|
With Labor More Plentiful, Raise the Bar for Your Trades
 With labor more plentiful than new jobs right now, builders have an opportunity to raise the quality of workmanship from their trade partners and to build lasting relationships with them.
Doing so is a two-step process that not only puts your trades and craftsmen on notice that more is expected of them, but also requires the builder to organize his business processes in a way that enables his trade partners to do a better job, according to custom home builder Richard Pagotto, of Granor Price Homes in Horsham, Pa.
Fire Your ‘Punch List Guy’ and Put Your Trades on Notice
One of the simplest and most direct ways to raise the bar for your craftsmen and trade partners is to fire your “punch list guy,” Pagotto says. “Send out a notice: ‘Johnny Fix-It is not going to be there anymore. You’re going to have to fix it yourself.’” With the punch list guy gone, trade partners will quickly learn to do the job right the first time.
Pagotto also recommends that builders eliminate the word “sub” from their vocabulary. Sub is a demeaning term for the artisans and craftspeople you depend upon for excellent work and service. Instead, call them your trade partners or trade associates.
Tasks Builders Can Handle for Their Trade Partners
Once the trades have been put on notice, it is up to the builder to ensure that the management practices he has in place will enable them to do a better job.
“These guys are artisans, craftsmen, so let’s do the business for them so they can do the work,” Pagotto says.
Pagotto recommends instituting the following business practices:
- Estimating — Send out a generic bid package. Negotiate a best price over a one-year period for a standard item, such as a three-piece bath, and then offer regular jobs. This helps your trades with their workflow and cash flow.
- Proposals — Provide detailed forms for price quotes, including all plans and specifications, so that all your trade partners need to do is fill in the blanks.
- Invoicing — Use purchase orders or work orders instead of invoices.
- Scheduling — Send advance notice — in months, not just days — to trade contractors of when they will be needed on a job site. This will enable them to plan their workflow better.
- Advertising — Keep the work flowing to the trade partners who add value to your business. When you win an award for a project, recognize your trade contractors’ contribution to the job.
- Takeoffs — Have suppliers handle takeoffs. Some will guarantee that their materials quantities are correct and will send more if they fall short.
- Standard Contracts — Provide your own standard agreement for trade contractors to sign.
Hone Your Bid Proposals
Keep bid requests to a minimum so you don’t risk alienating trade contractors by going to the well too many times, especially when you have to reject an offer, Pagotto says.
He also says that one call to a trade contractor should be sufficient for a return call. If the contractor doesn’t return the call within a reasonable time frame or meet your deadline for proposals, reject them out of hand, he says. Their unresponsiveness is a good indication of how they will treat you and your projects once they are on the job.
He also recommends that you standardize your trade pre-qualification form. It should require the name of the company, principals, address (not a P.O. box number), years in business, dollar-volume for the past three years, number of employees and liability insurance limits. The form also should have a question inquiring whether the company hires out work to other contractors.
“Make your forms fill-in-the-blank so you can get estimates faster and easier,” Pagotto says.
After Receiving the Bid, Make the ‘Trim the Fat’ Call
Even with fewer bidders, builders can still ensure that they get quality work for the best price. The key, Pagotto says, is that the builder should always make the “trim the fat” call to see how much contractors can trim their prices and still “take the work cheerfully.”
Always negotiate and never take the lowest bid without having a contractor double- and triple-check the math, Pagotto says. At the same time, never share bids of other trade contractors.
And don’t forget to thank each bidder for taking the time to submit a proposal, he says.
To further cement good trade relationships, Pagotto recommends calling at least one trade each day just to talk — assuming the contractors have the time — and to share their schedules for upcoming projects without hesitation.
Once you get a trade on board, he says, make your company a preferred builder to work with by paying on time and eliminating unnecessary paperwork.
Put a ‘Kick-Out Clause’ in Your Agreements
Finally, Pagotto says every builder should have a “kick-out clause” in their trade agreements stating that if a trade contractor does not perform to the agreed-upon standards, the builder can hire another contractor to complete the work and charge back the materials and labor to the original trade contractor.
For more information, e-mail Richard Pagotto, of Granor Price Homes in Horsham, Pa., or call him at 215-651-1687.
For more tips about working with trades, visit www.nahb.org/trades on the NAHB Web site. (This link is available to NAHB members only.
NAHB Has More Than 300 Resources to Help You Run Your Business More Profitably
Go to NAHB's Business Management Tools Web pages (available to members only) for instant access to more than 300 timesaving, moneymaking and cost-cutting business resources to help you run your business more profitably. Get guidance on accounting and financial management, business strategy, computers and information technology, customer service, human resources and more.
Resources are added weekly, so bookmark www.nahb.org/biztools to go directly to these vital business management resources.
Local and state home builders associations can link directly to www.nahb.org/biztools from their Web site and give their members instant access to these resources. It will make your HBA's Web site the place to go for the information and guidance that members need to succeed.
|
