My wife and I have spent the last two years on a six week renovation project.  We are nearly finished, in fact it appears that we only have eight weeks left. 

My wise and experienced friends told me that it would take twice as long and cost twice as much as the original estimate.  I am a heavily experienced project manager and a CPA.  So I believed that I could do much better than the twice for both timing and cost.  The projects I have experience managing are giant application software system implementations.  Projects that cost tens of millions of dollars and run for a year and a half.  Certainly, very different than house renovations but ventures that definitely require adroit project management. 

Cost wise, the home renovation project has performed fairly well.  Timing has been abysmal.      

We are really committed to finalizing renovation of this home because we plan on staying here until we become blithering idiots.  So we engaged a General Contractor to complete the project. Much of the work would be completed by his staff.  However, he augmented his team with a hand full of specialists (plumbers, HVAC professionals, tile people, painters, etc.).  

It did not take long to determine that the primary reason for the timing over run was delayed performance by the lead contractor and all of the subs. In the robust Florida economy, everyone seemed to be over committed.  All of the delivery dates started to slide.  A year into our six week project it was clear that timely delivery was not on any contractor’s radar screen. 

I tried the carrot.  “Hey do you guys and ladies like barbecue?  Next Wednesday, finish up the new siding and I’ll smoke a pork shoulder and some ribs.”  They arrived at my house at 4:15, put up two sheets of Hardy Board and spent three hours eating barbecue.

I appealed to the heart strings.  “You know having the demolition half done for five weeks is wreaking havoc with my asthma.  Can we get through this phase, soon?”  The Contractor says, “I know what you mean about the dust.  If I didn’t take three days a week to get off shore on my fishing boat, I couldn’t breathe.  A few more weeks and the demo will be history.”

I tried the stick.  “Oscar, I have been talking to my lawyer about the delivery delays.  He thinks there is a major problem with a six week project pushing two years without completion.”  The Contractor replies: “I know what he means, what a pain!  I’ve got twelve projects in the same boat.  That’s why I never put “time is of the essence” in any of my legal documents.”                  

So with eight weeks left on our six week project, I decided to get a Contractor’s license and finish the job.

What do I know about residential construction?  Nothing.  But I’m not going to do any of the work.  The subcontractors will.  All I have to do is find the right men and women to do different elements of the project.

You have to pass a test to qualify for a Contractor’s license for the state of Florida so I enrolled in a school for Contractors to prepare for the exam.

Here are some of the highlights of the Curriculum for General Contractors:

Choosing the Ideal Client

The optimal residential construction client is both wealthy and gullible.  It is challenging to find a non thinking individual who is well healed but the search is well worth it.  As the project unfolds, it will be very helpful to have someone who will believe the myriad of thin excuses you may have for non performance or delays. 

“No we can’t complete the wall because I can’t get the required Schlagger toggle bolts.  They are all produced in China and none are being shipped to the US because of the trade war initiated by our government. My supplier thinks that this will change in a few weeks and I really don’t want to take a chance on the less desirable alternative from Brazil.  Thanks to this political upheaval, the price for these beauties is going up.  Can you cut me a check for another $500?”    

Creating a Decades Long Backlog of Business

The reasons for creating a massive backlog are fairly obvious. 

First, the financial benefits are overwhelming.  Your policy upon signing an agreement must be to collect half of the fees up front.  Ostensibly, this is to pay for materials.  Since we have selected the optimal client described above, there should be no problem getting these funds.   So upon signing, you receive half the revenue and more than all of the profits for your entire project and you haven’t spent a dollar.  This is better than Charles Ponzi’s postage stamp gambit.  A solid business practice for any successful Contractor is to continually have a five year backlog of projects under contract.

Second, the accelerated cash flow will allow you to proactively acquire a lot of needed equipment and other assets.  These substantial deposits may be used to purchase miter saws, cordless drills, a second home in the mountains, a motor home (which can be creatively written off as a mobile office for tax purposes) or a first class boat.  Since you live in Florida, you should consider extensive investment in your personal residence.  In a few years, when the bubble bursts, your home cannot be taken in a bankruptcy action.  Ideally, you should plan on having a fully paid for residence with a value of at least $5 million.       

Third, locking in a large backlog of work will help ensure that you can keep your staff and sub-contractors busy for years.    

It should be very clear that none of the contracts you sign have any provisions that are time sensitive.  You may verbally explain that we should finish this up in three weeks but you will maximize the time value of money and compound interest by stretching the project out for a year.  Explain to your client that so many of the variables are outside of the Contractor’s control that you can never commit to an absolute delivery date for anything.  This is the key to raking in the proceeds of the five year backlog and avoiding annoying lawsuits for untimely performance.

Scheduling Your Work

Perhaps the most critical responsibility for a Contractor is scheduling the activities of your staff and subcontractors.  None of your clients know that you have promised eleven customers service tomorrow and that you only have three assistants. 

Adroit communication with your customers is very important.  Always tell them in advance the day when you will be arriving at their home.  However, be vague in defining the time that your staff will arrive.  Never use an actual time, such as “We will be there at 8:30.”  You can say we will be there in the morning or even first thing in the morning.  At ten o’clock call the customer and tell them that there was a problem at home depot and your guys should be there soon.  At three, send one of your workers over with sand paper and a caulk gun.  Have him or her patch up some nail holes and leave for a critical problem with another job.  The assistant can hit four or five different customers with the same process in one afternoon.  You will have fulfilled your promise to be there Monday.  Over time your customers will be trained to expect this kind of performance from you.      

Monday evening, text all eleven customers to tell them you will be there first thing in the morning or right after lunch.  On Tuesday, run through the same cycle.  

Eventually, you will have to be productive for all eleven clients.  By staying in constant communication, you can see where you need to prioritize resources as the level of dissatisfaction with untimely performance grows or wanes with each customer.  

Excuses

When there is a problem with timing, cost, or outcomes there is a need for a really solid explanation of what has gone awry.  “The dog ate my project plan” isn’t going to cut it.       

The best excuses are logically solid and very difficult to verify or refute.  It also helps to be creative and incorporate current events that might impact a construction project.  If you have researched and selected the ideal client, you will find that they may actually believe the tripe they are being fed by the mainstream media.  Having a problem related to this news is perfectly logical and believable to these people.  For example, this was a great excuse for 2021.

“Two of my carpenters were vaccinated for Covid last week.  They really had adverse reactions.  We hope that it is just a side effect of the body creating antibodies but we are concerned that there are flaws in the vaccine that may change their DNA and impact their ability to wield a hammer for many months.  We certainly don’t want to send anyone to your house who may compromise you or your family.  I’m trying to bridge the gap but it will be tough sledding for a while.”

Perfect.  This will change the client’s expectations of delivery for many months with no negative impact on you or your company.    

After attending classes, I feel qualified to replace all the Contractors on the great 21st century renovation project.  So I call my General Contractor and tell him that his services are no longer needed.  Please create a final bill.  To pay the final invoice, I will judiciously follow the performance standards he established for the project.  He can expect my payment in thirty one short months. 

I don’t know how long it will take to complete the renovation. I do know that I can do it a lot faster than my previous General Contractor.  I have the advantage of actually wanting to finish the project.

I am astounded at how poorly I ran my consulting practice for 40 years.  We never collected fees “up front”.  Services were only billed after we provided the service.  We didn’t over sell engagements.  We only signed contracts for business that we could address with competent staff.  We hit almost every timeline and almost every budget for 40 years.  We stayed busy even during economic downturns and never filed bankruptcy to avoid refunding prepaid fees.  

What were we thinking??!!