CANADIAN CONTRACTOR March/April 2015

Mike Holmes’

Ottawa Renovator

Steve Maxwell’s

Ten Percent ‘Bullsh*t’

Case Study

Living Attics

page 12

page 34

page 49

BIG MONEY $

ISSUE OUR SEVENTH ANNUAL

SALARY SURVEY

THE MAGAZINE FOR PROFESSIONAL RENOVATORS AND CUSTOM HOMEBUILDERS

The

CANADIAN

.ca .ca

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CONTENTS

CONTENTS

Cover Story

SALARY SURVEY

features

18

COVER STORY Our 7th Annual Salary Survey 18 And it’s not just a salary survey, but also a survey on Canadian contractors’ gross sales, margins, take-home pay, employee versus subtrade ratios, marketing efforts, shopping habits… and much more.

Case Study

Victorian 38

Reno

The Creative Eye: Victorian Row House 38 We travel to Montreal’s Plateau Mont-Royal area to look at how a Victorian row house was remodelled to fit the 21st century.

34

Case Study

What is a Tile Mural?

2008 $526,000

2009 $624,452

2010 $680,527

2011 $855,774

2012 $641,748

44

It’s a method of applying decorative art to walls in commercial buildings and private homes.

Tile

Murals

2007 $591,681

34

We take a look at the books – through good times and bad – of an anonymous Ottawa-area renovation contractor.

44

2013 $322,643

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March/April 2015

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ONLINE CANADIAN

Visit us online

CONTRACTOR

.ca

H B

VIDEO

ONTARIO BUILDERS VOLUNTEER FOR DOMINICAN YOUTH In this video, Rob Koci talks with Melissa Almonte, Gregor Homes, Barrie, ON, about a volunteer build of a youth centre in Puerto Plata, Dominican Republic. The structure will be completed in November of this year when the roof will be poured and the interior finishing will be completed. You might even find that you want to help with the November build, using your Canadian contracting skills to help people who don’t have the resources that we do.

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

VIDEO

ROB TALKS ABOUT HIS ROLE IN THE NEW ‘BLOOD, SWEAT AND TOOLS’ TV SHOW In this video, Rob and Steve first talk about the Salary Survey in this issue – and then move on to discuss Rob’s role in a new TV show on the Discovery Canada channel. It’s called Blood, Sweat and Tools and it might soon mean that Steve has to talk to Rob’s agent if he ever wants to communicate with him again. We can’t quite believe our ink-stained publisher has found his way into the living rooms of the nation – without a crowbar.

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

VIDEO

STEVE MAXWELL’S WATER WELL DRILLING TOUR Our venerable tools editor shows us how a well was drilled at his son’s cabin on Manitoulin Island, Ontario. Two different drill bits were used in a rotating, pounding action to power through the limestone bedrock. A very good well was established – though that’s not always the case, since drilling for water can be a hit and miss process. Learn the basics of water well drilling here, if you’ve never had to do it before. You never know when a customer might need a little bit of expertise on your part in this area.

CANADIAN

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

CONTRACTOR.ca BUILD | GROW | PROFIT

Volume 16, Number 2 March/April 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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March/April 2015

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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.

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EDITORIAL

Voices

CAN TEN PER CENT CASH MAKE THE DIFFERENCE?

By Rob Koci

D

iscussions of the cash economy are usually framed as “us” (100 per cent legit contractors) versus “them” (100 per cent

cash contractors.) It’s convenient for discussion, but we in the industry know that as a completely false paradigm. No one does all cash work.

Every year in our salary survey we ask you how much cash work you do. This year, 25 per cent of you said you collect up to 10 per cent of your income in cash (see page 21). 71 per cent did no cash work.

In other words, almost all of our survey respondents say they run legit, above-board businesses that pay taxes, workers’ comp, etc.

One in four of those “legit” contractors, after paying their taxes and workers’ comp, take a 10 per cent cash-work bonus.

I believe that is where the vast majority of the cash economy exists: It’s in that 10 per cent of work done by legit companies.

A good example: A friend was having above-board work done

”

on his house that required custom-built doors. The legitimate price

Doing 10 per cent cash, he can feed

Rob Koci

who would do the doors for cash at about 2/3 the legitimate price.

