Trust and Risk Mitigation in Construction

Trust and Risk Mitigation in Construction

Editor’s note: Our social calendar (including blog posts) is scheduled weeks (sometimes months) in advance. The following post was written over a month ago and “calendared” at that time. In other words, we did not plan this post to coincide with the Coronavirus scare and reaction. But it has proven to be well-timed.

Trust is about taking risks

I learned of some folks who took in a young foster care child who had been abused by his parents. He was unwilling to trust. He couldn’t trust anyone or anything in the world he inhabited. His mistrust of life was so deep-seated it even included simple addition. No matter how many times his care family showed him that two apples plus two apples always equaled four apples, his response was, “What if it doesn’t equal four the next time I try it?”

This story broke my heart when I first heard it, and thinking of it now still saddens me.

Trust is a basic tenant on which we all make it through each day. From the floors we stand on, to the chairs we sit in, to the mugs we pour our hot drinks in, we trust they will continue to do their jobs. Yet, there are those times they don’t.

For example, you trust that when the traffic light is green one way, it is red the other. Further, you trust that when the light is red for the cross-traffic, the drivers in that lane will stop. And this sometimes leads to trusting that the ambulance drivers will take you to the nearest (or best) medical facility.

Every day, we get up, and without thinking about it, we trust. But sometimes we realize we must verify before we continue to trust.

Verification is about risk mitigation

From the products you purchase to the services you take advantage of, to the people you hire, there are ways to verify if you’re likely to receive that which you desire. A prudent verification process is essential.

It can be as simple as looking for the number of stars other users have given a retail item or as difficult as checking a doctor’s background and credentials.

In the end, verification allows you to eliminate, reduce, or control the impact of known risks.

Because our practice consists of management accounting, we advise commercial construction subcontractors to protect themselves from data fiascos through the process of risk mitigation.

Risk mitigation through contingency planning

There are multiple ways to lose data, such as fire, storms, cyber-attacks, employee theft, and beyond.

The key to developing a good plan is to focus on possible losses rather than events.

 

Think in terms of which data takes priority. What would cause the most pain if lost? With this understanding in mind, here are a few items for you to consider while developing your data contingency plan.

 

  • Rank which data are most important
  • Review data back-up and storage procedures
  • Find back-up service providers (you may find this article helpful)
  • Develop a back-up procedures manual
  • Secure outside support for payroll or other financial issues

 

Remember to include client and employee management strategies to be used during a crisis when developing your back-up procedures manual.

Risk mitigation through back-up

The goal is to establish data back-up systems to protect critical documents.

Remember when someone pointed out you were comparing apples to oranges rather than apples to apples? Yep, that sometimes happens. And the simple solution is to remove the oranges as you make your decision based only on apples. If only it were that easy when trying to determine which method or service to use for backing up your data.

It turns out that deciding between your back-up options is more along the line of comparing tacos to tacos. Do you prefer street tacos? How about deep-fried tacos or fast food tacos? Do you want to sit and enjoy handcrafted tacos?

The plethora of options can tend to get in the way until you determine the specific needs of your construction company’s data back-up and recovery needs. Which tastes better to you? How much time do you have available? Does location matter? Does the price make a difference?

Further, back-up is not the only piece of the equation. Fast recovery of all that backed up data is important. The point is to quickly put everyone back in touch with the information that’s needed.

Risk mitigation through insurance

You already insure your building, equipment, vehicles, life, and health. It only makes sense that you use insurance for the data you have stored in the cloud. In an article posted on The Balance Small Business, it is stated, “Cyber liability policies protect your business from claims and expenses resulting from a data breach.” The article, What Does a Cyber Liability Policy Cover? explains various components and aspects you need to look for and consider when purchasing this type of insurance.

You can check to see if your present provider offers cyber liability protection, or you can purchase this insurance as a stand-alone product.

Risk mitigation through checks and balances

Finally, as management accounting specialists, we advise contractors to mitigate risk with the simple process of checks and balances. Following is a list of checks and balances you may wish to consider for your construction company.

  • Use a system of double-signature requirements for checks, invoices, and payables.
  • Make use of the services of an accounting firm and the different services of a tax preparer.
  • Provide multi-department authorization for final figures.
  • Separate handling responsibilities from record-keeping functions and purchasing responsibilities from payables functions.
  • Before payroll preparation, require supervisors to approve employees’ timesheets. (Or automate time tracking for accurate timesheets using an app such as ClockShark)

A couple of other ways you can mitigate internal risks are:

  • Require accounting department employees to take vacations.
  • Make use of independent audits.

In conclusion

If you define risk as being the probability of an event attended by the possible consequences, then risk mitigation is the practice of using various tools to manage the risks.

Keep in mind; risk management is not a one-off exercise. Continued monitoring ensures that risks have been correctly identified and assessed and that appropriate controls are in place.

Editor’s note 2:  We are working hard to see to it that our clients weather the storm. Definition of “weather the storm” from Merriam Webster — to deal with a difficult situation without being harmed or damaged too much.

We desire to familiarize you with business concepts, which will make it easier for you to be a better commercial construction subcontractor through our blog posts. Some are new ways of looking at things, and others are refreshers. 

Schulte and Schulte Provides Accounting, Contract Document Management, and Advisory Board Level counsel for small to medium commercial construction subcontractors.

