The Design Builder's Blog

Compliance Checklist: Will You Be Ready If OSHA Visits Your Job Site?

Recently there has been a lot of buzz around the remodeling and home improvement industries regarding OSHA enforcement.   OSHA has definitely stepped up its focus on residential construction.   With the onset of summer weather much more work is being done outside making it easier for OSHA Inspectors to observe not only where work is happening but also easily observe and identify violations by only having to drive by construction sites.  Inspectors have been instructed; if you see it - make a visit.  One contractor even reported that an OSHA Inspector was driving around Cambridge MA on a bicycle!

OSHA requirements are not new, even though you might think so by reading some of the banter on sites like LinkedIn.  Significant OSHA enforcement within the residential construction industry has only recently been happening and has been getting a lot of press coverage.  As a result many contractors are only just now becoming aware that OSHA compliance and the related expenses to comply apply to them.    

When Does OSHA Apply?

OSHA requirements do not apply if you are the business owner and only work alone.   However, OSHA requirements do apply when employees or other workers conduct work activities at your jobsite. So, if you are a general contractor, OSHA will hold you responsible for verifying OSHA compliance and overseeing the actions of your subcontractors while at your jobsites.   

Depending on the type of work you perform, specific OSHA compliance requirements will vary.   To simplify what you need to consider, just assume that no matter what they are doing, your business is responsible to protect the health and safety of all workers at your jobsite.  To protect your business and your employees, I suggest OSHA compliance oversight should be included in the job descriptions for lead carpenters, production managers and project managers.

Be Sure To Document Worker Training

Below is short a list of things contractors should consider if they want to be ready when an OSHA Inspector drives by and or stops in to check out your job site.  This list comes from Mark Paskell of The Contractors Coaching Partnership.  Mark helps contractors and their employees comply with OSHA.  He offers group training classes as well as company specific training and assistance with compliance requirements including jobsite practices and the gamut of required documentation.  When I spoke to Mark about this topic he stressed that OSHA was concentrating heavily on worker training and protection from fall hazards, and that contractors needed to have written documentation of the training they provide.

OSHA Compliance Checklist for Contractors:

• Keep your job site in a clean an orderly manner
• If on roofs above a 4 pitch use anchor points, harnesses and lifelines
• If you do not use harnesses use guard rails
• When setting ladders make sure they are 3 feet above the roof edge and on stable ground
• Don't use ladder jacks with ladders over 20 feet
• If you use ladder jacks over 10 feet makes sure you are tied off from above
• Wear hard hats and safety goggles
• Make sure scaffolding is set properly with planking
• Set ladders at the right angle
• Don't climb scaffolding bracing
• Don't use the top steps of your step ladders
• Use ladders and step ladders only within the manufacturer's parameters 
• Use guard rails on pump staging and do not forget the ends
• Cover skylights in the work area
• Always us guard rails on landings, stairs and ramps
• Use guard rails across large openings on upper levels
• Don't set ladders or staging within 10 feet of power lines

Don’t Underestimate Your Estimating System’s Potential

Knowing what to charge clients for the work you do is often the difference between long term success and eventual failure for the business. Many contractors look at estimating simply as a way to determine the cost of a project. In the traditional design-bid model of project delivery, this simplistic approach may work, assuming your sell price generates enough gross profit to cover your overhead and profit requirements. However, if you’re doing design/build, and your current estimating system is limited to only producing the number you charge clients for a project, you may be missing out on many other possible benefits.

