Tuesday, April 24, 2012

All Things Must Pass

     This blog was started at a time in my life when I had been reminded of the passion for writing which had long been dormant. Blogs were new and there was a lot of different information about their potential. Like many, I dove in and played hard, thinking if I focused on the construction business I knew, an audience would be built.

     Over time, my interest in writing grew stronger and I focused on a personal blog about the transition in my life and the embrace of creative passion I was making. This one grew quiet. Last year, it was revived with new energy and a determination to carry further into the realms of business and home ownership advice.

     That focus has increased with time and so has the need for a more expanded website.  This one has served me well to get me initiated and moved me more fully towards my real purpose. With no need for redundency, therefore, I am retiring this blog to its transparent pastures. Essays and information are more available than ever at http://artisanbuildersworkshop.com.

     Check it out...

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Thursday, January 19, 2012

Renovations from Heart to Home

          The process of renovating a home, depending on the size of the project, can be an intimidating project.  Even small repairs sometimes can lead to big stress if we're not comfortable having strangers in our home.  It's important to ensure a comfort level with your builder that reduces the worry and stress during your renovations so that not only is the completed project beautiful, but the actual process of construction is a pleasure as well.

            Likewise, for the small business owner taking on increasingly larger budget projects, there are easily as many areas of stress and pitfalls that can overwhelm and damage projects.  The homeowner can relax once the dust has settled, but the owner of a construction business can face a few more projects knowing the profits will go to repair the mistakes of that last disaster.
            The result of this cocktail mix of potentialities is that renovations are often approached with dread and uncertainty on the one side and bravado and a thin veil of strength on the other.  Having heard all the stories of great projects gone terribly wrong, the fear that things can go bad will invite the reality that they just might again.

The solution is communication

            Talking to each other is absolutely the best way to avoid problems in any situation.  A renovation is no different.  In some ways it resembles a marriage (albeit short) and a blending of families and requires all the skills, patience, finesse and forgiveness.
            For a renovation project to be successful, all tools must be laid on the table. The builder presents a portfolio and the homeowners must open the doors to their intimate closets.  Fears and insecurities must be made as evident as the dreams and desires.   Beyond the fancy pick-up and the big front door, the people should meet as partners, joined together to create something wonderful.
            Being open and honest from the beginning, having a realistic conception of amount of dust that is generated goes a long way to easing through difficulties when the roof is torn off or the owner runs late on a decision.  In any good relationship, talking through the problems, ensures that problems can be removed and not grown to inoperable tumors.

Money is the root of all good

            People are often uncomfortable talking about money, but in a large renovation, a lot of the green stuff must change hands and it is not always easy.  The grease to get the project complete must be applied efficiently or the engine comes to a grinding stop.

            Ego and power must be left at the door as much as it is possible to leave the muddy boots.  Certainly if "X" is not accomplished, "Y" dollars should not be paid, but often in the shadows lurks an insidious creature exerting control or undermining a sense of worthiness that can easily foul things up.

            Money should be treated with the same care, respect and ultimate neutrality as the lumber for which it is exchanged.  It is the commodity that builds the structure, no more or less than the nails that hold it together.  One cannot be done without the other and so it is best considered with emotional neutrality as any other item negotiated and executed in the contract.

Playing in the Sandbox

            Staying relaxed and focused on the end result keeps homeowners and builders on the same team.  The project is the uniting factor and it should always be remembered that it is in the best interests of each party to get it done in the best way possible. 
            No one really wants a problem, but some are inclined by nature or experience to look for them and in projects of this size and complication, there is no shortage of possibility.  A better understanding of what it takes from both sides will more often create a meeting in the middle that results in an addition or renovation in which all can take pride.

            This is a blog about finding and nurturing that sweet spot for both the homeowner and the small business owner.  Like marriage counseling, it shines a light on various aspects of each individual, sometimes in celebration and sometimes with discomfort.  The purpose is to make the union stronger.

