CANADIAN CONTRACTOR MAY/JUNE 2015

The Price is Right

Contractor University

Smart Bidding for Renovators

Mike Draper on Deposits

page 18

page 34

CANADIAN

THE MAGAZINE FOR PROFESSIONAL RENOVATORS AND CUSTOM HOMEBUILDERS

Who is this

Crazy Scot ? and what is he doing on your job site? page 26

alec caldwell

Canadian Association of Renovators and Home Services (CARAHS)

Publications Mail Agreement #40069240

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MAY/JUNE 2015

.ca .ca 15-05-15 12:18 PM

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CONTENTS

Cover

26 Story

features COVER STORY

Who is This Crazy Scot? And What is He Doing on Your Job Site? 26 A profile of Alec Caldwell, Canadian Association of Renovators and Home Services.

The Price is Right

18

A look at how contractors are finding ways to defend their value and win the renovation contract in the face of stiff competition.

The Creative Eye: New Build in Newfoundland 36 We travel to Conception Bay, Newfoundland, to view the Texmo-Storey house, pride and joy of St. John’s architect Robert Mellin.

The New Shingles

42

Widespread product failures in recent years damaged the reputation of asphalt shingles.

But new technology has restored their appeal.

The Three M’s

46

Ron Coleman, a business consultant to contractors based in B.C., shares some simple ways to calculate how your business is performing.

42

The New

Shingles 18

www.canadiancontractor.ca

May/June 2015

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CONTENTS

56

HomeStars

10

Winner

departments

Maxwell’s Picks

Online 6 A look at some of the stuff we have for you, right now, online.

Editorials 8 Rob and Steve argue about freebies.

Site Notes 10 An interview with Hotwire Electric president Hanna Taylor.

Voices 12 A sample of some of the online comments from our 16,500 contractor e-news subscribers.

Contractor U 34 Renovantage’s Mike Draper on deposits.

49

Insulation 58

Maxwell’s Stuff We Like 49 Our contributing editor Steve Maxwell talks about “futureproofing” your insulation projects.

What Would You Do? 58 Tell us how you would handle this sticky business situation. You could win a DeWalt cordless framing nailer.

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The

Discovery

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CanContra

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ONLINE CANADIAN

Visit us online

CONTRACTOR

.ca

VIDEO

STEVE TALKS TO ROB ABOUT ‘BLOOD, SWEAT & TOOLS’ In this video, Steve continues to harass Rob about the sizeof his ego, now that he is on TV as one of the co-hosts of the Discovery Channel’s “Blood, Sweat & Tools.” The show is on Mondays at 11 pm, Eastern Time – or your equivalent. We can’t believe people will watch Robbo at 12.30 in the morning in Newfoundland.

Type “Blood” in the search bar at canadiancontractor.ca to find this video easily

VIDEO

DAMON BENNETT ON HOW TO PREVENT WATER TRAPPING IN BUILDING ENVELOPES In this video, Rob Koci chats with contractor Damon Bennett, the “brand ambassador” for CertainTeed Insulation. Bennett is a well-known TV personality (10 years alongside Mike Holmes on HGTV) and public speaker – and here he talks about the problem of water trapping in new builds. Worth viewing if you want to add to your knowledge about building envelopes.

Type “Bennett” in the search bar at canadiancontractor.ca to find this video easily

VIDEO

STEVE MAXWELL’S ELECTRIC INFLOOR HEATING TOUR Want warm feet? Canadian Contractor’s contributing editor Steve Maxwell shows you how can help your clients to save money with reduced overall room temperature and still be comfortable.

The answer, of course, is an in-floor heating systems. Previously technically complicated to install in an existing house, in-floor heating installation is now light-years simpler thanks to Schluter Ditra-Heat.

CANADIAN

Type “Infloor” in the search bar at canadiancontractor.ca to find this video easily

CONTRACTOR.ca BUILD | GROW | PROFIT

Volume 16, Number 3 May/June 2015 canadiancontractor.ca | Tel: 416 442 5600 |

Editor Steve Payne spayne@canadiancontractor.ca

80 Valleybrook Drive, North York, ON, M3B 2S9

Contributing Editors John Bleasby, John Caulfield, Steve Maxwell.

Canadian Contractor, established in 2000, is published 6 times a year by Annex Business Media.

ISSN 1498-8941 (Print) ISSN 1929-6495 (Online)

Art Director Mary Peligra mpeligra@annexnewcom.ca Publisher Rob Koci rkoci@canadiancontractor.ca Production Manager Gary White gwhite@annexnewcom.ca Circulation Manager Beata Olechnowicz bolechnowicz@annexnewcom.ca

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Mike Fredericks, President & CEO Annex Business Media Tim Dimopoulos, Vice President, Annex Business Media East Corinne Lynds, Editorial Director Subscriber Services To subscribe, renew your subscription or to change your address or information contact us at 416 442 5600 x3547 Subscription Rates: Canada $45.95 per year, Outside Canada $83.95US per year, Single Copy Canada $9.95.

Privacy Notice From time to time we make our subscription list available to select companies and organizations whose product or service may be of interest to you. If you do not wish your contact information to be made available, please contact us via one of the following methods:

Tel: 1-800-668-2374 Fax: 416-442-2191 Email Privacy Office: vmoore@annexnewcom.ca Mail: Privacy Office, 80 Valleybrook Drive, North York, ON, M3B 2S9.

Contents of this publication are protected by copyright and must not be reprinted in whole or in part without permission of the publisher.

Publications Mail Agreement No. 40069240 We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund of the Department of Canadian Heritage.

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EDITORIAL

Voices

NO GOOD DEED GOES UNPUNISHED

By Rob Koci

I

t’s natural to want to be generous. As nice as it is for the one receiving your generosity, it’s even better for you and your sense

of self worth. Being generous within the context of a renovation contract, however, can be disastrous. I say it’s just not worth it.

Here’s an example: During a full-on kitchen renovation, your customer asks if your tiler can do about six square feet of tile replacement in the front foyer while he is installing the backsplash.

She has the tile already and the old tile is removed. No problem, you say. You’ll throw it in the deal. Your customer is thrilled.

Feels good, doesn’t it? What a nice guy.

Here’s the rest of the story: Three weeks later, the foyer tile starts coming apart. It cracks. The floor is not stable and your tiler didn’t put down a thick enough scratch coat. The customer calls and says you have to redo it. In your head you say, “Have to? It was a favour!”

”

Yes, you have to. Your customer no longer remembers your generosity. All she sees now is her disintegrating floor and an

If a freebie

goes wrong, it’ll

cost you, big time.

agreement that you would fix it. Never mind that you “threw it in” out of goodwill.

”

Rob Koci Publisher

rkoci@canadiancontractor.ca

And she has a holdback she has no intention of giving you until the tile is replaced.

It gets worse. This is the point in the story when you discover the tile is discontinued. She says absolutely nothing will do as a replacement except a sumptuous Italian import that will cost about the same as your truck.

Still feeling that glow of generosity?

You want to feel you good about yourself? Give to your local youth centre. Volunteer at a shelter. Take the profit from your successful projects and give some of it to a street guy. Give where the giving has a beginning and an end. Where the offer is well defined and limited. Don’t be a giver at work. Within a project, your generosity will too quickly become entitlement and eat the profits that could have helped someone who really needs it.

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EDITORIAL

Voices

IT’S NOT THE GENEROSITY, IT’S KNOWING WHEN TO USE IT

By Steve Payne

G

eez, that’s a sad story that Rob tells, across the page.

Contractor wants to be a nice guy on a kitchen reno, offers to

throw in an hour of tile-setting in the foyer for free – and it ends up costing him a whack of money.

“No good deed goes unpunished.”

I’ve always disliked that nasty, negative saying.

It reminds me of people who have signs on the walls of their offices that read: “A lack of planning on your part is not an automatic emergency on mine.”

Nice. You know you’re dealing with someone with a bad attitude, as soon as you see that sign. You know the person with that sign posted will never have your back. It’s a sign of bitterness, fatigue and cynicism.

Anyway, back to Rob’s contractor being punished for his niceness.

What really went wrong?

It’s not the freebie. It’s that that the freebie was offered compulsively with no planning. And this is the how too many contractors fail Sales 101. They just blurt stuff out.

There is absolutely nothing wrong with offering to “throw in” a freebie for a customer. But it can’t be thrown in casually. It has to be planned. It has to be treated with the same diligence you put into your paid work.

”

Too many

contractors fail Sales 101.

All that the contractor needed to do in this case was to use his head. Why were the existing floor tiles missing? Who took them out? Why were the new ones sitting right there, yet not installed?

Could it be that there was something wrong with the sub floor?

Is this something only Stephen Hawking could have figured out?

Seriously?

The generosity is not the problem. The generosity is going to keep this contractor busy with projects for the rest of his career – if he is smart about deploying it.

”

Steve Payne Editor

spayne@canadiancontractor.ca

Yes, you can give a few hours away. Don’t turn into Ebeneezer Scrooge just because you’re too lazy to investigate the onsite conditions of small favours you should still be doing. www.canadiancontractor.ca

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SITE NOTES

Interview with Hanna Taylor, Hotwire Electric The Vaughan, Ontario electrical contracting firm has just picked up its fifth HomeStars ‘Best Of’ award. We asked Hanna Taylor about the value of online marketing, what makes her electrical firm stand out, and where she sees her future growth coming from.