Because it was done inside a legitimate contract, there was no

of his work for his family.

of the doors blew the budget, so the contractor found someone

”

Publisher

rkoci@canadiancontractor.ca

chance of it being discovered. Because there was trust at every level of the transaction, the customer happily paid cash for the doors, and continued to pay for everything else above board.

There is a regulatory-cost tipping point that we all intuitively know. When it gets crossed, we find a way to mitigate those costs.

A contractor friend of mine thinks he has found a formula to mitigate the onerous regulatory costs of running his legitimate business.

In massively-taxed Ontario, his formula will require him to do about 10 per cent of his work in cash.

All indications are it takes at least a 35 per cent gross margin to do legitimate business in Canada. Contractors are struggling to make 25 per cent, but with his 10 per cent cash work idea, voilà – he feels he can feed his family. I am struggling really hard to find anything ethically wrong with his plan.

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EDITORIAL

Voices

CASH WORK IS A SLIPPERY SLOPE

By Steve Payne

R

ob, across the page, is “struggling really hard to find anything ethically wrong” with his friend working for cash. Many will

agree with him on the ethics. To them, tax evasion is only an ethical issue when government spends our tax money ethically. It’s a legal issue.

But Rob’s friend’s “Ten Per Cent Cash Work Solution,” while it sounds great, isn’t anywhere near as lucrative as he makes out, as a business proposition. Rob makes it sound as if a contractor can feed his family if he does ten per cent cash work, while the table is going to be bare at Mr. Contractor’s house if he doesn’t take the envelope.

Well, working the numbers, it doesn’t look like that’s true – at the 10 per cent cash work level.

Let’s look at workers’ comp first. Workers’ comp tops out at a maximum insurable amount, so 10 per cent cash isn’t going to help anyone there.

Let’s look at sales taxes. HST can be saved on the 10 per cent cash work you do, but that’s not going to save YOU 1.3 per cent of your total gross in Ontario, for example. At best, you can split much of that HST savings with your customer, who will want a discount of about 30 per cent or more. So you might pocket an extra 1.0 per cent of your total annual gross, as far as avoiding the HST, by doing 10 per cent cash work.

Saved income tax on that 10 per cent cash is going to run at a marginal tax rate of 28 per cent, for an average earning contractor.

But what would your income have been on that work, if you’d

”

He might

need to do a

lot more cash than that.

declared it? About 10 per cent of the total cash job price? Which is only 10 per cent of ALL your work. So you will save 0.28 per cent of your total gross there. Add that to your 1.0 per cent HST savings on your total gross and you pocket 1.28 per cent of your total gross, under Rob’s 10 per cent cash plan.

The median gross done by our contractor readers last year was $600,000. Rob’s buddy’s 10 per cent cash work plan would return him, in cash, 1.28 per cent of that $600,000 – or $7,680. Why? Because most

”

Steve Payne Editor

spayne@canadiancontractor.ca

of the savings will go into his customer’s pocket.

Which is why cash work is always a slippery slope. Cash work is a drug, not part of a sound business plan. www.canadiancontractor.ca

March/April 2015

9

SITE NOTES

By John Bleasby

Vancouver homebuilders support regional sales tax The board of the GVHBA (Greater Vancouver Home Builders’ Association) has given its endorsement to the idea of a Metro Vancouver regional sales tax of 0.5% to fund transit improvements. The tax proposal will be voted on by the public in a DeWitt plebiscite between mid-March and May. If the tax is introduced, the City of Vancouver will have found a way to raise $250 million annually for improvements to roads and the city’s TransLink public transit system. However, such a tax would add significant dollars to the cost of home construction and renovation – an additional 0.5% tax would add $1,500 to a $300,000 project.

This does not seem to have deterred the GVHBA’s 18-member board from supporting the idea. The association’s CEO, Bob DeWitt, says the benefits of improved transit infrastructure outweigh the small additional cost. “No one wants higher taxes, but in the absence of any other funding model at the moment, this is better than nothing,” DeWitt said. “In the shorter term, this does add to costs. However, in the longer term, improved infrastructure makes it is easier for builders and vehicles to get around. Not only that, building development usually increases in step with improved transit. It’s the correct long-term position to take.”

