Tom Swartz, CGR
Some remodelers insist the lead carpenter system is the only way to maintain quality control and customer satisfaction. A lead stays on one project for its duration, doing most of the work himself and communicating directly with the homeowner. Others prefer to use a project manager to handle communication and logistics, outsourcing most labor. With fewer employees, the business pays less in insurance and benefits. This model, proponents says, also puts the work in the hands of specialists. Tom Swartz asks George Martinec and Don Strong which method is better.
Tom: George, take a minute to talk to us about production management.
George: Our lead carpenter is also a project coordinator. Once we start a project he's there every day until he finishes. He's our main liaison with the client. He is also the carpenter. We also have a production director who is over all the production teams. He assigns labor and supports the projects and supports the lead carpenter but does not work on the job.
Tom: Does the production director visit the jobs?
George: Yes, but not on a regular basis.
Tom: If the lead carpenter has a question on the job scope or price who does he go to?
George: Whoever he needs too. Right to the salesperson or right to the director. We have a pre-construction meeting with the customer. The lead, salesperson and sometimes the production director are there. They all have the same paperwork and review all projects with the customer.
Tom: Don, give us an overall view of how Brothers Strong views and handles production management.
Don: We started out with a lead carpenter concept, then evolved into a project manager model. Our lead carpenters were probably doing 80 percent hands on and 20 percent non-hands on. That is now just about reversed. The project managers have to be in the pre-construction conference with the client. They have gone over the project ahead of time and are often consulted in the bidding process, because if the project manager brings the job in at less than cost, he gets a bonus based on the money he saved. That encourages him, for example, to clean himself rather than bring in the cleaning crew. This route relieves the salespeople of constantly heading back to the homeowner. When we had the lead carpenter, the salesmen were still heavily involved in the relationship with the homeowner. Now, Michael and I visit the job once or twice a week. The project manager is expected to visit every job in depth daily, not just stick his head in the door.
Tom: Is he a salaried employee?
Tom: George, are your leads hourly or salary?
Tom: Do they have the opportunity for any incentive or bonus if the job comes in OK?
George: Not at this time. It's stated in their position contract that they need to bring these in on time. They have all the information they need.
Don: We do a cost analysis of the job when it's finished. If it's extraordinarily high or low, we meet with the production guy and ask, "What happened?" It may have been sales who underestimated or overestimated the time.
Tom: So, he has three goals: on time, on budget and a happy, well-satisfied customer.
Don: That is correct. If the customer puts anything in writing about the job and mentions their name, how happy they were, each of the production guys get $50 cash when that letter comes in.
Tom: Are they permitted to ask the customer for a letter?
Don: If a customer says you did a nice job, you can reply and ask them to please put that in writing.
Tom: Your project manager is required to visit these jobs daily. What if you get busy? How many is too many?
Don: It depends on the size of the job. Last year, they were handling four jobs each at the same time. I'm never really too far from the job. I'll help out.
Tom: George, compared to one job for your guys?
George: We have five lead carpenters, so we have five jobs going on at a time. The production director lends a hand as far as making sure the materials are there on time and helping things to run smoothly.
Tom: Do you subcontract certain things?
George: Very little. Sometimes drywall or excavation.
Tom: Is one of the inefficiencies of the lead man system that he does things however he can get it done? Is it maybe quicker or cheaper using a subcontractor?
George: Not everyone is good at everything, so we try to position our guys where their strong points are. Then he can use other people on our staff as subs to help him. He just coordinates that with the director. A guy that is really good at masonry may come in and do the brickwork while he does something else. So we kind of handle that within the company, but his responsibility is to coordinate any onsite work with the subcontractors. He's in charge of them.
Tom: So what does he do when the drywall is going up and nothing else is happening at the job? Does that happen very often?
George: It does on a bigger job. He will supervise the drywallers but he might be outside installing siding. He'll be working as well as supervising.
Tom: Is it possible a lead will help a co-worker frame an addition and not be on his job that particular day?
George: We don't pull the main lead off a job. He really is there all the time.
Tom: Do you manage the same way for both large and small jobs?
George: Yes, that's the way our company is set up. Sometimes we have two to three leads on a big job, but one is the main lead. They know that and they work under him for that period.
Don: They're handled the same way. When our production guy is mobilizing, work orders are issued to every sub. It's faxed, e-mailed or picked up and it has the date and when they're expected to be on that job. We give them good notice and ramp up slowly so we don't end up with any down time.
Tom: Does the lead carpenter know all the costs for each project?
George: Yes, we run an open-book system here, but he doesn't necessarily carry that around with him. He has another set of paperwork that doesn't have any numbers on it. He is more or less working on the hours that are allotted each category. The production director has the responsibility of getting the main order of materials at the job site. The salespeople are responsible for getting all special orders to the lead on the job before it starts, so he pretty much doesn't have to work numbers with the customer. He doesn't have to buy much except for incidental things he might run out of or critically needs.