By John Bleasby Photo: courtesy HomeStars

Q. How have you met the obvious challenges of being a successful woman in a male-dominated industry?

A. Our electricians know the code much better than I do. While I may not run the wire, I understand the process. I know the clientele and the administrative side. I go to jobsites, I meet with clients; I can deal with the ESA and deal with inspectors. That’s the value I bring to the business. Basically, I am the director of operations, a female bossing around 14 guys!

Q. Many homeowners get frustrated with trades who are inconsistent with schedules and management.

How have you overcome this?

A. Many clients don’t treat you well because they have low expectations due to past experience. They don’t expect you to show up on time, or expect that you will create a mess. Our job is to exceed expectations. Organization is so important in this industry. When my guys show up on Monday, they know where they are going and what they are doing. Our trucks are clean and organized, the paperwork is complete. Our crews don’t walk around with drooping pants wearing random T shirts; they have a uniform and a name tag. They are instructed to treat the customer’s house better than their own. It’s more than a jobsite; it’s someone’s home, it’s where they live.

Q. How do you feel about customer procurement of fixtures?

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A. Our customers buy their own fixtures. However, if clients go to Chinese sites and buy cheap fixtures, we will not install them unless they are CSA-approved. We educate our clients before they spend their money. We meet to discuss the layout their lighting plan, how they plan to use their space, and how to best use various lighting options. We offer every client a level of personalized creativity beyond mere electrical wiring.

Q. What has been the impact of your multiple HomeStars Best-Of Awards on your business?

A. Our relationship goes back eight years. It was slow at first, but as they built their profile on search engines, it started to impact us big time. A large part of our business are builders; they don’t care about HomeStars. However, we have a huge daily volume of service calls from home owners. That’s where HomeStars really does impact us, especially how we operate versus other trades and companies. For example, if my crews don’t clean up and vacuum, there will be a negative review.

Q. Hotwire has a very impressive website and you use social media extensively. How has that impacted business growth?

A. Instagram and Linkedin have helped us build relationships with other trades who might be in position to recommend an electrical contractor. Those avenues were not available a few years ago. I use them actively.

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SITE NOTES

Q. Do you feel TV renovation shows set up unreasonable expectations for homeowners?

A. Homeowners can definitely learn from these shows, especially regarding unsafe electrical work. However, they make it look like you can fix a house in a couple of days. That sells, but it’s not realistic; it’s drama. We have to explain to clients what their expectations really should be.

Q. Where do you see the future growth of Hotwire coming from?

A. Growth will come from training our electricians to be more than licensed tradesmen and to develop customer and organizational skills. This will build our reputation and referral ratings. Small jobs can lead to bigger jobs later.

Secondly, we’ve trained and certified our crews as generator installers and also maintenance and warranty technicians.

Most electrical companies don’t want to do that.

Under-the-table residential construction worth $12-billion a year: StatsCan Canadians spent $42.4-billion in underground economy transactions in 2012, StatsCan says in its latest report on the practice.

And residential construction is the highest contributing industry, the agency says, pegging the dollar volume of unreported transactions in our sector at $12-billion, or 28.3 per cent of the total underground economy. The residential renovation and repair business is worth $63.4-billion, according to a report last year from TD. $12-billion in underground transactions would represent 20 per cent of that amount.

Many media reports in recent years have given the impression that the underground economy is rapidly increasing in Canada – a reaction to increased taxes and fees. But the underground economy, according to the StatsCan report, is not actually changing much.

It has been roughly stable, at about 2.5 per cent of the Gross National Product, plus or minus 0.2 per cent, since 1993. In 2012, the last year reported, the underground economy in Canada was worth 2.3 per cent of GNP.

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VOICES

Deposits

How much are you asking for?

When Mike Holmes said in his nationally-syndicated column that “No good contractor needs more than 10 per cent to start a job,” we got a ton of posts from contractors describing the deposits that worked for their particular business. We ran some of those posts last issue, but here a few more gems.

“Create the ballpark you want them to play in, don’t play in their ballpark.”

Asking for a fair deposit is such an important issue it really is a make or break practice for getting established and staying established. So much depends on perception. Many contractors have a preconceived notion of what customers think and plan their strategy accordingly. However, a mentor of mine always said: “Create the ballpark you want them to play in, don’t play in their ballpark.”

Another way to phrase it is: “Are they buying your story or are you buying their story?” You need to establish the rules of the game from the start (create your own ballpark).

There are plenty of justifications for taking deposits: You are ordering products like cabinets and windows that don’t fit any other home; you are spending time to travel, time to prepare quotes, you are doing design work, etc. And if you don’t value your time by charging for it, how are you going to convince some else of the value of it?

In my province (Alberta) there is a provincial pre-paid contractor’s license as well as our municipal business licenses. I show these licenses to every prospective client before we discuss their project and I tell them that without these licenses any contractor is not legally allowed to take a deposit. So I establish from the start that to do otherwise is illegal (and probably foolish) and at the same time it shows my legitimacy by being transparent (building trust).

Now when they talk to other contractors who do you think they will be comparing them to? I’ve started to establish the rules of the game from the start and established in their mind that deposits are legitimate - if you have the license.

Ben Kuypers

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“We will not order any product without a deposit of 25-33 per cent of the project total…”

In my company (a chimney and stove service) we will not order any product without a deposit of 25-33 per cent of the project total and a signed proposal for work. We will occasionally get a secondary payment before we start work, depending on the size of the project.

It is not that we are going to run and hide when we get the money but that the client will at least have paid for some of the materials before we begin a project.

Our upfront costs can broken down to include: initial visit time and travel, office time to prepare paperwork, sending the paperwork out to client, material costs, travel time and delivery to site.

So a contractor must get some of his/her money up front in order to not have to absorb all the fees in case the client decides to run out on the final billing.

We do no work without a signed work proposal or contract which definitely delineates our terms for the project’s duration and payment times.

We have had no problems with this procedure in 38 years of business and we have only been stung three times. And in each and every case, we did work on trust alone with no contract. Goes to show you.

We once purchased a large unit for a client and he backed out two days before installation was due to start. According to our terms, in this situation, he would not get his deposit back - and indeed we kept the deposit.

His lawyer called us. We read him our Terms of Cancellation and told him that the client had signed that he had read them. No contest. The lawyer said thank you and hung up.

Yvette Aube

“The deposit also limits the client’s risk…”

We are a small company with an A+ BBB and 5-star Trusted Pros rating. We ask a 50 per cent deposit from our clients upon signing.

This is perfectly reasonable as we have large items to buy such as walk-in tubs, showers, cabinetry, counter tops, faucets, etc. costing thousands of dollars prior to starting work. In effect, we work and remain unpaid until the job is done to the satisfaction of the client.

One of your commenters implied that any contractor asking for a deposit was a crook who had no business sense or intention of doing or completing a project.

As a small company, if a client defaults on payment, we are out of pocket. And to go through legal routes to regain that which is owed to us is very costly. Small businesses go out of business

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VOICES

because clients default and suppliers are owed.

The deposit limits our risk – and that is good business practice: We can pay our creditors even if we end up working for free ourselves; we have not defaulted. The deposit also limits the client’s risk of us going out of business due to unpaid suppliers before completing the job.

Most businesses where orders are placed - carpet stores, for example - ask for a deposit and sometimes even full payment before the service is provided. Why is a contractor viewed as bad for doing the same?

I agree there are bad contractors and clients that have been ripped off: We find we are often viewed as guilty until we prove ourselves innocent. That is hard enough without the likes of your online commenter planting the idea that any contractor asking for a deposit is a crook! And even more important than the deposit issue is that the contractor does good paperwork, that the quote gives a full, detailed breakdown as to what is to be done and what is included and what is not included. This way, the client has the full picture.

Bridget Piper

“Liens expire here in B.C. after one year.”

An HVAC contractor in B.C. I have been in the HVAC business for 40 years and we always ask for a deposit. We do this to ensure that the customer is serious and is not going to cancel the day before we start - when we have already purchased an expensive heat pump or other custom unit for the client plus other non-returnable gear. Sometimes we can reuse the equipment elsewhere but a lot of times it sits in the shop for a long time and then is hard or impossible to sell.

Sure it is easy to file a lien on someone’s house but that is only useful if the customer is trying to collect a mortgage draw or selling within the year. Liens expire here in B.C. after one year – and once that happens you have to go to court and spend many thousands of dollars in lawyers’ fees and the process can take 7 years. Small claims is the same thing – it takes years and even if you win, there is no way to collect. A waste of time!

So our policy is to ask for down payments up to 30 per cent, including from commercial clients for the same reasons. In an ideal world we could trust everyone to pay their bills but in the real world that is not the case. Folks who give deposits are usually the same folks who pay their bills.

Wilf Scheuer

“Keep your customer on a financial leash” We have had very little bad debt ever since we started taking

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deposits for any job over $1,000 about 15 years ago. An old mentor of mine used to say, “I just want to see the colour of your money.”

I believe the best value of a deposit is that it stops the shopping around that some people would do if they had not signed a contract and given a deposit.

Almost all our bad debt has actually been from general contractors doing home renovation type work. We are approached about once every couple months from supposedly established GCs looking for a new electrical contractor. I have a few qualifying questions which I ask, and one of them is whether or not they get deposits from their clients. More than half get angry when I ask this question.

From my perspective, if they don’t take deposits they are a big credit risk no matter how the credit check comes back. And people with good business sense want to associate themselves with other like-minded sub trades.

“Keep your customer on a financial leash” is a term that at first made me gulp and wonder if I was working with a shady general contractor. Now I wonder why anyone wouldn’t have a schedule including a payment schedule.

