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Four Considerations for Contractors Offering Design - #4 is Most Important!

Posted by Shawn McCadden on Thu, Mar 12,2015 @ 06:00 AM

Four Considerations for Contractors Offering Design - #4 is Most Important!

How a contractor can sell designWith a well thought out strategy for offering design services contractors can differentiate their businesses and attract better quality clients and projects.  However if their offering is not well thought out contractors can lose a lot of money and waste a lot of time.   

If you want to offer design services consider these four important areas before you go for it.  If you are already offering design services, these same considerations can help you validate and or think a bit more strategically about your offering.

 

#1: Compensation

Nothing is free, neither is design.  Even if you offer it for free to prospects doing so still adds to your business overhead costs.  Charging each customer for their design is one option.  If you don't charge consider how many free designs you will complete to sell one job and add the anticipated costs for doing them to your overhead budget before you determine your markup.  How you choose to go forward with this consideration should be based on the targeted customer type you identify in your marketing plan.  

Offering design comes with risks. I also strongly recommend getting Design Liability Insurance and adding the cost of coverage to your pricing strategy. 

 

#2: Create a clearly defined process

To control costs and manage customer expectations you need to decide what level of service you will offer, and whether you will offer your design services at a fixed price or on an hourly rate.   At my business I used a fixed/defined process and price strategy limited to concept design.  This was because as a Design/Builder our goal was to quickly get to a contract for construction.  Completing the plans for permit application only happened if we built the project.   For our target customer type that process worked well and kept the upfront cost of making decisions and getting to a fixed price quote down for our clients.

The image below shows the first half of the Design/Build process I share with my clients.

Design build process example

 

#3: Ownership of the plans

Consider whether you are selling design services or plans.  If you sell plans your clients may see their project as a commodity and may want to use those plans to collect bids from other contractors. Allowing that to happen also definitely increases your design liability.  My recommendation is to differentiate your business by selling personalized design services, not plans.  Then, only offer design services to prospects who intend to hire your business to complete the project.  Plans for permit can then be created and shared with them after they commit to construction.

download shawn's free sample design build retainer agreement

Marketing design services for contractors#4: Use a supporting marketing and sales strategy

After thinking through and deciding on the considerations mentioned above the business will need a way to market and sell their offering.  The right marketing should help define your offering so prospects can prequalify whether what you offer is right for them, or not.  Doing this will help attracted your targeted prospect and save salespeople a lot of time on sales calls. This is because by doing so prospects will only need to clarify and confirm your offering when they request to meet or speak with you, you will no longer need to introduce and explain your offering. 

Your web site is a great tool to use for marketing and explaining your design services. And, if the information is on your web site, you can direct prospects to it from the other marketing tactics you use, or when they first call your office to inquire about a project that requires design.


Other Design related articles you might find helpful

Managing Risks With The Right Design/Build Insurance Options

Design and Spec Considerations for Remodelers Looking to Break $1Million

All Plans and Specifications Will Be For The Exclusive Use Of …

As Designers, Are We Honest in our Business Dealings?

10 Ways Some Architects Do A Disservice To Contractors & Home Owners

Design Options for Design/Builders: Partnering for Design

Design Options for Design/Builders: In-House Design

 

Topics: Design/Build Process, Marketing, Prequalifying, Plans and Specifications, Working with Design Professionals, Insurance Considerations

Building the Right Team: How to Work With the Architect, Subs & Designers

Posted by Shawn McCadden on Fri, Feb 13,2015 @ 06:00 AM

Building the Right Team: How to Work With the Architect, Subs & Designers

Working with an architectAs a contractor, you know that building a custom home or doing a major remodel is not a one-person job. You need to work with an architect, an interior designer, one or more sub-contractors and any number of laborers—and, of course, the homeowner. Getting everyone on the same page can be the difference between an amazing house and a patchwork disaster.

 

Who’s the Boss?

The buck stops with the owner. The one who is paying for the work is the top dog, even if it doesn't always feel that way. Hurricane-torn Florida has some of the strictest construction laws in the nation, so let’s use it as our model. A full construction team may consist of an architect or engineer, a building contractor and an interior designer. The contractor may hire subcontractors. All of these people are, in some ways, like employees of the owner.

