. What are they interested in? Where do they spend their time when not working? What are the ages of their children?

Bargains, discounts, and low-cost gifts

Be on the lookout for bargains and discounts on the items you’ll be presenting to your employees. The obvious option is buying while items are on sale. You can also ask for a discount when purchasing in bulk – even if the “bulk” is only a few dozen on some items. Discounted gift cards are a good option.  Another source for bargain priced gift cards is found here.

You can also consider gift cards in small denominations. Five or ten-dollar cards to local fast-food restaurants and coffee houses, plus slightly higher denominations for familiar department stores.

Get the crew talking – in a good way

Remember, the pleasure your crew derives from receiving achievement bonuses is three pronged. They want reward, recognition, and experience.  Following is a list of fun or different gift items sure to get people talking – adding more to the experience part of receiving the bonus.

Extraordinary shaving items

Gentleman Barbarian T-Shirts

A variety of products found at The Art of Manliness

Give some fun from Etsy

Sleeve notes (you know who needs this)

Key finder (another of those products best suited for certain members of your team who most “deserve” or need them)

Consider the gift of home cooking made easy here, here, or here.

And of course, rubber duckies.   You decide how and when you pass out these little lovelies based on . . . well, who knows what! They’re just for fun.

Perhaps you can start a rubber ducky tradition, similar to the golden banana award tradition. If you don’t already know about the Hewlett Packard Golden Banana Award each of these articles includes the story. New York Times.   Smart Business.   Cindy Ventrice on LinkedIn.

If you missed part 1 you can find it here.

In part 3 expect expanded information concerning how to implement a bonus program based on the 6 Ds mentioned above. Plus, there will be a simple example of the system used in “real life.”

Call today to get in on the Schulte and Schulte accounting advice you need. 866-629-7735

Penny Pinching is Good for Your Construction Business

Becoming profitable through saving money

Becoming profitable through saving money

You’ve moved up from “Have hammer, or wrench, or paintbrush – will travel,” to running a construction contracting business. Now, you have much more to be concerned with than simply finding a project, doing it, and getting paid for your effort. You have a business to run, one which should be profitable.

And in the construction business, just as in other businesses, cash in king. That is simply how it is. To run a profitable construction contracting business you must learn how to master the cash, how to make decisions concerning the cash, and how to prudently use the cash.

Are you making a profit?

While there are a number of things which you can change concerning how your numbers are adding up (or not adding up,) in this article the subject will center on ways you, a construction contractor can tighten the belt, can be more frugal, can pinch a few more pennies on your way to making a profit.

And while we’re on the subject of decisions, let’s back up a minute and understand that those expenses in your accounting records represents a decision you’ve already made. It takes fortitude to look at a particular expense, challenge yourself, and think about the decision you made, then perhaps taking steps to change or improve it.

First things first

When you first started out you had ways to “get by,” to make ends meet, to keep going while you looked for that next job. Now, you have people working for you, running crews, driving your vehicles, using your tools, performing the back-office duties. You have jobs back to back or over-lapping and you have lots of expenses.

It is time to revisit your ability to “get by.” It is time to be innovative and to grow your ability to solve problems rather than throwing money at them.

Get out of the rut!

In some ways, this is a call to reduce inefficiencies in your own as well as your employee’s work habits. In other ways it’s a challenge to see if there are better, less expensive ways to get things done. It’s easy to get stuck in a rut. Yet, once you know you’re in a rut, you can take specific measures to get out of it.

Top 5 ruts to jump  

Vehicle or fleet

Whether you have only one business truck or an entire fleet of vehicles there are likely ways to reduce your expenses. One major way to save money here is to be cautious and certain before signing on the dotted line for that beautiful new pickup you’ve had your eye on for a few weeks. Do you really need it right now? We can help you determine whether or not your business can really afford that shiny new toy. Also, when it comes to vehicles, there are other ways to save, for example, in this article from Construction Executive, there is a list of 5 simple changes you can make to help control fuel costs.

Office tools and supplies

Whether you need to complete an RFP (Request for Proposal) with a few of the top suppliers, or you simply need to keep an eye on the cost comparisons of a few local office supply stores along with membership stores, get out of the rut of always buying supplies from the same place. One simple method you may choose is to maintain relationships with two providers that are competitive on price. And, because the ordering process is easy online you can switch providers quickly and easily. Check out these tips and tricks from Grainger concerning managing your office supply inventory.

Construction supplies and materials

Your particular trade will often dictate your choice of suppliers. Yet, just as in the office supply providers in the above section, you will do well to maintain relationships with more than one supplier. And, you already know who the heavy hitters are in the overall construction supply industry. Are you taking advantage of all they have to offer? While it may take some of your upfront time delving into all the benefits they offer to the pros, it will pay off in both time and finances to become familiar with and take advantage of their programs. You can start by getting to know your Pro Account Representative at Home Depot and checking out Lowe’s ProServices.

Tools and equipment

Determining whether you need to purchase or lease particular tools and equipment and the cost saving factors of either choice will have an impact on your ability to save pennies now and dollars down the road. This article from Construction Marketing Association will give you information you can use in the decision-making process.

Also, when you make the determination that you will purchase tools, be cautious about quality. Invest in the best quality tools you need and can afford rather than trying to get by with cheap substitutes. Just be sure you remember the need factor.

Credit card processing fees

Shop around. One of the first places you may want to check is with your trade organization many of which have an agreement with credit card processors to provide lower rates. Be cautious, some companies will try to lock you in for a long period of time in order to receive a better rate. Also, look for rates concerning leasing the equipment. When you use QuickBooks Online you are able to take advantage of their bank transfer processing through ACH (Automated Clearing House) payments. You may choose to accept only ACH payments at no charge, or to also accept Credit Card payments (with percentage fees) based on your needs.