Rob Sloan

For more on deposits, see Contractor U, page 34.

Time and materials or fixed price?

“T&M is fair to everyone.”

“We run four plumbing trucks here in Prince Edward County (Ontario). Normally three are doing service work. Time and material billing works for us: it’s fair to everyone. We run Ford E-250 extended cargo vans - there’s lots of room for parts and supplies. The key is to make sure your client tells you everything that is required to be fixed before you go to the job. No need to run to the supply house if you are prepared.

Harry Veenstra

“I only work T&M and known that I am making a good living.”

“I was a contractor with eight employees for 25 years, got frustrated with bureaucracy. I took eight years off and now have been a renovator on my own for 10 more years. I only work T&M and finally know I that I am making a good living. Nothing is hidden from the start including markups. No advertising, just returning customers! It can work. Be honest!

JD

www.canadiancontractor.ca

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VOICES

Ontario College of Trades under ‘review’ Online, we’ve been reporting on the Ontario government’s response to the controversy surrounding their establishment of the Ontario College of Trades (OCOT). They responded as governments often do – by appointing an expensive consultant to examine the issue. His name is Tony Dean – but the “Dean Review” of the OCOT isn’t going to do what the vast majority of our readers tell us they want – for OCOT to be scrapped.

“OCOT: We have no control, no vote and no say in anything it decides or does.”

(Ontario Premier) Kathleen Wynne promised a review of the college while campaigning in the last election. The review ended up being culled to a very narrow scope of two issues being that of the voluntary versus compulsory trade reviews and the public safety aspect. Had the review been a complete review, where the tradesperson could actually voice their own concerns and opinions regarding the OCOT, I think our voices might have finally been heard.

What they said to trades people to sell the OCOT before the legislation was pushed through Queen’s Park doesn’t match what the OCOT is now. The original seed sown by the McGuinty government back in 2007 was in fact an attempt at getting a “new revenue tool” in place, although they didn’t say it as such.

The plan from the beginning was to make all trades compulsory, hence more revenue through exam and licence fees as well as additional funds through educational institutions. In about two years of planning from 2007 to 2009, the Ontario College of Trades was dreamt up and implemented. It’s mind boggling how quickly this was legislated into place with very few of the trades people knowing about it. Our own industries failed us as along with our provincial government, they both kept us in the dark about it.

The government, as well as big business, corporations, unions and associations, are the main beneficiaries of this thing. We the trades people who have been mandated to fund this new bureaucracy have no control, no vote and no say in anything the OCOT decides or does.

Dean Kadikoff

Public caning for tool theft?

We ran a post online with a video from CBC Regina. It shows a couple of thieves ever-so casually removing the tools from a house under construction. They looked like they owned the place. This video seems have to have gotten under the skin of a poster called “Picked Clean” who has some modest ideas for reform to our criminal justice system.

It is unfortunate that our police system is only interested in “cost effective” policing (speeding tickets, traffic violations, etc. – any activity that generates income by targeting those who are likely to pay – middle class, non-criminal types). If they wanted to curb this activity (tool theft) they would set up “Bait Houses” and the courts would actually administer justice and protect society’s interests.

But, if that miracle could ever happen, taxpayers would be burdened with having to pay to keep the worthless thief housed and fed. And all the bleeding hearts would make excuses for the criminal. Bring back work camps and chain gangs. Thirty days on a chain gang would be enough to set most losers straight. Public caning would also be a good idea for smaller offences.

Picked Clean

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SALES

a u lf ie ld

By John C

Homeowner perceptions of what a renovation should cost aren’t always realistic.

So it’s beneficial to bid on jobs strategically. Here’s how some contractors have learned to do that.

ILLUSTRATIONS BY GLENN MCEVOY

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SALES

“People are fearful because they hear about and see on TV homeowners getting ripped off by contractors.”

Frank Cohn Cohn Construction

L

evel One Construction in Vancouver is one of Canada’s busier renovation contractors. This 16-year-old company tackles about 140 projects annually, 70 per cent of which fall within the $150,000 to $200,000 range. In mid March, Level One was about to close on a $300,000 whole-house renovation contract, for which three or four other contractors had probably bid, guesses Level One’s president and CEO, Randy Kautzman.

What pushed his company ahead of its competitors – based on feedback he’s gotten from homeowners on other projects – was its “personality,” which Kautzman says started with the employee who initially fielded the customer’s call.

Winning large or small jobs isn’t just a matter of dollars and cents anymore.

Price quotes and profit targets must be

balanced against market and competitive forces that aren’t always amenable, and homeowner perceptions of what a renovation should cost that aren’t always realistic.

Canadian Contractor recently spoke with nine contractors across the country about how they price jobs and position themselves with customers. These pros mostly agree that the bidding process boils down to an elaborate getting-toknow-you dance, where in the best of circumstances the client takes the lead on deciding a project’s scope and cost.

David Litwiller, who owns Litwiller Renovations and Custom Homes in Calgary, observes that homeowners typically will talk with three renovators before choosing one to do the job. “They are more interested in relationships”

than anything else, including price, says Litwiller, whose company does about 25 projects a year, ranging in price from $75,000 to $150,000.

Homeowners seek trust in pros they hire Establishing rapport with homeowners, though, is no easy task, especially when they are predisposed to distrust contractors. “People are fearful because they hear about and see on TV homeowners getting ripped off by contractors,” says Frank Cohn, who owns Mississauga, Ont.-based Cohn Construction – which the Building Industry and Land Development Association recognized as its 2014 Renovator of the Year. Cohn does a weekly home-improvement program

www.canadiancontractor.ca

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May/June 2015

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SALES

“I can’t do a bathroom for under $30,000 and I have to explain reality to them.”

Shane Van Barneveld Shane Renovations

on NewsTalk 1010 radio in Toronto.

Pros blame the media, and HGTV in particular, for poisoning the well by giving viewers false impressions of how much money they’d need to spend on a project. “Most customers have no conception for what renovations cost, especially bigger jobs,” says Shane Van Barneveld, who owns the design/build firm Shane Renovations in Ancaster, Ont. “I can’t do a bathroom for under $30,000, and I have to explain reality to them.”

Kautzman adds that when customers ask why he can’t redo their kitchens for $15,000, he informs them that amount wouldn’t even cover the cost of the cabinets and countertop.

A “price-first” mentality, though, doesn’t mean homeowners are automatically defaulting to the cheapest bid. “One of the biggest misconceptions among pros is their belief that most customers want the lowest price,” says

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Mike Draper, president of Renovantage, the contractor training organization program. “What they really want is the best value.”

There’s no one right way to quote prices, and the most popular methods – cost plus, fixed price, and to a lesser degree project management fees – all have their advocates among homeimprovement contractors.

Litwiller, for example, says that he quotes more than 90 per cent of his work cost plus 24 per cent, with the “cost” being materials and labor, and the “plus” covering personnel and administrative.

“I prefer to have a bottom-line budget, with 3 to 10 per cent contingency built in,” he explains. Litwiller also likes to get the “plus” part of the equation out of the way early with the customer “because I don’t like to go back and ask for more money later.”

Settling the price is part of a process

that begins with Litwiller discussing the scope of the work with customers and giving them a ballpark budget. After that, his team reviews the site, and takes notes and photographs, to get a more precise handle on what the job entails. The team also confers with trade partners before it gives the customer its estimate. If the customer agrees with the price, he or she signs a letter of intent and puts down a deposit. During the renovation, change orders are processed as required.

Fixed pricing only works when costs are set Fixed-price bidding is just as commonly used, if not more so, among renovators.

“We don’t want to have to defend every little bill that comes in,” explains Cory Kloss, co-owner of Red Seal Builders in Winnipeg, which specializes in additions and major renovations. On projects like these, “there are hundreds, even thousands, of receipts that have to be paid.”

Kloss never discloses his margins, and when customers want to know why, he often replies “when you buy cereal, do you ask Walmart how much it’s making?”

Before arriving at a fixed price, Red Seal conducts a pre-build analysis “to see what the customer’s vision is,” says Kloss.

It then develops a construction plan, but without extensive design drawings at first, so the customer’s initial out-ofpocket expense is only $5,000, compared to between $10,000 and $15,000 that design drawings can cost. This process gives the customer a starting price point to work from, says Kloss.

Another fixed-price contractor is CCI Renovations in North Vancouver, which does between 10 and 12 projects a year that average between $100,000 and $125,000 each. Owner John Friswell

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SALES

Kloss never discloses his margins

“When you buy cereal do you ask Walmart how much it’s making?”

Cory Kloss Co-owner, Red Seal Builders

concedes that cost-plus makes charging for change orders easier. And any advantages gained from a fixed-price quote “depend on just how ‘fixed’ the design is when I set the price,” he says.

Fixed-price contractors typically are not their markets’ low-price operators.

It’s to their competitive advantage to get customers thinking about something other than price. “I often say, ‘let’s not look at the number, let’s look at the scope [of the project],’ ” says Van Barneveld, That way, it’s up to homeowners to decide what they can afford and what they want the contractor to do.

“I bid jobs based on what it’s going to cost me,” says Jeff Hayes, owner of Jeff Hayes Contracting in Ottawa, which does between 12 and 15 jobs a year that range anywhere from $5,000 to $75,000.

“We’re a supply and install business and we bid each component individually so the homeowner has as much detail as

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possible, and can pick and choose what they want done, what they can pay for, and what they’re willing to do themselves.”