At the top of the chain is the architect. Since he or she is the one who has taken the owner’s ideas and turned them into schematics, all significant changes need to go through him (or her). These changes are done via a written document called a change order. The use of a change order is important and often costs money, so get agreement from the owner and interior designer before you issue one.

 

The Social Aspect

Working with design professionalsIn a study about collaboration, students from the architecture, interior design and construction schools of Mississippi State University were blended into different collaborative groups, ranging from highly engaged to mainly separated. The findings showed that the groups with the most social interaction had the most creative outcomes, though not the fastest completion rates.

Bring your construction team and your interior designer together for coffee and make them talk. With construction, speed is not necessarily your friend. Some jobs take time to do them right. If your people cannot find the time to sit and understand the project, then they will not have the time to do the job correctly. For example, a designer working with a contractor on windows and lighting might meet at a Shade Store showroom to point out ideas as they discuss them. They do not need to become fast friends, but they do need to work together on a creative level.

 

The Subs

Working with sub contractorsMost contractors do not have a licensed person on their team who can handle all the components of a construction job. For roofing, foundations, plumbing and electrical, they will usually subcontract to a licensed professional and or expert. In many cases, the interior designer may be a subcontractor of the lead contractor, making him the designer’s de facto boss. Whichever way you structure the construction process, you have some legal issues to handle. Make sure to meet with and manage your subs since, at the end of the day, you are responsible for paying them.

 

Paul Reyes-Fournier

 

Guest Blogger: Paul Reyes-Fournier has served as the chief financial officer for social service organizations, churches and schools. He created his own marketing firm, RF Media. Paul holds a BS in physics and an MBA.

 

 

Topics: Team Building, Production Considerations, Guest Blogs, Building Relationships, Subcontractor Considerations, Working with Design Professionals

Design and Spec Considerations for Remodelers Looking to Break $1Million

Posted by Shawn McCadden on Wed, Feb 04,2015 @ 08:57 AM

Design and Specification Considerations for Remodelers Looking to Break $1Million

contractor_with_couple-wrIf your goal is to grow your remodeling business past the $1Million installed sales volume threshold the business will need a design and or specification process.  That process must support the ability to perform a "handoff" between the salesperson and the production team that will build sold projects.  Without adequate plans and specifications the production team and a project's lead carpenter will be constantly contacting the salesperson for the information needed to build what the customer is expecting.

Even if you do not plan to offer design services, or even if you work from plans created by an architect, it is likely the projects you build still require design and or specifications at some level. For example replacing a back entry porch and stairs can involve designing the railing style, or specifying the decking materials your business recommends to the homeowner to serve their expressed purpose.

Here are several design and specification considerations remodelers should address if their plan is to grow past $1Million. 

Be honest about the level of design you can offer

Skills needed to offer remodeling design servicesBe honest not only to your customers, but also with yourself.   I fortunately recognized very early in the building of my business that I was not a designer.  I can build any design you give me, I just don't have the right talents to design renovations at the level my target customer expected and deserved.  So, if you do offer or plan to offer design services make sure you find the right talent to do so.  That person could be an employee, or as in my case, that person could be a subcontractor.  Don't risk having your client tell you they don't really think you or someone else from your team is a designer.

 

Manage your risks before you offer design

Insurance coverage for remodeling design servicesFirst, make sure you can legally offer design service where your business operates.  Next, make sure you and or your employees have the right construction, product and building science knowledge and experience to offer design and or specification assistance.  Value engineering for a prospect may help you sell a project, but what if you suggest or substitute products that compromise the design, the structure and or the purpose of the project?   You may own the end result and it could cost you a lot of money.  Consider professional liability insurance coverage; sometimes referred to as Errors and Omissions coverage, to protect you from such risks.

 

Make sure designs and specifications are complete

Creating remodeling specificationsThis may seem like an obvious point but here me out.  If your goal is to bust past $1Million your plans and specifications should include not just what might be needed to sell the job and or get a permit.  Your plans and specs should really be communication tools that your production team will use to build from.  Measurements, product sizes, rough opening dimensions, center lines and clearances all become critical when building, and even more critical if you want to protect your margins and project schedules.   With the right plans and specifications you can protect your profits and only have to build the project once.