So you can Run With the Big Dogs! Call us 866-629-7735

Budgeting and Estimating

Estimates and Budgets for construction contractors simplified through software

Proper budgets and estimates

If your commercial construction contracting business is to survive, then you must be equipped to provide proper budgets and estimates. More importantly, if your construction business is to be profitable, then having budgeting and estimating skills in place is essential.

Develop a total project budget

Developing a project budget includes:

  • Analyzing requirements and drawings to verify the scope
  • Determining cost and time parameters
  • Allocating enough for contingencies and cost escalation

Moreover, once the project is underway, the budget allows you to:

  • Remain vigilant concerning variances
  • Make decisions based on actual costs

Therefore, using a project budget establishes useful guidelines for completing profitable jobs.

Benefits of proper budgets and estimates

While there are some easily spotted benefits to using proper budgets and estimates such as:

  • Avoiding inaccurate bids
  • Curtailing the constant use of change orders
  • Collecting sound financial information on which to base decisions

There are other benefits which are less easy to measure, for example:

  • Realizing a greater ability to make continuous improvements and anticipate problems
  • Growing an improved sense of clarity and focus
  • Achieving more confidence in your decision-making

Estimating – the cornerstone of construction projects

Accurate cost estimation is critical for creating and maintaining a feasible budget for construction project costs.

Estimating is the process of evaluating or calculating the amounts of material, labor, and equipment necessary to complete a project. Therefore, it becomes the cornerstone upon which all else rests. Above all, getting project budgets right and controlling costs is essential to project success.

And, like any other phase of construction contracting, having the right tool for the job makes the difference. Thanks to technology, estimating has been dramatically simplified and streamlined.

Knowify makes it easy

The team here at Schulte and Schulte knows, uses, and recommends the use of the software developed by Knowify. They provide a step-by-step process which moves from bidding, to the proposal, to billing.

In no order, I’ve listed a few of the features or functions construction contractors note they can apply when using the system developed by Knowify.

  • Labor costs tracked precisely
  • Avoid missing items when invoicing
  • Change orders sent and approved quickly
  • Monitor the profitability of each current job
  • Better track materials
  • Better organization of invoice tracking and employee productivity
  • 2-way sync with QuickBooks
  • Ability to create AIA style billings

Moreover, one contractor said Knowify is a “one-stop-shop for estimating, time-tracking, invoicing, and scheduling.”

To sum it up, Knowify helps build a budgeting plan, measures results, and improves overall operations.

 

We desire to familiarize you with business concepts, which will make it easier for you to be a better commercial construction subcontractor through our blog posts. Some are new ways of looking at things, and others are refreshers. 

Schulte and Schulte Provides Accounting, Contract Document Management, and Advisory Board Level counsel for small to medium commercial construction subcontractors.

So you can Run With the Big Dogs! Call us 866-629-7735

Leadership — Develop an eye for the big picture

Leadership through developing an eye for the big picture

How neglecting some things in your business pays off

Here’s the deal; big picture thinking is a core leadership competency. Yes, as a leader, you must see the forest and let others be concerned about the trees.

Savvy construction leaders focus more on steering long-range objectives, providing inspiration, and motivating others. They are likely to:

  • Anticipate opportunities, contingencies, and potential problems
  • See idea, theory, and concept connections
  • Understand people networks and relationships
  • Discern and make use of data
  • Avoid or (at least) reduce discord
  • Recognize associates, collaborators, and competitors
  • Develop the skill of situational awareness

Therefore, all the minor things, the “details,” are left to others. Experienced leaders know how to delegate, designate, automate, or eliminate.

By giving your team the opportunity to take care of the details you gain more time for effectively leading.

A few examples of big picture thinkers

According to Rowan Bayne, author of “Psychological Types At Work,” about twenty-five percent of the population are big picture thinkers.

Wow, not a huge group. Here are a few examples you’ll recognize.

  • George Washington
  • Winston Churchill
  • Steve Jobs
  • Sandra Day O’Connor
  • Aristotle
  • Jeff Bezos
  • Warren Buffett
  • Mark Cuban
  • Elon Musk

Big pictures and details

While some have a natural tendency to see the big picture others are more likely to focus on the details.

For years I believed you had to be one or the other. You had to be someone who could see the big picture or someone who thrived on dealing with the details. Then, I discovered the concept isn’t that simple. Or that hard.

Rather, there seems to be a continuum or scale on which we all fall. At one end are the folks who find it difficult to notice details because they’re so focused on the big picture. And vice versa, at the other end, people who are so close to the details they don’t seem to notice there is a big picture.

And then, there are those who fall in between.

Big picture and detail in the Schulte and Schulte office

We were interested where the folks in our office were located on that scale. So, we took a little test.

Tonya came in at 60

This is what she learned, “You scored as more of a ‘big picture’ thinker. This means that you often zoom out and try to understand a situation from a broader perspective, but you sometimes miss out on the finer details. You likely consider yourself more of an ‘artistic’ or ‘creative’ person rather than a ‘scientific’ or ‘rational’ person. You aren’t as interested in the small nuts and bolts of how things work, but how things fit together in a larger context. The closer your score is to “100” the more of a ‘big picture’ thinker you are.”

