Boots on the Ground

Subcontractors, The Heartbeat of Construction

Reach for the Stars if you Want to Get Ahead

MB TruckIn his presentation to the NC Subcontractors Alliance at their July 2013 meeting, Gary Olnowicz, president of The Linda Construction Company, said “Sometimes, you have to bite off more than you can chew.” The meaning behind this is that to grow in business, sometimes you have to reach beyond your comfort zone.

My moment came in 1978 when I was a young contract salesman for Binswanger Glass in Norfolk, VA. I was in my second year in sales. In those days, I was strictly commission, earning 15% of the gross profit of the sale. To get a jump start, I had been concentrating on small jobs that could be turned around quickly so that I could get into position to cover my draw. My commission was paid quarterly, after deducting for my draw and expenses. Luckily, I was successful in landing a very busy metal building dealer who furnished me a couple nice jobs each month and a builder who was building nine Roy Rogers Chicken restaurants in the area. We did not use project managers at the time, so each salesman was totally responsible for his jobs until they were handed off to the Glazing Superintendent to get them installed. It was taking a lot of time to stay ahead on small jobs, so I realized I needed a bigger job carry me along.

One day, I was alone in the contract office when the call came. It was a call from The Haskell Company in Jacksonville, Florida. They were going to design/build at truck assembly plant for Mercedes Benz in Hampton, Virginia and wanted Binswanger to price it for them. I wasn’t going to give it up. I had them send me the plans. The job was big, but fairly simple. It consisted of 1,000 running feet of 4 ft. tall fixed and operating self-mulling strip window units and a 100 foot x 27 foot tall curtain wall assembly. I got all my quotes, put the labor on it and went to my manager to get approval to bid it. We put the price on it and I rolled the dice.

A few weeks later, I got a call from my contact at Haskell. He wanted me to fly down to Jacksonville the following Monday to meet with the design team. I told him I would get back to him. Both the contract manager and branch manager tried to discourage me from going. They both suggested that Haskell was just using me and that I would be making a mistake to go. I said I had a feeling on this one and had developed a feeling of trust with my contact. He told me to go ahead, but he made sure I understood that all the expenses of the trip would be charged against my commission.  1978 was before airline deregulation and the cost of a same day trip from Norfolk to Jacksonville and back was $678. Yes, I still remember that amount. It was a significant amount when your monthly draw was $1,000. That was a sleepless night.

The next morning, I called Haskell and told them I would be there Monday. Sunday was another sleepless night. Up early on Monday to drive out to the Norfolk Regional Airport. The flight, including a stop in Atlanta took about four hours. A taxi ride to Haskell’s office and I was there with about 20 minutes to spare. The advantage of a design/build team is that everything is done in house. I was before the estimating team, the project manager, the architect and the engineer. I made my presentation, then we got to the meat of the meeting. The architect had specified Kawneer windows and Kawneer 1600 curtain walls. Binswanger was not a Kawneer dealer so I had come to the table with Miami Wall Systems windows and Amarlite curtain walls.

But, in an unexpected development, the project manager spoke up and said he did not object to Miami Wall, they had been used on several of their Florida projects. Someone else said, “I understand Amarlite’s curtain wall has a 2” wide mullion and Kawneer is 2.5” wide.” Before I could answer that I had figured on Amarlite’s heavy system, the architect spoke up “I don’t object to a 2” mullion as long as it windloads. A quick call to Jerry Wright at Amarlite got me the windload values and everything worked. I realized they wanted to do the deal as much as I did. They assured me a contract would be going out to me the next day. We shook hands and they had one of their assistants take me back to the airport.

There I was. A twenty-nine year old kid who had landed his first big job. I was walking on air. I don’t remember a single thing about the flight home. The moral of the story is you have to take a risk if you want to score the big one.

In Business, Relationships Rock!

Swim with the sharksFirst Posted September 8, 2013

In 1988, a man named Harvey Mackay wrote a book that set the business world on fire. It was called “Swim With the Sharks Without Being Eaten Alive.” It is an entertaining and enlightening handbook to be successful in your career and personal life. It is a networking bible. It established Harvey Mackay as a respected author and columnist.

The book chronicles Mackay’s career from a recent college graduate trying to find a job, becoming successful selling envelopes, to buying a failing envelope company and turning it into a huge success. The book has been re-printed and needs to be in every businessman’s arsenal.

As a construction Subcontractor, we are losing the personal relationships we have with our customers, the General Contractors. Invitations to bid are sent out electronically. To view plans, we go onto a contractor’s FTP site or to a service like iSqFt. We download and print plans or order the prints from a third party printing service. We send our bids by fax or email. General Contractors now have a “pre-construction” department that puts the bids together before handing them off to the project manager, sometimes with a purchasing department in between. Unless you have a relationship with a contractor, or a really low price, your lines of communication with the contractor are limited.

