Most remodeling companies start with a carpenter, a truck, a tool belt, and hope.
But those that evolve into respected upscale remodeling firms eventually find that they must have systems to manage the growing complexity of their projects.
“If you don't put systems in place,” says Houston remodeler Bill Shaw, “you're just going to die.” And nowhere are those systems more crucial than during the handoff of the project from the design stage to the construction stage.
In a sloppy or rushed handoff, details worked out by the designer and expected by the client can get lost like sand through the boards of a deck. Although a flawless handoff is key to a successful project, the foundations for it are laid long before the pre-construction meeting when the actual handoff typically occurs.
Here are three remodeling companies that have, over the years, developed systems and strategies to make sure that the package handed off from sales and design to production is as perfect as possible.
William Shaw and Associates
Type of company: Design/build
Location: Houston In business since: 1984
Annual volume: $2 million Employees: 5
What's in the package?
Sales lead sheet
Design agreement
Job cost analysis
Scope of work
Construction budget Notes and correspondence
Drawings Bids and estimates
Permit Product specifications
Client Pre-Construction Progress Checklist
Before photos of project site
Who sees a project before the job starts? When do they see it? What input do they have?
Company president Bill Shaw, who does most of the sales and design work, has divided the pre-construction process into two phases. Before the final phase, which includes construction drawings and a firm contract, the company produces preliminary drawings and a preliminary budget. The goal is to produce a design that is within 10% of the client's budget. “If I miss it by a lot, I'm probably going to lose the job,” Shaw says, “but I'd rather know it early instead of later down the road when I have a lot more time invested.”
The company uses Chief Architect software for all drawings, which is helpful to subcontractors but also to homeowners who have trouble visualizing their project in 3-D. Shaw reviews preliminaries with his draftsman, and with the construction manager who will be working on site during the project. Because all production work is subcontracted, it's critical that nothing is missed and that all details are thoroughly defined so that subcontractors can do accurate pricing from preliminary drawings. The product manager also gets involved at this point to provide allowances (more about this below).
The clients sign the contract after construction drawings are completed and the construction budget has been updated with subcontractor changes or pricing for any work added to the preliminary drawings. The production department then reviews the package a final time to make sure it is complete. Shaw wants their input both to make sure that nothing is missing, but also because their bonuses are based on job profits. But he limits this review period to three days. “We have to keep things moving at this stage,” he says. “If I don't hear from them, I assume I have their blessing.”
What systems have been put into place to keep track of details and changes?
Checklist. As projects have become more complex during the company's evolution from a handyman company to a design/ build firm, systems have increasingly been put into writing. One indispensable document is the five-page Client Pre-Construction Progress Checklist. This serves as a reminder of necessary tasks and who in the company is responsible for them. The checklist is on the company's Web site, and after clients have been qualified, Shaw asks them to download it. “It helps for them to see that we have systems in place and to build the comfort level that we know what we're doing,” he says.
During the pre-construction process, the project package circulates in a white notebook that includes the checklist, so everyone in the small office can determine where things stand at any time.
Product manager. This position was created four years ago not only to help clients with product selections, but as a central point of contact for specifying, ordering, receiving, and for warranty management. “The job is really complete product management,” Shaw says. “That includes signing off on all deliveries to make sure the finishes are right and that nothing is missing or damaged.” The product manager produces a selection guide notebook, meets with vendors, and orders products. She also produces copies of product specifications for the project manager and the designer-estimator, as well as for the cabinetry provider, the electrician, the plumber, and the HVAC contractor, as needed. She uses allowances for preliminary pricing, but for the final package she converts them to definite product selections and creates a shopping list for the clients.
Biweekly meetings. As a project goes into production and changes are made, the opportunity for mistakes increases. To keep on top of these changes and their repercussions, the company holds biweekly staff meetings on Mondays and Thursdays at 8:30 a.m. Rather than relying on paper memos, which tend to get lost or are ignored, this company uses a white board or a flip chart in the production office to write down what needs to happen, who needs to be notified, what needs to be ordered, and so on. When a task is completed, it comes off the board. Otherwise, Shaw says, “It's sitting there staring at you.”
Gehman Custom Remodeling
Type of company: Design/build
Location: Harleysville, Pa.
In business since: 1991 Annual volume: $3 million
Employees: 28
What's in the package?
The Red Notebook created by sales and design includes:
The signed contract
Estimate showing detailed breakdown of labor hours, materials, subs, and overall expected gross profit
Project location map
Purchase orders for long lead items, ready for production to fax as soon as the schedule for the project has been set
Final selections worksheet
Copy of drawings Black-and-white before pictures of the project site
The Blue Notebook given to the project manager includes:
The signed contract Estimate showing detailed breakdown of labor hours, materials, subs, and overall expected gross profit
Project location map
Purchase orders for long lead items that have already been placed
List of subcontractors to be used for the project
Final selections worksheet signed by the clients
Copy of permit drawings signed by the clients
Pictures of the project site
Additional Work Orders (AWOs) consecutively numbered, including cost estimate
AWO tracking sheet noting which were accepted and which were declined Permits for posting on site
List of required inspections
Phone numbers to call for inspections
Approved permit drawings
Who sees a project before the job starts? When do they see it? What input do they have?