Alicia scored 34

She was told, “You scored as more of a ‘detail oriented’ thinker. This means that you often zoom in and breakdown a situation based on its individual parts, but you sometimes miss out on the bigger picture. You likely consider yourself more of an ‘scientific’ or ‘rational’ person rather than an ‘artistic’ or ‘creative’ person. You are often interested in the small nuts and bolts of how things work but find it difficult to see things fit together in a larger context. The closer your score is to ‘0’ the more of a ‘detail oriented’ thinker you are.”

Joe showed up at 49

His results were, “You scored as equal parts ‘big picture’ thinker and ‘detail oriented’ thinker. This means that you are capable of zooming out and trying to understand a situation from a broader perspective, but you’re also good at zooming in and seeing the finer details of how things work. You likely consider yourself both an ‘artistic’ and ‘creative’ person, as well as a ‘scientific’ and ‘rational’ person, depending on the situation.”

Take the quiz

You may already have an idea where you fall on the continuum. Or you may be surprised. So, go ahead and take the quiz. It is free and you don’t have to give your email to get the results. It is twenty-five questions long and takes only minutes to complete.

Not only will you have a better idea of which traits you already possess, but you’ll also be able to note in which areas you may need to improve. And yes, it is interesting to get others in the office to take the quiz also. It may be eye-opening for you and your staff or coworkers.

In case you were wondering, I received the same response as Joe although my score was 54.

Unexpected ways to improve your big picture eye

Stay informed. Think about what is happening beyond your business or community. Think about trends in demographic, economic, social, and technological ways.

Be sociable – in person. Connect with a variety of people. Spend time talking with people from different areas of life. More important than talking to them is listening to them. Consider other’s opinions and views.

Read or listen to books. Not just construction or business-related books. Read about the “things of interest” in your mind. Science, music, history, people, or ideas you wish to explore. Whatever. Have fun. And learn some stuff along the way.

Volunteer. Of course, there is always value in the act of helping others. But you may not have thought of the value you can receive from seeing the world from a different perspective. Plus, typically when you volunteer you can interact with like-minded people who show up where you show up.

Chase rabbits. OK, there is a different term for this activity. Some call it “surfing the web.” Go with no purpose in mind. Travel to places you’ve never gone before. See something that interests you? Chase it down. Share what you learned with others. (In the past, this category would have been called, Go to the library.)

Play games. From getting involved with an amateur sports team to playing board or card games there are many ways to play games. And oh, what you can learn! Leadership skills, teamwork, staying on track, focus, determination, and sportsmanship are just a few of the lessons learned from playing games. Perhaps the most important lesson to be learned is to not take yourself too seriously – have fun along the way.

Check this out also

This article is the third in a four-part series concerning leadership in the construction world. The first was, Leadership – Keep learning. The Next was Leadership — Practice Composure.  And the fourth is Leadership — Inspire others

 

We desire to familiarize you with business concepts, which will make it easier for you to be a better commercial construction subcontractor through our blog posts. Some are new ways of looking at things, and others are refreshers. 

Schulte and Schulte Provides Accounting, Contract Document Management, and Advisory Board Level counsel for small to medium commercial construction subcontractors.

So you can Run With the Big Dogs! Call us 866-629-7735

Organizing Time in the Construction World

Organizing time is about organizing time well.

Organizing Time is about organizing time

When you find yourself running from one business fire to another all day long, there’s a good chance you didn’t take TIME to organize your time. From calendars to to-do lists and everything between, there are plenty of time organizing tools.

  • Calendars
  • Clocks
  • Watches
  • Apps
  • SaaS
  • Timers
  • Checklists
  • To-do lists

In this article by John Rampton on Forbes, you’ll find twenty time management tips. 

All of the tips are valid and can make organizing your time easier. Of course, there are tons of other lists concerning time management out there as you’ll easily see if you google something like “time management tips.”

Some are more enlightening than others.

None are a bit of good if all you do is read them and move on. You must act if you hope to manage your time better.

The rule for organizing time

One of the tips Rampton suggests is to follow the 80-20 rule. It is this suggestion that supersedes other time organizing strategies. Get this one right, and you’ll find it is easier to use the tactics described in the multitude of time organizing lists.

You probably know this rule as the Pareto Principle. And, at its base point, it is a principle, not a rule. There could be danger in assuming only 20% is enough to remedy all situations.

For example, knowing that 80% of a bridge is built in the first 20% of the allotted time doesn’t negate the fact that the entire bridge must be built to be useful.

In the final analysis, the idea is to use this principle to determine what activities generate the most results, then give those activities your appropriate attention.

Finding your 20

Take the time to think about the work you do on a day-to-day basis and ask yourself questions like this:

  • Who are the 20% of staff who manage to interrupt my day 80% of the time?
  • Which 20% of the general contractors I work with provide 80% of my revenue?
  • Which 20% of my routine tasks deliver 80% of my effectiveness?
  • Who are the 20% of employees who help me with 80% of the work I delegate?
  • Which 20% of tasks completed will solve 80% of the problems I have to face today?
  • What are the 20% of my construction company’s jobs that gave me 80% of my satisfaction last year?

You’ve probably noticed none of these questions are simple, nor are they easily answered. It isn’t as if you can write a “find my 20” on your to-do list one day and check it off at some point in the day.

Finding your 20 is a habit you build over time, and it takes practice to see the benefits.

