CC - May - June 2017 by annexbusinessmedia

Mid Century Modern in West Vancouver page 22

Do You Know Your Numbers? Take Our ‘GM Aptitude Test’ page 30

Maxwell On Masonry Chosing The Right Bricks page 32

ROSE'S WAY

How Rose Barroso built her homebuilding firm by thinking different Page 16

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AIRSTREAM batteries also feature a button activated LED power level indicator at the back to let you know remaining cell capacity. Go online to ﬁnd out more.

Editorial 6

Steve talks about the importance of being a number cruncher.

Voices 8

The best of the recent online comments at www.canadiancontractor.ca, the most outspoken forum in our industry.

Site Notes 14

News from around the residential construction industry, including Western Canada drywall tariff and GTA housing prices.

Hot New Products 28

What’s new and improved from building product manufacturers.

Steve Maxwell 39

Stuff Steve likes, including a primer on building with masonry.

The Dilemma 46

Send us your solutions to this month’s contractor dilemma and you could win a cool tool from DeWalt.

442 5600

Editor Steve Payne spayne@canadiancontractor.ca

Contributing Editors Rob Blackstien, John Bleasby, Alec Caldwell, Mike Draper, Steve Maxwell

Art Director Lisa Zambri

Publisher Rob Koci rkoci@canadiancontractor.ca

Account Coordinator

Tracey Hanson thanson@@annexbizmedia.com

Circulation Manager

Beata Olechnowicz bolechnowicz@annexbizmedia.com

Voices

” Your financials person is the key to your survival.

”

WHY YOU NEED A NUMBERS GURU

By Steve Payne

People who are able to run successful contracting businesses all on their own are very, very rare.

They are rare because of the nature of the beast. A successful contracting firm is one-third sales excellence, one-third building excellence, and one-third financials excellence.

Get only two out of three correct – and your business is going in the dumpster.

I mention this because I just came back from a two-day financial management for contractors seminar. It was delivered by Steve Ryan, one of the smartest numbers guys for residential contractors I have ever met. Steve offers a number of courses on contractor management for TARION, the Ontario home builder warranty folks. (See an article by Steve on page 30.)

During the course, Steve led us all through basic – and more complex – financial calculations from sample contractor operating statements.

He showed us how it’s possible to have an incredibly busy contracting firm that is doing business at good margins – and have it fail.

The basics of cash flow, which was his point here, are not intuitive. You can’t just figure this stuff out in your head.

You need a smart numbers person to ride herd on all aspects of your business.

If that person is you, that’s terrific. And if you can be a terrific sales person and a terrific project manager, all in one, congratulations.

You will be a one in a thousand contractor.

Chances are, you can’t do it.

One of the most successful businesses in Canadian history, Canadian Tire, got that way because the two founders, brothers A.J and J.W. Billes, were as dissimilar as chalk and cheese.

A.J. was the marketing, sales and ideas man.

Steve Payne Editor spayne@canadiancontractor.ca

J.W. was the dour numbers guru. He said no to a lot of A.J.’s less numerically-sound ideas.

If you have a Steve Ryan type character riding herd on your own numbers, you’re in great shape.

If you haven’t – and you want us to hook you up with some financial management expertise – send me an email to spayne@ canadiancontractor.ca.

Don’t be a two out of three contractor. Get all aspects of your game in gear.

Bob Collins

Home Building Centre – Gravenhurst Gravenhurst, ON

BUILDING RELATIONSHIPS TO HELP YOU BUILD YOUR BUSINESS

When your reputation is built on quality, you depend on relationships built on trust. That’s why you can trust the Experts at Home Building Centre and Home Hardware Building Centre to provide the tools, materials and services you depend on – from dedicated contractor sales staff and easier ordering through phone, fax or email to job site deliveries, credit services and package pricing. With a relationship built on trust, you know you’re building on a strong foundation.

pronews.ca

GETTING PAID

We still get lots of comments and emails about a post we put up almost five years ago called Getting Paid.

“We almost need to treat honest people as dishonest!”

I am a well-seasoned contractor and strive for an over-the-top satisfied customer in the end. I get constant compliments on the quality of our homes. But let me tell you about a recent project (on which I was solely the project manager):

The couple told us that they were honest people and that we didn’t need to go with a lot of signed documents. They did sign an estimate of cost as a go-ahead but it did not give much detail on the expected finishings. Instead, they added many finishes to the house as we went along and each item was priced and they (verbally) approved. Then, when it came to paying the invoice, they didn’t want to pay for the additional finishes. They started complaining about shoddy, hideous workmanship: All the mitres were precise, the doors were plumb and square. (Ultimately) they paid most of the invoices. But now they are suing for a full refund!

I’m just reminding contractors to be wary of people that come on that way. They are the seasoned con artists. My suggestion is to not start any projects without a signature on a detailed quote. People will ask you why you don’t trust them. It’s because of the dishonest people that we almost need to treat honest people as dishonest, too. Personally I hate it. But we, as contractors, can’t let ourselves be abused by those kind of people.

Ernie

Here’s a reply to Ernie from a veteran homebuilder with a unique system for getting paid by using his lawyer extensively. Presumably his lawyer isn’t charging him $300 an hour and up…

Use your lawyer for draws and change orders

Here is a way to make sure you get paid for your services listed in your building contract.

1) Have your lawyer’s name in your contract.

2) All project draws as per your contract are paid by your client via your lawyer.

3) All requests for extras by your client must be submitted to you in writing.

Submit your quote to your client with a copy to your lawyer. Client has five days to respond. If client approves the extras, they must submit the funds for the extras to your lawyer. Do not start any extra work until your lawyer advises you they have received

payment for the requested extra(s).

We have built over 1,000 single family homes in the past 31 years using this policy, and it works. If your prospective clients do not like your payment policies, then you know up front that they are not worthy of your services.

Lee

GOVERNMENTS AND UNIONS

This post from a Calgary electrician was replying to another contractor who said that government-mandated apprenticeship ratios were sops to the big trade unions. In Alberta, that’s not the case, he argues.

“Government is anti-union” on apprenticeships

In Northern Alberta, non-union firms have about 80 per cent of all the work. At Fort Hills the ratio is about 95 per cent non-union with only about 5 per cent of the work going union. Next year, expect the industrial wage to drop from $47 to around $32 an hour. You can thank non-union companies and the CLAC for that. And no, there won’t be any extra work, just lower wages.

The government is, in fact, very anti-union and has been working very hard (with big business lobbying) to bust unions. You’re a total idiot if you think the unions have been helped by the government. Get your facts straight before you blame unions for locking you out of a job.

Flooding the trades with an over-abundance of labour and driving down wages is only good for big business. For the tradesperson it is a good reason to leave the trades altogether. Others won’t have a choice.

As a Master Journeyman Electrician I have found that, in general, contractors are not looking for experienced journeymen: they want to hire the cheapest labor that they can legally hire. They only employ the minimum amount of journeymen that they are required under the apprentice ratio laws.

The problem is that there are many more journeymen who now can’t find jobs because the contractors find journeymen way too expensive and would prefer to hire cheap apprentices (or cheaper offshore foreign workers). So big business lobbies the government and complains they need more apprentices and can’t hire them because of the ratios.

But the one thing that they won’t tell government is that there are plenty of unemployed journeymen electricians available that they can hire but don’t because they are too expensive.

I have been out of work for over a year now, unable to find a job as an electrician in Calgary and I do not have much hope

in the future. There are no jobs available around Calgary for journeymen, but they are still hiring apprentices. There is no shortage of tradespeople, just a shortage of cheap disposable workers. Talk to a tradesperson if you want to know the real story, not some rich business tycoon who is promoting what is best for himself and his stock owners.

Adam Smith

On a different topic, this former HVAC contractor says that, without doubt, governments are pro-union when it comes to closed shop contracts…

Open up bids to everyone!

As a steamfitter, refrigeration mechanic, gas fitter, HVAC tech and business owner for over 30 years, now retired, I wanted to give my views on bidding on government projects. By the way, I was union in the past and open shop in the last half of my career. I just want to say there is no good reason for governments to restrict projects to unionized only companies. The practice is politically motivated and only serves to drive up costs to the taxpayer. Most people do not know but unions give large amounts of cash rebates back to unionized bidding firms to help them come in with lower prices to beat out open shop contractors. I have no issue with that practice as it is their money! However, bids should be open to all as long as the firm has the insurance, bonding and licensed staff on hand to do the job.