Not surprisingly, given the extent and complexity of their work delivered, design/build firms favor a fixed-price model. One such company is Aquarian Renovations in Edmonton, which has been in business since the early 1990s, and whose 20 to 25 jobs per year average around $250,000 each.

Owner Maria Soprovich says that design fees alone run customers between $5,000 and $12,000 to cover measuring the house, and drawing up floorplans with Autodesk Revit for design and Sketch Up software tools for 3D renderings. Once that design is agreed upon, the project moves into the estimating phase, “where customers go shopping with one of our design coordinators and select all of their products, right down to the towel warmers,” says Soprovich. At that point,

the estimators come up with a fixed price that is the basis for the construction agreement. Once that’s signed, Aquarian assigns a site superintendent who meets with the client to get the renovation moving forward.

Competing with clueless bidders Whatever quote strategy pros present must find a match among homeowners who, while not necessarily expecting bargains, want to save money wherever possible. “People in Winnipeg are very frugal, and want to see us building in a smart, efficient way,” says Kloss.

Kautzman points out that this is also true of residents in Vancouver, whose land and labor costs make it one of the most expensive places to renovate in the world. But most pros resist straying too far from their margin base. The conundrum, says Friswell, is that it’s tough to squeeze enough savings out of the supply side to make a dent on the overall cost, and that going with cheaper labor “opens another can of worms,” he says.

Fortunately, Friswell and other contractors say they aren’t encountering many homeowners who offer to pay cash in exchange for a discount. “Most of my customers are borrowing to pay for the project, so they need the paper trail for the bank,” says Mark Hofstee, co-owner of Rammik Renovations in Guelph, Ont., which last fall moved toward a design/ build model. Cohn says he avoids cash customers altogether because “they don’t care about quality.”

These contractors don’t sound overly threatened by pros who are willing to work under the table for cash. However, legitimate contractors are more concerned about competitors whose quotes bear little resemblance to the actual cost of

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SALES

Some contractors are underbidding because they don’t understand their own business or how to make money.

a job. Some of those low ballers are just trying to get their foot in the door. But others are underbidding because they don’t understand their own businesses or how to make money.

Soprovich acknowledges that her company’s responsibility includes “keeping it real for our customers so we can bring a project in on budget.” But she cautions homeowners about shopping for the lowest bid because “you get what you pay for.” Cohn went so far as to relocate his base of operations to Mississauga as to avoid bumping heads with cutthroat competition in Toronto and, instead, focus on bidding for projects in less-competitive surrounding markets like Oakville and Etobicoke, Ont. “We constantly run into contractors that underprice jobs,” says Van Barnevelt. “I don’t worry about it, but it’s a conversation you have to you with customers, and I have a hard time

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discussing another contractor’s work.”

Van Barneveld is in the enviable position of being able to turn down jobs that don’t meet his profit parameters. But most other contractors still need to hustle to make ends meet. “I’m not making a lot of margin because I’m a small guy in the market,” says Hayes. In Ottawa, there is “a ton” of cash-only contractors whose proliferation Hayes attributes to homeowners actively seeking cheaper, underground alternatives to circumvent the province’s Harmonized Sales Tax, which has been in effect since 2010, and increased the levy on renovation to 13 per cent from 5 per cent.

Vetting clients Hayes does note, though, that the quality of his leads has improved markedly since he became involved with the online review and referral site Homestars.com, which provides him with 70 per cent of his leads.

Draper believes that finding customers who align with a pro’s pricing strategy “starts with your marketing.” Homeowners have certain expectations about price when a website says a company is design/build. On the other hand, “don’t present yourself as a handyman and then try to get higher prices,” he says.

Hofstee, a Renovantage member, recently started working with a marketing consultant “to focus on the people who are our target market.” And Friswell, whose company is certified by RenoMark, is hoping that connection will mean more to western homeowners as RenoMark creates a national image for itself.

Pros readily admit they vet homeowners as potential clients. Cohn, for example, prefers customers with a sense of humor, and stays away from homeowners in certain professions. (He declined to say which ones, but other pros say that teachers can be frugal in the extreme.)

However, contractors can only be so flexible about whom they work for and what they charge if their markets’ economies are uncertain. That’s the current situation in Alberta, where plunging oil prices have caused considerable layoffs in the oil and gas industries. The construction industry association BuildForce estimates that construction jobs in the oil sands could fall by 15 per cent or more over the next three years.

Litwiller’s company is already feeling the impact. “We’ve had three jobs postponed until the summer, and there’s no guarantee they’ll get started then, either.” He’s also seen some homebuilders bidding for renovation projects. But he’s not worried yet, and isn’t planning to change his quoting strategy, either, because, he says, “renovating is an entirely different business.” cc

www.canadiancontractor.ca

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COVER STORY

alec caldwell

Canadian Association of Renovators and Home Services (CARAHS)

All Photos: Larry Arnal Photography

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COVER STORY

SMART

ALEC B y S t e ve Pay n e

How Alec Caldwell’s renovators association, CARAHS, is quickly becoming an essential service.

O

K, you read it on the cover – and I’ll say it again here.

Alec Caldwell is a Crazy Scot.

We don’t know whether me calling him that is going to end our excellent working relationship, but that’s just the way we see it.

We can call him a Crazy Scot on the cover of our magazine because we at Canadian Contractor have the evidence to prove it.

Exhibit One: Alec Caldwell is Scottish. There, that part was easy. Alec is so Scottish in his speech, some people can’t understand him. He tends to say “Aye” instead of “Yes.” He is so Scottish that he sounds like Robin Williams doing the stand-up comedy bit about the Scot who invented golf.

Exhibit Two: The crazy part. The man makes a living, with no regulatory powers whatsoever, walking right onto contractors’ jobsites and telling them in excitable terms (he sometimes gets as wound up as a hot-tempered baseball manager arguing a bad call with an umpire) about their safety violations, insurance risks, commercial vehicle non-compliances and other fine-waiting-tohappen gambles.

The crazy thing is: Alec rarely gets thrown off these sites (he does this activity almost every day of the week). Probably if you or I tried this, we’d quickly find it exhausting and discouraging.

We would get thrown off the site.

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May/June 2015

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COVER STORY

The CARAHS team: Alec Caldwell, Carrie Gibson (safety coordinator), Monica Olenroot (co-founder), Gordon Caldwell (web and marketing).

Not Alec, for some strange reason. Alec makes friends and gets nothing but new members for the organization, CARAHS (Canadian Association of Renovators and Home Services), that he and his wife Monica Olenroot founded ten years ago.

Basically, CARAHS saves contractors from themselves – by showing them how easy it is, but how important, too, to get compliant with half a dozen government agencies that are out there to shut sites down, fine contractors – and in the event of tragedy, possibly jail them.

CARAHS undoubtedly has saved hundreds of contractors from tens of thousands of dollars of fines – and we think they have possibly saved a life or two along the way.

So yes, we think what Alec does is crazy: crazy smart.

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Alec and Monica, were safely in the business of selling insurance back in 2005 – and had been for years – when it occurred to them that most of their clients were self-employed trades people: electricians, plumbers, carpenters, etc.

They noticed that these hard-working people seemed to be getting the run-around endlessly from ministry inspectors and workers’ comp departments, and that contractors weren’t interested in paperwork, regulations and bureaucracy. First of all, the stuff was just too hard to understand.

And second of all, there was the feeling among the selfemployed that all that stuff was for the Ellis-Dons of the world: the giant commercial builders, the high-rise contractors, even the big subdivision developers. Not for the guy ripping out and replacing

www.canadiancontractor.ca

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COVER STORY

H B

Alec Caldwell visiting a jobsite with CARAHS member John McLellan, Pickering, ON.

a kitchen. But the hook and ladder guys were getting hammered by inspectors, all the same. So Alec and Monica decided to start an association for renovators and home services contractors that, in many cases, used their kitchen tables as their offices.

Ten years later, Canadian Contractor caught up with Alec and Monica and their family members who work in the business, Gordon and Carrie, at the CARAHS offices in Pickering. Here’s the interview.

own. We can usually make it understandable really quickly. We aren’t a government agency. We aren’t a union. We are just a family business like most of our members are.

What are the most common things your members need help with?

Is it our imagination, or have the government enforcement types made it their special mission in recent years to go after the little guys – who maybe don’t know the rules – rather than the big contractors?

Monica: In Ontario, WSIB is number one, because of Bill 119.

We get lots of calls about clearance certificates and how to get registered, how to register their subs. We are getting a lot of calls about the new Working at Heights rules and training. It’s very confusing for small contractors to figure all this stuff out on their

Carrie: Contractors want to know what they are liable for, health and safety wise. They want to comply with all this stuff, but they don’t know where to start. So we do a lot of handholding and we walk them through it. Even if they aren’t our members. Just call us.

Alec: They are! We had one of our guys get a visit recently in Oshawa at nine in the morning. The Ministry of Labour guy was sitting there in his car, getting the guy’s information. He didn’t have

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COVER STORY

his fall arrest card with him and he was given a two-day grace period to show he had one. He had no idea where it was. He called in here, and since we keep all the cards indexed, we were able to fax a copy to MoL and get the guy off the hook. We also called the inspector to follow up to make sure the file was closed. That saved him a pretty big fine.

CARAHS’ slogan is ‘Education, Information, Benefits.’ Tell us about what you’ve added recently in terms of education.

