NOW ACCEPTING
RESERVATIONS!
for
March 16-17, 2006

For the last three plus years I have been helping construction business owners get their businesses to work in roundtable boot camps called“Profit Builder Circles.” It is an exciting opportunity for me to give back to the industry that has helped me get what I want: time, freedom, and lots of wealth!

Got Fun?

Got Time?

Got Profit?

Got Wealth?

Got Great People?

Got Loyal Customers?

The many who have attended these working sessions leave with a customized action plan to help them reach their goals. Some are in the early stages of growing their businesses and need help getting organized and systemized. Some have a well-managed company and want to take it to the next level. Others want answers how to create equity and build their net worth. Just a few days ago I received the following fantastic letter from a graduate of our Profit-Builder program who has grown his business over 200% in less than three years!

What Gordon said after attending a ‘Profit-Builder Circle’

George:

I wanted to drop a line to let you know; almost 3 years after having participated in your program, I still keep many of the concepts we discussed in mind:

• At your prompting, I joined Young Executives Organization and have maintained a productive relationship with members of my peer forum.  That suggestion alone has contributed in the successful growth of our company . We have grown over 200% in only 3 years.  We’ve also improved profitability and maintained a strong, reliable, and appreciative customer base.

• I recently joined the Associated General Contractors and have developed many fruitful relationships among competitors and clients alike.

• Profit, profit, profit…I practice and preach the principal constantly.  We’ve become much more efficient at identifying loser jobs and clients, and removing them from our midst.  We are now making over 9% net profit after capitalizing $350,000 worth of equipment using $100,000 in cash directly from our cash flow.  We also paid off $250,000 worth of debt. Plus I paid myself a solid salary, and I’ve managed to acquire another property, which my company pays for in rent.

• I’ve managed to parlay an M1 property in Ventura (my last yard/office) into a High-Density Residential parcel which we’re working to developing into 25-30 residential condos.

• I’ve traveled to China to see my YEO mate’s factories first hand…on a whim. I went to Sri Lanka for 2 weeks last January to help with the Tsunami clean up…on a whim, and I’m headed to Costa Rica in January to work on a volunteer project in the jungle...not a whim.

• I’ve taken at least 6 weeks a year off.

• My kids actually know who I am and my wife no longer works in the office and is able to be a full-time wife and mother.

I really could go on and on, but I don’t want to gloat. 

I’m not saying I accomplished this because of your program, but the timing of our meeting was perfect. Your story of success and personal intervention allowed me to see first hand, what a businessman can accomplish through hard work, integrity, and common sense. I detected a like-mindedness and confirmation that what I was trying to accomplish was genuine and attainable. The experience I had with you was an affirmation of my personal and business principles.

I have a boat load of challenges ahead of me, and I am trying to appreciate these great times as best I can, because this all goes in cycles. There are a series of challenges on the horizon; the last two months have been incredibly busy for me. But I’m working on my business, and for the first time in 16 years, I’m having fun.

Thanks for all you do to help guide fledgling construction entrepreneurs to success.  Please consider me a resource for anything you try to accomplish in your future.

Sincerely,

Gordon Miller, Owner, GPM Sealrite, Inc.

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Check Out George's Upcoming Speaking Calendar:

1/16/06 World of Concrete - Las Vegas, NV

1/19/06 Michigan Infrastructure Trans. Assn - Mt. Pleasant, MI

1/24/06 East Kentucky Power Coop - Louisville, KY

2/3/06 - Church & Dwight Co., Inc. - Tampa, FL

2/6/06 - Canadian Masonry Contractors Assn - Cancun, Mexico

3/7/06 - NADCA Convention - Dallas, TX

3/8/06 - Michigan Green Industry Assn. - Novi, MI

3/13/06 - Ideal Lease of No. America - Dallas, TX

Recent and More Upcoming Speaking Engagements

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This Month's Featured Article

Is Your Bid Only An Estimate?                          

By George Hedley

You know what I really hate? When I negotiate an easy project to build with a great customer who doesn’t question our costs and gives us the job at our price. Then, seven months later, we discover our estimator didn’t have enough in the budget for labor to complete the work. This is my worst nightmare! All the time and energy we invested building a trusted customer relationship to get them to negotiate a construction project with our company is wasted. Then, after working on the project for seven months we discover we don’t make any money.

So, I ask the estimator ‘what happened?’ He blames it on the project manager, or the superintendent, or the weather, or the architect, or the engineer, or bad plans, or his bad childhood! So, what do I do? I can’t fire him. We need to bid lots of work to keep the pipeline full. Has this ever happened to you?