Two notebooks, a red one and a blue one, are created for each job. The red notebook — created by the design and sales teams — comes first. They hand it over to the production supervisor, who comes back to them with any adjustments or corrections. If the project budget is affected, estimating makes any adjustments to the internal cost breakdowns. Because this process typically takes place simultaneously with permitting and product selections, permit drawings are sometimes added at this stage, along with any late-arriving product selections.
When the red notebook is as up-to-date and error-free as possible, the contents are duplicated, put into a blue notebook, and given to the project manager. The project manager reviews the contents, and any significant changes made at this point are put into sequentially numbered Additional Work Orders (AWOs) that are reviewed by estimating. Some AWOs do not affect cost but serve as documentation for specification changes, such as product selections. Because the contract has been signed and the project budget set with the clients, changes to the contract price are rare at this point. “Pricing changes most often come into play in cases where the estimator figured that a sub would do the work but production says they will do it,” says company president Dennis Gehman. “So those pricing adjustments - need to be made internally.” If the bookkeeper has already entered the job into the accounting system, this kind of cost shifting is handled with a “dummy” AWO. Once construction begins, AWOs are more likely to affect overall project cost. They are priced by estimating and, once signed by the . homeowners, are added to the blue notebook.
Gehman says that the company has been using the contrasting red- and blue-colored notebooks for as long as he can remember. “It's an easy way to make sure everyone is working with the most current information.”
What systems have been put into place to keep track of details and changes?
Teamwork.
Gehman Custom Remodeling uses a team approach. The salesperson is first to meet with the client. After a pre-construction contract is signed, the designer and the estimator go out to the client's home. Even when a project is in the beginning stages, “a lot of eyes have seen it,” salesman Gary Hoch says.
Typed meeting notes. Everyone is diligent about making notes at every meeting with the clients, typing up those notes, and putting them in the job notebook. Hoch types up his notes himself, while company president Dennis Gehman speaks his notes into a tape recorder after the meeting and has his assistant type them.
No oral prices. To avoid confusion, all prices —including for additional work orders — are put in writing. No oral prices are ever given. Estimating used to be done in Excel spreadsheets, but the company recently converted to The American Contractor software. The hope is that the software will help the company integrate the estimate with the other construction documents.
ARDO Contracting
Type of company: Handyman, renovation, and design/build
Location: Columbia, Md.
In business since: 1983
Annual volume: $1.9 million for design/build division ($3.2 million, total company)
Employees: 16 in design/build division (28, total company)
What's in the package?
Client information sheet
Contract
Specifications
Adjusted plot plan Permit drawings
Floor plans, electrical plan, other drawings as necessary Project timeline/Gantt chart
Building permit
List of allowances List of client selections (already made and remaining to be made) Copies of bids from subcontractors
Copies of price quotes from vendors Budget sheet
Who sees a project before the job starts? When do they see it? What input do they have?
ARDO Contracting is organized into three divisions: a handyman division; a traditional remodeling division doing projects of shorter duration and ranging in cost up to about $80,000; and a design/build division. Each has its own sales staff and production crew. Company owner Paul Arnold is the design/build division's production manager, and the first time he sees a project is about a week before the pre-job meeting with the clients. Up until that time, company architect, Jim Molinelli, steers the project through the sales process, performing both design and estimating duties.
In the initial meeting with clients, Molinelli establishes the scope of work, tries to get a sense for the types of products the clients are interested in, as well as the price level for both products and the overall job. “At that first meeting, if I don't get a budget, I don't do the job,” Molinelli says. In subsequent meetings, as the design emerges, he also provides allowances for key materials, features, and fixtures. There is some “ping-ponging” back and forth, Molinelli says, but his goal at each meeting is to give the clients a clear choice. “I want them to be comfortable in each decision with both the design and the price.”
In one-third to one-half of the projects, Molinelli will also hold short meetings with Arnold during the planning stage to get input, especially about process — cost and timing to support the second floor while dismantling the first floor, for instance. Lately, Molinelli is also meeting more often with the carpenter who will be on site, so he will be more familiar with the project before meeting the clients.
What systems have been put into place to keep track of details and changes?
Selections room-by-room. When the package is handed over to the production manager, a spreadsheet shows selections made by clients and those remaining to be made. The twist here is that the selection list is organized by room rather than by type. According to Molinelli, this helps cut down on overlooked details. “It's easier to stand in the middle of a room, physically and mentally, and say this needs to be done and that needs to be done.”
Three budgets. Molinelli produces three separate budgets. The original is a complete line-item spreadsheet showing all detail and serves as the master. Every time the budget is revised, Molinelli creates a clean copy so that he can trace all changes. A cleaned-up version of the estimate goes into the package handed off to the production manager. It has no multipliers or any other detail that might enable a client to calculate markups should the job folder accidentally be left overnight at the site. The third version is broken into the cost categories used by the company's accounting software. This includes labor broken into time-sheet categories.
Owner's assistant. Company owner Paul Arnold came into the business from the field, and while his expertise is in building, he's not as comfortable with the paperwork. After he hired an assistant to take care of the paperwork, the company started running more smoothly and now fewer details are lost or forgotten.