Tip: Block out time on your calendar (yeah, that time organizing tool) to spend time on finding your 20. Some find it useful to choose a short time frame daily. Others prefer a longer time frame weekly.

Ask more questions

It pays to remember that 80-20 is a guide, not a rule, a principle, not a law. Plus, 80-20 may change proportions somewhat. It can be 90-10 or even 70-30, yet the concept remains the same.

Here are more questions for you to consider:

  • Which 20% of our systems are responsible for 80% of the errors we come up against?
  • What 20% of the mistakes we make on job sites are responsible for 80% of our call-backs?
  • Which 20% of our vehicle loading procedures are causing 80% of misloading problems?

Or, you can turn this around and ask this type of question:

Which 80% of tasks do I complete day-to-day that only give me 20% of my good results?

What are 80% of our employee benefits that only help 20% of our employees?

What are 80% of our overhead costs which contribute to 20% of our results?

As a construction contractor, you have a lot of information and a lot of tasks you need to stay on top of constantly. You can see that taking the time to master the habit of using the 80-20 principle will pay off.

If you’ve gotten this far, I guess that you know you need help in your time management strategy. There is no better time than right now to begin. Use these five tactics to become better at time management.

  1. Mark 80-20 thinking time on your calendar. Keep it sacred.
  2. Make sure others you trust know you’re on this journey.
  3. Get someone to hold you accountable to stick with it.
  4. Watch for small victories and note them.
  5. Teach someone else to use these principles.

If that last step seems odd, remember there is no better way to learn about a subject than to teach it to someone else.

Two last thoughts

Managing time well is a tool used by successful business people in all industries. And, managing your time with purpose is a skill set which you can master through practice.

 

This is the second article in a four-part series dealing with organizing your construction business.  To read the first part, The Hidden Strategy for Construction Subcontractors, link over. Upcoming in the series are Technically it is About Organizing the Tech and Organize Your Construction Office Space.

 

We desire to familiarize you with business concepts, which will make it easier for you to be a better commercial construction subcontractor through our blog posts. Some are new ways of looking at things, and others are refreshers. 

Schulte and Schulte Provides Accounting, Contract Document Management, and Advisory Board Level counsel for small to medium commercial construction subcontractors.

So you can Run With the Big Dogs! Call us 866-629-7735

Being Patient in an Impatient Construction World

being patient pays off

Being Patient for the long-haul

Learning to be patient takes . . . well, it takes a modicum of patience. And, I’m among those who’ve had to learn the hard way how impatience is a sure-fire way to run smackdab into trouble – quickly.

As a matter of fact, you and I both know it is often the case that we should take time to wait prudently to make the best logical move. Yet, we live in a fast-paced world where opportunities, bids, safety mishaps, product shortages, and lack of skilled labor can make us feel as if the proverbial walls are closing in. Then you must make decisions. Which will it be?

  • Time to act!
  • Time to be patient.

Patience plays a part in our short and long-term business results.

Limited knowledge or skill sets may be challenges you face when you rush your construction business along hoping for fast results. Patience to learn more about the business of being in business is worth the time it takes.

Yet, be careful. Failing to act when necessary is one way of using the “patience card” when what you’re doing is procrastinating.

Being Patient through relationships

Patience gives you an added ability to treat other people with kindness, a sense of decency, and respectful regard. That in turn, increases the possibility they will respond back to you in the same way.

Cultivate patience to increase good relationships with:

  • Partners
  • GCs or owners
  • Employees or subs
  • Suppliers and service providers
  • Family and friends

 

Being Patient pays off

What you gain are:

  • Personal Grit
  • Fortitude to make decisions
  • Ability to wait for the RIGHT opportunities
  • Positive recognition among your peers
  • Increased customer satisfaction
  • Stronger profits

What others say about being patient

“Patience is the companion of wisdom.” Saint Augustine

 

“Each life is made up of mistakes and learning, waiting and growing, practicing patience and being persistent.” Billy Graham

 

“Patience and perseverance have a magical effect before which difficulties disappear and obstacles vanish.” John Quincy Adams

 

“Patience is bitter, but its fruit is sweet.” ― Aristotle

 

“Only those who have patience to do simple things perfectly ever acquire the skill to do difficult things easily.” James J. Corbett

 

“Patience is a virtue, and I’m learning patience. It’s a tough lesson.” Elon Musk

 

“How poor are they that have not patience! What wound did ever heal but by degrees?” William Shakespeare

 

“All men commend patience, although few are willing to practice it.” Thomas a Kempis

 

In the end, being patient IS a big deal!

Savvy construction contractors understand delay doesn’t equal denial. And they see that success begins with patience. It is then strengthened with commitment. And continues with the due diligence necessary for excellence.

Patience takes time and conscious effort to master and is often the factor which sets successful construction contractors apart from Joe Blow Contractor.

 

It is our desire this article (among our growing library of construction-centric informational articles) is helpful in assisting commercial construction contractors build better building businesses. 

Providing Accounting, Contract Document Management, and Advisory Board Level counsel for small to medium commercial construction subcontractors.

So you can Run With the Big Dogs. Call us! 866-629-7735

Financial Acumen for Construction Contractors

Getting all the signals right when it comes to financial acumen.