What is your estimator’s #1 priority?

When I speak at conferences or conventions, I get many responses to this question. They include:

- Bid lots of jobs.

- Get lots of profitable work.

- Maximize sub-bid coverage.

- Be competitive.

- Know what things cost.

- Make a profit.

I want accuracy!

To me, the top priority for my estimator is to arrive at accurate job costs. I don’t want our bid to be an estimate of what it might cost plus or minus a percent or two or ten. Accuracy is the key. The only variable on any bid should be the profit mark-up. Excellent estimators know what things cost. They estimate to within less than one percent of the final actual cost. They compare past bids and compare them to the final results to see how they did, and then make adjustments for their next bid. They are in constant contact with the field superintendents and foremen to review how they should arrive at estimated costs. They continually review labor, material, equipment, subcontractor, and supplier costs to insure they know every possibility for differences in the jobs they bid. Use this checklist to improve your estimating accuracy:

Accurate Estimating Checklist

1. Accurate Time Cards – Excellent estimators know accurate estimating starts with accurate information from the crews who actually do the work. Step one is to insist your timecard is divided into the cost codes you want to estimate with. Then, it’s the estimator’s responsibility to insure field workers are filling out timecards correctly.

2. Accurate Labor Burden Rate – Do you know how your labor burden rate is calculated? Is it accurate or an approximation of what your accounting department thinks it should be? An accurate labor burden rate is essential for accurate estimating. If your rate is padded, you are too expensive, and if it’s not complete you will bid too cheap. Review it for accuracy and include: taxes, worker’s compensation, medical, liability insurance, vacation, union dues, safety training, small tools, overtime, and down-time.

3. Accurate Crew Bid Rate – Excellent estimators use different crew rates to bid different projects based on what the job needs. A crew on a difficult job needs more experienced people, while a larger simple project can use less trained crew members. Figure different crew sizes and make-ups to determine your accurate man-hour crew bid rate. I like to calculate bid rates for 2 men, 3 men, 5 men, 10 men and 20 men crews. You will find your bid rate varies considerably for different crews.

4. Accurate Equipment Rates – Excellent estimators know what equipment really costs. Calculate the cost for each piece of equipment your company uses. Total the purchase price, interest, maintenance, gas and insurance over the life of the equipment. Divide this total cost by the expected number of billable hours to arrive at your accurate cost per hour.

5. Accurate General Conditions – Most estimators either guess at the actual costs of job start-up, managing, supervising, temporary facilities, and closing out projects or they use a percentage to figure general conditions. And, the unit prices they use are outdated and inaccurate. On a typical eight month project, I find our general conditions can vary from $10,000 to $25,000 per month. Accurate estimating must include a review of what your general conditions really cost and then a budget based on input from the field.

6. Accurate Overhead – Your company overhead is a fixed (not a percentage) amount. Divide your total projected annual overhead by your total projected annual job costs (not sales volume). This percentage will equal the actual overhead recovery markup to use. Example: $800,000 projected annual overhead / $5,000,000 projected annual job costs = 16.0% markup for overhead recovery. Don’t get trapped into thinking you can use an industry average such as 15% or 20% to cover your overhead costs.

7. Accurate Profit Mark-Up – Profit markup is not determined by what you can get. It is a fixed amount of what you want. To determine the profit markup required to hit your goal, divide your total annual projected costs by your annual profit goal to determine markup. Example: $400,000 annual profit goal / $5,000,000 projected annual job costs = 8.0% markup to hit your profit goal. If you can’t achieve 8.0% profit markup in your market, your only solution is to adjust your volume up and your markup down until you hit your $400,000 profit target.

Want to make lots of money? Make you bid more than a guestimate. Be ACCURATE. Make each estimate an exact prediction of what it will take to build every project.

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George Hedley owns a $75 million construction-development company and Hardhat Presentations. He speaks to companies on building profitable businesses, leaders, and loyal customers. He holds 2-day in-depth "Profit-Builder Circles" open to construction company owners in an interactive roundtable format. The "Profit-Builder System" includes proven tools to always make a profit, build equity, create wealth, win profitable jobs, motivate your people, and enjoy the benefits of owning a profitable company. For information on Mr. Hedley's programs or to receive his free management e-newsletter, visit www.hardhatpresentations.com , call 800-851-8553, or e-mail him at gh@hardhatpresentations.com.