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Wednesday, December 7, 2011

Heart-Centered Holidays

As the days of December darken into winter, holidays ignite magic into our hearts, creating light to find our way. Be it Christmas, the Solstice festivals, Hanukah or Kwanzaa, the time is of celebration and gratitude for all the gifts material and metaphysical that we have received.
Tinsel and glitter, red cheeks and candles, song and festivities create sparkling energy. We eat too many cookies, dance with our friends and carol to our neighbors. We give gifts and acknowledge the love for those around us.
December, unfortunately, is also a time of great stress. As if to counter the darkness, we can be caught in a frenzy of materialism that attacks with pepper spray in a Walmart to get the best deal. Strained and compulsive, while our children are all safe with visions of sugarplums in their heads, we scurry about frantically, shopping late every night and maxing out credit cards instead.
To balance the frantic motion, I offer a teleseminar conference this Wednesday December 14th and Thursday the 15th focused on creating a heart-centered holiday. Through interviews with authors and coaches, we look at the little rituals and celebrations that hold the spirit strong and remind us of the deeper importance of the time.
You can register for the program here and receive a collection of short stories about transformations of lives that can happen in an instant. Each writer will also offer a bonus gift particular to their interest at the end of their interview.
In true alignment with heart and soul, writing is a transformative process. When troubled by doubt and uncertainty, in the act of scribbling in a journal or creating a novel, answers once looming vaguely transparent in the distant mist, come more clearly into focus. We are all writers in our own ways and these conversations will encourage listeners to find your own style for a deeper understanding of what connects you to the rest of the world.
In addition to fireside chats of stories and spiritual affirmations, this webinar through your computer or phone, also celebrates the release of my transformational book “Zen & the Art of the Midlife Crisis”, a memoir about the process of recognizing and shedding the parts of life that are not working to follow a path more centered from heart and living with purpose. By looking deeply at choices and influences of the past, I am better able to steer my life into the future and encourage readers to make similar choices.
Registering for the Heart-centered Holidays Teleseminar right here and now is at absolutely no cost and ensures two peaceful evenings of insight and affirmation that the world is indeed full of love, compassion, serenity and support.
Please join us in celebration of all that glitters and is truly gold.

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Thursday, November 10, 2011

Split Down the Middle

           Just like life, comparisons of Fixed Price and Cost Plus contracts have no either/or equation.  Without advantages and disadvantages to both, the argument would have been put to rest a long time ago.  It does not have to go on forever, however, when a little creativity and education can lead to solutions that combine the best of both.

            Contracts are fear based and only necessary as a resource to cover the contingencies for when and if something goes wrong.  If all the smiles and good feelings could last as the work was completed, there would be no need beyond the handshake, but in remodeling especially, surprises do occur and disagreements almost always happen.

Tough questions
            The bottom line is that owners have a budget stretched to the max and enter the project terrified it will still cost more...a whole lot more.  Quality is also important.  They do not want dust in their lives any longer than necessary and they want to know the builder will be around to fix any problem.
            The builder wants to be paid on time and fairly.  Period.
            A contract that meets these issues is the mutual goal.  The type of contract finally signed gets the project started, but more than the ground rules, the agreement subtly establishes the kind of relationship going forward.  Like love, we enter full of hope and the best assumptions and are usually at least willing to consider divorce somewhere along the way.

Plan A, B and All of the Above

                For a fixed price, the builder takes all the financial risk and races to completion with fingers crossed.  In a cost-plus contract, hands need to be held: reassurance is as necessary as the broom at the end of the day.
            A fixed price contract full of allowances or a cost plus agreement with a cap on specified areas are both ways to align what often seem like opposing needs between the home owners and builder.

