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A Better Way to Build:
Why the System for Residential Construction is Broken and What We Can Do to Fix It

The predominant paradigm for residential construction today is based on intense competition and limited responsibilities among the parties involved in a home remodel or custom home construction project.  This results in a lack of trust, greater conflict and a final product which is often compromised in design and quality. There is a new approach which I call “Collaborative Construction” which creates a more efficient design process, a cost effective construction project and a final product that is often superior to what was originally designed, while also creating quality relationships between all of the parties involved.

Under the traditional “Competitive Construction” approach, an architect designs what the client thinks they want, but not necessarily what they can afford.  Once the architect has completed this design, they feel obligated to put it out to bid to three qualified contractors.  However, the client is generally not willing to pay for enough detail in the plans to make them actually biddable which results in the architect presenting incomplete plans to the bidding contractors.

As a result, the contractors are forced to make their best guess on what it will actually cost to build the project.  In this competitive bid process, the contractor knows that the client will probably choose the lowest bid so this encourages him to be overly optimistic in his pricing.   The client then generally chooses the lowest priced, most optimistic and most unrealistic general contractor to build the project.

Often times, the cost of the project comes back higher than the client expected. This forces the client to give up part of their dream in order to build something they can actually afford.  With this process, the client starts in a state of disappointment knowing they can’t have what they really want.  It’s like test driving a Mercedes all day and then buying a Kia! They are never really going to be happy with the Kia because they didn’t get what they actually wanted to experience in a car.

The original plans are now incomplete because the client did not want to pay the extra architectural fees to spec out every detail. This forces the building process to become a series of change orders and ongoing negotiations filled with conflict until the project is completed. Each party is defending their position in order to build the project while maintaining their own financial interests.

Under the traditional “Competitive Construction” approach, the project evolves amid this very stressful process that can damage the relationships between all of the parties involved.  In most cases, the project also goes over budget and exceeds the schedule as well. This is a broken process and needs to be changed. All the parties involved can be great people with good intentions, but by the time they finish building a project using this process, they’re stressed and exhausted, with relationships permanently damaged. There is a better way.

An approach which I call “Collaborative Construction” is used by many design build firms but is still not the industry standard in residential construction. This collaborative approach is based on trust instead of fear. Using this approach, the entire building team is chosen at the onset of the project. This team consists of the architect, the builder, the interior designer, the owner’s representative and the client.

One key team member that is often overlooked is the Owners Representative. Even if the homeowner plans to be actively involved in the process, they usually lack the experience and ability to navigate a home construction project.  Often the other parties think the Owners Rep role is covered by the project managers for the architect and the builder, but this is not the case. The Owners Rep plays a critical role in advising the homeowner, guiding their decisions, managing their expectations and uniting the entire team in the Collaborative Construction process.

In this approach, the client states up front how much they want to spend on the project, enabling their budget to drive the design process. The Owners Representative is the team leader who manages project costs and with input from the builder, ensures that the architect does not design something that the client can’t afford. The design is completed with every detail and real pricing for all materials, labor, supervision, profit and overhead.  In other words, the project is completed before it started.

In this “Collaborative Construction” process, the team is committed to using their creativity, both individually and collectively, to ensure the client can get the very best product for the lowest possible cost.   Projects following this process almost always come in on budget and on time, while maintaining positive relationships between all the parties involved.

The building industry is full of talented people with wonderful ideas and great intentions. The competitive process they are forced to use, because it is the industry standard, brings the worst out in everyone involved. I think it’s time that we change the industry standard to something that simply makes more sense. I have used the “Collaborative Construction” process very effectively for over 15 years in the construction projects which I have been involved.  I have many happy homeowners, builders and architects with solid, lasting relationships to show for it. I think it’s time to make this process the industry standard.