Wolfgang Scheuer

WESTERN CANADA DRYWALL TARIFFS

The continued high prices of drywall in Western Canada after the sky-high “provisional” (temporary) tariffs on product imported from the U.S., imposed by Ottawa in October were reduced in February has frustrated many of our contractor readers. Here is the most detailed contractor email on the issue that we have received so far.

“The 16 to 20 per cent price increases are still in effect.”

Re: The February announcement by Ottawa that tariffs have been reduced on drywall in Western Canada. I have been looking into this with our suppliers since the announcement. There appears to be a ton of confusion as to if pricing will be adjusted. But what about the return of the overage also committed to in the ruling? This has cost us all dearly and the only people making the profits here are the ones who stirred the pot to begin with: CertainTeed Gypsum and the wholesale companies.

Our suppliers say they have no information from their chain of command on any of it (stalling I feel) and that prices have remained and will stay the same until they do. In addition when drywall went up the suppliers - and more specifically wholesale supply companies - also took the opportunity to raise all affiliated products (tape, bead and mud) by 16 to 20 per cent. No justification was given for these increases, just that it was needed and it was time (US exchange blah, blah, blah).

In the end the original 16 to 20 per cent price hikes we received in October are still in effect well into April with no signs of any changes into May. My supplier said they will get back to me if they hear anything.

I would love to hear or see the government enforce this ruling so that we can see a relief on this pricing. A ruling without calculating and enforcement is like a speed limit without cops. “Fine yourself if you feel you did a bad thing,” is the attitude.

For our average home (2,100 sq.ft. two storey with triple garages) this increase has added up to around $3,800 in additional costs. Most of which has been absorbed and taken out of our margin as many of the homes we presently have under construction were pre-sold at pre-drywall increase prices. This has taken about $40,000 in revenue out of our operation.

This is very frustrating and I would urge all builders to ask for an enforcement and return of the already stolen revenue from western Canada building projects.

Rick Lystang

President, Rococo Homes Inc.

Spruce Grove, AB

CERTIFYING CARPENTERS

Carpentry is still not a mandatory “certified” trade throughout Canada (although Red Seal certification is sought after and highlyvalued by many in the trade). We get lots of posts asking various levels of government – especially in Ontario – to change this. The following poster still doesn’t think it’s necessary – but he still thinks carpenters are underpaid.

“Buy cheap, buy twice.”

I would like to point out that the majority of carpenters / contractors that are able to start, oversee and complete complex projects do not need to be lumped into the Ontario College of Trades cash cow. Let plumbers do plumbing and electricians do electrical. Carpenters who have acquired years of skill and finesse, in my eyes, are undervalued and underpaid. Yes there are a lot of new businesses out there that talk the talk but can’t walk the walk.

So how about customers taking the time to use their due diligence and reference checks before making costly, uneducated decisions? Ah, maybe it all boils down to cost. Buy cheap buy twice. Valuing the people who do the work, always pays in spades.

Simon Hubble

SOLAR ENERGY

In early April, John Bleasby posted that the globally famous inventor and pitchman Elon Musk was about to put his own version of solar roof tiles on the market in the USA. There is no word yet on a Canadian launch date. Not all of you were that impressed by the Tesla man’s entrance into home improvement.

“Time for Elon Musk to go away” Isn’t it time for the over-promoter Elon Musk and Tesla to go away. I still remember all the people he sucked into prepaying for his electric car, only to hold them ransom and request more money from them when costs got away from him. We have been hearing his claims about his wall of power and his special batteries for a couple of years now. Elon Musk and Tesla didn’t change the auto industry and they won’t change the electrical generating game either. Like all inflated self-promoters, your money is his only goal. And his job is to spread the horse pocky.

Not So Gullable

NET ZERO ENERGY HOMES

On March 24, we published a press release online from Landmark Homes, Edmonton, touting their “under $400,000” NZE homes in the city. The head of the homebuilders association in Victoria, BC, weighed in on the economics.

Comparing the Victoria, BC and Edmonton markets

The average home price in Greater Victoria is $642,000. Edmonton is $391,000. A chunk of that is land. Construction costs are also lower in Edmonton versus Victoria, plus we have stringent seismic requirements/challenges. I would like to see the actual cost of land, construction, etc. versus the final price point to support the claim by Landmark Homes (that this model is) “highly replicable, affordable and scalable.” If so, our members would be very interested. Affordability depends on a community’s average household income. This is approximately $80,000 in Victoria which qualifies for about a $350,000 home with a low interest rate and a reasonable down payment.

Casey Edge Executive Director, Victoria Residential Builders Association

CONVERTING FROM BID-BUILD TO DESIGN-BUILD

In early March, well-known TV contractor Paul Lafrance proved that he is a real life contractor, too, in an interview with John Bleasby. He touted the benefits of being strictly design-build rather than bid-build. Montreal contractor Neil Damackine (on the cover in our last issue) posted this comment.

Awesome article on how Paul Lafrance runs his design-build business!

The majority of our jobs incorporate unique design and innovation so developing design-build propositions happened quite naturally but it’s only been recently that we’ve begun to recognize its bigger potential. Design build has a tremendous impact and value

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throughout the entire project and that’s a big motivator for us as we plan for the future.

I laughed when Paul said: “I knew they couldn’t afford it but I had to build it.” That’s me, too! The biggest take away in the article for me: “I find it such a mistake when companies say, ‘Call us and we’ll give you a quote.’ ” Quotes requiring design cost money.

Neil Damackine

Construction ND, Montreal

INSULATED CONCRETE FORMS

We recently ran an article on labour shortages in certain areas of the country and how Insulated Concrete Forms (ICFs) can be a partial solution. We weren’t specifically thinking of the Gulf Islands in BC, but one contractor in this area was very enthusiastic.

“Will never touch plywood forms again”

I read with interest John Bleasby’s article about labour shortages and ICFs.

On our island out here in the Pacific, the “younger people” are in their sixties so no local labour is available. So I have been choosing prefab homes from Purcell Timber Frame and Trout Creek SIPs (structural insulated panels) because their crews can come to install. Speed of construction is fast and I don’t have to lift anything. I also always use ICFs for foundations for these packages, again very fast and economical.

We just hosted an AMVIC ICF course in Burnaby, BC and had over 30 attendees, most of whom had never seen ICFs before. They are feeling the need to convert from tradition and attempt their first ICF builds. On March 9 in Delta, there was an ICF Expo where builders were told by forming contractors who recently switched completely to ICFs that they would never touch plywood forms again. Now their careers are prolonged by 15 years. BC building code changes are leading smart builders to get on the bandwagon now with R-30 ICF walls for future builds to meet stiffer codes. Could be R-32 in ten years.

Bill McCance, Mayne Island, BC

JOB SITE SECURITY

Many of you will have seen the late April news reports about a 23-year-old woman, Marisa Lazo, who had to be rescued after she was found dangling from the end of a crane cable, hundreds of feet up in the air, in downtown Toronto. Our resident jobsite safety expert Alec Caldwell, weighed in.

‘Crane Woman’ rescue a sad affair

Not only did Marisa Lazo endanger her own life that day, but she also put the lives of others at risk, too, during the rescue.

One of her friends, speaking to the media after her initial subsequent court appearance (six counts of criminal mischief), said that the woman was a “risk taker.” He spoke admiringly of her, it seems to us. Pathetic!

Lazo’s Facebook page shows her in various high-risk positions on the edge of tall buildings, a bridge, and other precipices. So it’s not the first time she has endangered others’ lives. If she fell from one of her previous adventurous perches, she could have landed on another human being – even a child.

What decent human being puts other people’s lives willingly and knowingly in danger for the thrill of publicity or social-media “likes”?

Still, if she’s eventually found to be mentally ill, we need to be compassionate. If she isn’t, she needs to be most severely dealt with.

The question is, how did she manage to get onto this construction worksite undetected? Were there barriers erected to stop her entering this work site? What other deterrents were there to stop her from climbing this crane?