Selected Items               

           Novice contractors can often be caught estimating a standard grade toilet and have to mask their surprise later or risk ill-will when the client finds the second most expensive choice in the catalogue.  A 2x4 is a 2x4, but so many features in a remodel are not generic.  The difference between painted and stained trim, for example, is a huge expense to swallow if it was not clearly defined in the price tag.
            Identifying the variables that require choice and naming a specific dollar amount--even if open-ended--grants the owner the satisfaction that the change is in their control.  Color choices, siding type, fixtures and doorknobs are all important and oh so subjective points of distinction where clarity makes all the difference.  Eliminating obvious surprises makes the rest less painful.
            With no victim, no one is hurt.

Not to Exceed    
            Placing a cap on costs while still operating with the flexibility provided by a Cost Plus contract is a solution from the other direction.  Arms and legs are not threatened when limits are placed either at the top or on quantifiable areas. 
            To alleviate concerns about gauging and motivate profit incentives, the difference between the actual cost and limit can be divided between the owner and builder.  Bonuses can be placed on timelines to ensure efficiency.
            Some aspects like the roof replacement can be estimated and billed as a line item at a fixed rate while something unknown like reversing a stairway can just be estimated and billed out accordingly.  This requires a little more education for the laborers to track their time accurately, but provides peace of mind for all by being transparent and fair.

Attitude Adjustment

            Accountability is key.  Presenting a bill with labor lumped all together as a single item creates distrust while dividing them by worker and categories makes the owner less inclined to count them from behind the curtain.    
            The point of a contract is to be fair and clear, to avoid misunderstanding and provide a resource to settle disagreements.  A partnership is preferred to an adversarial relationship.  The tools are available to make it so that the owners in the end can be comfortable stepping out onto the balcony they just paid so much to have built.

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Wednesday, November 2, 2011

For What it Costs

          Time and material, or cost-plus contracts, first appear to homeowners as a blank check for disaster when contemplating a remodel.  Unknown conditions and unscrupulous reputations create boogies that make any Halloween night seem tame.

            As part of the decision or after deciding on a builder, the next important bullet point is the type of agreement that will set the tone for the relationship throughout the course of the project and possibly far beyond.  The consequences are potentially huge and indefinably dynamic.
            A fixed price contract is the first most obvious choice for the owner who expects to purchase a remodel like a shirt off the rack.  For the agreed price of X dollars, a list of details is established to be completed satisfactorily before payment is issued; no surprises and only negotiated pain.  While it is clean and seems risk free, the line in the sawdust, unfortunately, has less obvious drawbacks.
            With little room to cope for a surprise behind wall number two or unpredictable conditions of weather and sub schedules, the contractor, no matter how conscientious, may be forced to make compromises to minimize the damaging effects to his own best interest.  The fixed price forces a focus on profit over quality that may not be apparent until paint peels or the floor finally squeaks in alarm a few years later. 
     Conversely, if all goes well, the homeowner ends up paying much more than it actually cost.               

Shoulder the Risk
                A contract based on the actual cost with a mark-up for the contractor's efforts may feel like an open wound about to bleed profusely, but with proper bandages applied, often ensures a completed project with a more balanced result.  Better than a win-win, the contract that pays for what it actually costs can create a trust between the parties that makes an ordinary project brilliant.

            A time and material contract shows every invoice for materials and sub-contracts, adds an agreed upon percentage for the contractor's risk and warranty, and charges labor at specific rates per hour.  Bills are presented weekly or twice monthly and due immediately, providing full transparency and continuous opportunity to re-evaluate the relationship at each juncture.

            In this version, an honest relationship is critical and attention to detail ensures a good outcome.  The builder makes every decision on quality first and cost second while the owners are able to tweak the design without constant stressful and time-consuming re-negotiations.
            Assuming there is not the luxury of an unlimited budget, the builder is not forced into the position of always saying "no" to changes or having to seem like a "nickle and dimer" having to revisit the contract at every new idea.  It is important, however, to regularly update owners on the effects of apparently small changes that can actually change the bottom line significantly. 