 

Ed EarlEd Earl is the principal of Priority 1 Projects, an Owners Representative and Construction Project Management firm based in San Diego.  Ed has 25 years of construction experience and an MBA from Stanford University.  He has represented owners on a wide variety of construction projects from a 27,000sf estate home to a safari camp rebuild in Africa. Ed is also a business coach working exclusively with contractors to help them increase both their profitability and enjoyment in their construction company.   He promotes an approach to construction project management he terms “collaborative construction” which is based on open communication, trust and shared objectives.  Ed has been nicknamed the ‘Zen Builder’ as a 20 year practitioner of Zen Buddhism and the project manager for the construction of a nunnery complex at Deer Park Monastery in San Diego which incorporates sustainable design and green building techniques including straw bale construction. Ed is also an energetic, talented national speaker with a passion for green building projects and helping contractors reduce conflict in their business and eliminate drama with their customers.  You can watch his presentations at www.TheZenBuilder.com  Ed Earl can be reached at Ed@Priority1CPM.comor 858-232-3677.

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80%-20% Principle

 

 

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I was working with a contractor. He says, he has just too much to do. He can’t get every project completed properly without burning out. I asked him if he knew of the 80-20 rule. He replied, “How does that apply to me?” I said that 80% of your problems probably come from about 20% of your clients. And that 80% of your income comes from 20% of your clients. My guess is it’s not the same 20%. So if you can eliminate the 20% of your problem client base, I guess you would not be burning out. Then we looked through his list of clients, ensuring that one; 80% of the problems were only 20% of the clients. And two, in his case, those problem clients were not the 20% that generated 80% of his income. When we found that the 20% that should be dropped could be dropped, I asked him to drop those 20% in any convenient way possible. Furthermore, I suggested, that taking clients at this 20% problem level wasn’t the right thing to do.

When accepting these problem clients, some part of his brain was telling him that taking this job is not going to be a good thing. But his fear of lack of money, or rejection, caused him to say yes, when he should’ve said no. I think intuitively we know when we’re making a mistake. And if we listen to that little voice inside our heads that nags us, and tells us we are in too deep. We would stop blindly saying yes to commitments we know are going to be difficult, if not impossible to keep. This begs the question, why do we keep saying yes to complex, unnecessary commitments, and accept responsibilities that we know we shouldn’t? I suggest that it is our fears. Fear of rejection, fear of low income, or even fear of letting a client down, can keep a small percentage of unnecessary problem jobs in the forefront of our big picture.

 

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Relationship Building with Architects

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Someone once told me a very valuable marketing principle that said, if you want to marry a rich woman, have to date rich women. I found this to be a very sound marketing principle. When it comes to a construction company, where do you find the rich women? My experience is most really good jobs come from architects. So if you know enough of the right architects, and have a good relationship with those architects, you’ll get a chance at all of the good work you want.
My clients tell me; well it’s not easy to get to see those architects. I disagree. By using a website like Houzz.com®, that lists all the architects that you want. It is very possible to find the right architect. You have their name, address, and phone number. From a marketing perspective that’s the most difficult part. The Simple truth is if you have the right relationships with enough of the right architects, you get all the work you want. So the challenge is, how do you get them to meet you?

I suggest to my clients that they interview the architect as much as the architect interviews them. Architects get about 50% of their work from contractors. So they are as interested in you, as you are in them. When you call them, let them know where you found them, (On Houzz.com®, referral, website ect.) and you’re very impressed with their work. After introductions, simply cut to the chase. Tell them you are looking for a good architect to refer to, and that’s why you want to meet with them. This works even better if you have a job to refer. If you do have a job to refer, I suggest you meet with several architects to get the most bang for your buck. Referrals in the construction industry are a type of currency, so spend it wisely. When you interview the architect make it mostly about them, not about you. Find some common ground to build a relationship upon. Whether it is construction, fishing, or biking find common interests. Remember you may not get a referral from this architect immediately, but you must have a good relationship for the future. A good relationship is probably going to take five or six visits. So persist, and don’t give up!
Make sure that before you leave the architect’s office you have the next meeting scheduled. Keep the meetings and the relationship up, until hopefully, they give you the opportunity to bid some work. The first visit is meaningless without three or four follow-up visits. Most contractors give up way too early in this endeavor. The contractor figures the architect knows what he is, and who he is. He hands the architect his business card, and asks if he has any work to give them a call. This is simply not how it works. Unless you make a sincere effort to maintain and improve the relationship, you will never get a referral from an architect. If the first visit is the architect telling you about themselves, the next visit can be about you. The third visit might be observing a job. The next visit could be having lunch, or some excuse to get together. Keep the ball rolling. Keep the relationship going. Stay at the top of the architect’s mind, if you want this to work. This is really where persistence pays off. If you’re not willing to persist to five or six visits, months of effort will probably be a waste of time.