Under Ontario’s Occupational Health and Safety Act, the public must be protected at all times while work continues on all construction worksites. But what more could the contracting firm do in this situation? Video showed Ms Lazo scaling the security fence around the site. There will likely be a Ministry of Labour review of the incident.

Ultimately, constructors are responsible to protect the public, even members of the public like Marisa Lazo. There is no site protection against crazy people – and we are responsible for them at all times.

Alec Caldwell

President, www.carahs.org

Alec’s post about the ‘crane girl’ got more than a few replies…

No cat skeletons in trees

Should’ve left her up there. When’s the last time anyone saw a cat skeleton up in a tree? Same with people. You find your way up, you can find your way down.

Wyandotte

Alec’s reply to Wyandotte…

$500 bail no deterrent I’m with you on that, Wyandotte, I’d have left her there all day. Pity it was not 30 below and then she might have had time to realize that her rear end had become welded to the boom.

Nevertheless, society asks us to rise above those who do dumb things. We have to rescue those who are totally stupid, like this woman. We have to put others’ lives at risk. Yes, she needed to pay a stiffer price and that $500 bail does not give her or anyone else much of a deterrent.

Alec Caldwell

“No defense against stupid”

They need to make an example of this woman. Fine her big time and make her put in community hours going to school telling kids how stupid she is. The rescue was not a big deal (once you water down the typical fireman hero, monument-building media opportunity). The real risk victim was the construction company / crane company. Because if she fell, the worker safety and all the brain dead government Monday morning quarterback entities would have made them responsible. We all know that signs, several fences and full time security are still no defense against stupid. And the regulatory bodies and lawyers always follow the money.

Justa Sayin

HOME AUTOMATION

John Bleasby’s post on home automation systems got healthy page views. We have largely stayed away from this topic, assuming that most renovation contractors and home builders will sub out any ‘smart home’ functions. But we might be out of step on that one. Here is a reply to John’s article.

Avoiding the angry husband

We have encountered so many homes that were completely and totally wired wrong

or just not wired for anything at all. Why are people still putting the coax TV cable above the fireplace? Did they not think that through?

Houses above 5,000 sq. ft. pretty much require some sort of ‘smart’ or automation system. Be it sound, lighting, shades, security, cameras, locks, home theatre, video distribution, garage door openers, there is lots that contractors can do to add convenience to a client’s home. And like any other system it needs to be professionally designed - and not the day before the drywall goes up! This will help you avoid the ‘angry husband and pissed off wife’ who think it all should ‘just work.’

Greg

CONSUMER PROTECTION ACTS

We frequently publish news releases from provincial consumer protection agencies detailing the latest ‘contractor’ to be fined or jailed for fraud. When we do so, we don’t feel we are adding to any negative perceptions the public holds about contractors. After all, doctors are held in high esteem, and has anyone looked at the numerous transgressions published in any provincial medical college’s professional journal?

“Kangaroo courts”

The biggest issue that the contracting and construction industry faces is that provincial Consumer Protection Acts against fraud have created a kangaroo court for legitimate businesses. Today, consumer perception is that our entire industry is some large menacing creature preying on their pocketbooks. This perception is shared by many – all the way from small clients to large enterprises. The larger industry organizations need to play a bigger role in setting consumer trends and then leverage that involvement with new legislation that helps secure their objectives.

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Drywall rebates in the West

The feds collected approximately $12 million in anti-dumping tariffs on drywall product entering Western Canada from September 2016 through to February 2017. Now contractors negatively impacted because of prior fixed price contracts can apply to have some of their losses refunded on a one-time basis.

According to the application guide for contractors issued by Western Economic Diversification Canada, the Drywall Support Program is designed to provide ‘partial relief’ only, and will be pro-rated according to the number of applications from “registered Canadian drywall contractors and builders operating in British Columbia, Alberta, Saskatchewan, Manitoba, Yukon and the Northwest Territories who experienced a financial loss as a direct result of higher drywall costs.”

A relief pool of about $1 million has also been established specifically for homeowners in the Regional Municipality of Wood Buffalo (i.e., Fort McMurray) to help with rebuilding efforts there. Separately, the Government of Alberta is providing more than $7 million in tax relief for families in this region whose residential

CERTAINTEED FIBER CEMENT SIDING CLASS ACTION - NOTICE OF SETTLEMENT

If you are resident in Canada and own a home, residence, building, or other structure located in Canada on which CertainTeed WeatherBoards Fiber Cement Siding (the “Siding”) was installed on or before July 1, 2016, your rights could be affected by a national class action settlement with CertainTeed Corporation (“CertainTeed”).

The Settlement Class action lawsuits were commenced in Alberta and British Columbia against CertainTeed alleging that the Siding is defective and subject to cracking, bowing, buckling warping, delamination and shrinkage. Although CertainTeed denies liability, it has reached a national settlement with the plaintiffs (the “Settlement”).

The Settlement has been approved by the Courts in Alberta and British Columbia. CertainTeed will pay CAD $7.25 million (the “Settlement Amount”) for the benefit of the Settlement Class Members (defined below) in exchange for a full release of claims against it and its related entities. How does the Settlement work? CertainTeed will pay CAD $7.25 million to settle the class action lawsuits. A Settlement Class Member with an Eligible Claim will be offered a cash payment in accordance with the Agreement. The amount available to each claimant is determined using the criteria described in the Settlement Agreement. Also, the amount payable to each claimant depends upon a number of factors such as (1) the extent of the Qualifying Damage; (2) how much of the Siding on the wall has Qualifying Damage; (3) the size of the wall; and (4) the length of time the Siding has been installed. Keep in mind that compensation for eligible Claims is based in part on how long you have already been able to use the Siding. The amount paid to each Settlement Class Member will be determined by using the pricing provided by “RS Means,” which is a widely accepted cost estimator used in the construction/building industry. RS Means accounts for regional differences in costs for labor and materials. If less than 5% of the siding on a single wall section has Qualifying Damage then the payment will be based on the actual number of boards or panels with damage. In order to ensure that all Claimants are treated equally during the six (6) year claims period, all claims will be paid on a two-payment schedule. The first payment will be in the amount of 50% of the claim value as soon as the claim is administered. The second payment would be made at the end of the Claims Period. If your Siding was installed within the last two (2) years, your SureStart warranty is likely still in force. If so, you first make a claim with CertainTeed under the SureStart warranty. However, if after making a claim with CertainTeed you believe you would have recovered more under this Settlement, then you can also make a claim in this Settlement. If

this Settlement would have provided you more, you will be paid the difference between CertainTeed’s warranty payment and the amount provided under the Settlement. The Settlement allows a class member to make more than one claim during the claims period if there are additional problems with the Siding. However, a Claimant cannot collect twice for the same wall section for which they previously received compensation. The Settlement does not extinguish any of your warranty rights. Warranties associated with your Siding will continue to be in effect after the Claims Submission Period expires. How do I know if I’m part of the Settlement? You are a Settlement Class Member if you own a home, residence, building, or other structure that had Siding installed on or before July 1, 2016. If you are a Settlement Class Member, you are only eligible for a remedy under the Agreement if you have an Eligible Claim. This means that your Siding exhibits Qualifying Damage pursuant to the criteria set out in the Agreement. You are NOT a Settlement Class Member if: 1) you opted out of the class actions; 2) you previously filed a claim concerning your Siding in a court of law and the claim was resolved with a final judgment or order, whether or not that judgment or order was favourable to you; or 3) you are a subsidiary, parent company, successor, assign or controlling shareholder of CertainTeed. To qualify for a remedy, you must meet these criteria:1) Submit a completed and timely Claim Form, along with supporting documents.

2) The Siding on your property must meet the definition of Qualifying Damage as set forth in the Agreement. Siding that shows certain shrinkage, warping, bowing, delamination and cracking, as defined in the Agreement, displays Qualifying Damage. 3) The Qualifying Damage must occur prior to February 17, 2023 which is the end of the Claims Submission Period. You can get a Claim Form by: 1) Visiting www.certainteedsettlement.ca; 2) Calling 1-866-482-5436; 3) Contacting Class Counsel (contact information below). When should I submit my claim? You can submit claims any time up until February 17, 2023 unless the Settlement Fund is not exhausted, in which case further claims will be accepted until the Settlement Fund is exhausted. Remember, this Notice is only a summary of important features. The Agreement, available on the website, www.certainteedsettlement.ca, contains all the details about the Settlement. FOR MORE INFORMATION on submitting a Claim Form or to view the Settlement, visit www.certainteedsettlement.ca. The CLASS LAWYERS are James H. MacMaster and Chelsea D. Hermanson of Branch MacMaster LLP and can be reached at: 1) Email: chermanson@branmac.com; 2) Telephone: (604) 6542999; 3) Fax: (604) 684-3429; 4) Mail: 1410 – 777 Hornby Street, Vancouver, BC V6Z 1S4.