Gordon: Education includes things to help our members to increase their business. We’ve developed a system call Close The Quote. It includes tips and tactics for generating more business. And a large part of Close The Quote is helping you separate yourself from the cash economy guys – so the prospective customer chooses you, the professional renovator. We also show you how to win the business when you know that the customer is, for example, going out there to get three quotes. We believe you can help them through that process by offering them, yourself, three different price ranges with three different types of finishes. It sounds simple but not enough contractors do it.

Alec: But three options with the same high quality of work! Close The Quote is about beating the competition. We also offer five pages of questions that the homeowner should be asking contractors when they go to hire them. Our members will beat out most other contractors on those questions. When it comes to WSIB, liability insurance, etc. you are already paying for these things. And since you are, you may as well use them as a sales tool.

Alec, you get to hear about everything that is bugging small contractors – and you write about it for us online. Firefighters working as contractors under the table. The Ontario College of Trades coming close to making it illegal for renovators to do their own carpentry. Self-employed guys just keep getting beaten up, right?

Alec: It never ends. I had this member tell me recently, Alec, I really don’t have time for these health and safety guys. But I do listen to you because you guys tell it like it is. Our members really do need someone on their side. We’ve been getting calls from contractors who have been told by homeowners, I’m not going to pay you your

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last payment, and if you make a fuss about it, I’m going to crap on you on a contractor review site. So they call us and ask, what can I do? This is the type of thing we are trying to help with, not just the legal and paperwork stuff.

Monica: Our members will give us different ideas, what’s bothering them. And because Alec is constantly on jobsites they really get to tell him what’s on their mind. A lot of them have big issues with the underground economy. We spend a lot of time helping our members with that.

Alec: We kind of dream about having a website where contractors can put the names of homeowners online who don’t pay them, but that would probably get into legal issues. But we would do it if we could figure out the law about it.

Tell us about your monthly meetings.

Monica: We meet at least once a month, and we are expanding into breakfast clubs. The networking is really important. We have larger members who will get calls on smaller jobs and those jobs may not be the right size for them. So they will pass the work to another CARAHS contractor, who they know will take care of that important customer. Or they’ll call us and we’ll make the referral.

“Who can take care of this?” they say.

Finally, the WSIB in Ontario has forced tens of thousands of self-employed contractors to cough up. And so people have cancelled their private policies. Big mistake?

Alec: WSIB isn’t going to cover you for sickness! Only for on the job injuries – and even then, if you claim, your rates are going to go right up. And the self-employed contractors generally won’t claim through WSIB because they can’t afford to. So many contractors had accident and sickness policies, but when they were forced into mandatory WSIB, a lot of them dropped their private policies. If they get sick or have an accident off the jobsite, it’s going to be a nightmare for them. So that’s a big part of our work, getting people educated. cc Reach CARAHS at 1.866.366.2930, www.carahsprotection.com, or email, alec@carahs.org.

www.canadiancontractor.ca

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CONTRACTOR U

How much of a deposit should you be asking from your clients?

Too little a deposit and you risk losing your shirt if the customer wants out after you’ve done significant upfront work – and ordered expensive custom product, of course. Too much of a deposit, and you put your own customer at risk – and look really bad in the process. So how do you figure out what kind of a deposit to ask for? We asked our resident contractor coach, Mike Draper (www.renovantage.com) to weigh in on the recent discussions in our pages about appropriate – and inappropriate – deposits.

Interview by Steve Payne Mike Draper is vice president, coaching, at Renovantage.com

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Q. Mike, there have been a lot of discussions on our online forum (canadiancontractor.ca) about deposits - what the right size deposit from a homeowner should be, for what type of work. Mike Holmes kicked all this discussion off, earlier this year, when he said in his nationally-syndicated newspaper column that “No good contractor needs more than 10 per cent to start a job.” Most of the contractors we heard from, disagreed. At Renovantage, what do you counsel your members about deposits?

A. Deposits are a frequent topic of conversation among contractors. That’s because there is no one formula for every single project – every project is obviously different. But there is a rule of thumb you can apply. The rule is that the contractor should be renovating with the homeowner’s money, not their own money. And if you use that principle for all of the money that a homeowner will provide to a contractor, the contractor should stay ahead of the homeowner on money collected based on the production that he’s got to do.

Now, if there aren’t a lot of costs associated with the beginning part of a project, the deposit can be lower. But if at the beginning of a project, the contractor has to order, say, $30,000 worth of cabinetry and there is a 50 per cent deposit required by the cabinet manufacturer, then the contractor needs a deposit of at least $15,000 so he’s not paying for that order with his own money.

Q. Apart from the notion of cash flow management which you describe, can the deposit also be a test of good faith – and also the likely creditworthiness of the customer?

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CONTRACTOR U

A. Definitely – and there is another consideration, too. If the project is a big one – say over $100,000 – the deposit should serve to hold that particular construction spot. The deposit based on that alone for a job of this scale could be about $5,000 – assuming the contractor does not have a whole lot of upfront costs associated with the project. And then on the first day of the project – and possibly a week or two earlier – the homeowner should provide a larger deposit that is a reflection of the actual upfront costs that the contractor is going to incur almost immediately, as we just discussed.

Q. At Renovantage, you’ve talked before about your mediation service that you are prepared to enact if there is a major dispute between the contractor and the homeowner. Have you ever had to do this mediation with respect to a dispute about deposits?

A. No, we’ve never had a deposit become a mediation issue, nor have we ever had a homeowner call us and say that one of our contractors has asked for too much of a deposit.

Q. What about a situation where the deposit has been collected, then the homeowner wants to cancel the project at the last minute, right before work has started?

A. The way we would negotiate that, if it were required, would be to recognize that the moment that a homeowner gives the contractor the go-ahead to do a project, the contractor starts to incur costs. These costs will include planning and design, pre-ordering, lining up time with trades, preconstruction binders, regulatory

paperwork including permits, etc. So if a homeowner cancels a deal after some of this work has been done, the homeowner needs to be held accountable for those expenses – which are real.

Q. Would it be helpful for contractors to have some sort of template for deposit amounts based on the broad general categories of work they typically do?

A. Again, this is difficult. Because even though two projects may be somewhat similar, in the renovation business we all understand that no two projects are really alike. On a $50,000 kitchen renovation, you’ve got the upfront demolition and disposal of the old kitchen and the ordering of the cabinetry. That upfront cost could be 50 per cent of the value of the project so the contractor needs to make sure they aren’t fronting their own money for that. So, yes, that particular deposit will be quite large. But if the contractor wins a job in the spring that won’t actually occur until the fall, say six months later, there’s no reason why the contractor should be holding a large deposit that early.

Q. So in that case we are talking about a nominal sum of money, as you described, to hold the construction spot?

A. Yes, that’s reasonable. But again, when the project actually starts, the contractor should require another, larger upfront payment for the immediate costs.

The principle is always the same: The contractor should not be paying for the project outlays out of their own bank account or credit. And this principle applies right from the beginning of a job, right through the stage payments, until the final payment is received.

Q. Earlier this year, we had the wellpublicized news story, in Toronto, of GarCon Construction. Some of the multiple homeowners in that case, who had paid up to $40,000 – it was reported – for major renovation work, saw GarCon lay down its tools midway through the demolition phase, and then declare bankruptcy. They had received only a small fraction of the actual labour value that $40,000 would represent, and no materials obviously – all that had been done was that demolition had occurred. And in one case, the demolition work had opened up holes that hadn’t even been tarped. A nightmare for these customers. What lessons can be learned – though I guess they are obvious – about how careful homeowners have to be about giving deposits to contractors? In this case Mike Holmes – with his broad brush comment about 10 per cent deposits being the maximum – was certainly correct.

A. Well, this brings up an important point.

I’ve been talking about protection for contractors. But we’ve got to protect the homeowner, too. And this is where the balancing effect is important. Deposits are supposed to protect both sides.

Clearly in this case, the homeowners were totally exposed by what were reported to be inappropriate deposits. Just as the contractor can’t be paying for work they haven’t been paid for, out of their own funds, the homeowner can’t be laying out that sort of money for simple demolition work. All of the fairness principles that I’ve been talking about, with respect to the contractor, need to be reciprocated to our customers. They are the ones footing the bill. Which is why blanket statements about appropriate deposits are not to be trusted. Each case needs to be evaluated on its own merits. cc

www.canadiancontractor.ca

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May/June 2015

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The house marries Mellin’s love of Newfoundland’s colourful clapboard look with the sharp, clean lines of contemporary architecture.

By John Bleasby Overlooking Conception Bay from a hillside near St. John’s, Newfoundland, the Texmo-Storey house confronts numerous climatic challenges: salt air, strong winds, fog, rain squalls, snow, and seasonal temperature variations. Recognizing the design’s success, St. John’s-based architect Robert Mellin was recently awarded the province’s 2014 Lieutenant Governor Award for Architecture.

The house marries Mellin’s love of Newfoundland’s colourful clapboard look with the sharp, clean lines of contemporary architecture. The open concept, high-ceiling interior is warmed by rich colours and wood flooring, themselves warmed by a geothermal heat pump supplemented only by a propane fireplace for quick heat and coziness in winter.

Spectacular views from the south-facing glass in the main level rooms maximize the passive solar effect, with temperature balances maintained by large sliding doors, blinds and controllable heat zones. Mature trees on the property’s west side provide a wind break from strong prevailing winds.

Climatic extremes were not the only challenges met in this project. Home builder Keith Pierce faced immediate site issues the moment shovels hit the dirt.