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How to Get Work From Architects Using the Website www.houzz.com

 

By Paul Sanneman- Dream Business Coaching Founder-

The website houzz.com® has made marketing for the general contractor and subcontractor much easier than it used to be.  I have developed a specific technique for general contractors, and subcontractors, it works very well. In fact, I have used this exact same technique to get as many new clients as I want for my personal consulting business.

Step one: You go to the houzz.com website and identify those people you would consider as prospects. For a general contractor, you would go to architects. This means you select the category architects, and then choose an area geographically that you’re interested in. For example, select architects within 10 miles of San Francisco. You then look at each architect’s houzz.com listing and decide the one(s) you would like to work with. Once you have chosen an architect you want to work with, copy the top of their houzz.com listing, which gives the basics about the company; the name of the owner, their address, and phone number. You then copy and paste this information to a word document and then print it out. This gives you a very basic paper copy of a lead sheet to work with.

Step two: Then you place the all important phone call. The most difficult part about getting in touch with contractors or architects is to actually, physically, get them on the phone. Here is an example of a message you leave to get them to call you back.  Hi, I found you on Houzz.com, I’m interested in what you do, please give me a call back, my name is Paul and my phone # is 123-4567.  DO NOT LEAVE ANY MORE INFORMATION THAN THIS. Use your personal cell phone, so when they call back it will not have your business name on the answering machine.

A lot of the people you call will call you back because, they went through a lot of effort to be listed in houzz.com, and they also think you are a potential job. The next 10 seconds are crucial. You have to be honest, tell the truth, and get them to be excited they called you back. Your phone script should go something like this. I found you on houzz.com, I am a general contractor, I’ve been in business for 20 years in the bay area, and I’ve worked with several architects like…. Make a list of people they know, and will be impressed with. State how long you have been in business, and continue to drop the names of references that they know. This should establish instant credibility for you, and will make them want to continue the conversation.

The entire mission of this conversation is to get an appointment. If they ask for more information, you will want to use any information you give as a reason to see them in person. For example, if they say, can you tell me a little bit about more your company? You close again and say, it is much easier to explain in person, that’s why I would like to set an appointment.  Turn any excuse or objection into a reason to meet.   Again the whole mission of this phone call is to get an appointment. This is assuming that you can meet them in person. If you’re trying to get a phone client, or you’re selling on the phone, this is where you give your sales presentation. If they say, I will not talk to you until you send me more information.  Then you send them an email, and then you set up an appointment over the phone to follow up that email.

Don’t forget to keep closing. You may have to close them three or four times. Remember in closing you repeat any objection(s), so they know you heard them, and then you close again for the appointment. The entire purpose of this process is to get an appointment with qualified prospects. I have found that when people hear you found them on houzz.com they’re not offended when you call them. They went to time and effort to be listed on houzz.com.  It’s like you’re part of the same club, in most cases, they will really like to talk to you. I have one client the told me the best thing that ever happened on houzz.com, was that I found them. I hope you get the same luck with houzz.com that I’ve had.  It’s a great tool, it works nationwide, and it’s going to get nothing but better.