This Notice is approved by the Alberta Court of Queen’s Bench and the Supreme Court of British Columbia.

properties were affected by the 2016 wildfire.

Although a single organization can theoretically claim up to $1 million in substantiated losses due to the anti-dumping tariffs, eligible contractors are restricted to those with fewer than 500 employees. However, the relief program does not cover “lost revenue due to cancelled jobs or lost work.”

In addition, the following conditions apply:

Applicants must provide proof of fixed price drywall contracts entered into prior to Sept. 6, 2016 that includes drywall quotes with quantities and pricing. Furthermore, they must provide proof of drywall purchased between Sept. 6, 2016 and Feb. 24, 2017, and then estimate the amount of the resultant loss that was passed onto others. Supporting purchasing documentation must include the square footage area of the purchases, plus proof of payment such as cancelled cheques, purchase orders or bank statements. To make things a bit easier, the on-line application process includes automatic calculation software. The program closes to applications on May 31.

When Finance Canada announced the reduction of tariffs on drywall product entering Western Canada back in February, the Ministry estimated that there would savings at the border of over 32 per cent. The expectation was that these savings would be passed on to purchasers.

However, Canadian Contractor has seen no evidence of any meaningful price reductions. In fact, for the most part, prices for drywall in Western Canada remain at the same level as when the high anti-dumping tariffs were in effect last fall and winter. Looking across the country, drywall prices for our benchmark drywall board (surveyed continuously for over 7 months now) remain 42 per cent higher in Western Canada than in Ontario, and 15 per cent higher than in the Maritimes

The rebate program is clearly a political reaction to the uproar created within the industry when the Canadian Border Services Agency placed “provisional” tariffs as high as 275 percent on U.S. drywall product entering Western Canada. The move disrupted the supply chain across the country as distributors and manufacturers adjusted to the sudden new landscape. The Drywall Support Program has received mostly negative reviews from contractors posting at canadiancontractor.ca.

John Bleasby

For up-to-date information on this story, please visit canadiancontractor.ca and type "drywall" in the search bar.

GTA's red hot market

In March, the GTA’s housing supply challenges resulted in record-smashing prices, continued unprecedented inventory scarcity, and a never seen before level of new condo apartments sales, the Building Industry and Land Development Association (BILD) said in a press release April 21.

The number of new homes available to buyers continued to drop to unprecedented levels of scarcity. Across the entire GTA there were only 10,153 homes available to buyers in builder inventories, according to Altus Group, BILD’s official source for newhome market intelligence.

The available builder inventory has dropped by half in just one year. In March 2016, there were 21,006 homes available to buyers.

“The ongoing decline in new housing inventory is a direct reflection of how difficult it is for the industry to bring product to the market,” says BILD president and CEO Bryan Tuckey. “The hurdles builders face keep getting higher.”

“There are ongoing major challenges with a lack of serviced and permit ready developable land and out of date zoning bylaws. The complexity and time it takes to get the vast numbers of approvals and permits necessary to build have increased dramatically in recent years,” he adds.

The available supply of new singlefamily low-rise homes, which includes detached, semi-detached and townhomes, has taken a nosedive since 2007. There were only 932 new low-rise homes available to buyers in builder inventories at the end of March, whereas a decade ago there were 17,854 available.

The scarcity is especially pronounced in the number of single-family detached homes, which has seen supply drop by 98 per cent in a decade. Last month there

were 233 detached homes available for purchase compared to 11,802 in March 2007.

“The inventory numbers are telling us very clearly that not enough new housing and not the right mix of housing is being built to keep up with consumer demand or our housing needs,” says Tuckey. “The industry is following the province’s intensification policy and building and selling far fewer low-rise homes than a decade ago, but demand for single-family homes has not dropped.”

The average price for available new low-rise homes was $1,124,600 in March up more than $40,000 from February and an increase of 32.4 per cent from a year ago. The price for available new detached homes hit $1,783,417 in March, an increase of $716,711 in just one year.

Prices of available condo apartments in high-rise and mid-rise buildings and stacked townhomes were up 14 per cent from a year ago. The average price of units in March was $532,792, with the average price per square foot at $666, and the average unit size 800 square feet.

March was the biggest month for sales of new condo apartments in the GTA with 4,500 units sold. Until last month, May 2016 held the record for the most condo apartments sales with 3,820 suites sold.

“The record number of condominium apartment sales in March was boosted by recent launches of product in prime locations – more than half of March sales were in projects opened in February or March,” said Patricia Arsenault, Altus Group’s Executive Vice President of Research Consulting Services. “Demand continues to be fueled by end-user buyers who are shifting their expectations towards more attainable product, as well as by investors whose presence will help ensure a steady stream of new rental housing supply in the years to come”.

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Rose Barroso and her husband Jorge Cruz have built Barroso Homes into one of Toronto’s premier high-end custom homebuilders. Their journey has been as unconventional as the way Rose designs her projects.

By John Bleasby

The original residences in the leafy Kingsway neighbourhood in Toronto’s west end typify the post-war era of ranch-style bungalows on wide lots. Those still standing are survivors of the recent buildand-replace movement featuring fauxclassic homes with stone facades and huge front entrance porticoes. The mix of the old and the new makes a strange brew. Yet these newer mini-mansions were

more acceptable to long-time homeowners than the modernism Barroso Homes began introducing to the area about seven years ago. The neighbours were not amused, and the new builder on the block, Rose Barroso, was feeling the heat.

“I was getting hate mail, messages from neighbours asking, ‘Who do you think you are?’ ” Rose recalls. “They were telling me I was ruining the character of the neighbourhood. Real estate agents called, asking if I knew what I was getting into, claiming the interest wasn’t there.”

How things have changed. Now agents

line up to show Barroso Homes’ builds before they go on the market.

There was, of course, a turning point. “When my first modern house was 60 per cent finished, a car parked outside and a lady walked in,” Rose says. “She told me: ‘I used to be an international model. Now I’m a designer. I’d like to look at this house.’ Afterwards she asked, ‘Can I bring my husband tomorrow?’ When they came back the next day, the husband took five minutes then asked her if this was what she wanted.”

It was, and the couple bought the

house. “From that moment on, I knew that although the pool of buyers might be smaller, so was the stock. There was a balance.”

Not a typical spec builder

By definition, a builder who buys a lot and builds a house with a view to finding a buyer later, is a ‘spec’ builder. But the term can have a little of the pejorative about it. When Rose finds a site and embarks on the design, she doesn’t do what most spec builders do, which is to make safe – even if luxurious – decisions on design elements. Barroso Homes’ projects are more like design-build projects with Rose as the owner/occupier (although she isn’t going to move in). Her projects are that personal to her.

This process is outside-of-the-box and Rose doesn’t click with every architect. “I have a vison for the home I want to create… I need an architect who understands what I’m building, who listens. I change things on site. I may like what I see on paper but when I see it up, well…”

Working with a client during the design-build stage doesn’t really agree with Rose’s creative impulses and visions either.

“I did some homes that way at the beginning, but now I’ve become a bit more selfish. I would rather do a complete home than work with the client through the process. I’ve had some prospective buyers ask if they can come and look, and I’ve said, ‘Not yet, not yet,’ because

PHOTO: LARRY ARNAL

Rose Barroso

Jorge Cruz

Barroso Homes’ ‘Lady Luck’ project illustrates Rose’s talent for sourcing items that bring focus to any room, particularly through her use of color and unique ceiling mounted light fixtures. These are bold choices, but ones that resonate with her high end clients.

while people might love my ideas, it then suddenly becomes their home. A client will second-guess my ideas. When it becomes their home, they’ll say that maybe it’s a little too modern, maybe it’s a little too funky, maybe it’s a little too outside the box.”

