VIEW POINT

FIRST WORD

  • A Tale of Two Remodelers

    One company installed a new forced-air heating system; the other mounted an access ladder in the hall ceiling and created a small storage space in the attic. Both worked in the same attic space, although not simultaneously, and both made a distinct impression on the homeowners--also quite different.

     

News + Notes

  • Housing Market Survives Recession

    A study released in June by Harvard University reported that construction activity on single-family homes hit an all-time high of $206 billion in 2001. The majority of our report doesn't deal with future projections," says Rachel Drew, a researcher at Harvard's Joint Center for Housing Studies, which conducted the study.

     
  • Subcontractor Court Appeal

    A Tennessee Court of Appeals will allow the American Subcontractors Association to submit a brief and include oral arguments in a case against a subcontractor. Cubbage says ASA's Subcontractors Legal Defense Fund (SLDF) is funding ASA's involvement in the appeal.

     
  • ServiceMaster Ends Depot Pilot, Adds Yahoo!

    After just five months, The Service Master Co. and The Home Depot have ended a joint home services program. The program, conducted at The Home Depot stores in Orlando, Fla., Memphis, Tenn., and Sacramento, Calif., tested a range of co-branded residential maintenance and repair services.

     
  • Erosion Fines Get Serious

    In 1992, the EPA instituted an erosion regulation -- under the authority of the Clean Water Act -- that holds developers, site owners, and contractors on construction sites larger than one acre responsible for the development and implementation of an erosion control plan for that site. The paper quotes Donette Dunaway, a water board staff member, as saying, "Through this enforcement case, we're trying to get the message across that sediment and erosion to our creeks won't be tolerated."

     

MARKET WATCH

  • Tough All Over

    Consumer confidence fell for the fourth straight month in September, according to The Conference Board. Sales of existing homes declined by 1.7% in August, even as already very low mortgage rates continued to drop. Another sign that the economic recovery is threatened comes from a third straight drop in The Conference Board's Index of Economic Indicators in August.

     

COMMENTARY

LINDA CASE

  • Hire Education

    Your company's growing and you're faced, again, with the prospect of sifting through resumes, interviewing, and hiring. Hiring shouldn't be a chore; it's an opportunity--a time to define the job as well as the attitude and values we want and to find the very best fit.

     

WALT STOEPPELWERTH

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    Dandy Handymen, Part 1

    Are you thinking about hiring a handyman or starting a handyman division for your company? But before assigning a staff member to be your company's handyman division or running out and hiring someone, it's important to be clear about what a handyman is, what he does, and what kind of client expectations exist.

     

GUEST COLUMNIST

  • Double Trouble

    For years we've been located in Phoenix, and from there we serve the entire metro area for jobs of every size. We set up the computer network system so that all processing was done at our Phoenix location.

     

YOUR BUSINESS

Ways + Means

  • Budget Busters Not Allowed

    Whether it be from client-generated change orders, contractor-generated change orders, or unforeseen conditions, the reason doesn't matter. Jill Liptow, of The Remodeling Center, a Pewaukee, Wis., design/build firm, calls it "the final agony."

     
  • Tall Orders

    One of the biggest reasons remodeling companies don't make money is because job costs are greater than the amount estimated.

     
  • In for the Long Haul

    Usually a warranty ceases to be in effect when it expires in writing. That is "on the high side," but not excessive, compared to that of other companies in a peer review group Wills belongs to.

     
  • Service 24/7

    Gary Crowley, owner of Crowley Construction, recently came back from a 12-day vacation and nobody even knew he was gone. A year and a half ago, fed up with solicitations he received at the office and not particularly happy with the "repetitious and impersonal" nature of answering machines, Crowley got in touch with Contact Communications.

     

BOTTOM LINE

  • Five Fundamentals

    Spending time on the production team and systems will get the results you want. --Mark Richardson is president of Case Design/Remodeling, Bethesda, Md. (301) 229-4600; mrichardson@casedesign.com.