Step Three: After calling many, many houzz.com® prospects you will be left with three categories of responses. They can be receptive, and pick a time and place for an appointment.  They can be disinterested, not call you back and blow off all other attempts to contact them.  They can be unsure, and do not set an appointment, but do give an indication of interest, just not right now.   Now that you have the responses, it’s time to organize the information.   For each category of response you have, place the paper copy lead sheet with the business info in that category.  This is so you do not call the same uninterested lead twice, wasting your time and theirs’.  Also, you do not want to unknowingly call an interested lead twice, give them your same pitch, and look disingenuous.   The maybe responses go in their call back category.  Remember, a little organization will save a lot of time.

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Driving Me Crazy: By Paul Sanneman


I know a general contractor who has a big time management problem. He has more to do than he can possibly get done. In a perfect world he would simply clone himself, unfortunately that’s not a practical solution. A real world solution is to hire somebody with his exact skill set. But since he’s been in the construction industry for 20 years, knows all the ins-and-outs of his business, and is literally irreplaceable, that person is impossible to find. Furthermore, an individual who could do even half of those tasks would cost a fortune. A reasonable solution was found by breaking down his typical day in the office/field. Bam! There it was. He was spending three hours out of the workday in a car. Problem solved, do his work while he drives, right? No. Not without killing himself and/or someone else. I suggested they hire a personal assistant that could serve as a driver, as well as assisting in other tasks. At first he thought the idea of the driver was absurd. I told him that I had a personal assistant who drove, as well as perform tasks that do not require my expertise. I have been using a driver for 10 years, and it’s worked out very well. I hook up a Wi-Fi hotspot to the car, bring along my laptop, and presto! I have a mobile office. This allows me to see more clients, as well as bettering the service for those clients. I suggested he try the same thing. This would give him three hours a day to do work he cannot do now. He should be able to do any work from his laptop in the car that he could do in the office.
Another technological innovation that is ready to aide his new mobile office is a cloud based storage and retrieval application. These types of applications would put all the files on his computer in the cloud. This allows him access to any file at any time, from his computer or cell phone. Cloud based storage is very inexpensive; it also provides a backup for all your data and information. The types of time saving tasks that my client could perform in the car while the driver is driving include: making important phone calls he needs to concentrate on, sending/receiving emails on his computer, and even doing estimates by looking at the plans on his laptop.
Sometimes the construction industry is slow to adopt new technology. But usually, if it’s used effectively, technology can be your friend and it saves a lot of time/money. There also happens to be a huge rate of return on investment if you hire a driver. By paying a driver $10-$15 an hour, you are able to buy back your time. This, as a business owner, is worth hundreds of dollars an hour. So for the small investment of a personal assistant’s salary, and the technology to go with it, you can actually buy that extra day or week that everybody is looking for.

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Good Business Communications

by Jim Noh-Kuhn, Dream Business Coach

In my experience good business communications is about good listening. It’s not about speaking well or writing well – our society, especially in business, handles those reasonably well. But business doesn’t emphasize listening; we don’t send our brightest employees to listening classes or seminars. While we do send them to all kinds of other seminars, we just assume that they know how to listen. That’s because we confuse hearing with listening.

Ultimately, listening is about feeling heard and getting to an understanding. Simply put, good communication involves 5 steps that will lead to understanding and empowerment.

1.    Get clear on what it is you want to say – don’t be afraid of a silent pause while you gather your thoughts.

2.    Actively listen – don’t agree or disagree; understand the others person’s perspective thoroughly; leave your thoughts and idea’s alone for the moment and concentrate on the other person (you can get back to your thoughts later).

3.    Reflect back what you heard – use the stand-by: “here’s what I heard you say… is that correct?”

4.    Ask clarifying questions – ask for additional information; don’t be afraid to admit what you don’t understand; ask the other person if they feel heard (which is an amazing experience on its’ own without any of these other steps).

5.    Agree on a course of action – who’s going to do what and why; allow your intuition, your gut, to guide you to a creative solution that can only come about once you both feel heard.

These steps can be used for spoken or written business communications. My experience is that if you are able to really listen, without any other agenda like speaking your opinions on the subject, then the other person feels heard. When everyone feels heard, conflict disappears. In fact, this type of practice will avoid conflicts in a good way.