Rose needs that empty canvas all for herself. “I get to implement what others might be afraid of. That is, until it’s done,

and then they love it. For me, I trust my choices, I’ve done my own research, and I know how it’s going to look.” The success of Barroso Homes over the past 12 years validates her tastes and choices.

It all takes time

Like her full circle design-build-sell process, Rose Barroso’s career path has been equally unconventional. A

lot has to do with the influence of her husband, Jorge Cruz. Jorge is a highly experienced builder who for 17 years ran his own company contracting the framing crews that assembled houses for large developers like Mattamy Homes and Regal Crest all over the GTA.

At peak times, Jorge was overseeing as many as 80 crews framing more than 500 homes. Due to the magnitude of his responsibilities, Jorge was leaving home at 4:30 in the morning and coming home at eight or nine at night after meetings, often working into to the early hours going over drawings and documents.

It was in those early morning marathons that Rose and Jorge began to learn to work together. “I’d pour a glass of wine and sit with him. We’d chat and I’d ask questions. I was curious. What were all those scribbly lines and things? What’s an LVL?” Rose recalls.

At that time, Rose was raising their children and serving as bookkeeper for Jorge’s company. It was a challenging work-family balancing act. She chose to scale back her career in commercial aviation with Air Transat, originally as flight cabin crew, finally as a flight operations manager. “Then one day about 14 years ago, Jorge arrived home and said there was a house for sale on our street,” Rose says. “He asked how about we buy it and I renovate it?”

Pushing and pushing

Rose wasn’t sure. ”Jorge said ‘You can do this, Rose.’ He was pushing, pushing, and I was saying ‘I don’t know anything about this!’ They went ahead anyway. “It was a very small reno, but very successful. Within months, we purchased another home and renovated it, and I said ‘Hey! This is cool!‘” Three years on and a few projects later, a real estate agent approached Rose suggesting she should be building not just renovating. There was little holding her back from that point.

Jorge’s support for Rose’s success creating stunning multi-

|

million dollar homes over the past dozen years can’t be overestimated. “My husband believes in women, he believes a woman can do the job. He’s always said, ‘Honey, look at what you do!’ and ‘If you’ve got questions, ask me or ask the guys! No one is born knowing everything.’ Jorge has pushed me further than I thought I could go. Now I know how to stand up and do my thing.”

Three years of persuasion

Although they’ve worked together on Barroso Homes since 2014, it took three years of persuasion for Rose to recruit Jorge fulltime. Rose’s ambition to be bigger, better and more outside-of-the box with each project was colliding with reality.

“I didn’t have the time to do it all,” Rose says. “There were years when I was doing my company work, my research, my sourcing with suppliers, being on site, then going home, having dinner, then working until three or four in the morning.”

It couldn’t go on. “There were kids in the equation. I had to be a builder, a wife,

a mom, and a secretary,” she recalls. “One day, I said to Jorge: ‘I’m going to burn out. Something is going to have to give. Either I don’t build so big or you don’t take on any more contracts.’ We were becoming friends instead of husband and wife.”

Rose made her pitch: If they worked together they could continue to grow Barroso Homes and do at least as well financially as they were before. More importantly, their family lifestyle would improve dramatically. Jorge finally agreed and passed his contracts over to another company.

Adjustment period

“It’s not like it worked immediately. There were hiccups,” says Rose. “After a few months, Jorge called me at the office. I had noticed something was bothering him. I went to meet him at the site, and asked what was up. He looked at me and said, ‘I want to know what my position is with this company.’”

The problem was that some of the men on the site, some of them old-school European tradesmen, were having a hard

I WAS GETTING

HATE MAIL, MESSAGES FROM NEIGHBOURS

ASKING, “WHO DO YOU THINK YOU ARE?”

time reconciling which of the two was in charge.

“The guys we’re asking Jorge if he had confirmed things on this and that with me,” Rose recalls. And I said to Jorge, ‘Welcome to my life! As a woman in construction, I’ve been asked that kind of question for 10 years!’ So, I had a meeting with everyone and told them that Jorge was just as much their boss as I was. And I told Jorge, ‘When I’m on site, I’m not your wife. I’m also not your boss. I am a builder, and if you do something I don’t like, I will call you on it, and I don’t want you to get upset. Outside the site, I’m your wife. Here, we work together.”

Over the past three years, Rose and Jorge have found the balance that such a close and intense work-family relationship requires. Rose takes what she calls her ‘doodles’ to the architect or to the site and lets her imagination fly. Jorg manages the projects using his immense experience and friendly personality to keep their loyal team of trades working efficiently as they move from project to project, building another dream come true. cc

MID CENTURY MODERN

Due to the slope of the property at the front of the house, the priorities at the outset of the renovation were slope retention, stabilization and drainage. Care was taken to match the original stone facing in the foundation reconstruction and new retaining walls.

Inset: The front yard of this 1940s era home, overgrown with unkempt vegetation, was replaced with over 4,000 native B.C. plants.

Residential Renovation

West Vancouver, BC

Contractor: maison d’etre design-build inc.

Design: Ben Bialek

Project Coordinator: Darren Reidel

By John Bleasby

Photography: Rob Capar, Darren Riedel

This complex renovation in tony West Vancouver was a project made-to-measure for the experienced team at maison d’etre design-build inc. The integration of design, engineering and construction elements is their speciality.

"We’ve been design-build for 20 of our 23 years in business, and always maintained an in-house design team,” says company president Rob Capar. “That allows us to take the design work right through the approval and permitting process and through construction.”

Properties in this gentrified neighborhood sell in the millions, with many original homes being replaced with large new houses. In contrast, maison d’etre’s clients purchased this 2,200 sq. ft. 1940s-era split level on a 1/6-acre corner lot fully intending to retain its mid-century modern styling. “They were aficionados of the 1940s look,” says project coordinator Darren Reidel.

The midlife owners had no children and intended to make this their long term home. Extra wide hallways and doors, level transitions between rooms and flooring types, minimal level transitions to the exterior, and barrier-free main bath features were a nod to their aging-at-home vision, as was the revised main floor layout. All their personal living space was allocated to the main floor: main living room, kitchen, dining room, master bedroom with ensuite, dressing room, and powder room. Secondary lifestyle features were located to the lower level, dominated by a 13 foot by 23 foot TV/study room, plus a guest bedroom with bath, storage area, orchid room, utility room, and multi-purpose room.

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The

Left to right: A newly constructed ‘bump-out’ allowed for the glass wall and the rear deck. Two new lower level walkouts on each side were also constructed.

Before any of this could begin, initial inspections revealed the need for extensive remedial foundation and drainage work. The basement floor, for example, had been subject to hydronic lifting and erosion due to the lot’s overall slope and the absence of drainage around the foundation. As a result, a new fully insulated concrete pad was poured and new footings and underpinnings added in several six foot sections. An comprehensive new site drainage plan was developed for both the building and the extensive gardens and retaining walls added in the rear garden. Foam board insulation was added to the exterior of the foundations to avoid any reduction in living space on the lower level, what Reidel calls ‘building in.' As well, new in-ground electrical and water services for the entire property were brought in from the street.

Improvements to the interior included a major upgrade to the wall insulation. Spray foam was installed between the true 2x4 studs, and also under the roof deck to form a ‘hot roof’ which was then re-sheathed and re-shingled. The house’s stucco exterior was preserved, with care taken to match stonework additions on the street side to the original.

Typical of the era, the home was rather dark and the lower level cut off from the main. Increasing the natural light for the interiors of both levels, and linking the interior more directly to the outdoors, resulted in significant structural changes. New beams were required for an added staircase at the front entrance that splits to both the main and lower levels. This in turn led to considerable collaboration with the mechanical and electrical installers to avoid those new beams intruding into the living spaces. To further supplement the supply of natural light, a remote control opening skylight replaced the original fixed unit.

The outdoors blends into the home’s interior via the rear deck, accessed through a 12-foot moving glass wall at the end of a new ‘bump out’ off the kitchen. The deck then leads to a spacious yet tranquil food preparation and entertainment area, complete with

Continued on next page

kitchen opens to a new rear deck via a 12-foot movable glass wall.

gas service to the barbecue and water services to the bar, built atop the original carport pad. The rear garden is also accessible through newly-added lower level walkouts at each side of the house, one from the second guest bedroom and one from the lower level TV/media room. The old carport pad and an added soil swale for the privacy gardens are reinforced with new retaining walls.