“Water drainage ran straight through the site. It was a serious focus throughout the project.” To keep the site workable prior to the pour, several feet of saturated material were removed and replaced by 5” stone, and a trench dug under the footings Continued on next page

All Photos Robert Mellin

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SOLID AS A

ROCK

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CREATIVE EYE

The clean exterior linearity is maintained by mitering the clapboard siding at the corners and eliminating vertical trim boards. Bold exterior colours recall traditional fishing village homes.

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Texmo-Storey house, St. John’s, Newfoundland

Continued from previous page

to allow the water to run clear. Once the footings and basement were completed, a “double drainage system” was installed starting as far back as 100 feet from the house, continuing around the perimeter.

In many respects, the building itself is surprisingly un-complex; traditional 2 x 6 framing and walls firmly anchored to the poured concrete basement and hurricane ties securing the roof to the walls.

However, equally surprising is the natural wood painted siding, Mellin’s preferred exterior for this often harsh ocean-front environment. In fact, Mellin, also an associate professor at McGill University, is an expert on the subject, having published several articles concerning environmental challenges to exterior cladding.

Key are the vented “rain screens” running along the base of the exterior siding walls, doors and windows, which Mellin describes as “vented and compartmentalized air spaces placed under all components of the exterior cladding including window, door, eave, and corner trim boards. The rain screen permits both internally (moisture flow from interior to exterior) and externally (rain) generated moisture to harmlessly escape from the wall without compromising the integrity of the exterior cladding and paint finish. It also neutralizes air pressure on both sides of the cladding… reducing the potential for leaks around windows and doors caused by a vacuum effect.” Other considerations include the use of stainless nails or screws, particularly when wood siding is painted or stained, due to the corrosive quality of salt air and spray.

Strong prevailing winds influenced the addition of sheltered alcoves to the wraparound deck for outdoor enjoyment away from the breeze.

To minimize visual intrusion of deck posts and rails, marine stainless steel wires were used, visually reinforcing the linearity of the clapboard.

Continued on next page

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CREATIVE EYE

A drainage trench was dug to allow water to run under and past the footing and basement prior to pouring (see arrow).

All Photos Robert Mellin

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Texmo-Storey house, St. John’s, Newfoundland

Continued from previous page

Mellin also concludes that “Latex paints are superior in this environment than oil.” While gloss finished oil based paints have been typically used on Newfoundland houses, oil base primers and paints, even oil base stains, “create a vapour barrier on the exterior of the house. Oil-based paint is forced off the wood when moisture traveling through the wall from the interior to the exterior encounters the vapour barrier created by the paint.

For these reasons, current best practice is to use latex primer with two coats of latex paint.” Furthermore, Mellin believes that latex is superior to stain, observing that chalking, splitting and warping are reduced. He also favours raw hewn wood versus smooth, feeling that paint adhesion is superior to the absence of the ‘mill glaze’ that can accumulate on surfaces during the planning process.

The Texmo-Storey house site commands the hillside, while its carefully executed design successfully controls its location’s environmental challenges.

The living and kitchen areas are defined by partial height walls which hide support beams and allow pot lighting both down and up onto the walls above. Client Keith Storey: “At night, this gives a wonderful, subtle effect that adds an additional dimension to the upper part of the room.”

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CREATIVE EYE

EXTERIOR CLADDING RAINSCREEN DETAIL AND CONCRETE SLAB WITH RADIANT HOT WATER HEATING DETAIL A: TYVEK B: WOOD STRAPPING OR RAINSCREEN MAT C: LOCAL SPRUCE CLAPBOARDS, LOW VOC LATEX PAINT D: PLYWOOD SHEATHING WITH VENT HOLES IN EACH STUD SPACE E: INSECT SCREEN WRAPPED UNDER STRAPPING F: POURED IN PLACE CONCRETE FOUNDATION WALL G: EXTRUDED INSULATION INSIDE FOUNDATION WALL H: CRUSHED STONE I: VAPOUR BARRIER J: DOUBLE LAYER OF EXTRUDED INSULATION K: REINFORCING BARS L: RADIANT HEATING PIPES M: MACHINE-TROWLED CONCRETE SLAB N: GLASS FIBRE BATT INSULATION O: AIR-VAPOUR BARRIER CONNECTED TO UNDER FLOOR VAPOUR BARRIER P: GYPSUM BOARD

Architect Robert Mellin’s exterior siding technique is detailed in this cross-section

All Photos Robert Mellin

Both the 5/8” plywood wall sheathing and 2 x 6 framing are secured to double sill plates, which in turn are bolted firmly to the poured concrete foundation wall. Roof joists are secured with hurricane ties. www.canadiancontractor.ca

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ROOFING

The New Asphalt Shingles

By John Bleasby Some types of older-style asphalt shingles have been the focus of class-action lawsuits for premature failure from curling, cracking or peeling.

The shift to fibreglass matting has transformed the roofing shingle industry.

I

t all seems pretty basic to Brian Audia, president of A&G Roofing in Orillia, Ontario. “People want a roof that is economical in cost but will also last them the entire time they occupy their home.”

Yet with so many new technologies arriving on the market, most Canadians still turn to what is tried and true; the asphalt shingle.

Still the Consumers’ Choice Asphalt shingles may have historically represented at least 80 per cent of the roofing market for years, but that doesn’t mean manufacturers have had an easy time of it. Recent class action lawsuits against several manufacturers have, however, triggered significant changes and improvements in product technology, most noticeably the evolution from organic to fibreglass-based shingles.

The shift to fibreglass has transformed the roofing shingle industry, confirming its position as the preferred residential roofing material. Although more expensive per square foot than their predecessors, fibreglass shingles are a lighter, more flexible laminate available in numerous architectural styles. Most importantly, they do not shrink over time. This improved dimensional stability is particularly important in Canada, given our seasonal climatic variations. “Asphalt shingles are here to stay.” says Audia.

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From Organic to Fibreglass Asphalt shingles are comprised of three basic components.

The woven mat underlay is first impregnated with asphalt. The coloured ceramic granule is then pressed into the softer asphalt.

For decades, the industry standard for the important mat layer was an ‘organic’ fabric, essentially a felt or heavy tar paper made from various recycled materials. This organic mix was run through an oil saturation process to form the underlying waterproof mat. Rolled tar paper, itself an organic product, was often installed underneath the shingles as further insurance against water ingress, the theory being that moisture would simply run off the water repellant tar paper.

However, shingle failure problems started when reinforcing and stabilising additives like asbestos were eliminated from the organic mat mix for health and safety reasons several decades ago. This resulted in an organic mat layer that would shrink, whereas the asphalt and granular layers on top would not. That caused shingle failure, commonly seen as premature buckling, curling, cracking, or peeling, exposing the mat further and accelerating its degradation even faster.

The new fibreglass matting underlay resolves this, and now

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ROOFING

manufacturers offer warranties as long as 50 years on their fibreglass shingles if installed by a credentialed installer in conditions that include roof decking and attic ventilation systems meeting code.

This Roofer is Confident How can manufacturers offer long-term warranties on shingles that have been around for only a decade or so? Audia is confident. “The fibreglass technology itself has been around in one form or another for about 25 years. As a roofing contractor, I don’t see how you’re going to have a major breakdown in the product in the first 30 or 40 years.” The implications are high. If a manufacturer doesn’t stand behind their product, family businesses like Audia’s take the fall in their local markets. “At the end of the day, our customers trust us to come to them with a product we believe in.”

Water Flows Uphill Neither new shingle technology nor steel sheeting alone can overcome the very Canadian issue of ice damming. Audia sees dozens of ice-damming problems each year on homes, condominiums and commercial rooftops alike. Damage to interiors can be extensive. Audia believes the cause is often

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At the same time, steel is making a strong comeback as a roofing material. Audia sees that as a result of shingle problems of the past that have resulted in those class action lawsuits. “There’s a sincere belief amongst customers that steel is a better choice, largely because it’s steel. It is definitely proven roofing material when properly installed.” Audia also points to the attractive variety of roofing designs available in steel and not in shingles.

VicWest ‘Super Vic’, for example, is designed to mimic the battened, standing seam style. Steel can also, in certain instances, be installed directly over old shingles as a replacement. However, there are limitations. Audia would not install steel on a near-vertical mansard roof, for safety reasons, nor on a pitch less than 4:12 without serious customer consultation.

Installing steel around dormers and skylights can also become a cost issue.

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ROOFING

inadequate attic ventilation, particularly with additions or renovations to older buildings.

He adheres to the very critical 300:1 ratio of ventilated attic space to roof area. Without balanced air movement inside the attic and soffits, the roof deck itself can suffer premature deterioration from the underside, plus heat loss and ice damming in winter. In summer, a superheated attic can cook and break down an asphalt shingle from the underside.

Ice damming can occur with steel or shingles.

In fact, although steel roofing sheds snow and water faster than shingles and may escape some of the pitfalls of poor attic ventilation, the sheets don’t seal to themselves nor have profiles high enough to prevent ice backup. Buttal tape or silicon on seams can help but are not sure bets. Furthermore, various ice and water shield products applied underneath do not offer any Anatomy of an ice dam: The root cause lies on the inside, due to an inadequate specific guarantees for longevity as far as Audia ventilation plan or poor insulation in the attic air space. is concerned and while useful, are certainly no substitute for a well-planned roof system. “You either design correct ventilation in the attic or you manage the problem from the surface. Ice damming is not a failure of product or workmanship. It’s a failure of planning.”

Using Specialists Can Increase Your Profit

The 3-part composition of the traditional shingle has not changed.

However, the preferred choice today is a fibreglass base material versus an organic mat.