Tom: Who lines up the subcontractors when they're needed?
George: Usually the production director will line up the subcontractors and coordinate with the lead carpenter on the job.
Tom: Don, does your project manager know every cost on each of the projects?
Don: Yes, especially on a complicated project. They will have been in on the beginning because we will consult with them so that we have numbers that they can live with. They keep a daily log of any conversation with the homeowner and anything that will impact the bottom line of the job, so they can come back and say, "Don, you were low on this," or, "You didn't figure this one properly." The advantage is they may be able to save a buck. Let's say that we're bringing somebody in to hang rock and we've set a figure of $1,100. He just may shoot the sub a figure of $900. If the sub comes back to us, then we say OK and adjust it. If he doesn't think we were light on it, then the project manager has $200 to work with in case there's slippage someplace else.
Tom: George, that sounds different in your case — the director has to do that but the carpenter doesn't?
George: Well, not really. Every day our projects are job costed, so he will know what his running totals are. He will know how the job is running and if anything needs adjusting on a daily basis.
Tom: About what percentage of subcontractors do you use?
Don: About 100 percent.
George: We're about 2 percent.
Tom: Don, what prevents the homeowner from hiring one of your subcontractors direct to do additional work?
Don: I have that chat with them in terms of dealing with the homeowner. Just the other day a homeowner said, "Can you paint this little bathroom?" and the sub said, "You'll have to check with Don." In this case, I said, "Go ahead and go direct," but the subs are very well tuned in to the fact that if they accept work on the side that usually would be grounds for termination.
Tom: Do you ever get into that type of situation with lead carpenters?
George: Yes, we do, but our guys are loyal because they are full-time employees. They aren't just part of production, they're part of business development. We have a moonlighting policy that they are not to do that and they understand that when they sign up.
Tom: Don, how do your subcontractors know what's expected? Is that in writing?
Don: It is not a written policy. We talk the obvious kinds of things. They don't smoke. They're to be clean. I don't care if they have facial hair, but if they don't then I expect them to be clean shaven, appropriately dressed. I just make it very clear that these are the conditions under which they are going to work.
Tom: George, do you have a written job description?
George: We have an employee manual that states the general rules of our company. Our position contract goes beyond that in defining the work and the standards and the results that we want from this position. The employee knows exactly what the responsibilities and accountabilities are for everything from tactical work to strategic work. He signs; the manager signs that he will help the employee produce the results.
All the carpenters at this point, whether lead or apprentice or regular carpenters, report to the production director. They have a one-on-one meeting every two weeks. Also, we have an operations manual. It's a 3-inch binder that has everyone's position contract and the standards we want to meet out on the job. How we want drywall done. How we want moldings cut. They meet as a group and decide those issues.
Tom: As more Hispanics enter the business, does the language barrier affect production, especially using subcontractors?
Don: A lot of our subs are Hispanic. Regardless of which crew is there, there will be a lead man who speaks English. If the homeowner has a question and our production guy has just left or isn't there yet, we don't want anyone standing around shrugging their shoulders.
Tom: Does your project manager need to understand and speak Spanish?
Don: No, because we expect the trade lead men to be proficient in English.
Tom: Who presents invoices and the final statement to the customer?
George: Usually that's the salesperson. Before the lead carpenter is finished, he alerts us that we need to do a walk-through with him so that he has another pair of eyes. Then we have a walk-through with the customer and salesperson and ask if they see anything that needs to be resolved. The salesperson will collect any final payments. Before the job starts, the customer knows exactly when payments are due.
Don: Our production schedule shows when the draws are due. The production guy typically will say to the homeowner, "OK, we're doing this, the plumber will be in tomorrow, and tomorrow I'll pick up a check for $14,506." We'll try to give them a few days notice if it's a draw of any consequence. If it doesn't happen, then the production guy is held accountable. After the last payment is received, we set up a meeting two or three weeks after that and they get their closing package, which has details of their warranty. The production guy is expected to accumulate all the paperwork and hold that aside for the homeowner. It is bound in a package. The sales guy comes back after a couple of weeks and presents that closing package.
Tom: If you had to give advice to a remodeling contractor and some things to watch for using your form of production management, what would they be?
Don: Watch the details. A guy said to me one time that more people die from mosquitoes than elephants. Because the elephant is big enough, you keep track of him and you stay out of his way. The mosquito is the little job, the spot on the door that wasn't taken care of. Every time the homeowner sees it, it bothers him again. So I would watch for the mosquitoes more than the elephants.
George: In the past few years the most dramatic change for us has been involvement with the E-Myth Mastery Program for Contractors. This is changing our business daily to a point where the business is no longer dependent on myself for every little thing. We're getting too large to do that. The myth point of view is getting a perspective on one's business and life and the interrelationship between those two. I have to delegate responsibilities and accountabilities for all these positions.