Transcript Piecing It All Together

Piecing It All Together !
Fundamentals to Consistently Make
Money with Your Business
Presented by:
Tyler Construction Engineers, P.C.
Tyler Construction Engineers, P.C. work exclusively within
the engineering construction industry to provide the most
comprehensive business resource for small business
owners.
Our Consultant Team

Marie Williams, MBA – human resources specialist & leadership development

Sandra Webb – accounting & payroll systems

Jay B Mercer – accounting & small business tax strategies

Curtis Webb - strategic marketing & competitive advantage strategies

Marshall Tabb – accounting, cash & debt management , leadership development

Ericka Hayes, CPA – business planning & Information technology strategies

Teresa C Daniel, PHR - – human resources specialist & leadership development

Victor Tyler, P.E. – construction business practices , bidding & pricing strategies
Introductions

Your Name

Hometown

School

Your interests

What do you see yourself doing in the future?
Successful business owners/ managers
share 3 Characteristics:
•
They Know What They Want.
•
They have a Written Plan to Get What They Want.
•
They Always Make Progress Toward What They Want.
Successful business owners create processes
that are…
• Measurable
• Predictable
• Repeatable
Business Fundamentals:
• Business Strategy
• Marketing Strategy
• Financial Strength
• Human Capital
• Information Technology
• Leadership
Let’s Talk …
• Fundamentals of Company Operations & Culture
Panel Presenters: Marshall Tabb & Ericka Hayes
• Fundamentals of Marketing
Panel Presenter: Curtis Webb
• Fundamentals of Making & Maximizing Your Profit
Panel Presenter: Victor C. Tyler, P.E
• Fundamentals of Tracking & Measuring Your
Performance
Panel Presenter: Jay B. Mercer
What’s wrong with this picture?
Company Operations & Culture
Presented
By
Marshall Tabb & Ericka Hayes, CPA
Fundamentals of Service Delivery
Your Company Culture
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Company Policies Procedures
Customer Service
Work / Life Balance
Discipline
Attitudes
Risk
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Business Strategy
Financial & Budget
Business Processes
Information Technology
Marketing
Sales
Training
THE LATE GREAT HENRY FORD SAID:
“COMING TOGETHER IS A BEGINNING”
“STAYING TOGETHER IS PROGRESS”
“WORKING TOGETHER IS SUCCESS”
SUCCESS?
ACCORDING TO WEBSTER’S:
THE ACHEIVEMENT OF SOMETHING
DESIRED, PLANNED OR ATTEMPTED.
Policies & Procedures
Begin with the End in Mind
THE POLICY MANUAL
 Direct employees to conform to overall
management philosophy.
 Highest authority for conduct in the company.
 Takes precedence over all other publications.
 Should not hold the company “Hostage” by being
too restrictive.
Standard Operating Procedures
• Details the “How To” of a job or task.
• Start with a Purpose, a General Narrative and
show its Applicability.
• Use position titles/functions vs. individual names.
• Must be kept current.
COMMON POLICIES & PROCEDURES
Accounting
Operations
Personnel
Marketing
Bidding/Estimating
Safety
Record Retention
Risk Management
Lack of Policies & Procedures Cause:
 Inconsistency
 Poor Internal Control
 Poor Communications
 Confusion
 Low Morale
 Employee Turnover
 Anger / Frustration
 Lost Profit (Rework)
Policies & Procedures
Create Processes That Are:
Predictable
Measurable
Repeatable
Lack of Policies & Procedures Cause:
Inconsistency
Poor Internal Control
Confusion
QUESTIONS?
FUNDAMENTALS OF MARKETING
Presented
By
Curtis Webb
What Is Marketing?
An activity or process that creates interest
The Goal is
to…
 Attract
 Persuade
 Retain
Foundation Statement
You can’t give value to someone until they
understand or appreciate what you are
doing, or what you’ve done!
Where Do I Begin?
Begin the marketing process by
doing a self-assessment – There
are three critical questions to
ask…
Self-Assessment
What is it
that I’m
trying to do?
• Know what advantages you bring
How am I
trying to do
it?
• Define the objective
Who am I
trying to do
it with?
• Know who to target
Its All About Benefits
…let your prospects know all the benefits your
solution gives!
Explain Your Solution
Let your prospects know you have a
better solution to their problem!
Showcase Your Solution
…tell your prospects why your solution is better!
Remember…
▪ Say or do something that gets your prospect’s
attention
▪ Let the prospect know you have a better solution
to their problem
▪ Tell them why your solution is better
▪ Let the prospect know all the benefits your
solution brings
▪ Prove to your prospect that what you say is true
▪ Get your prospect involved in asking questions
FUNDAMENTALS OF MAKING & MAXIMIZING
YOUR PROFIT
Presented
By
Victor Tyler, P.E.
Spending Habits
Where's the Splurge
Category
Food and dining out
Entertainment and Recreation
Shopping and Personal Items
Nothing
Home and Housing
Children and Schoolng
Don't Know
Bills and Utilities
Other
Cars
Medical
Source: PewResearch Center
%
25
17
15
14
7
7
6
4
4
3
1