 

Summary

Design considerations for remodelersAs produced volume increase for a remodeler, that remodeler must decide between being a contractor and a construction business owner.  As a contractor you can do all of the above yourself, but breaking $1Million will be challenging, require lots of work hours and may not be practical depending on your target project types.  As a construction business owner your role will be to profitably run the business not the jobsite.  If that is your goal make sure your team members will be creating the information each department needs to successfully sell profitable projects and perform their assigned responsibilities.

 

read blog articles about breaking 1 million

Topics: Plans and Specifications, Design Options, Working with Design Professionals, Insurance Considerations, Breaking $1Million

10 Ways Some Architects Do A Disservice To Contractors & Home Owners

Posted by Shawn McCadden on Thu, Jun 26,2014 @ 06:00 AM

10 Ways Some Architects Do A Disservice To Contractors and Home Owners

Why contractors don't like architects

 

If you have been a contractor any length of time you have probably had negative experiences trying to work with architects.   You have probably also witnessed the frustration, disappointment and financial challenges some architects cause for home owners due to their methods of doing business and how they do design development.   Keep in mind I purposely said “some architects”.   Just as there are good and bad contractors, there are good and bad architects. I have personally worked with a handful of great architects.

I know I am taking a risk here and that I will definitely get some passionate comments from architects.   That said, below I offer 10 ways I think many architects do a disservice to contractors and home owners.  Feel free to offer additional reasons and or to dispute my list.   All opinions are welcome, as long as you are respectful and appropriate when doing so.


  1. Bidding on architects plansThe architect either invites multiple contractors to bid on the project or gives the homeowner the names of 5 (or more) contractors to bid on the project, essentially setting up an auction.  So 5 contractors and all their subs do free estimates for the chance to be the lowest bidder (biggest loser).  Then when the home owner actually buys from a contractor they are the ones paying for all the free estimates that contractor did for the people who did not buy.  I think it would be interesting to hear the reaction home owners might have if they knew they were paying for other home owners’ free estimates.
  2. Do you know any architects who have estimating training and or experience? Many architects say they can and will design to a budget and or quote square foot costs to their clients that are unrealistic.   Then if the contractor bids come in over budget many architects will blame all the contractors for being over-priced.   These same architects then even have the nerve to charge the home owner to redesign the project to get it closer to the original budget.  Why do home owners put up with being treated that way?  
  3. Many architects create multiple designs and plan sets for the same project, most of which ever get built from because they do not take into account all of the related considerations (Budget/cost, zoning, soils, incomplete plans/specifications…). When this happens often times the home owner spends so much money on the unusable designs that they have to then scale back the project budget.  Unfortunately the home owner pays for it all the wasted services and contractors waste their and their sub contractors’ time doing multiple estimates, typically all for free. 
  4. Some architects charge contractors a referral fee for introducing them to the client, but tell the contractor they don't want the client to know about it.  In my opinion this is not ethical.   I have no problem with the referral fee as long as the contractor is OK with it.  But hiding it from the client is deceptive because now the cost of the referral is a cost of the project, and, in essence, the architect is asking the contractor to lie about it.   I don’t think contractors need to volunteer the information.  But, if asked about it by the client, or if it’s a cost plus contract, I think the contractor needs to be honest.  For T&M contractors, letting the home owner know that their markup on costs has to help cover the cost of the architect’s referral fee could help justify the markup percentage.
  5. The architect provides incomplete and or conflicting plans.  This one creates big challenges for the homeowner as well as the contractor.   If the contractor points out the missing details he can be accused of throwing the architect under the bus and probably won’t get the job.  On the other hand if the items are missed or ignored when the contractor provides a price the missed items become change orders and the home owner has to pay the additional cost.
  6. architect's plans are over budgetMany architects take the plans too far before knowing if the customer can actually afford the project and or if the project can actually be built.  I think this is one of the worst things architects do to their customers.   Wouldn’t it make sense to make sure the there are no zoning issues and that the project and or the scope are realistic before spending the client’s money to bring the plans from concept to ready to apply for permit?
  7. Some architects require the contractor sign the AIA contract.   That contract essentially says once under contract the contractor has to eat any additional costs to meet building code requirements even if the plans and or the design don’t meet code.  Shouldn't a licensed architect be responsible to design to code and be responsible to their clients for the additional costs of what they missed?
  8. Not allowing the contractor to meet the home owner before providing a bid.   I’m really not sure why architects do this.   Why refer a contractor to the project but then not allow both the home owner and the contractor the opportunity to meet and make sure there is a good fit and that the budget is realistic before asking the contractor to invest a lot of his and his trade partner’s time assembling an estimate?  I think this may have to do with number 2 above.   The architect has no idea what the project will really cost and doesn’t want to risk that the contractor will help the home owner figure that out.  If contractors allow this to happen and still submit a bid, shame on them!
  9. Designing to a budgetThey over-design the project past the agreed budget without providing realistic insight about the additional costs.   Again, assuming the architect agreed to design to a budget, refer to number 2 above.   If the home owner asks for things and or the architect suggests things that will blow the agreed budget, shouldn’t the architect make the true price difference clear to the home owner first and ask if they will commit to increasing their budget before expanding the design and collecting bids from contractors?
  10. The architect specifies products he has no experience with.    This one has caused many contractors a lot of money and or lost sleep; including me!  Often the products can be difficult to procure, may be new and have not yet been proven to serve their intended purpose long term, and or may be way outside the client’s budget.  By doing this the architect often creates financial hardships for the contractor and the home owner, and can cause serious project failure and or warranty problems that typically fall back on the contractor, not the architect.