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After Articulating Business Goals, Create a Plan

By Jim Noh-Kuhn, Dream Business Coach

Garden at Versailles

A well thought out goal and plan resulted in this

In my last entry, I wrote about the importance of articulating business goals. After writing your goals down, you may find yourself filled with energy, and want to do something about your newly articulated goals. So, what next?

The first thing is to notice the energy you feel. You may think to yourself that you don’t want to loose that energy, and may even become fearful that you will loose it. Have no fear: you will. Inspiration is great – I highly recommend it; I find it a necessity for a balanced and successful life. But it is very rare to carry the energy of inspiration 24/7 throughout your entire life. It’s been done before, but mostly by people who have a title (two letter hint: St.)

Don’t despair, once inspiration is found, it can be found again. The key at this point is to use it while you’ve got it. That’s why many (most?) successful writers don’t rely on and wait for inspiration to do their writing. The schedule their writing like appointments and keep going.  When inspiration does strike they will recognize it, and use it to write words that inspire or to come up with ideas for the next project.

Use your inspiration as if it was a tool that will help you further on down the road, not just for the particular task at hand. You could use this new found energy to start the work, or you could develop the plan that will lay out the path towards achieving your goal.

For example, let’s say that the goal you articulated was to plant a garden in the back yard by the end of next month. After waking up full of energy you could grab tools and start the digging. There may be a semblance of a plan in your head of what will go where, but you want to “just start”, so you begin tearing out the weeds and debris. By lunch time your back hurts, your hands have blisters, your neck is sunburn, and you feel miles away from the completed garden. You may also notice that the energy of inspiration has been used up.

Or, the other thing you could have done as inspiration dawned is to sit back down with your newly articulated goal in front of you, and write out a plan – a set of objectives: the first is to clear away the debris. The second objective is to start seed germination, which you also note will require seeds, and small seedling containers. The third objective is to create a detailed map of what will be planted where. The third objective is to develop a budget for expenses. The fourth and perhaps most important objective is to develop a time line: how long will it take to clear the debris? What specific day will you be free to go to the nursery to get the seeds and containers? Tomorrow? Next Saturday? Make the time line specific, for all of the objectives, all the way to the celebration of the achieved goal. See the pathway to completion laid out in front of you.

This planning stage is about taking the inspiration and using it to help carry you through not only the next step, but many steps. From personal experience, just having a plan for business goals is inspiring, which I can then use to start working, but with realistic expectations as to how long and how much energy it will take me to clear the debris. With that, I’m now on my way towards achieving the goal.

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Goals Written = Goals Achieved

by Jim Noh-Kuhn, Dream Business Coach

With a practiced eye, I feel that the answers to my question of “what are your business goals, what is it that you want to achieve” become articulated right there on-the-spot. Usually the answer had already been a thought, perhaps even for a very long time. But it all-to-often had never been spelled out, literally.

Is this you? Do you have an idea as to what your goals are, thoughts, but have not committed to writing them down?  Or, perhaps those ideas, those goals are new: “how could I have written them down when I’ve only just now thought of them” you say. That could be true, but what about the last set of thoughts/goals – how successful were you at achieving those?

The inferred commonality is that these business goals were not written down. The other inferred commonality, equally important, is that these goals were not achieved.  There is a direct correlation between those two inferences: if you write down your goals, you are much, much more likely to achieve them than if you only think your goals through. If you don’t write them down, you are much, much more likely to not achieve them.

This sounds so silly, so easy, that it can’t possibly be true. But it is. So what to do about it? Take advantage:

Start with a comfortable medium: pan & paper, MS Word, a post-it note, the back of a napkin, it doesn’t matter. Then write down what it is that you want to accomplish. Don’t worry if it’s the most important thing, or if it’s realistic. Don’t worry about knowing how you’re going to achieve it. Don’t worry about punctuation, or getting it just right. Just write.