Photos: Courtesy VicWest

Correct planning means the existing attic must first be inspected, perhaps by an insulation specialist. Audia often works sideby-side with insulation installers who are prepared to do the nasty work of crawling around confined spaces. Furthermore, contracting an accredited roofing specialist means extended warranty protection for your customer and will ensure due diligence is undertaken to confirm both proper insulation and balanced ventilation under the roof deck. Their crews will likely work more efficiently than your framers and carpenters too. Correct allocation of resources means maximising profit. cc Follow John on Twitter @john_bleasby

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CONTENTS

Introducing Fiberon Symmetry Railing.

Fiberon Symmetry™ Railing has a unique two-piece top rail design, featuring an aluminum channel reinforcement and versatile hidden bracket system. It’s easy to install, provides application flexibility and is extremely sturdy. Symmetry Railing comes in a beautiful matte white finish with a spanning capability up to 12 feet. So you can finally give your customers the look they’ve been asking for. Learn more about the benefits of Symmetry Railing at fiberondecking.com.

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February 2014

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REALTORS

How to Manage Your Business Using the

Three M’s

By Ron Coleman

The best way to stay in control of your contracting business is by using the 3 M’s: Measure, Monitor, Manage. Or maybe we should call them the M&M&M’s because they really are a sweet way to make money! Let’s look at them in turn…

others. Use a GPS system either on smart phones or trucks to monitor both these numbers.

Monitoring your net profit is done by subtracting your overhead from your gross profit.

Set a budget so that you can monitor how your actual overhead What to Measure numbers compare to your budget. Generally 50 per cent of • Gross profit per your monthly profit and loss statement overhead for a trade or specialty contractor is payroll related. So, • Gross profit on each job if you are going to reduce overhead you are likely going to let • On service work, the hours paid compared to the hours staff go or put them into direct cost. billed to customers When you monitor the activities you will • On retrofit and construction work, the hours identify which activities are at an unacceptable allowed for the project compared to the level. Manage the activities, not the person.

The best actual hours In other words, focus on the activity that is not way to stay in • Net profit getting you the outcomes you want. For example There are several reasons why the gross profit if the hours over run on a job, identify what control of your figure on your profit and loss statement might differ activities may have created the overrun and seek contracting from your estimate. You may have overbilled or advice from your team as to how this could be maybe some of your costs have not been processed. corrected or avoided in the future. Do your best to business is by Very often I find that elements of cost that avoid personality clashes. using the 3 M’s: were included in the estimate as direct cost are in How to Manage your overhead. These would include WSIB/WCB Measure, As a manager your role should be to look for premiums and employers’ portion of CPP, EI and Monitor, problems and find solutions. Work on providing benefits. Also a warranty provision was likely better support, mentoring and training for your allowed in your estimate but not in your job costs.

Manage. team.

Gross profit on each job also suffers from the above.

If your overhead is within budget and you are What to Monitor not making the desired profit then your gross profit is too low or In order to have something accurate to monitor, I would your overhead is too high. recommend monitoring hours. The best way to monitor individual If your sales are below target then it will be very difficult to jobs is to monitor the actual labour hours compared to the make your desired gross profit. You may have to reduce overhead estimated hours. Break down the job into phases so that labour to reach your net profit target. If your job costs are too high then and production can be measured in an accurate and timely your monitoring should help you pinpoint where the problem is manner. This should be done with each payroll, thus giving you and how to correct it. good, timely and reliable data that you can monitor, measure and What’s the ideal size for your company? manage.

There is no ideal size; it is very much dependent on your structure.

Service work should be monitored by comparing the hours The way to answer this question is by asking the question, “If we billed to the hours paid for each worker with each payroll. You added another work crew would we have to add any overhead will likely find that some workers are far more productive than

“

”

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CONTENTS

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DEWALT WALL SCANNER

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Futureproof Your Project Page 52

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P RO D U C T S , T E C H N O L O G Y & T I P S F O R C O N T R AC TO R S

INSULATION

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MAXWELL’S MIND

S

S

H

The Little Voice That Says “No”

By Steve Maxwell

I

t was the spring of 2003 when I was reminded how important it is to listen to that little voice inside your head, the one that sometimes says “no.” A contractor friend living 30 miles away was visiting a neighbour of mine who had advertised for a major renovation. He was parked outside the place for less than half an hour, then left. “Did you get the job?” I asked a couple of weeks later. He was one of the best contractors in the area, but I also knew this particular client could be “interesting.” Was he sharp enough to pick up on that?

“I got the job,” he said, “but turned it down.

The whole thing smells like trouble. A hassle job is worse than no job at all.”

His hunch was right. A few weeks later, another contractor started work, but the job ended bitterly. Complaints, late payments, gossip, unattainable expectations and that trapped feeling you get when a building project turns into a battle zone. The homeowner even stole materials from the project, squirreling them away as “scraps” on another property, ready for handyman projects of his own.

The discipline to keep your enthusiasm in check when sizing up a job is often the difference between projects that make money and those you regret. We all want work, sure, but who can afford nightmare jobs?

Contracting is like getting married again and again, every time you shake hands with a new client. Some of your contracting marriage partners will be dreams come true that eventually turn into friends. Others are the kind of people that little voice warns you about. Have you learned to hear the voice?

Let your enthusiasm get the better of you, take on a few bad jobs, then feel the sting of your own foolishness. You’ll soon get smarter.

Smarter, that is, or broke. steve@stevemaxwell.ca

Steve on his homestead on Manitoulin Island, Ontario

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MAXWELLâ&#x20AC;&#x2122;S S t u f f We L i k e

Futureproof

Your Projects Building and renovating with energy in mind

By Steve Maxwell

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I

ncreased energy performance and rising insulation standards are the biggest long-wave changes coming to the building world. Despite improvements in construction unfolding since the 1980s, there are still efficiency gains to be made. Governments realize this and have served notice that even todayâ&#x20AC;&#x2122;s leading-edge codes are only stepping stones to something more. Homeowners expect more too, especially as energy costs trend upwards.

All this is why learning to build for energy efficiency is one of the best ways to

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MAXWELL’S S t u f f We L i k e

futureproof your career and win more work. Understanding how to talk about and sell better insulation features in your projects comes down to knowing and presenting the kinds of facts that clients need to consider more often.

Fact #1

Insulation Means Comfort It’s easy to overlook this truth, but better insulation simply makes everyone in the house feel better. A warm home that holds heat well at, say, 20ºC is more comfortable than a poorly insulated house that demands more energy to maintain that same 20ºC room temperature during winter. Lack of drafts and cold spots are the main reasons why. Same goes for air conditioned spaces during summer. If you could transport your clients back and forth between alternate realities with different insulation levels in the same house, everyone would understand. But since you can’t, you’ve got to explain the simple fact that better insulation means better comfort, both now and in the future.

Fact #2

Insulation is a Great Investment It goes without saying that better insulation saves money. What many clients don’t realize is just how much money upgraded insulation can save over time. It’s more than most people consider because the savings go on and on as long as the house stands.

BETTER BATTING Most Canadian homes are built with some kind of batt insulation in exterior walls, and there are three things that go into optimal performance of batts. The first is fit. While it’s tempting to cram uncut batts into non-standard stud cavities, this reduces insulation effectiveness as batt density goes up.

Strictly speaking, about 15 per cent to 20 per cent of batts require some kind of custom cutting, and while this is a pain, it’s getting easier. Today’s batts are more rigid and easier to slice precisely than previous types. A serrated bread knife is the perfect tool for cutting batts – better than any utility knife.

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For example: Let’s say an insulation upgrade saves a homeowner $2,000 a year in energy costs. This size of performance boost can easily happen when you’re starting with an underinsulated home. What people often don’t realize is that this kind of savings provides the same financial boost as having a $100,000 long-term GIC with your name on it delivering interest year after year. And the higher energy prices go in the future, the bigger the yield on that insulation “investment” will be. There is never a level of insulation so high that it fails to pay off financially. The highest level of insulation I’ve seen in any home is R90 in the attic and R70 in the walls, with a corresponding heating bill of less than $20/month during the coldest weather.

Fact #3

Insulation Makes a House Bigger (Sort Of)

Adding acoustic insulation between floors and interior walls keeps more sound from leaking into the rest of the house. A quieter bedroom, for example, seems farther away from the basement rec room with the TV going, or the kitchen and the socializing that goes on there. Houses always seem bigger when you can’t hear what’s going on elsewhere, and acoustic insulation can do this for your clients.

More and more sound insulation products are coming on stream now, and they make a big difference. Coupled with diligent acoustic sealing between rooms and spaces, your clients will notice the difference you’ve made.

Busting the Heat Source Myth The more people pay for heat each year, the more they start wondering about cheaper sources of energy. I hear it all the time: “I want to lower my heating bill. What kind of heating system should I switch to?”

But the fact is, insulation levels can have a bigger impact on home heating bills than whether or not heating happens with electricity, propane or oil. The fact is, it’s easy to miss the reality that heat loss from a building is what matters most. Sure, there’s a big difference in the cost per BTU of electricity versus natural gas, but real world heating and cooling costs have more to do with energy loss through attics and walls.

Insulate first, upgrade heating systems second.

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MAXWELL’S S t u f f We L i k e

Better Ways to Break Thermal Bridging

Convincing people to pay for more and better insulation might seem like a hard sell, but it’s getting easier. While superior insulation still has to compete with more visible upgrades like a granite countertop instead of arborite, or real hardwood instead of laminates, Canadians are more willing than ever to be convinced that better insulation makes sense.