How Financial Acumen puts you ahead

When you gain financial acumen, you understand how to use financial reports along with all the accompanying metrics to monitor your commercial contracting company’s performance and make proper adjustments.

Think about it. When you make decisions based on both historical and predictive indicators you gain a better outlook for success.

Therefore, gaining financial acumen means you possess a solid understanding of what drives your company’s profits. You “get” how financial decisions form the backbone of your business.

Therefore, it is about following the signals – and knowing which signals to follow.

It affects your employees  

Your employees and subs want to know that your business is viable and capable. They want a secure company which provides stability for them and their families. Check out this article from businesscollective.

It isn’t enough that you’re a “nice guy” who has an “excellent vision.” If you don’t have the moxie to pull off the difficult financial decisions, finding good people who will stay the course goes up in a puff of smoke.

General Contractors must see your Financial Acumen

While there are different requirements made by different general contractors it is typical that they want to see financial data. They will collect and analyze it to determine the stability and adequacy of your construction company’s financial resources to perform the work.

They will look at your financials in order to gauge annual sales volume and present net worth. Often, they will go on to analyze financial ratios such as working capital, total assets, sales assets, and retained earnings.

This is a quick example of what general contractors are looking for.

You benefit by growing your Financial Acumen

Of course, the down-and-dirty is being able to support yourself and your family. Yet, there are other, more subtle ways you benefit through growing your financial acumen.

  • Able to hold your own in a conversation with fellow contractors or other business leaders
  • More ability to analyze data and interpret key performance indicators
  • Greater understanding when dealing with lenders
  • Better able to develop business plans or personal objectives in line with your goals and strategy
  • Growth of decision-making skills
  • Increases your financial understanding and confidence

Final notes  

It isn’t our job to wipe your plate clean of financial concerns. It is our job to help you put the right things on your plate. We’re here to help you follow the right signals.

The signals which will aid you in building a healthy construction contracting business through gaining financial acumen.

 

It is our desire this article (among our growing library of construction-centric informational articles) is helpful in assisting commercial construction contractors build better building businesses. 

Providing Accounting, Contract Document Management, and Advisory Board Level counsel for small to medium commercial construction subcontractors.

So you can Run With the Big Dogs. 866-629-7735  

Building Codes in History

Building Codes from history form a basis for today's codes

Building Codes in Stone

So, you think it is hard to deal with city hall? Then, you gotta check this out.

The beginning of documented building codes came from Babylonian king Hammurabi, who reigned from 1792 to 1750 B.C. The black stone stele containing the Code of Hammurabi was carved from a single, four-ton slab of black diorite.

Most of us know that dealing with a slab of stone weighing in at four tons, measuring 7 feet 3 inches high, with a circumference at the base of 6 feet 2 inches and at the top of 5 feet 4 inches is no easy feat.

And those of you who deal directly with stone know diorite is difficult to sculpt because it is hard, its composition is variable, and it has a coarse grain size. Leaves you wondering why this type of stone was chosen.

So, let’s get the obvious out of the way first. Yes, this stele is a phallic symbol which Hammurabi used to declare more than the simple fact-of-the-matter laws.

Building Code preamble

I mean, check this out. This is what Hammurabi had the stone masons carve as the preamble to the laws:

“When the lofty Anu, King of the Annunaki and Bel, Lord of Heaven and Earth, he who determines the destiny of the land, committed the rule of all mankind to Marduk, when they pronounced the lofty name of Babylon, when they made it famous among the quarters of the world and in its midst established an everlasting kingdom whose foundations were firm as heaven and earth – at that time Anu and Bel called me, Hammurabi, the exalted prince, the worshipper of the gods, to cause justice to prevail in the land, to destroy the wicked and the evil, to prevent the strong from oppressing the weak, to enlighten the land and to further the welfare of the people. Hammurabi, the governor named by Bel, am I, who brought about plenty and abundance.”

Hell—low! Ego much?

And, remember I noted above that this stone is hard to carve. It isn’t likely Hammurabi was trying to make life difficult for those carving the laws into stone. It is more likely Hammurabi was doing his best to make it difficult for anyone to pick up a “stone eraser” and change the law. So yeah, there is the difference between “let’s do it this way for now,” and “sorry buddy, this stuff is carved in stone.”

The down and dirty of the Building Code

While there are a lot of other laws on the stele, this is a short list of the laws we would construe as building code. (With my thoughts and notes following in parentheses.)

  1. If a builder builds a house for someone and completes it, he shall give him a fee of two shekels in money for each sar of surface. (Area measures are based on the sar, which is one square nindan or about 36 square meters. That’s about 387.50078 square feet if you’re wondering.)

229 If a builder build a house for someone, and does not construct it properly, and the house which he built fall in and kill its owner, then the builder shall be put to death. (Doesn’t seem to be any wiggle room here. Like, never mind trying to blame the subs!)

230 If it kill the son of the owner, the son of that builder shall be put to death. (So, I guess we’re just assuming the builder has a son. And, if he didn’t, I’m not sure where daughters might fit into the picture. Kind of makes me glad – again – I’m a girl.)

231 If it kill a slave of the owner, then he shall pay slave for slave to the owner of the house. (Rather than eye-for-eye it looks as if, when it came to slaves, it was good enough to provide value-for-value. Although you do have to wonder if it was the less-than-attentive slave who caused the “falling in” in the first place.)