Your Estimating System Should Support Your Business in Several Ways

If you think of Design/Build as a way of doing business, your estimating system must become a tool that facilitates how you do business, not just a way to get to the price.   Here are several ways a Design/Builder or a remodeler can maximize the potential of the method and system used to do estimating:

• A design/builder’s estimating system should be fast and easy to use.
• A computerized system should be used that allows the estimator to concentrate on estimating, not adding up numbers.
• All estimating cost assumptions for labor must be accurate in terms of time per task.
• The system used for estimating should have the ability to use your company’s actual burdened labor cost per hour to determine total labor cost per task.
• The system should also allow for on the spot “what-if” adjustments to quickly estimate the effects of any changes or suggested alternatives to the project during design.
• To increase accuracy, estimating should be done so it is comparable to the company’s job costing system and job costing categories.
• Information within the estimate, and job costing, should be broken down to a level of detail that allows the insight you need to make future estimating adjustments.
• The estimate should also help you or your lead carpenter produce an accurate materials list, not just a materials cost allowance.

Below is screen shot of a simple estimating spreadsheet template used to estimate a deck project. 

Request a free working copy of the template for your own use.

Read more about the potential benefits of your estimating system

The Design/Build Remodeler’s 10 Step Plan For Long Term Success

A long time ago a remodeler in my NARI Chapter who was just starting his business asked me for advice about how he too could have a successful and profitable business.   Seeking to keep my response simple and to the point I came up with a list of nine steps.   When I was explaining my list to him he asked where he would find the time to do all these things.  He said he was already straight out trying to sell and complete work.   That’s when I added step number one to the ten step list below. 

Success won’t happen by accident.  If you are disappointed with your level of success use the list below to help identify what you need to do to get your business on the path to planned success.

Recharge Your Batteries!

Step ten might be the most important.  Unless you take time to recharge your batteries they will go dead.  My experience has shown me that business owners get a lot more done and can remain positive even during challenging times if they take the time to reward themselves for all their hard work and effort.

“To get to the next level in your life will require a higher level of thinking than the level of thinking that got you where you are”   Thomas Edison

The 10 Step Plan For Success

1. Make time to create and implement your plan.
2. Establish your criteria for personal and financial success.
3. Establish an obtainable volume of sales for the coming year.
4. Create a budget based on historic information.  Adjust as needed to achieve current goals.
5. Establish the Mark-up required to provide planned gross profit.
6. Accurately estimate project costs and mark-up as planned.
7. Find your customers and sell them projects at the price required to obtain planned gross profit.
8. Monitor production and overhead expenses.
9. Adjust business as needed to maintain path to planned net profit.
10. Enjoy planned personal and financial success.

Don’t Confuse Bad Cash Flow With Under-Pricing

First, it’s important to define what cash flow is. 

Good cash flow is the ability to pay your bills on time because you have collected enough money from your customers in advance of having to pay those bills.    

It’s called cash flow because the money flows in to cover bills and only flows out if and when you can pay them.  Therefore, to have good cash flow, you need to know how much you need to collect and by when.

Bad cash flow or cash flow problems happen when the business fails to collect enough money at each progress payment and or doesn’t bill and or collect the money from customers ahead of when it is needed. The key here is that the money used to pay those bills comes from your customers, not from other sources.

Good cash flow for remodelers happens on purpose

If you don’t charge enough money for the jobs you sell you will experience what seems like cash flow problems.  The difference in this case is that you will never be able to pay your bills using just the money collected from customers because you have under priced your work and there will never be enough money coming in to cover what needs to go out. 

When this happens, it should not be referred to as bad cash flow.  The problem isn’t with flow.  It should be referred to as buying rather than selling jobs.

Paying the bills for yesterday’s project using the deposit money from a job you haven’t started yet may seem to solve the cash flow problem; however it only temporarily puts off the eventual reality that you are buying jobs instead of selling them.  Due to the recession many contractors discovered this reality when the new job deposits dried up and there was no money in the bank to pay the bills for work already completed.

To avoid under pricing what you sell you need to know what it costs your business to do business.   First, you must properly estimate what it costs to produce a project.  Second, you need to know what your business’ overhead and profit costs are (I assume profit as a cost of doing business) for a certain volume of sales so you can determine what markup to use on estimated costs so you can get to the right selling price.  Without knowing this information, when you quote a price to a prospect, you are probably using what is referred to as a WAG, a Wild Ass Guess! 

Bad cash flow is sure to follow.