 

So, that’s my list. 

I have more but I think that’s enough to get the conversation going. 

Design Build for contractors

 

By the way, if you are a contractor or a home owner reading this, there is a better way.  True Design/Build Contractors use a process that can eliminate every one of the challenges listed above.  Check out this article titled The Advantages of Design/Build for Remodeling Clients for more on why Design/Build might be a better way to go for many contractors, home owners and even for architects.  

 

 

Topics: Customer Relations, Design Options, Working with Design Professionals

Designer or Decorator – Know and Manage the Difference

Posted by Shawn McCadden on Tue, Jun 12,2012 @ 05:00 AM

Designer or Decorator – Know and Manage the Difference

Reva Kussmaul, remodel coach

 Guest Blogger: Reva Kussmaul, owner of Remodel411.  Reva began her practice as a remodeling coach in 1998.  Reva believes that remodeling should be a 50/50 relationship and if it wasn’t cultivated as such - nightmares can occur.  According to Reva, those nightmares are typically caused by a gap in communication and it could come from either side.  For Reva it became quite obvious that someone who knew about and cared about both sides was a missing piece to the puzzle of remodeling nightmares.   So, she decided that both homeowners and contractors could use a coach when it came to their relationship - the remodeling relationship that is.  In this guest blog Reva talks about the difference between an designer and a decorator.  Check out her book: Remodel 411: Secrets to a Successful Remodeling Relationship

 

COMMUNICATE TO CREATE AN AMAZING REMODELING EXPERIENCE

IT’S ALL ABOUT THE TEAM-WORK!

 

Designer or decorator, whats the difference

 

Contractors & Homeowners:  There is a distinct difference between someone who chooses pretty things for the home (see the definition for decorator below) and someone who knows what choosing pretty as well as designing for the building/installation of pretty is (see definition of designer below).

Designer:  A person who plans the form, look, or workings of something before its being made or built; a creator, planner, inventor; maker, architect, builder.

Decorator:  A person who decorates, in particular a person whose job is to decorate the interior of someone's home, by choosing colors, carpets and furnishings.

 

Many decorators call themselves designers and they are far from it

I’ve worked with them, so I know.  Now, I’m not making them wrong for what they do, I’m saying how they define themselves is incorrect.