And there is more

232 If it ruin goods, he shall make compensation for all that is ruined, and in as much as he did not construct properly this house which he build and it fell, he shall re-erect the house from his own means. (And, he darn well better hope he gets it right this time! Although, it could have been worse – see laws 229, 230, and 231)

233 If a builder build a house for someone, even though he has not yet completed it, if then the walls seem toppling, the builder must make the walls solid from his own means. (Kind of puts the kibosh on today’s nonsensical business “wisdom” of fail fast, fail often.)

Of course, Hammurabi’s isn’t the only ancient documented set of laws we know of. Yet, it is often touted as the first to have guidelines for contractors.

Building Codes in a newly formed country

In 1788, the Constitution of the United States of America was working its way through the ratification process one state at a time. Georgia became the fourth state to ratify on the second of January. By June 21st New Hampshire provided the needed ninth ratification and the Constitution went into effect. (It wasn’t until May 29, 1790, that Rhode Island voted to ratify the document. It was the last of the original 13 colonies to join the United States.)

In June of 1788, Old Salem (now Winston-Salem) North Carolina adopted the first known building code in the United States. Yet, confusing matters just a bit, North Carolina didn’t ratify the Constitution until November 21, 1789.

If you check the Constitution, you’ll find there is no official language mandated in the United States. Yet, it is intriguing that in a (mostly) English speaking nation, that the first building code was written in German.

The Building Code of New Salem

You can find an introduction to and a translated copy of the Code of New Salem here.

Go check it out. It is rather short – I mean, there are only 11 Building Regulations in the document. I know! Right?

And, I love the preamble:

“We are not going to discuss here the rules of the art of building as a whole, but only those rules which relate to the order and way of building in our community. It often happens, due to ill- considered planning, that neighbors are molested and sometimes even the whole community suffers. For such reasons, in well-ordered communities, rules have been set up. Therefore our brotherly equality and the faithfulness which we have expressed for each other necessitates that we agree to some rules and regulations which shall be basic for all construction in our community so that no one suffers damage or loss because of careless construction by his neighbor, and it is a special duty of the Town Council to enforce such rules and regulations.”

Beware of peeping neighbors

The tenth regulation in which there is mention of “peeping neighbors” as well as instruction concerning fences and window placement is perhaps my favorite. Here it is in its entirety.

“10. Since experience has taught us that so many complaints and quarrels and damage can arise from access between lots, so that often one cannot enjoy his own piece of land and work on it, it is mandatory that henceforth every lot must be completely fenced in. No gates or openings shall be left for communication except with the knowledge and permission of the community government. A house that is placed near the side line of a lot shall not have any windows that look into the neighbor’s yard and in general all gable windows shall be well considered as to whether they are necessary, so that the aforementioned molesting can be avoided.

For the lower floor there is not too much objection because of the fences, and in kitchens and service porches only high windows can be used anyway. However, a common rule cannot be fixed and decisions must be made from one case to the next. There are no objections at all to windows facing the street. The people will have to take care of peeping neighbors in the usual way.”

So yeah, today’s codes are much more complex. Yet, it is in these early codes where we find the concepts of standards, zoning, and enforcement that have reached down to our present-day building codes. Think about this the next time you’re dealing with permits, inspections, and all things code.

 

Schulte and Schulte provides Accounting and advisory board level Strategic Counsel for small to medium commercial construction subcontractors. You can learn more about us here. http://www.schulteandschulte.com/

So you can Run With the Big Dogs. 866-629-7735

Subcontractors – What’s Your Story?

Subcontractors tell your story to grow your business

Subcontractors – What’s Your Story?

Subcontractors create

The culture you create within the confines of your construction subcontracting business radiates. That culture becomes the story your construction company is known for. What story is your subcontracting business telling?

Are your crews known for showing up on time prepared to give it their all? Or do they have the reputation for being late and leaving the site frequently to retrieve forgotten tools?

Are your people the ones who will go the extra mile to help out the GC? Or are they the ones who fail to clean their own mess because they “don’t want to be taken advantage of?”

Can you be sure your phones answered by people who either know the answers or know how to get them?

Is all the paperwork your general contractor asks for submitted in a timely manner? Or is it only taken care of when someone in the office or the field gets nagged enough to get it done?

Creating a culture which stresses “customer service” allows you to tell a better story.

The first two questions you need to ask are:

  1. How do the GCs in my area perceive my company?
  2. What do I want it to be known for?

Subcontractors develop

The culture you develop in your construction business has the power to attract the right employees. I’ve heard Tonya express it this way many times – your vibe attracts your tribe.

When your employees and subs know you care about them as human beings, not just a tool you use to get a task done they’re more attuned to supporting your efforts. Giving bonuses and raises whenever possible is only part of the picture. Giving praise and supporting their efforts for personal as well as professional growth helps your team see you as someone who cares.

With that being said, let’s move to ways to help your team understand your stance.

Want your team to lie to you? Teach them that lying to the GC is acceptable. Or would you prefer your employees tell the truth about errors and omissions? Be sure to model that behavior.

Do you want your team to steal from you? Show them that cutting corners is the only way to get ahead. Or, does it make more sense to teach them that your expectation is for excellence and “good enough” is never good enough.