Getting to know the people in the company you want to do business with are more important than having the lowest price. Contractors are looking for the lowest responsible bid, and when the contractor knows you, you get a seat at the table when the job is bought out. What Harvey Mackay wrote in 1988 is relevant today, except that part about a Roladex. If you use Mackay’s principles, including the “Mackay 66,” the things you should know about your client, your business relationships will be greatly improved. For you youngsters, it is even available as an e-book.

How’s Your Project’s Cash Flow?

TenaciousFirst Posted September 2, 2013

In an uncertain economy, a positive cash flow is imperative. Your goal should be to exit the recession with the same amount of cash you entered with. If you don’t have cash, you won’t be able to fund the materials and labor necessary to take on additional work when the economy recovers. Your accountant furnishes you with a periodic cash flow statement at the end of the period, but very few subcontractors do a cash flow statement on their individual projects. A project cash flow statement will let you know how each job is affecting your overall cash flow.

You can download an Excel template for a simple cash flow statement at http://office.microsoft.com/en-us/templates/statement-of-cash-flows-TC001046101.aspx?AxInstalled=1&c=0 . You should have your project manager furnish a monthly cash flow statement on each project. You only need to do the top section, Cash Flows from Operational Activities. It is only 7 lines long and you are only concerned with the top three lines, cash received, cash paid for materials and cash paid for wages, benefits and other operating expense. The template will calculate your cash flow for the project.

Why do a project cash flow statement? The project manager has the most influence on cash flow and contractors fail when they run out of cash.

Tips for improving your project cash flow:

  1. Front load the Schedule of Values. This is critical to maintain a positive cash flow on the job.
  2. Get the billing in on time and done correctly. Re-work on the billing is deadly to cash flow.
  3. Negotiate for payment of stored materials.
  4. Negotiate lower retention terms. Make sure the contractor passes through any reductions he gets from the owner.
  5. Email your invoices. Even if you are still required to mail an original, the contractor will still be able to include your billing for the month if the mail is delayed or lost.
  6. Utilize ACH payments. The money is sent directly from their bank to your bank.
  7. Get a check scanner from your bank and immediately scan any checks received.
  8. Have one person dedicated to collections. Must be tenacious.

Forecast for 2014… A Lot Like 2013

Martha-Ann Marley First Posted September 1, 2013

Long-time members of ASAC-Charlotte, now NC Subcontractors Alliance, will remember a program in 2008 by Martha-Ann Marley, called “A Contractors Diet: How To Get Lean.” The program was a segment of her 2 hour seminar and based on an article she wrote for the CFMA magazine, “Building Profits,” January-February 2006 issue. Based on her 24 year experience as a surety underwriter with a major surety company, poring over thousands of financial statements, audits and economic data, she realized certain common attributes of companies that survived and thrived during down economies, versus those that failed. The main attributes being, maintaining liquid assets, cash flow and a plan for controlling costs during the downturn.

Based on her study of economic data, she predicted that the coming recession, now known as The Great Recession, would be deep and would not begin to show improvement until 2013. She gave a detailed list of things that contractor’s needed to do to survive and thrive during the recession. In her latest seminar based on her article “Stuck in Neutral?” “Building Profits”, May-June 2012 issue, Martha-Ann shows the data that indicates the bottom of the recession was reached in early 2013. But, there are not yet any indicators showing that the economy is pulling up off the bottom. She has now revised her prediction. Now, she predicts that the economy will not show improvement until late 2014.

There is still a lot of uncertainty in the economy. What is the Fed going to do with interest rates? What is going to be the cost to your business for Obamacare? What will be the impact of pending federal regulations from OSHA and EPA? Remember, the EPA director in speeches has promised to “regulate the coal industry into bankruptcy.” What will that do to energy prices?

If you can’t attend one of Martha-Ann Marley’s seminars, you owe it to yourself and your company to read her articles. She is now NC President of Gardner Insurance Group. These articles are available on her website, http://www.gardner-insurance.com/ and can be downloaded in a pdf format by clicking on the pictures of the magazine covers.

In The Beginning

Art-1iwMy name is Art Rouse. I have been employed by Binswanger Glass for 39+ years. I have worked as a sales representative, office/operations manager, branch manager and now as the area administrative manager. I have been involved in all aspects of subcontracting, from estimating to project management. My current job is to assist Binswanger locations in North Carolina and western Virginia with the administrative side of subcontracting and requires that I stay current with legal issues that affect subcontractors.

I will be blogging for the North Carolina Subcontractors Alliance. This is the former Charlotte Chapter of the American Subcontractors Association of the Carolinas. In a special meeting of the membership in June 2013, a majority of the membership voted to disassociate itself from ASAC and focus on legislation and construction issues at the state and local level.

The plan is to link this blog to the NCSA website and online newsletter. Since the organization will be using the WordPress templates for the website and newsletter, I have been asked to do my blogging on WordPress as well. My original posts were done on my personal blog on BlogSpot, so my next few postings will be re-posts from BlogSpot.

I hope you find these posts helpful and relevant. I will try to keep them interesting and timely. Comments are always appreciated.