They’ve been hit by rising energy costs long enough to be open to the message. You just need to know how to say it. cc

Wood certainly isn’t the world’s greatest insulator – only about R1 per inch – and that’s why it’s getting less acceptable to insulate only stud cavities in exterior walls. The transmission of heat and cold through studs is what thermal bridging is all about, and adding a layer of insulation sheathing on the outside of stud frames solves the thermal bridging problem. It does something else, too. Insulation applied to the outside face of a stud frame makes the stud cavity warmer for a given outdoor temperature. And a warmer stud cavity is less likely to trigger internal wall condensation if moist, indoor air happens to leak into that cavity during cold winter weather. A whole range of rigid insulation products have appeared on the market especially for the outside of exterior walls. The best are even dense enough to support strapping and siding anchored to the underlying wall frame.

Air Leakage and Your Reputation When it comes to assessing the energy performance of a building, actual energy consumption is rarely monitored directly. It takes too much time and too many measurements for that. Instead, the industry infers how efficient a house will be by analyzing air leakage rates. Blower door testing pressurizes the house, measures the rate of air leakage under pressure, then assigns something called an ACH number.

The whole process takes less than an hour.

ACH stands for “air changes per hour”, and it’s the working predictor for actual energy efficiency. The lower the ACH number, the less air leakage, the greater the energy efficiency. Or so it’s assumed. Technically speaking, a tight house doesn’t necessarily have great energy performance. A balloon has an ACH number approaching zero, but it still loses heat quickly when taken outside in winter because the membrane of the balloon has almost no insulation.

All this said, your reputation as a builder will still be assessed more and more often by how low the ACH numbers come in on your buildings and renovations. You can install tons of insulation with high R values, but if there’s a break in the building envelope somewhere, it will leak under pressure and make your ACH number skyrocket and your reputation plummet. That’s why tight construction – as well as well-insulated construction – is a big part of the game.

And finally, understand that adding insulation and reducing air leakage will affect indoor humidity and the ability of a structure to dry. That’s why a good vapour retarder and mechanical ventilation must be part of the plan.

Homeowner health is tops.

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MAXWELL PRODUCTS MAXWELL’S PICK

DEWALT DCT419 Hand Held Wall Scanner Real X-ray vision would be a handy thing when renovating around hidden wires, pipes and rebar, and real X-ray vision is what tool designers have been working towards since patent protection on scanning technology opened up in 1998. The DEWALT DCT419 is the latest entry in the wall scanning tool category, and it sees wood, metal, plastic and unshielded live wires through drywall, plywood, ceramics and concrete. Boot up the tool, select the type of scanning you want, then roll the unit over the surface for initial mapping. Roll it back again in reverse direction and the 3 1/2” screen shows what’s underneath. In my tests the DCT419 performed nearly flawlessly. It even detected studs underneath a wall sheathed with 5/8” drywall over 1/2” acoustic board. About $500 with a 90-day money back guarantee if the scanner doesn’t suit you.

MAXWELL’S PICK

CERTAINTEED MEMBRAIN Air Barrier and Vapour Retarder The problem with standard poly vapour retarder is that it’s not smart enough to know when to keep moisture out of framing cavities and when to let it out.

CertainTeed MemBrain is different. It changes pore size depending on surrounding humidity levels and that’s key. Permeability will be 1 perm or lower in winter, when it’s important to keep indoor air out of wall cavities and attics, yet pores open to a very airy 10 perms to allow drying if internal humidity ever rises to 60% or higher. This ability for a vapour retarder to change perm characteristics is the single biggest advance in stud frame technology since the invention of the insulation batt, and clients will love to hear about the greatly reduced potential for mold growth that MemBrain delivers. Might as well look like a genius whenever you can. 800-233-8990; www.certainteed.com/membrain

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EDITOR’S PICK

FUSION STONE Thin Stone Veneer

Get the most out of your fleet, on the road and online.

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Remarketing

apart from the cost of the work crew?”

If you don’t have to add overhead then aim for adding the work crew. If you do have to add overhead, better to raise your prices and do less work for more money. For every dollar in additional overhead you will need to generate approximately 8 to 12 times the cost in additional sales (depending on your mark up) or make significant savings within your existing infrastructure.

There are a host of other key performance indicators that you can apply the 3 M’s to. However, the key is not to do any of them yourself but to set up the process and delegate to other team members. For example, you might want to track quotations - the number you do and the conversion rate and then focus on how to improve the conversion rate. If you can go from converting 4 out of 10 to 5 out of 10 your sales will increase by 25 per cent with no additional effort.

There are a host of other performance indicators to which you can apply the 3 M’s. Don’t go overboard. Identify the key ones for your business and work on those. Start with one or two. Get some positive outcomes and move forward one indicator at a time. cc

Fleet Management

THREE M’S Continued from page 46

Leasing

“Fusion” is defined as “a merging of diverse, distinct, or separate elements into a unified whole.”

So it is with Fusion Stone: the coming together of the beauty, strength, and maintenance free characteristics of traditional stone with the ease of installation and affordability of stone veneer.

Fusion Stone is a thin stone veneer that is easily installed with the included stainless steel clips and screws.

You just screw it to the wall and it’s “Hooked for Life.”

Fusion Stone is available in three distinct systems, all backed by a lifetime guarantee.

Fusion Stone can be installed on both new and existing wall assemblies. www.fusionstone.ca

www.jimpattison lease.com

Ron Coleman (www.ronaldcoleman.ca) is a Vancouver-based construction consultant and public speaker.

www.canadiancontractor.ca

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WHAT WOULD YOU DO?

The Discovery Professional renovator Brigham Wild is being ripped off by his millionaire client. Then things take an interesting twist…

By Rob Koci

B

uster Belichek, although very rich, was the kind of customer you look forward to seeing the back of. Brigham Wild, Best Build Renovations, was three-quarters of the way through a massive reno on Belichek’s house and was heartily sick of the stress and the abuse. Belichek had ridden him so hard, and been so obviously dishonest, that Brigham wondered if he would even collect the rest of his money. He was still owed half the project fee.

Then, Brigham stood in stunned silence as Belichek handed him a list of make-goods (as Belichek called them) on the work so far and an ultimatum: Brigham was to complete the list to Belichek’s satisfaction before continuing the work or he could pick up the dumpster in the driveway, pack up his team and leave. And get sued.

Complying with Belichek’s demands would assure a net loss on the $150,000 renovation. Walking away would mean

getting sued and losing even more money. But then, as if by miracle, a third option presented itself.

Earlier that day, Brigham had come in alone to prep a second round of demolition. He tore away some drywall from a chase to check the mechanicals.

Behind the drywall he discovered a large cash box and inside the cash box were hundreds, possibly thousands of fifty-dollar bills, 1950s-style, clearly hidden decades before Belichek bought the house. Brigham stopped counting at $77,500 with barely half the pile done.

Yes, Brigham knew the law: the money belonged to Belichek. But he was also being plainly ripped off and bullied by his client. And the found money was unknown to Belichek.

What would you do if you were Brigham? See the options at right.

WHAT SHOULD BRIGHAM DO? 1. Walk away and keep the money.

2. Give the money to Belichek and do the make goods.

3. Not give the money to Belichek until a negotiation on the make goods has been resolved to the contractor’s satisfaction.

4. Give the money to Belichek and walk away.

5. Some other course of action (please describe).

WIN! A DEWALT XR DUAL SPEED cordless framing nailer Retail price: $549

LAST ISSUE’S WINNER – “THE DILEMMA” In our last issue, we told you about general contractor Jesse Westbrook, who has a job going sour really fast, with only one man capable of putting things back into shape for Jesse’s unhappy client. That man is Jesse’s ace painter, John Thatching, Able Painting. But Thatching has run into financial trouble and has told Jesse that he will only work for cash from now on. We asked you if it is worth it for Jesse to pay John for this job, or should Jesse stick to his guns and ask for receipts and regular paperwork.

Here is the winning entry from Alex Munro, president, Stint Construction Ltd., Nanaimo, B.C. “Jesse made the right call in not paying subcontractors under the table. A project going sour is not out of the realm of possibilities for any GC, whether you have an dream sub like Able Painting or not. The sooner Jesse learns to deal with good and bad projects without Able, the better, and this project would be a good start. Doing what is right isn’t always comfortable or cheap, but in the long run Jesse will be better off for it.”

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HOW TO ENTER Email the number that matches your best answer, with your comments, to rkoci@ canadiancontractor.ca. Please title your email “What Would You Do?” We will select the answer that impresses us the most and send the winner the DEWALT nailer.

www.canadiancontractor.ca

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TY1091 T

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2015-04-14 9:28 AM 15-05-15 12:19 PM

WHY WE SETTLE? DON’T.

With CertainTeed blown-in insulation, you’ll never have to settle when choosing an attic or sidewall insulation.

CertainTeed loose-fill, blown-in glass fibre insulation is a perfect fit for attic installations of all shapes and sizes. Installed with an easy to operate blowing machine, CertainTeed insulation is super-expanding, requiring fewer bags than other competitive products, to achieve the same R-Value. Its light weight and fibrous design allows the product to sit softly in any space, and will not settle over the lifetime of the home.

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CER-2028/0415

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CertainTeed

APPROVAL INITIALS

PROOF DATE: April 29, 2015 11:59 AM

CertainTeed “Why Settle” Ad (Canadian Contractor Magazine)

STAGE

ARTIST

CD/AD

AE/AD

REV# PROOF

QC

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