Do you prefer your team members show up on time? Then of course, you must be their example. When you call for a meeting, you must show up before the meeting starts, not a few minutes later.

Subcontractors lead

If you don’t already have the skills of a leader you need to develop them. Here is a great graphic which depicts the difference between a boss and a leader. You can check the graphic to see which skills you need to improve or strengthen.

Want your folks to feel all they do is work hard for a paycheck? Neglect to let them know what it is they really do. Want them to get the vision? Show them the vision.

And the way to frame that is often with the end game in mind. Are they laying brick or helping build a medical facility which will save lives? Do your hands think they’re painting walls or do they believe they’re putting the finishing touches on a space which will provide jobs for the community? Are they laying wire or pipe or rebar which will not be seen when the building is complete, yet will bring integrity and ultimately usability to the shopping district?

The next questions you should ask yourself are:

  1. How do my employees feel about their jobs?
  2. What do I want our team members to feel about their jobs?

Subcontractors improve

When it comes to company culture and telling your story there are likely areas in which you can improve. Because, as you know, if you’re not getting better . . .

The purpose of your business (why your company exists) is where your story begins. How do you fit into the big picture in the construction industry? How well do you pass on your vision?

Look at your mission statement, values, and long and short-term goals to get a handle on your culture. The next step is to observe how your employees reflect the statement, values, and goals. Be sure your mission statement isn’t just a bunch of words, rather that it captures the essence of how your team operates. Know what values are important to you. Devise a way to pass on those values to those in your employ. Be sure everyone is on the same page concerning long and short-term goals.

See to it your team has a clarity of purpose. Work to be sure your employees are engaged, not just getting by. Trust your team and do all in your power to let them know they can trust you. Always be learning. See to it you’re providing opportunities for your team to learn and improve. Finally, make sure your company policies align with your company culture.

The final set of questions to ask and act upon are:

  1. What is right about our company culture?
  2. How can it be improved?

Develop an excellent company culture and tell your story so you’re able to:

 

  • Capture General Contractors’ Attention

 

  • Enhance Recruiting and Retention Efforts

 

  • Improve Your Business

 

Control your story both internally and externally.

 

It is our desire this article (among our growing library of construction-centric informational articles) is helpful in assisting commercial construction contractors build better building businesses. 

Providing Accounting and Advisory Board Level counsel for small to medium commercial construction subcontractors.

So you can Run With the Big Dogs. 866-629-7735

Delegating in the Construction Arena

Delegating helps you grow your construction business

Delegating in the Construction Arena

Delegating: a leadership tool

Every day you send people into the field or to their desks to accomplish a variety of tasks. You’ve delegated a certain portion of the work to each of them. How well they perform is based on their skill level and on how well you’ve delegated.

Therefore, your job isn’t to accomplish the things your employees or subs are tasked with. Furthermore your job is to see to it they have the proper understanding and the correct tools to get the job done.

Delegating requires trust

Before you can trust someone to accomplish something, he or she must climb your “trust ladder.” Some of the steps they must climb are:

  • Show up on time
  • Be competent at their work
  • Be dependable

Once these rungs are accomplished there are a few other steps which must be taken. You want your people to:

  • Tell the truth
  • Admit when they don’t know something
  • Admit when they’re wrong
  • Do the right thing even when they think no one is watching
  • Listen – truly listen

When these trust levels are met then you:

  • Trust them with your resources
  • Trust them with information
  • Develop relationships

I can’t go on without mentioning that sometimes trust is broken. When it is, this article from Frank Sonnenberg discusses how best to deal with the situation.

Delegating takes guts

Just like you can’t seat every pipe, pound every nail, or swish every brush, you already understand you can’t perform every task.

Hence, there is a very good chance you’re holding on to some tasks you think only you can perform.

So, what should you do? Stop it.

From the jobsite to the office there are probably tasks you do which would be better left to others. And, it takes guts to pass them on. Most likely, the reason you haven’t already passed them on falls into one of two categories. You don’t think someone else can do them as well as you do, or you never even thought of passing it off – because you’ve always done it.

Delegating – divide the tasks to multiply the success

Delegating isn’t something you’re new at. By the very nature of the beast, construction depends on a myriad of delegation levels. Likewise, it is part and parcel of what you do. Yet, there are likely ways you can improve your delegating powers.

As an aside, if you would like to see a stunning example of delegating to the nth degree, drop in at your local fast-food joint. Not all, but many fast-food restaurants have delegated the duties of the host, wait-staff, and bussing personnel. Not only have they nearly erased the rolls usually performed by people in those positions, they’ve delegated much of their associated tasks to . . . uh, you – their paying customer. Just sayen’.

What to delegate

There is a myriad of tasks which you can pass off to others. You’ve already stepped into that realm when you hired your first employee or contracted with your first sub. Yet, there are more tasks and efficient ways you can delegate. It is quite likely there are some duties you feel you are the only one capable of handling correctly. Many of those tasks you can trust to others. Really.

In this list there is only one item included that you will likely be better off doing yourself. Can you figure out which one it is?