Newly laid solid oak floors with period-correct detailing presented the opportunity for a new in-floor heating system. However, numerous opening windows were chosen over air conditioning. “The house is well insulated, there’s not a lot of heat gain,” says Reidel. “There are good sized overhangs in the rear which is south-facing. And the exposed concrete floor in the basement works as a heat sink.”

The clients’ ethical desire for a low-impact renovation and environmentally conscious house that prioritized the use of local materials led maison d’etre towards Built Green’s certification guidelines, but not with any rating goal in mind at the outset. “We approached this renovation in a holistic manner,” says Reidel. However, the finished home did in fact earn a Platinum rating, an Energuide score of 82, and a Georgie nomination in 2016 for ‘Best Certified Whole House Renovation’. cc

The rear garden and retaining walls have their own independent drainage using 6-inch and 4-inch piping, based on the estimated volume of rain and ground pressure. Gas and water services extend to the food preparation area.

Left to right: A gas fireplace replaced the original wood burning unit, and warms the pine-paneled, mid-century styling of the TV and study area

Financing: Your New Secret Weapon

Three tips to help you counter common customer objections and close sales

Let’s start with a simple truth: All customers have objections. They’re a natural hurdle in the sales process and a nagging barrier when you’re on the verge of closing a deal. They can run the gamut but stem from issues surrounding cost, competition or bad timing for your customer.

The good news? Offering financing is a powerful tool for a customer who’s on the fence. We’ve outlined the most common objections below and three rock solid tips to help you counter these snags and close strong with your customers.

Tip #1: Soften price tag shock with low monthly payments.

The most common objection is the most obvious: the price tag is too high. Luckily, you have a secret weapon patiently waiting in your back pocket: a monthly payment plan. Suddenly, you’re in control of the conversation, because the price

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THINK YOU KNOW YOUR NUMBERS?

TAKE THE TEST!

How well do you understand your business’s financial performance? A quick glance at your monthly profit and loss statement isn’t enough. Take our General Management Aptitude Test to see if you truly understand how your business is actually performing.

Continued on next page

By Steve Ryan

Like many independent business owners, you may view financial management as a distraction from the day-to-day running of your business. Looking at your numbers often waits until there is time and opportunity to get beyond the pressing needs of today. If you operate like that, take a look at what

distinguishes successful contractors from those who are barely surviving. Among the critical differences will be a working knowledge of finance. From that perspective you see that an ability to understand your numbers and use them to make better decisions is no luxury. It is a key to success.

Accounting and finance might seem to be all about looking backwards at what you have already done. Actually, they have more to do with looking ahead. When we understand how money moves through a business we learn to recognize the patterns and indicators for how things might behave in the future. We make better decisions, anticipate difficulties and, in the end, spend less time on crisis management.

Now let’s deal with another misconception. You may think that management finance means diving into ledgers and spreadsheets, distracting you from the real work happening on the job site. The real objective, though, is to minimize the time you spend on facts and figures. When you learn to focus on the numbers that really matter, the rest of them become less confusing. Understand what they tell you about your business and you can make better decisions in a lot less time. It takes some effort to learn what those financial guideposts are, but once you do, you become a more efficient manager.

You may be thinking, "There has to be a catch here somewhere or we’d all be doing it, right?" Yes there is a catch. It just isn’t very obvious how these financial “guideposts” relate to the real world. Why do they matter, and how do a few isolated numbers say all that much about your company? It is a leap of faith. If you put in the effort, can you be sure to see the benefits promised so confidently by those

of us in our “ivory tower."

When we start to work with a contractor, one exercise we conduct is a series of questions. Most people don’t have the answers, but that isn’t really the point in asking. What we want to know is whether the client can wrap their head around why the question matters. As with most problems (or opportunities), half the battle is appreciating what the questions are. It’s a sort of general management aptitude test.

If you think it’s time to take your financial management up a notch, try some of these questions for yourself. We can’t cover them all in one short article (and you wouldn’t want us to). Nor can we pretend to explain all the why’s and wherefores. You may not have answers at your fingertips, but remember that’s not the point. Okay, let's get started.

HOW MANY PROJECTS DO YOU DO IN A YEAR?

We need the actual number, not an estimate, because if you are not counting your projects, you should be! The number of jobs you do dictates the resource requirements of your company just as much as the size of each job.

HOW MANY PROJECTS COULD YOU DO WITHOUT ADDING PEOPLE, EQUIPMENT OR PROPERTY?

You need to know your capacity in order to respond to opportunities. Odds are, if you want to take on new business you will need to beef up some element of the operation. When you know where your constraints are, you can assess opportunities better and prepare for action more effectively.

HOW MANY PROJECTS DO YOU WANT TO DO?

You’ve heard Einstein’s definition of insanity: “Doing the same thing repeatedly and expecting something different to happen.” He was being an optimist. In this industry, if you keep on doing the same thing something different will happen. The world will change around you and you will be left behind. Set a target. Yes the future is unpredictable, but you will still get closer to a moving target when you take aim at it than when you leave it up to circumstance.

WHAT IS THE AVERAGE SIZE OF YOUR IDEAL PROJECT?

Sure your jobs can range from very small to immense, but most organizations have a sweet spot. Your crews, equipment, office support, project management, all have a scale at which they are most efficient. You probably already have a sense of your “typical” or “ideal’ job size. Now compare that to the average size of the jobs you are actually doing. Either adapt your operation to the work you are doing, or target your sales effort toward the type of work you are best equipped to perform.

WHAT IS YOUR AVERAGE

Each job earns a margin., which is the difference between what you earn to do a job (your sales) and what you spend to do the work. This is not your profit, because you typically have “fixed” expenses (rent, vehicle leases, insurance etc.) that must be paid whether or not you got the job. An estimate, or gut feel won’t do much for you here, because success or failure in the construction business can hinge on one or two margin points. If you don’t know how to calculate your margin, you need to learn.

WHAT IS YOUR “BREAK-EVEN” MARGIN ON A PROJECT?

Again, we need the exact percentage, not an estimate. Remember those “fixed” costs you still have to pay after the project work is paid for (rent, vehicle leases, your salary)? We all know what it’s like to feel pressure on our pricing and it can be too easy to “sharpen our pencil” to get pricing down to where it needs to be to win work. If we don’t know where our limits are, we might accept a price that doesn’t leave enough to pay those “fixed” costs. In the heat of pricing negotiations, you must be crystal clear on where to hold the line. Builders who know their break-even margin and stick to it, are much less likely to price themselves out of existence.

WHAT IS YOUR TARGET MARGIN?

It may be reassuring to know the point at which you will break even. But you’re not in business to break even. You are entitled to a reasonable profit, so incorporate that into you planning and into your pricing. As we have already suggested, you will come closer to a target when you know what you’re aiming for.

Now, we talked of financial “guideposts” that let you focus on the things that matter and your margin is one of those. Most of what we've mentioned

up to now are one-time (or once a year) exercises. They tell you what to look for so you can focus your energy where it has the greatest impact. So now the question is…

WHICH PROJECTS DON’T ACHIEVE YOUR TARGET MARGIN?

This is where your planning and goalsetting meets hands-on management. When you know the margin you need/ want your projects to achieve, you can isolate the outliers. For each of them, there is a reason for the miss (weak pricing, poor cost control, specific people dropped the ball). There may also be jobs that came in above your target margin. Find out which jobs they were, look for how it was achieved. Adapt your operation to control the things that caused poor results and reinforce the practices that brought success.

Financial management is also about protecting the investment and a couple of key questions can keep you on top of that...

HOW MUCH MONEY DO YOU OWE?

We are talking here about money your business owes to suppliers, subtrades, banks and credit cards. Most of us have an instinct that we shouldn’t owe more than we own. But we have less instinct for how rapidly things can change. You should always have an accurate knowledge of your debts and know what financial buffers you have available. Most critically, you need to know what sources of funds are available to you on short notice. Here’s why:

HOW MUCH MONEY IS OWED TO YOUR BUSINESS?