Trust the process
                The most important concern in a time and material contract for the owner is that the labor cost will be out of control.  Owners can be quickly consumed by the minutia of pennies and lose sight of the dollars saved by efficient planning.  Animosity can brew while the carpenter whistles merrily along.
            It is easy to be swept up in a day of counting coffee breaks and judging production on the basis of over-heard conversations. Idle stances may disguise industrious calculations and a casual huddle may not show the hours saved in scaffold building afterward. After two days of absence, the quality of doors painted in a dust free environment is missed in the lack of apparent activity.    

Accountability & Communication
            With today's software and text messaging standards, there is no reason to leave customers or builders in the dark as the process evolves and questions arise.  Fears can be quickly and easily laid out for solutions.
            Programs like Quickbooks, the industry standard, can easily tabulate every nail and hour on or off the site.  Microsoft Project and other CPM software present a schedule and chart the deviations and delays.  A spreadsheet comparing the estimate to the actual costs with projections to finish can keep anxiety under control.

            Ultimately, the kitchen table still reigns supreme at the end of the day where a cup of coffee or cold beer keeps the conversation human and on task, focused on the facts.  The ability to speak openly as partners on the project makes all the difference to the quality as egos and ownership are dormant and the goals are aligned to make it the very best it can be.

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Wednesday, October 12, 2011

Fixed Costs

A major decision for home owners before embarking on a renovation is whether to agree on a fixed price with a contractor or build the project on a straight cost basis. The question, in one form or another, has been around as long as carpenters have been competing for work.

                A fixed price or lump sum contract is when the builder estimates all costs, allows for contingencies and marks up for profit, presenting a bottom line to the owner.  If actual costs are below the estimates, he wins; if overages occur, the problem falls on the builder.  There is no going back to cry, "Ooops!"
                A time and material contract, also known as cost plus or T&M, arranges reimbursement to the builder for every invoice with a little extra percentage for the trouble and warranty.  It costs what it costs and the risk for the owner at the beginning feels like a potentially whopping blank check and the reputation of being a fool.
                Of course, there are variations in between these two options and no single version works for every client, builder and circumstance.  Once again, the answer boils down to the matter of trust and the comfort zone of risk each party is willing to hold.
                Fixed price contracts are every home owner's first choice.  When we go to the store to buy a shirt, we look at the price tag attached and pay it without negotiation or concern for how much each of the buttons, fabric and thread might have cost individually.
                Often the initial phone call to a builder includes the desire for a square foot price (the average total cost divided by the square footage of the area affected) which is really an inaccurate measure for a remodel, considering the size, scope and complications have no average.  At the end of the first look interview, after numerous ideas have been bantered around with no clear decision, the potential client inevitably asks for a ballpark figure ("I won't hold you to it," they promise), a wild guess that either sets the bar at a ridiculously low number against which all is measured or whacks the builder right out of the game entirely.

                After careful consideration, the fixed price contract defines the size of the field, all the rules and players, even declaring the home owner a winner while the builder never knows until the dust has settled and the green grass is grown in how well he has done.  Settled on the price, the owners can go on to deal with the physical stress of disruption and door knob decisions, well-prepared to have checks ready according to the schedule in the contract. Relieved from most painful surprises beyond inconvenience, the job gets done and they transfer the funds.
                The builder also enjoys the benefits of planning and if all goes well, packs up tools with a tidy smile and a thicker wallet.  A clear payment schedule and description of scope, defined allowances and method for change orders, and the orderly completion of tasks creates an equally seamless flow that turns each large check into countless smaller checks good to their subs 30 or 60 days later, or to employees that very same Friday.  Everything lines up and everyone is happy.
                The problem in a fixed price contract arises when Mr. Murphy appears to blow the best laid plans away.  A simple, but large line in the estimate might have been miscalculated (computers can do that, ha-ha) or misplaced entirely.  Bricks instead of wood might be hidden unconventionally inside the wall.  The customers may be so convinced they said "blue", it is better to paint the room over than to argue the point and fail to receive the check that is needed that Friday to bring the plumber back on Monday.