  • Bidding
  • Estimating
  • Sales
  • Approving change orders
  • Paying bills and payroll
  • Cultivate a strong company culture
  • Invoicing
  • Managing individual crews
  • Software or SaaS acquisition
  • Selecting new tools or equipment
  • Approving purchase orders

If you determined the one item which doesn’t fit in the above list is “Cultivate a strong company culture,” you’re right. One of your most important tasks as the leader of your construction company is to set the course. And, if you’re too busy taking care of the other tasks, you have no time for course-setting.

Delegating gives you space for true leadership

It is your job to lead the business. There are areas where you need to direct your focus once you’ve passed on tasks, responsibilities, and duties to others. Here are some areas where you can spend time once you’ve delegated well.

  • Set up and develop the brand name
  • Create and implement vision and direction
  • Form company culture
  • Understand the budget and the financials
  • Establish financial performance metrics
  • Develop long and short-term strategic plans
  • Plan recruiting and retention strategies
  • Lead, guide, and evaluate employees and subs
  • Establish criteria for success and provide leadership for achievement of goals
  • Hold employees and subs accountable
  • Delve into innovation
  • Seek opportunities for expansion
  • Stay on top of new industry developments and standards
  • Solicit advice from mentors, associates, and experts
  • Represent your company in civic and professional associations
  • Participate in industry related events
  • Assess operational situations for crisis management, safety, and escalation protocol
  • Determine solutions to project issues
  • Develop cost effective resources

Avenues to delegation

There are basically four avenues you can use to step up your delegation game.

  1. Use in-house personnel – Whether in the office or in the field, the judicious use of delegation to the people in your employ makes your company healthier.

 

  1. Engage trade subcontractors – Handing over part of the work to trusted subs is a long-standing method of increasing the capabilities of your construction business.

 

  1. Deploy outside sources – This delegation option (once only available to the wealthy) is becoming more and more necessary, accessible, and expedient. A few available options you should consider are an attorney, accounting services, a virtual assistant, marketing, website development, janitorial services, outsourced human resources, and tax preparation.

 

  1. Adopt technical systems – There are several critical processes you can automate (think delegate) through the use of software or SaaS and apps. A few which come to mind are project management, takeoffs, estimating, and job costing.

Delegating is an investment

Remember that an expense is different from an investment. Mike Harden, of The Clarity Group says, “What’s the difference between an investment and an expense? The difference is simple: one will start paying you back, and the other is a drain on your resources.”

  • Taking time to delegate is an investment.
  • Paying fees to delegate is an investment.
  • Choosing correct technical applications is an investment.

Investing in your business through delegating well is a sound business principle. A business principle which has the power to exponentially increase the value of your company.

 

It is our desire this article (among our growing library of construction-centric informational articles) is helpful in assisting commercial construction contractors build better building businesses. 

Providing Accounting and Advisory Board Level counsel for small to medium commercial construction subcontractors.

So you can Run With the Big Dogs. 866-629-7735

Outsourcing Accounting – How to know when it is time

Outsourcing accounting is how savvy contractors grow their businesses.

Outsourcing Accounting – How to know when it is time

Outsourcing accounting too soon

If you:

  1. Are an average (non-construction related) small business owner who factors in the time needed for administrative and accounting tasks you can probably wait to outsource until such time as you become quite busy.
  • Can’t identify the business result you want to see (an actual benefit to you or your business) perhaps you should wait. You must be clear in your own head about what you’re paying for and what you expect as a result. If you think of an accounting specialist as a cost generator rather than a business and profitability advisor, it is likely you’re not yet ready.
  • Are hell-bent on having your fingers in every piece of the pie. If you’re an (as yet) unconverted micro-manager who has a low trust level, it is probably better that you wait.

Outsourcing accounting when it is too late

If you:

See that your books and therefore your business is so messed up, so in debt, so unorganized, as to be on the brink of bankruptcy – it is probably too late.  

Outsourcing accounting just in time

If you:

  1. And your office staff are constantly feeling as if you have too much to do and not enough time to get it all done, it is a prime time to begin looking for an outsourced accounting provider.
  • Understand outsourcing your accounting duties can be a total game-changer for your construction contracting business, then finding a virtual accounting firm should be your next move.
  • Know you’re ready to delegate the accounting operational tasks so you can focus on tasks of a business owner designed to grow your business, it is time to pick up the phone.

Outsourcing accounting pays off

For example, you have time for networking, meeting with in-progress clients, selling your services, and developing more ways to serve both your clients and your employees.

As independent contractors, virtual accounting specialists are part of your team without the “headache” of extras. Extras such as benefits, taxes, sick pay, and so on. This article from Entrepreneur tells why outsourcing certain functions can mean better talent at lower costs.

Outsourcing accounting with the Schulte and Schulte team means:

You get the best of our extensive construction contracting accounting knowledge and acumen.

Here are a few things we are good at dealing with for you:

  • Job costing
  • Audit readiness for high-risk workman’s comp companies
  • Complicated sales tax issues
  • Payroll
  • Inventory tracking
  • Systems development and deployment
  • Financial planning

Quick checklist

This quick checklist will be of help when you’re trying to decide if you’re seeking an outsourced accounting firm just in time.

Your business is growing.

You or your staff find you’re spending more time learning than doing.

You’re drowning in administrative tasks.

Your office staff is fraught with overwhelm.

You’re running out of time to focus on what makes you money.

Your personal life is taking a toll.

 

Wondering if now is the time to outsource your accounting and back office needs? Get in touch here and we’ll talk.