While the down-economy mantra might have been “any job at all,” remodeling companies still needed to make a profit. Doing so while increasing the number of smaller jobs is a challenge that requires good scheduling and improved efficiency to reduce slippage and maintain margins.
Though many remodelers characterize small jobs by cost, Bob Mock, owner of Case Design/Remodeling, in Anoka, Minn., feels there should be a different approach.
“The complexity of the job makes the biggest difference,” he says. “You can have a $5,000 complex bathroom freshen-up or a straightforward exterior remodel at $50,000. I would encourage people not to get caught in the revenue amount of the project. That’s irrelevant. ‘How do you get efficient with small jobs?’ is the question.”
Efficiency starts up front. It’s not production that causes inefficiencies that lead to slippage, it’s what happens at the front end. “Get the job specified and lined up so production has a chance to win,” Mock advises.
Keeping a watchful eye on efficiency, labor, and possible slippage will lead to better estimating and better margins.
Sometimes with larger projects, you start to relax on the markups based on efficiencies, Mock says. “There’s a wisdom you develop as you start to understand your margins and what your markup should be to achieve those margins. We look at total revenue and try to hit an average margin; we know some will be under and some over, so we try to hit toward the middle. And that’s easier to do by looking at job complexity [than at revenue].”
Mock’s company does about 300 transactions a year (down from 500 before the downturn) and many are smaller in scope. But a project is never “small” to a client. Every project starts with educating clients. “We take them down a certain path that’s logical and makes sense for them,” Mock says.
He developed a sales process sheet that shows what happens when a call comes in. As project complexity gets established, there’s a clear chain of events. Projects fall into one of five silos: handyman, insurance claims restoration, home improvement, remodeling, or in-depth remodeling. Handyman repairs are done quickly — assigned on the spot and paid the same day on a time-and-material basis, but there is another subcategory called “value package,” which requires the production coordinator to schedule a four- or eight-hour block of labor and take a deposit. “The sheet defines for clients what we mean when we say ‘full-service,’” Mock says.
When Mock brought the handyman division together with his remodeling and restoration business in 2004, he knew that he would need a way to schedule jobs, so he created a production coordinator position. This person sees all the projects coming into production. Using whiteboards for scheduling, the production coordinator has been the key to streamlining the process of “feathering in” smaller jobs.
The coordinator is in charge of everything at the front end: paperwork, permits, drawing verifications, following up on Environmental Protection Agency regulations, ordering materials and making sure they are in on time, assigning the proper labor, and scheduling the job. A project manager works on site.
“The coordinator schedules everyone on the whiteboard and can see the big picture,” Mock says. “Slippage can happen when your field labor is not utilized well.”
The production coordinator can stay on top of that, moving available people into position. If a homeowner calls in and needs someone for a time-and-material job, for example, the coordinator can look at the board and quickly see that a larger project has an inspection going on, which means that a laborer is freed up to work on another job.
A coordinator is not for every company, and it’s important not to overstaff. But if you decide to increase staff, weigh and balance the income from more transactions with increase in overhead. And don’t rush. It has taken Mock three years to develop this system.
—Stacey Freed, senior editor, REMODELING.