                To keep the labor cost under control, certain tasks are inevitably hurried and corners might be cut more quickly, a little more squarely than round.  The in-stock sink could be purchased instead of the special-ordered extra (and more expensive) myl of stainless steel, looking just as shiney upon installation, but showing scratches much sooner.  The decision to let a bad cut fit or replace the board can more often land on the cheaper side of "close enough."
                Conscientious, well-organized and financially comfortable builders do just as well as the home-owner with fixed price contracts, often better than with the less risky luxury of  a cost plus contract.  The underlying costs, however, in quality and dollars could eventually add up to far more than fabric, thread and buttons combined.

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Friday, October 7, 2011

Nailed Down

For most projects, the most important and over-looked tool is the contract. Large or small, a clear agreement in writing and with signatures can avoid more damage ultimately than the shoddiest roof.

During the courting period and initial stages of projects, everyone is on their best behavior and words, far more than actions, are setting the tone. Purposes are aligned and the satisfactory completion of the project is beautifully envisioned.

When problems arise, however, the true strength of the relationship is tested, bending and relaxing under the stress or suddenly snapped by the weight of unforeseen pressure. A well-written contract can provide the support and recourse to keep negotiations and ultimately the project itself on track.

Like a pre-nuptial agreement, many people--especially hearing that it will only be a day or two, in and out, for sure--waive the formality. The implication of distrust may create animosity and feel like an insult to integrity, but a professional with experience understands the legal binder protects the contractor as much as the homeowner. There are as many nightmarish clients as bad builders.

The size of the job can determine the complication of the document, but for any project, the basic agreements should always be in place and well-stated. Similar to the journalistic rules of a first paragraph, the who, what, where, when and often the how should be clear in every contract. Most importantly are the clauses relating to "how much and when".

Smaller jobs can be a one page proposal with space for signatures to accept the terms. The vitals are still necessary, even if stated as casually as "replace the kitchen sink" at an hourly rate of "X" plus the cost of materials (with a mark-up). The proof can be in the process as long as the outcome threatens not to break either bank or back.

In my own business, the division came at about $1,500, more than a week's worth of work, or involving several distinctive components. A mid-size contract with more detailed specifications naming the type of door, quantity of siding and allowances for choices that could be open-ended ensures the two-headed purpose of protection and flexibility.

The larger projects invite multi-page, multi-tiered documents covering the basics, coloring the details, connecting the schedule of payments with performance, and carefully delineating ways to separate should that become necessary. Room for change is still important, even as details are crossed and contingencies dotted.

Architects and lawyers often advocate a standard contract which is easily available through the AIA. While it provides valuable clarity in commercial situations without a lot of expensive negotiations, home owners can be overwhelmed by inappropriate clauses and the builder too constrained by the stringent definitions. Simple is better and a contractor with enough experience to do the job should be able to produce a tried and true document off his word processor.

With a contract so specific, the temptation is to name a hard, fast and intractable dollar amount, but all of my experience--given a strong sense of mutual trust combined with a good estimate and specifications--an agreement based on actual cost is the fairest to all concerned. With clear parameters, solid budgets and honest communication, time and material contracts work very well.

Regardless of the best made and laid plans, things change and room must be made for Mr. Murphy to show an ugly face. Allowances and change orders are important parts of any agreement and coverage must be in place in case disaster leaks through a roof, spills out of a can or is short-circuited by a wire that should have been there, or worse, should not have.

Once a wall is framed, the view might invite a window that was not originally figured into the job. While the temptation and urgency of the schedule might dictate a quick decision to proceed and figure out the cost later, postponement of the cost implications can have serious repercussions burning a deep hole in the pocket of the builder or a terrible sticker shock long after the fact.

Regardless of size, a written contract is the best tool to ensure a project goes smoothly with as few negative incidents as the law of averages guarantee will happen. The comfort and ease with which one is negotiated will often be an indication of how well the parties will work together throughout the adventure.

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