Making & Maximizing Your Profit
•
•
•
•
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•
•
•
•
•
•
Know Your Costs.
Understand Your Costs.
Cost first, then price.
Make the estimate comparable to the P&L Statement
Document data.
Be detailed
Be factual
Base the estimate on historical data
Compare final actual with the estimate.
Synthesize all facts into the bidding plan.
Be timely & respectful of the estimating system.
Strategy
Start
• Position (Market)
• Project
Strategy to winning •
more profitable work. •
People
Product / Service
• Price
• Production
• Profit
You cannot begin to accurately price your
products or services without knowing your
cost.”
“To achieve consistent profits you must:
 know your costs
 understand your costs, and
 control your costs.
Price Structure
Contract Price
Total Cost
Direct Cost
Work Item Cost
Mat l. Labor Equip Subs
Profit
Gen & Admin.
Jobsite OH
Understanding Risk & Pricing
Labor
Material
Equipment
Subcontractor
Other
Total
Overhead & Profit 25%
Total Bid
Old Way
Costing
$50,000
$70,000
$7,000
$76,000
$3,000
$206,000
$51,500
$257,500
New &
Improved
Costing
$50,000
$70,000
$7,000
$76,000
$3,000
$206,000
Labor
Material
Equipment
Subcontractor
Other
Total
Multi-Overhead Allocation
Labor Burden
Project Site
Overhead
Subtotal
Home Office
Overhead
Profit
New Total Bid
21.0%
$10,500
5.0%
$10,825
10.0%
5.0%
$227,325
$22,7336
$12,503
$262,560
How Time In Construction is Spent
Opportunities for improvement
36%
other
activities
64%
Installation
 Planning makes actual
installation more efficient
 Other activities such as site
movement, material
logistics, general nonproductive time and
rework is minimized
The Average Construction Day
DESCRIPTION
%
HOURS/DAY
Study Plans
Material Procurement
3%
3%
0.24
0.24
Receiving & Storage
Mobilization
3%
5%
0.24
0.40
Site Movement
Layout & Marking
5%
8%
0.40
0.64
Actual Installation
Cleanup
64%
3%
5.12
0.24
Breaks – Non-Productive
6%
100%
0.48
8.00
TOTAL DAY
Where can we improve?
Look at 176 Man-hour Month
DESCRIPTION
%
HOURS/
MONTH
Study Plans
3%
5.28
Material Procurement
3%
5.28
Receiving & Storage
3%
5.28
Mobilization
5%
8.80
Site Movement
5%
8.80
Layout & Marking
8%
14.08
Actual Installation
64%
112.64
Cleanup
3%
5.28
Breaks – NonProductive
6%
10.56
TOTAL MONTH
100%
176.00
For one employee
approximately 63
hours per month is
spent on activities
other than actual
installation
…. approximately
760 hours per year
for that one
employee.
$45,619 per year
If you have 4 full-time field employees
paid at $15 per hour …
That’s why I talk about productivity in the
estimating processes for both
field employees and equipment.
Seminar Tip
Use accurate rates and reduce idle time.
Cost Summary
The Estimator’s View
Company Income Statement
The Accountant’s View
Direct Costs
Direct Labor
Equipment
Materials
Subcontractors
Other Direct Costs
Revenue
Cost of Sales
Direct Labor
Equipment
Materials
Subcontractors
Other Direct Costs
Labor Burden Rate (%)
Indirect Expense Rate (%)
Gross Profit
$$$
General & Administrative Rate (%)
(Company Overhead)
Indirect Costs
Labor Burden
Other Indirect
Gross Profit
Profit Rate (%)
Bond Rate (%)
$$$
General & Administrative Expenses
Income Before Taxes
Total Cost:
$$$
$$$
$$$
Margin vs. Markup
Job Profit and Loss Statement
Sales ……………. $
Less COGS …...
Gross Profit …….
Less OH ………..…
Net Profit ..……..
700,000
507,000
193,000
175,000
18,000
As a % of
Sales
Markup
As a % of
Direct Cost
100 %
138 %
72 %
100 %
28 %
38 %
25 %
34.5 %
2.6 %
3.6 %
Basic Cost Summary
Expanded Cost Summary
% of
Direct Costs
% of
Revenue
$ 700,000
136.72 %
Labor
120,000
23.44
Material
300,000
58.59
10.71
Equipment
75,000
14.64
12,000
1.71
Subs
12,000
2.34
193,000
27.58
Other Cost
5,000
0.98
Total Direct
$ 512,000
100.00
Labor Burden
$ 40,000
7.81
Supervision
75,000
14.65
Total Job Site
$ 115,000
22.46
$ 627,000
122.46
Gross Profit
73,000
14.26
Overhead
55,000
10.74
$ 18,000
3.52
$ 700,000
100.00
Labor
120,000
17.14
Material
300,000
42.86
Equipment
75,000
Subs
Revenue
Overhead
and Profit
Revenue
Direct Costs
Job Site OH
Total Cost Input
Profit
Why is it so important to know what
costs belong to each job?
•
•
•
•
Accurately measure profitability
To determine what amount to bill
To support change orders or claims
Financial performance (banker, surety, etc.)
Bid Strategy
1. Only bid what you do best - specialize and focus on certain
types of projects, in specific locations, for certain types of customers
2. Define the ideal project size
- increase your effectiveness
and become more competitive
3. Seek negotiated jobs - and never bid or propose on projects
against more than three quality competitors . Do not become a "'too busy,
low profit" contractor
4. Develop accurate job costs -
The only variables between the
bid and the completed project should be overhead and profit markup.
Consistent Profits
QUESTIONS?
Thank You!
cost consultants | estimators | management consultants
810 Dominican Drive, Nashville, TN 37228
tel. 615.469.5398 fax 615.469.7054
www.tyler-engineers.com