     
  • Accounting for Replacement Costs

    Repair and replacement costs can take a bite out of your operating budget. Philbin's crews also pay to repair their tools, unless the damage was due to negligence of a co-worker, but Philbin pays to sharpen or replace bits and blades.

     

Sales & Marketing

  • Building a Better Client Base

    Marketing hinges on a simple truth: No recognized, admitted need goes unfulfilled. The trick is finding potential clients with recognized, admitted, yet unfulfilled needs who can pay for services. Buy good mailing lists from reputable sources.

     
  • Green Marketing

    Neil Kelly Co. partnered with its local utility company to promote the restoration of a 1928 English cottage using sustainable remodeling and energy efficient practices. Tom Kelly, president of the Portland, Ore., remodeling company, says although the goal of "The Legacy House" was to win business, the company sees the "green" remodeling market as a growing one -- and as a great differentiator. Kelly's company volume is about $13 million, with less than 10% of it "green."

     
  • Marketing Workshop: Before+After

    Critique courtesy of Janet Wagner, Ph.D., associate chair of marketing, R.H. Smith School of Business, University of Maryland, www.rhsmith.umd.edu. Wagner holds a B.A. in graphic design from Cornell University; her graduate degree is in marketing.

     

FIELD NOTES

  • Round the Clock

    Dick Seibert turned to a time clock system to track employee hours for two reasons. First, many members of his crew had worked independently and were used to making their own hours.

     
  • The Right-Sized Crew

    The number of people working on a jobsite should be determined by need and not by the traditions of the industry. Many accidents occur when one person attempts work that should be done by a crew.

     

BY DESIGN

  • Portal Power

    When architect Dean Brenneman needed to hide some ductwork in this whole-house renovation, he used a simple yet strong design solution. Staff carpenters in the design/build firm crafted the matching ceiling panel on site, fitted it with cast aluminum registers from Reggio Registers, and painted over them.

     

Tech@Work

  • Organize By Numbers

    Computers have made it easy to packrat away all kinds of data, but not so easy to find it again. The numbering scheme can be something you create, but it's probably better to base it on an established source like NAHB's Chart of Accounts (see www.nahb.com/builders/chart.doc).

     
  • Online Matchmaker

    Chris Paquette says an online referral service has been a boon to his business. It outdistances similar services because people, not computers, match clients with contractors, according to the Philadelphia-area remodeler.Paquette, who usually does $350,000 annually in kitchen, bath, and cabinetry work, says he has contracted for $415,000 worth of work through HomeNet Solutions this year.

     

FEATURES

Before & After

Cost vs. Value Report

  • Family Room Addition

    Anytime you increase space that's centrally heated and air conditioned, you increase the per square foot value of the house," says San Antonio real estate agent Pat Clay. Homeowners usually add a family room because the family's grown or because they're dissatisfied with the configuration or size of their current first-floor layout.

     
  • 2002 Cost vs. Value Report

    Does remodeling pay? Our annual report gets to the bottom of the age-old question.

     
  • Basement Remodel

    About one-third of the projects built by Ryan Schleper, owner of All City Builders, Buffalo, Minn., are basements. Schleper says clients want their basements finished for two reasons: They need space, and it's usually about a third of the cost of an addition, because mechanicals, foundation, and outside walls are already in place and no re-landscaping is required.

     
  • Bathroom Remodel

    For Stephanie Witt, owner of Kitchens by Stephanie, Grand Rapids, Mich., the question comes down to, "Do you want a payback on your investment or the room of your dreams?" Replace all fixtures to include standard-sized tub with ceramic tile surround; toilet; solid-surface vanity counter with integral double sink; recessed medicine cabinet; ceramic tile floor; vinyl wallpaper.

     
  • Bathroom Addition

    Seen strictly from the standpoint of resale, carving a bathroom out of existing space, especially in a home that has only one or one and a half baths, might be the most productive remodeling project you can undertake. Even first time buyers, whose expectations may not be as high, "want a master bath and at least one more," she says. Include cultured-marble vanity top, molded sink, standard tub/shower with ceramic tile surround, low-profile toilet, general and spot lighting, mirrored medicine cabinet, linen storage, vinyl wallpaper, and ceramic tile floor.