More ruts to consider

Insurance

Be sure you’re getting the best rates for each of your insurance needs. Check around, look for providers that know and understand the construction industry. For example take the time to shop around for the best workers’ compensation prices you can find, especially if your company has a low accident rate that you can use to negotiate with carriers and agencies.

Marketing

When you’re low on money, marketing is one of the last things you should cut totally out of your thoughts or your budget. Yet, by being creative and using many of the options for marketing which are no or low cost you can remain in the game getting the word out. This article from Forbes gives you four creative and useful ways to save money on marketing.

Rent or mortgage on office and shop locations

Again, creativity is your best friend. Would you benefit by moving your operation to a different (less expensive) location? If your construction business doesn’t depend on walk-in-traffic why pay more for a location which touts traffic as a rental perk?

Temporary office structures and/or sanitary utilities

Should you own or rent your on-location structures? Is there a better rate for the portable toilet from a different vendor than you normally choose?

More money saving tactics to scrutinize

  • Determine if selling or leasing underutilized equipment will be of benefit.
  • Reexam your need for company owned vehicles.
  • Review your entertainment costs. (This is no longer an expense which can be deducted on your tax reports.)
  • Look for free or low-cost training for yourself and your employees. If you belong to a trade association take advantage of what they offer.
  • Adopt a just-in-time philosophy of material staging in order to deter waste as well as keep the money flow in check.
  • Save money by outsourcing your accounting and some other office tasks.

 Get in touch here, or give us a call 866-629-7735.

Financials: Cash Basis versus Accrual Basis for QuickBooks Online

If you want to get a handle on the numbers in your Construction Contracting business then it is imperative you understand your financial statements.

Understanding the difference between a cash basis financial statement and an accrual basis financial statement is a good start. Then, understanding what makes them different in QuickBooks online and how they’re deciphered there aids you in getting a firm grip on those numbers.

Cash Basis Perspective Gained – The Cash Flow within Your Construction Contracting Business

In its most simple format, Cash Basis is achieved by recording your income and expenses when payments are received and when expenses are paid. If money moves one way or the other it is recorded then and there. Your customer pays his invoice and the amount is entered as received. You buy some new tools and the cost is entered as paid out.

Example: Customer ABC agrees to a job which will cost him $1,000. He pays you when the job is complete. This is a cash basis transaction.  (Even if he pays you with a credit card, it is a cash basis transaction because the credit card company will place the fund in your account within a couple of days.) Therefore, payment was made. Yet, if the customer pays you the next month, you won’t recognize the sale until next month.

Accrual Basis Perspective Gained – The Financial Health of Your Construction Contracting Business

Now, on to Accrual Basis. In this format, you record your income and expenses as payments are earned and expenses are incurred. Put simply, you record the transactions whether the money moved or not. What you’re doing is recording when the promise of payment is made, whether by you or by your customer. What you will see is either an Accounts Receivable or Accounts Payable in your books.

Example: You perform a job for customer XYZ. Once you’re done, you leave the job site. When you return to your office you generate an invoice and send it to her for $1,000. This is an accrual basis transaction. The customer now owes you money for your services and you now have an accounts receivable balance on your books.

Now if your construction business delivers long-term contracts, transactions that will take longer than 12 months or cross fiscal years, then these rules get a little more sticky. I won’t try to get into the ramifications of those circumstances in this post.

What all this means for your transactions through QuickBooks Online

In QuickBooks online, it is very easy to switch between cash and accrual systems in the reports. At the top of the report, where the options are listed, you will see Accounting Method. When you switch from accrual to cash, QuickBooks reverses out receivable and payable transactions because cash did not change hands, no cash moved.

Once you make the switch the financial statements will look different. And, as you can see, this is because some transactions are handled differently under each accounting system.

Not all transactions are converted equally under each system. Understanding these differences and how they affect your financials will help you understand which financial picture you are looking at.

One step further

Let’s go back to our previous example under the accrual method above, where you created the invoice for $1,000. This invoice will appear on your accrual basis Profit and Loss under sales but it will not appear on your cash basis Profit and Loss. Because of this difference, when you look at the cash basis Profit and Loss, it will not show you how many sales you really transacted during that period and your statement will be understated. Only the accrual Profit and Loss will show you the true sales number.

If customer XYZ pays you $500 of the balance, when you look at your accrual basis Profit and Loss under sales you will still see the $1,000 sale, but now when you look at your cash basis Profit and Loss you will see the $500 under sales. You only see the $500 because you actually received the cash.

Yet, when you look at this financial statement, your sales are again understated. This time by the $500 balance that remains. This is an important distinction to understand when looking at how much sales your business generated for the period.

The effect of these two examples can also occur in your expenses or accounts payable transactions. If you record a bill for $100 in supplies, that bill will appear in your accrual system profit and loss but not your cash system profit and loss. This will result in understated cash basis financials. Once you make a $50 payment on that bill, the $50 payment will appear on your cash basis Profit and Loss but that statement will still be understated by the $50 balance still due.

Know what you’re looking at

When looking through your financial reports, be certain you understand the type of data each report provides based on the accounting method being used.

We, at Schulte and Schulte, LLC believe the accrual method is best because it tells you the financial health of your business. Yet, if you are inclined to run a cash basis statement, be certain you understand what you are looking at and the story that it tells.

Have questions? Give us a call, we can even help you make sense of those long-term contracts and accounting that occurs cross fiscal years. 480-442-4032 or Toll Free: 866-629-7735