Perhaps it’s easier to sell one’s services if called a designer as opposed to a decorator - maybe more money can be charged?!  However, there is a very important difference.  When a decorator, who sometimes has no true knowledge about building, has a plan B with possible change orders for “unforeseens”, etc.; the project suffers UNLESS they have consulted with the contractor and are willing to refer to their expertise.  Then, we have what is called “a team” and an experience is created.

Design/Builders can offer the full service option

This is also part of the remodeling relationship I write about in Remodel 411: Secrets to a Successful Remodeling Relationship. My advice to homeowners - choose a design-build firm that is full-service and if you feel a need to have someone help you decorate with pretty, simply ask if their company is staffed for that service as well.  Save yourself time, money as well as emotional fall-out.  In the long run, this is what will create a great remodeling relationship.

difference between a decorator and a designerMy suggestion to design/build firms is to have a decorator either on staff or one you’ve built a good relationship with available to you, that is willing to work in conjunction with the designer and/or contractor as far as the pretty aspect of such things as tile lay-out, mirror and sconce placement goes.  This is where creating a team comes into play.  When all parties are able to communicate clearly with one another and work together everyone wins.  That’s the whole point - everyone does what they’re good at, has a good time and works together so more business is forth-coming.

It’s about clear communication and teamwork

A great team, which includes quality craftsmanship, is what creates a win/win experience for all involved. It’s not about anyone being right or wrong, it’s about creating an amazing experience.

 

Topics: Guest Blogs, Plans and Specifications, Opinions from Design/Builders, Definitions, Design Options, Working with Design Professionals

Should You Add Design/Build to Your Company Name?

Posted by Shawn McCadden on Tue, May 22,2012 @ 05:00 AM

Should You Add Design/Build to Your Company Name?

Choosing a name for your remodeling company or Design Build company

 

Naming or renaming your building or remodeling company is an important decision. Many business owners may not realize this significance or the long-term impacts this decision can have. Many things can and should be considered before committing to a business name, far more than can be covered in this blog post. The purpose of this blog post is to focus only on what architects and other design professionals may think about your business if you add the words Design/Build to the business name.

I suggest that you don’t look at this information as an architect-bashing session or as a complete guide for making your own decision. Concerns expressed here are based on real experiences shared by contractors. Use what is being shared as a start toward qualifying what you should consider. Then, Design/Build your business’ name.

Will architects be willing to work with you?

If they find the words “Design/Build” in your company name, many architects and design professional may be hesitant to work for you as your employee or as a sub contractor.  Depending on their belief system, education, or what I call their “reality”, there could be several obstacles to their willingness to work for or partner with you. Here are a few:

  • Maning a remodeling businessThey may be challenged if no longer the one in control of the design process, the construction methods and the client.
  • Removing the bidding process may send shivers down their spines.
  • Not putting their name, but rather your company’s name, on the plans may feel completely unacceptable.
  • Not being the guardian or protector for the homeowner and the homeowner’s money may feel completely unacceptable.

 

What architects think about remodelersWill they refer you to their own clients?

Assuming your business is still willing to bid, if they see the words “Design/Build”, will an architect or designer refer you to their clients? Other legitimate concerns could include:

  • Will you embarrass them if their plans are incomplete or not quite buildable? 
  • Will you start offering value-added construction options or product alternatives directly to the client without first consulting them?
  • Will they be afraid you will steal the design process away from them,
  • Will you expose mistakes in the plans or overlooked zoning issues due to your own acquired expertise?

Shawn McCadden opinions

 

Read more of Shawn's thoughts about adding Design/Build to your business name.

Topics: Sales Considerations, Business Considerations, Plans and Specifications, Working with Design Professionals

Design Options for Design/Builders: Partnering for Design

Posted by Shawn McCadden on Thu, Apr 05,2012 @ 05:00 AM

Design Options for Design/Builders: Partnering for Design

Finding an architect for design buildDesign/Build has caused a major role reversal.  In most Design/Build situations, the contractor is now choosing the designer, after the project or design retainer has been sold!   Finding a design professional who will work in this new role can be a challenge, but if the relationship is built for mutual benefit, all parties win, including the homeowner.