     
  • Contributors

    Resale values for the 2001 Cost vs. Value Report were estimated by the following real estate professionals.

     
  • Two-Story Addition

    People usually add on to stay put, points out Kerry Butler, owner of Butler Construction Services, a full-service remodeling company in Kelso, Wash. "They like the neighborhood, the school district. They've looked at newer, larger homes and decided to invest in the home they have and stay in the neighborhood."Real estate agents agree, rating this project a 94% recoup overall, with the recoup on additions in areas such as Washington, D.C. (177%), and San Francisco (126%) returning even more.

     
  • Window Replacement

    Bob McCay, owner of McCay Building Company, Birmingham, Ala., says prospective home buyers with experience -- that is, those who've already bought and sold homes -- notice windows. In this year's Cost vs. Value Report, an upscale window replacement project -- with a national average of $15,502 installed -- yields a slightly higher return -- 77% -- than replacement windows at a mid-range price point, with a national average of $9,424.

     
  • Roof Replacement

    As Minnesota remodeler Marty Schirber points out, a homeowner thinking of selling might solicit 10 bids from 10 roofing companies and go with the cheapest.

     
  • Siding Replacement

    Depending on the product and the color, new siding can change the whole shell, the character of the house, as defined by the outside look, says San Antonio real estate agent Pat Clay.

     
  • Major Kitchen Remodel

    This year's study offers two gut-and-replace kitchen remodels: a mid-range price project at $43,213 and an upscale kitchen -- same size, different components -- at $70,368. The price difference in specing granite vs. other types of materials for countertops, for example, may be $5,000, Dawn points out, but "it can make a $20,000 difference in the asking price, because of the perception about the quality of the home."

     
  • Master Suite

    Minneapolis remodeler Marty Schirber observes that potential home buyers often like some feature of a house simply because it's something they couldn't imagine building for themselves. One such example is a master suite, which Schirber calls "sanity space."

     

Reader Panel

  • Reader Panel: Profit Slippage

    Typical profit slippage -- the difference between estimated and produced gross profit--is 5% or more according to our survey.

     

BIG50

CLOSE UP

  • Profile: Jim Maguire

    When he was awarded Big50 in 1989, Jim Maguire had just finished a $2.5 million year doing insurance restoration and remodeling work.The company, now based in Waterbury, Conn., only does insurance restoration, cleaning, mold remediation, and building envelope drying. The system initially paid a straight commission of 15% of the gross profit of each job produced to salesmen and production managers who worked solely for that commission.

     

SECOND LOOK

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    Second Look: Randall Fenton

    When Randall Fenton was named Big 50 in 1987, he was pushing to expand Inrecon into a nationwide insurance restoration business. Yellen says the remaining partners and BELFOR intend to double the company's sales volume in the next six years.

     

SOLUTIONS

FACE OFF

  • Face Off: Should profit margins be smaller on larger jobs?

    I'd love to say no to this question, but the reality is when you get into upwards of $600,000, the homeowners--lawyers, bankers, all tough negotiators--are looking for deals. We aim for a 40% markup to produce a 28.5% margin, but there's no way I'm getting a 1.4 markup on an $850,000 job in my market.

     

KITCHEN + BATH

DESIGN CLINIC

  • Master Kitchens Rise and Shine

    Homeowners are demanding more amenities to create the ultimate master bedroom retreat. One such luxury is having a "morning" kitchen to brew coffee in the room. And the morning time frame can stretch to evening, with small refrigerators to chill wine for a relaxing night. Mini-kitchens are more popular in new construction, but a few remodelers and kitchen designers are finding their clients asking about them.

     

Management

  • Professional Help

    A new Web site provides a forum for professional kitchen and bath designers to share knowledge and information. The site, www.kitchenbathpros.com, is the brainchild of designer Susan Serra of Long Island, N.Y.

     
  • Q+A: Ask the Experts

    Last year, designers Amy Sussek and Jackie Zager launched a Web site called www.askthekitchendesigners.com. We wanted to give homeowners a place to educate themselves about materials and the remodeling process, so that when they start shopping at a showroom, they won't be overwhelmed.