Most contractors have major amounts tied up in ongoing project work. You can be profitable but have no funds available because so much is invested in work in

process, or tied up in unpaid customer invoices. Your company may have money, but if it’s tied up and you can’t get at it so you may have to borrow money to pay your bills. That on its own isn’t a bad thing, until things get out of balance. Even companies that appear large and successful can fail when there is no cash in the bank for immediate expenses.

We can’t fully explain here all the principles that make these questions relevant. All we hope to do is illustrate how some things that seem like abstract topics for another day are actually critical to what you do today. More importantly, they are vitally important to what you may achieve in the future. When we put these questions to company owners we are less concerned with what facts they provide than we are with whether they see the point of the question. As a business owner, you will be a lot more effective in making decisions, setting priorities and preparing for what comes next, when you have clear reference points that define your company and its capabilities. If you don’t know what “normal” looks like you won’t see “abnormal” coming. More than this, you won’t be able to see what’s needed to become extraordinary. cc

Steve Ryan is the principal of MMI Business Training for Builders. He is a veteran of both corporate and construction business management roles and is a Tarion-certified training provider for the general management and finance education that is now required of new home builders in Ontario. . Steve has an MBA from the Ivey School of Business, at Western University, London.. Reach Steve at steveryan@mmiproservices.com

Make your focus the bottom line

By Mike Draper

Some companies strive to increase their top line revenue without too much worry about the bottom line. A company that thinks this way is typically in rapid-growth mode. On the flip side is the company focused primarily on profit without too much concern for revenue. This type of company is looking to make as much money as possible.

Lastly, there is the company that wants a balanced combination of growth and profit. It wants to grow, but wants to do it profitably. Which type of company are you? Whichever company you are, let me make the case for being a profit-centered, bottom-line company.

a no brainer.

A bottom-line focus can also drive efficiencies into your business that will increase your profit more rapidly when the top line grows. Reducing your costs by just 10 per cent will have an equally big impact on your bottom line as raising prices. The truth is, you can always do a better job in buying product, running your projects more effectively and reducing the labour portion of your work (the most expensive part!)

The trouble with top-line focus

It happens often that contractors increase sales, but profits don’t change. They take on more work, but the increased volume creates inefficiencies in the business. More, not less, mistakes are made because the business owner is not on site as much, trades and employees take too long to do their work, and not enough time is spent on planning, etc. All of this translates into increased costs and less profit.

Little changes make big bottom-line differences

Top line focus usually means big sales efforts and lots of time making sure your pipeline can handle the increased load. On the other hand, focusing on the bottom line can make life a lot easier. Consider this: If you currently have a 20 per cent gross margin and you increase your price by 10 per cent, you will make 50 per cent more Gross Profit. That’s right! A 50 per cent increase in Gross Profit from a 10 per cent increase in price. Remember that Gross Profit is Revenue less Job Costs, before subtracting overhead expenses. True, if you increase your price you might not win as much work. But since the work is at a higher profit margin, when you do win work, you will need less of it to make the same profit. Less work for the same money is a good thing. In the example above, you will make the same Gross Profit while doing 50 per cent less work. That’s

Here are two examples where savings can occur quickly here with a bottom-line focus:

1. Running to the local building supply store many times a day is very inefficient. Plan the needs of the job well in advance and get more material on site at one time. Do your best to think ahead for what you will need and order it in advance so that you can order it from lower-cost suppliers. Buying materials at the last minute from the closest lumber yard costs more. You will spend less time running around picking up material and you will be buying at better pricing.

2. Dealing too much with cash flow is an efficiency killer. When you spend five hours a week juggling cash flow (that’s low for many contractors!) you have five hours less selling time. In a year that corresponds to over 260 hours or six weeks of extra selling time that is lost. With six weeks more time to secure better work, your business will look totally different.

The truth is, there is no reason for contractors to have cash flow problems. Make sure that you set up your milestone payments so that you get paid before you have to pay out. It’s that simple! Other options are to borrow money if you can or go to your suppliers and trades and negotiate better terms.

Bottom-line thinking is the way to go, but remember, making the changes bottom-line thinking demands will take time. Stick with it and in due time, you’ll see the rewards.

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• Entry to Construct Canada AND Contractors who can share their business and product challenges.

“ Whether it was being involved in discussions or just listening to the other contractors and being involved working, writing, and talking about our challenges and triumphs, it showed how professional we are in our industry. Great all round! ” - A RenoFocus Contractor BE A VOICE FOR OUR INDUSTRY | JANUARY 22 & 23, 2018

RenoFocus is a series of focus-group sessions behind closed doors in which manufacturers and suppliers gather market information from successful contractors.

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Why diplomacy is the essential contracting skill

By Steve Maxwell

Afriend of mine, Gord, sits at the top of a large, family-owned company and he had a beautiful home built some years ago in Southern Ontario. “I really like the contractor I chose to build my place,” Gord explained to me, just after the job was done. “This guy knew how to gently steer me away from my own foolish ideas. I have to save my own customers from themselves like this all the time”, said Gord. “So I know what gentle, skillful diplomacy feels like.”

The ability to effectively lead clients away from bad ideas and towards good ones is a key part of most businesses, especially contracting. It’s a vital soft skill if you aspire to get better and more successful. Apart from the ability to estimate accurately and profitably, your skills as a diplomat need to be finely honed. Why? At least two reasons, as far as I can tell.

First, bad ideas from clients almost always end up being your headache in the end. When things go bad technically down the line, you’ll be responsible for making them right, even if you were just “following orders” from a client who didn’t know as much as you. I know a contractor named Rob who does a lot of roofing – about 1,000 bundles a year, mostly on his own. “I always turn

down jobs if the owner won’t pay me to strip back to a bare deck”, Rob told me one day. “New shingles on old shingles are a time bomb I don’t want to deal with just because a client is too cheap.”

The second reason for being a good diplomat is repeat business and referrals. It’s a rare client who doesn’t offer you at least the opportunity to speak a harsh word or raise a judgmentally-angled eyebrow towards them if you’re so inclined. As tempting as these opportunities are, don’t take them. It might feel good at the time, but it’ll cost you big-time in the long run.

Learning to be a diplomatic contractor makes you a better person. Patience is always better than impatience. Knowledge is better than ignorance. Persuasiveness always beats being bull headed.

The wisdom behind kind diplomacy isn’t new. The best source comes from a carpenter who was building things about 2,000 years ago, before it came time for him to change the world. “Do for others what you’d like them to do for you.” Simple, powerful, and easy to remember, isn’t it?

steve@stevemaxwell.ca

BRICK SMARTS

Helping your clients make sense of all those brick choices

By Steve Maxwell

Brick

is the oldest building material in the world, but there’s more to brick than just a simple, familiar name. When you come across clients who are interested in brick for new construction or renovations, you’ll look good if you can answer their questions and explain how to choose brick wisely.

There’s more to explaining brick options than meets the eye. You’ll gain credibility if you offer clients insights they never even thought to ask for. Size, colour, texture and durability issues are all things you’ll need to explain to clients when you lead them as the guru on their project.

Colour

“I like brown.” Some version of this simple statement is likely one of the first things a client will say about brick because colour is the most visually obvious detail. When it comes to helping your client choose brick colour, there’s one consideration worth starting with, and it’s probably not obvious to your clients: Solid colour or varied?

Many decades ago, when the clay brick industry was more primitive than it is today, batches of brick had naturally occurring colour variations because the clay varied as it came out of the ground. Deposits could be darker in some places and lighter in others. This accounts for the different shades you see in many kinds of antique brick on older buildings. As it turns out, varying colours like this makes buildings look great in an old-time sort of way. People recognize this nowadays, and that’s why some modern brick is intentionally made with two or three shades in a given type.

Of course, we now have the ability to make single shade brick and these create a more modern, formal look. So one of your first guru talking points should be about the way varied shades create a more casual, older and less formal appearance. Single shade brick is one important hallmark of a modern styling.

In some ways choosing brick colour is like choosing wallpaper. You look at samples, then make a choice. But you should never allow your clients to choose a brick colour based on simulations only. You really need to get them to see actual bricks laid into an actual wall. And the larger the display the better able your clients are to choose. Be sure to visit a brick display with your clients before letting them choose anything, and always use bricks from the same batch lot for consistent colour.