Then put the pen down, or back away from the keyboard, and look at it; take it in and notice how you feel. Then, do not, under any circumstances, delete it, nor crinkle it up and throw it away.

The third step is to write a second version. No matter how well written, the first version needs a rewrite. That’s why you stopped in the previous version to notice how you feel, because there will be something about that first version that is gnawing at you, and you need to fix that. Spend some time in this next draft to make the goal specific; Also, apply a time element to it – don’t just say “own my own house”, make a commitment, like “own my own house within five years”.  You may not yet know what all has to happen in those five years, but don’t worry about that yet. Establish a time frame, and if it later needs to change, then it can change.

Beyond this step, there are many possibilities. There will be another blog on this in the near future. At this point, you are already more likely to achieve your desired outcome than in the past. So take your newly re-written goals and do something with them: put the post-it note on the fridge, make it your screen saver, or even just chuck it in a drawer and ignore it – you’re still more likely to achieve it.

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Selling Versus Marketing

by Jim Noh-Kuhn, Dream Business Coach

I have noticed a tendency of small businesses to market by selling, and to sell by marketing. It’s important to remember that these two activites are different. Marketing is the attraction of potential customers to your business; converting a target audience to become potential clients. Selling is the act of converting those potential clients to actual clients by understand their needs and meeting those needs.

As Ron Willingham points out in his excellent book “Integrity Selling for the 21st Century“, selling is about the personal relationship you have with a potential client. It’s about solving their problem, whether that solution involves your product or service or not. If the potential client sees that you have their best interests in mind, then they are much more likely to reward you with business and/or a referral.

Ah – the referral. That brings us to the best business strategy for marketing: word of mouth recommendations. It may not be fancy or sexy, but it has always been more effective towards getting more new paying customers than anything else. And in this day and age of social media and electronic connections, that word of mouth can spread quickly.

But word of mouth is not something controllable, and your marketing plan needs to be controlled (and measured). If selling is about solving a potential client’s need, then target marketing is about reaching people whose needs could be solved with your products and services (if they only knew that you existed). For example, if your business is installing kitchen cabinets, then your target audience is everyone who needs new cabinets.

An important question at this point is whether your marketing plan includes those people who don’t yet know they need new cabinets. How comfortable are you in “creating” a problem, where perhaps a potential client can’t afford new cabinets. This is where your company’s values come into play. That’s why it is so important to articulate and know your values upfront, before a marketing plan is defined.

The next time you’re faced with a potential customer, ask yourself what their real need is, and help them solve that. And the next time you’re faced with spending marketing dollars, ask yourself two questions: what are my values, and who is my target audience? Then, satisfying their needs will feel truly fulfilling.

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Define Business Success

by Jim Noh-Kuhn, Dream Business Coach

How do you know if your business is a success?

Without thinking about it, most people think they know what business success is. Coming up with a definitive answer is one of the most important things that you can do for your business.

Well-meaning managers often define it in financial terms. While those are certainly important, the financial numbers are just that – numbers. They do not tell the story of how it feels inside, whether there is fulfillment, or an emptiness that even strong financial numbers can not fill.

In my experience, business success will always be tied to core values. If they are being expressed, then there will be a feeling of success.  The more conscious one is of the values, the stronger the feeling of fulfillment. It’s important to identify a definition of what each value means. Two people can have the same value of “family” but it may mean something completely different to each of them. These kinds of details are integral to defining what success is for your business (as well as for your life!).

Finally, the way I advocate to find out what your values are is not to brainstorm with a white board and a few of your top managers. Instead, it’s to look at what is most important, for example, why you started the business in the first place; or look at your conflicts, because your values are showing up there.  Often times, it’s far easier to identify your values using support. That may come in the form of a coach, or someone else who you have hired; it can also come from a colleague, friend, or family member.

Once your values are revealed, you can articulate exactly what success is. Specifically, when what you are doing is a manifestation of a value, you will feel successful. Therefore, define business success in the terms of your values. Then, look to see how they feel, and if you feel more successful.

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