Typically, the hardest part about subbing is finding a good sub worth partnering with. High quality standards being a given, a good sub also complements your team and meets all the legal and insurance coverage requirements. The same will be true if you subcontract the design work for Design/Build projects. There are plenty of design professionals out there, but how many are working as subs, better yet work as project partners with general contractors?  

Agree to Agree

If you truly want to partner with a design professional on a subcontracted basis, start with the guidelines of the relationship. Contractors and design professionals can both have strong personalities and have been observed on occasion to let ego compromise the project or relationship. Working out what each expects of the other and how the relationship will work before partnering on a project will help avoid some of the disappointments typical to a blind date.

Topics to consider might include the ability to design within a budget, incorporating construction methods already familiar to the contractor’s team, who will pay to fix the plans if mistakes are discovered, and who will cover the errors and omissions insurance coverage in case of design failure.

 

Take Time to Establish and Evolve Your Design/Build Partnership

Design build lunch

 

 

Consider a lunch meeting together with your designer to discuss expectations and workout any kinks before meeting with any clients. Blind dates may be fine if you have no expectations for a long lasting relationship, but don’t lose a client by double dating with a stranger.

Fortunately, in a true Design/Build setting, the contractor and designer are together at every meeting with the client. This provides a great way for both to observe and monitor the dynamics of the meeting and the contractor/designer relationship. Be sure to include time (maybe another lunch meeting) for a debriefing discussion right after leaving the design meeting to work out any issues and or confirm what worked well.  Doing so can help both of you advance and improve your process and your working relationship.

Successful Design/Build doesn’t happen by accident!

 

Read this previous blog post about doing design in-house

download shawn's free sample design build retainer agreement

Be sure your business is ready when the market improves!  If you are looking for better results from your Design/Build business contact Shawn today.  

 

 

Topics: Design/Build Process, Plans and Specifications, Design Options, Working with Design Professionals

Design Options for Design/Builders: In-House Design

Posted by Shawn McCadden on Tue, Apr 03,2012 @ 05:00 AM

Design Options for Design/Builders: In-House Design

Design options for design build

 

 

Design/Build contractors have come to realize the need for and importance of design as it relates to getting and producing the construction of a project. Typically, there are two options for getting the design done; In-house or out-sourced.  This article will discuss in-house design.  In my next blog I will discuss partnering with others to get the design work done.

 

The Designer Must be Qualified To Do The Job

Choosing the right designer for design buildNot all contractors or homeowners have creative design skills, but most can tell a good design from a bad one.  A drive through your local area may provide a few good examples of projects where the contractor completed the design, but perhaps should have stuck just to the build part.  The project could have met the client’s needs for space or function, but the end result may have been a T-1-11 box added onto a Victorian gem.

The first consideration before offering in-house design services should be an assessment of the designer’s skills and qualifications.  Depending on the type of projects you do or the design expectations of your clients, do you have the experience and skills on staff to complete the required designs and drawings?  Also, consider the legal requirements for the design or designer in the market area you work to be sure your designer and or your business can even offer such services.

 

In-House Design Considerations

If you are currently doing your design work in-house, or plan to, consider the following before it’s too late:

  • Do you have the time in your schedule to add or keep up with the demand for design, particularly if your business or volume grows?
  • If you bring a designer on staff, will you have enough work to keep him/her busy and productive?  If not, what other skills do they have or what other skills does your business need that this person could bring with them?
  • Are you limiting your client’s projects and design desires to your in-house capabilities and experience?  Will that be a problem?
  • What will happen if you or your only designer is injured or otherwise unavailable to do the design work?
  • If you do not have a professional designation, what will you do if your prospect or client wants the prestige of a professional architect, or the project requires structural engineering? 
  • Even if you plan to do the design work in house, should you find an additional resource or two as back-up to get the design work you need done when you needed it?

If any of the above could affect you or your business in a negative way, partnering with others may be the answer.  Watch for my next blog for some insight on partnering with others to get the design done.

download shawn's free sample design build retainer agreement

Be sure your business is ready when the market improves!  If you are looking for better results from your Design/Build business contact Shawn today.  

 

Topics: Design/Build Process, Plans and Specifications, Design Options, Working with Design Professionals