Stuff We Like

BRICK PROS AND CONS

PROS

• The higher cost of building with brick is balanced or exceeded by higher property values.

• Brick construction makes you look more prestigious as a contractor

• Properly chosen and installed brick is reliable and callbackfree

CONS

• Brick can be difficult or impractical to use for renovation on a building originally designed for non-brick siding.

• Brick costs rise with increased distance from cities.

• Skilled bricklayers are specialists in demand in a busy economy

NEVER PAINT EXTERIOR BRICK

While some renovation clients might ask you to paint their exterior bricks, don’t do it. Painting outdoor brick may be fine in warmer parts of the world, but not where temperatures regularly drop way below freezing, like they do here in Canada. The problem is moisture. Paint traps moisture within the brick, preventing if from drying. Even a brick that normally wouldn’t flake apart and spall because of absorbed moisture can be damaged over time by the moisture-holding effects of paint.

MAXWELL’S Stuff We Like

Texture

The situation with texture is similar to colour. Real antique bricks were sometimes made less regular than modern bricks. Older bricks often shows signs of wear and weathering. Modern brick makers recognize the appeal of varied brick shapes, so they intentionally create bricks with imperfections on them. Modern brick is also made with textured surfaces to create a softer look than smooth-faced brick. Besides colour, one of the most important reasons to see brick in context before choosing is to understand the effect that texture has on overall appearance.

Size

Chances are good that you’ll hardly ever have clients who realize that bricks come in different sizes, but this is still something you need to bring up with them. That’s because brick size affects the overall look and feel of a building, at least to a certain extent. And it has to do with the way labour costs have affected brick manufacturing.

Years ago, one-third of the cost of brick construction was labour and two-thirds was materials. These days the numbers are reversed – two-thirds labour and one third materials.

With such a high cost of labour, there’s a tendency for bricks to be made in larger and larger sizes as time goes on. Bigger bricks make for a wall that goes up faster since there’s more brick in each hand. The visual difference between a large brick and smaller isn’t huge on your overall colour scheme, but it does make a difference with a smaller brick showing more mortar. If your client is looking for a heritage appearance, steer them towards smaller brick. Larger bricks help create a more modern look (and reduces labour costs).

One of your main jobs as a contractor is steering clients towards materials, designs and approaches that deliver as much quality and value as the building budget allows. And value is about more than just low cost. As building choices multiply and clients gain dangerous bits of knowledge online, the guru side of being a contractor is not getting any easier. Brick is one of those options that requires more explaining than other choices, but enduring value is the reason brick has been around for so long.

IS THAT BRICK CANADA-TOUGH?

Even in countries like Canada that have many freeze-thaw cycles each year, brick can last indefinitely. It all comes down to how the raw materials react to absorbing moisture. That’s why Canadian brick manufacturers constantly test their bricks to ensure they withstand the test of time.

Savvy clients may wonder to you about the risk of bricks flaking and spalling over the years, so you should know some background on this situation. The primary reason that bricks flake and spall is attributed to poor design or installation of the brick. The Clay Brick Association of Canada publishes minimum durability standards for what’s called “exterior grade” brick. This is based on testing that includes measuring the amount of cold water absorbed over a 24-hour period, measuring the absorption after five hours of boiling the brick, as well as measuring the loss of brick mass after 50 freeze-thaw testing cycles.

There are few countries in the world that have as severe weather as Canada, especially in our regions of greatest population. The more freeze-thaw cycles a region experiences, the more it matters that brick not hold too much moisture. If the brick you’re using meets CSA Standard A82-06 for exterior grade brick, and is designed and installed according to local building codes and best practices, then it will last just fine in Canada.

Chisholm (left) with Koci in Prague

MAXWELL’S PICK

DEWALT XP TAPE MEASURES

Extended Performance

Tape measure wars continue to rage with DEWALT’s latest offering in the professional category. This is a war of refinement that centres around things that matter to pro users: case strength, blade standout, tool weight and belt hook design. In my tests of the initial batch of XP tapes to hit Canada, the first thing I noticed was the clever variable curvature of the blade. Near the tip of the tape the blade measures 1 1/8” wide, but as you pull out more tape, the curvature increases to make the blade stiffer near the 11’ to 14’ range. Although DEWALT still claims the usual 13’ standout, real-world resistance to buckling is more than I’ve seen before. The numbers on the all-Imperial model I tested are also bigger and bolder than any other tape I’ve used. The XP tape lock activates with the usual downward push of a button, but is easier to use because it deactivates with a simple inward push. With it’s open-mouth design, the belt hook is more likely to grab your belt or pocket the first time. Cost for a 25’ model is $35 at The Home Depot and independent construction outlets.

MAXWELL’S PICK

HOMESTEAD HOUSE

Milk Paint

When clients want an antique painted look on trim and built-ins, you can’t do better than real milk paint. I started using this old, simple, nontoxic paint in 1987 for traditional kitchen cabinets, and I’ve used it now and then since. I just finished using milk paint recently on a restoration project, too. Homestead House is my go-to source for the stuff. It comes as a powder that you mix with water and I use a big old 1-1/2” spade bit in a drill to stir things up. For renovation applications over an existing finish they sell a bonding agent that you add to the water to make the paint stick to old varnish. Homestead House milk paint really excels when you want to create a distressed look. It sands well, so it’s easy to rub through and make zones of wear on corners and edges. This stuff isn’t cheap – about $45 with tax and shipping for enough powder to make a litre of paint – but it does create an effect I haven’t been able to match with any other coating. Order online at www.homesteadhouse. ca; 866.269.9430 fax.

The big heist

Bryce Christie let a brand new subtrade lock his tools up in his jobsite trailer over the weekend. Then a bad thing happens.

Bryce Christie wanted his crew finished up by Friday, but it looked like this renovation project was going to run into the following week. This was in part because Bryce’s finish carpenter, a nice young guy named Johnny Millen, had missed a few days that week running personal errands, and wasn’t going to be done. Johnny was a sub-contracted carpenter; it was the first time Bryce had used him. At the end of work on Friday, Johnny asked if he could leave his tools in Bryce’s work trailer over the weekend instead of taking them home in his truck as usual. Johnny needed his truck to be empty so he could help his sister move. Bryce only had some building scraps in his trailer and said OK. Johnny loaded all his gear into the trailer, locked it up, and everyone went home for the weekend.

Come Monday, the lock was gone, the trailer was empty, and all of Johnny’s tools had been stolen. Johnny was devastated. His loss was over $4,000. He had no insurance, either. Bryce didn’t know what to do, and debate whether he should get involved at all.

What should Bryce do? See the options at right.

WHAT SHOULD BRYCE DO?

1. Tell Johnny to replace the tools at his own expense.

2. Make a claim on Bryce’s insurance, pretending the tools were his own.

3. Advance Johnny money to buy new tools and have him work it off with labour.

4. Lend Johnny some tools so he can finish the job and can afford to buy some replacements.

5. Something else. Please explain.

HOW TO ENTER

Email your answer to John Bleasby (jbleasby@canadiancontractor.ca)

You suggested solution can be any of the above ideas, a combination, or your own solution entirely. Please explain your answer in up to 300 words of text. The contractor-submitted answer chosen as our winner will

LAST ISSUE’S WINNER – PANGS OF GUILT

Last issue’s case study featured contractor Steve Fleckenstein, who feels guilty about his role in placing a poorly-supported I-beam across the top of a basement wall, ten years after the fact. It was heartening to read that almost every respondent expressed the importance of informing the current occupants of the potential for structural failure. Sadly, however, there is more to this than simple morality. There are serious legal issues to be considered. Our winner, Byron Emmons of Kingston, Ontario, wrote: “Steve first needs to seek proper legal advice… The ‘right’ thing and the ‘legal’ thing are two different things in this country.” Byron wins a DeWalt 20V Brushless XR WIN Reciprocating Saw (DCS367) featuring a 9 amp 60V FlexVolt battery. The package has an approximate retail value of $650. Congratulations, Byron!

a DeWalt 20V XR VersaClutch Drill complete with two batteries, charger and kit bag, with an approximate retail price of $380

Entry deadline is June 28

BREATHEASY

NO VOC’S IN ANY COLOUR

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