     

SPEC BOOK

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    Bathroom Lighting

    The Ambiance Lighting System offers many solutions for task or accent lighting. Also available in an antique brass finish, the fixture extends 9 inches from the wall and measures 24 inches wide by 9 inches high.

     

REPLACEMENT

ROOFING

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    Roofing Safety Check

    Besides endangering a worker, a roofing accident is bad for PR, leaves the job short-handed, demoralizes the crew, raises insurance premiums, and creates paperwork.

     

Windows

  • Additions a Sales Opportunity

    By Jim Cory. Additions often present an opportunity to suggest clients change out the windows in the rest of the house to match the windows going in the addition. "We're always working budget-backwards," says Jim Strite, Strite Design + Build, Boise, Idaho.

     
  • Name Brand Recognition

    Rich Gaspar, owner of Gaspar Construction in Seattle, notes that there's a 20% to 30% price difference between nationally known window brands and locally produced brands. The clients who choose the lesser products run a heightened risk of the windows failing," Gaspar says.

     
  • Look Before You Leap

    By Phil Rea. A: First, ask yourself why you want to take on a new product or service. --Phil Rea is president of Phil Rea and Associates, a firm offering sales consulting, motivational speaking, and a monthly newsletter.

     

PRODUCTS

TRENDS

  • President Bush Outlines "Healthy Forests" Initiative

    By Stephani L. Miller. Some groups have even said that the president's plan would hand over national wildernesses to the whims of lumber companies while it ignores the needs of communities along the edges of forests.However, some lumber companies, such as Weyerhaeuser, see little value in harvesting on public lands, because the wood taken is not usually of the same quality as that cultivated on their own lands. President Bush's Healthy Forests Initiative Will Involve the Following Measures:

     
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    Open-Air Kitchens With All the Conveniences

    Outdoor kitchens have become increasingly popular with homeowners, and manufacturers are responding by creating a wide variety of appliances especially for the outdoor kitchen. KitchenAid's stainless steel outdoor refrigerator provides ample chilling space.

     

Reader's Choice

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    Glass Act

    KS Remodelers has been installing Hurd Windows for 15 years, says Ken Skowronski. "From the lap siding, the corner boards, and the cedar look-alike gables, to the soffit, fascia, and the eyebrow work on the arches above, they're all Hardie siding products.

     

ON THE JOB

  • It's All In the Flashing

    I've remodeled houses for more than 25 years and am still amazed at the amount of water damage caused by poor flashing details. Even the best products won't work if they're installed improperly.According to Paul Fisette, a building products scientist at the University of Massachusetts, housewrap and felt each have value in reducing air infiltration and water penetration (for more information, see "Housewrap vs. Felt," the Journal of Light Construction, November 1998, or go to www.jlconline.com).

     

IN FOCUS

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    Stucco Products

    The new One-Coat Stucco System is a pre-blended mix to which sand and water are added on the jobsite. Sto Corp. Powerwall Stucco is a factory-blended cement, lime, fiber, and additives mix that yields a Portland cement stucco base coat that is breathable and resists wind-driven rain and ultra-violet light, says the maker.

     
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    Basement Waterproofing

    A two-part waterproofing system prevents leakage, condensation, and seepage. Xypex Chemical Corp. HD-150 penetrates into the structure of concrete walls and floors, creating a non-soluble crystalline formation that seals the concrete.

     
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    Power Tools Go Ergonomic

    Ergonomics in the hand and power tool industry is the applied science of designing and adapting tools to accommodate the physical needs or capabilities of the user. The results of all these tests will be a Hand Tool Ergonomic Data Sheet defining the ergonomic strengths and weaknesses of a particular tool.

     

LAST WORD

Benchmark

  • Benchmark: Holes in the Net

    Back in the June 2000 issue, we set the REMODELING benchmark for net profit at 10%. According to financial data collected twice annually by Business Networks from each of its 100-plus remodeling company clients, the average net profit actually reported is just over half of the benchmark.