“No one wants higher taxes, but in the absence of any other funding model at the moment, this is better than nothing.”

Not all members agree. DeWitt said he has received emails from his own members criticizing the GVHBA position taken on their behalf. He acknowledges the concerns surrounding government accountability for the funds raised. He said there were criticisms from individuals “who are dogmatic in their opposition to new taxes generally.”

Regional tax supporters like the GVHBA face considerable opposition. The Canadian Taxpayers’ Federation vehemently opposes the new tax. Jody Emery, a small business owner and political activist in Vancouver, said that “taxpayers are tired of being disrespected,” citing mismanagement at TransLink and misdirected priorities in government spending. “We simply do not have any more money to spare, and this is an opportunity to tell government to stop hurting taxpayers.”

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Last February, some 60 volunteers from the Ontario homebuilding trades visited Puerta Plata in the Dominican Republic to build a Youth Development Centre.

Ontario contractors ready to raise the roof for Dominican Republic youth As soon as Melissa Almonte returned from a volunteer housebuilding mission in the Dominican Republic, shortly after high school graduation a few years ago, she passionately described to her parents the lives of families living in poverty in the island nation.

Melissa told her father, James Bazely, owner and president of Barrie, ON homebuilder Gregor Homes: “Dad, if a bunch of teenagers can go there and build houses in three days, imagine what you could do!”

James, already active in community work, was moved by his daughter’s passion. “She really was a changed person after that trip,” James told Canadian Contractor. “And she was right; we could go anywhere we want and build something.” Melissa’s connection with the Dominican made it the right spot for his attention.

When James later became president of the Ontario Home Builders’ Association, he convinced the membership to hold its 2011 annual conference in the Dominican Republic rather than at a resort in Ontario.

The conference was extremely successful. Many delegates wanted to get more involved with a volunteer build. James and Melissa nurtured that interest, ultimately using Melissa’s involvement with Dove Missions Canada to make plans to build a Youth Centre in Puerta Plata. In February 2014, they returned with their own group of 60 volunteers to begin work on the 2,400 square foot building.

“In terms of specific trades, plumbers, electricians, carpenters,

SITE NOTES

we worked with who signed up,” explains Melissa. “Our group of volunteers was pretty diverse through age, skills and experience.

Whatever we lacked, we hired local labour.”

As James explains, there were many logistical challenges facing the group. “We had a design, but only a handful of the locals spoke English. We arrived to find our foundation was not quite ready. The concrete block had not been delivered.” And, of course, there were the cultural differences relating to language, time, and schedules. “At the end of the day we would laugh and have a beer, but it was real eye-opener to those new to this type of project.”

“Dominicans tend to build in what I call an old-fashioned way” James explained. “All the mortar gets mixed on the street; the sand gets sifted on site. The ready-mix and big pump trucks are used on the big resorts and government buildings; local buildings don’t have those budgets. They are also willing to do things two or three times, reflecting locally accepted coordination of trades when pouring concrete, or re-parging after each trade installs wires, plumbing and fixtures.”

The initial stage of the Centre was completed in one week and serves over 200 young people, providing leadership and skills training. And, most importantly, a reason to stay off the streets.

The next group trip is in November 2015. Prior to that, money must be raised to pour the concrete roof so interior finishing can begin immediately upon the volunteer team’s return. “Then we can parge, we can add flooring, we can paint and so on,” explains Melissa.

Sponsorship opportunities are available. To donate your time or resources please contact Melissa Almonte at builders4changedr@gmail.com or visit www.dovemissions.org

bathroom and attic.

Things quickly went south. Part way through the project, the CBC reported, the contractor convinced Braden to sign documents stating satisfaction with the work done. He then left with the $20,000. Much of his unfinished work was seriously substandard.

For Dave Anderchek, getting involved was the only option. “I’m a fan of the industry. It’s an insult to see this poor workmanship, then realise somebody actually took Janice’s money and left her high and dry.”

Anderchek has been coordinating the industry-wide effort to put Janice’s house back together. At first, 26 companies reportedly expressed interest in helping. “Those who remain dedicated to the project have been great,” says Anderchek. “But getting solid commitments from suppliers and coordinating the timing has been a challenge.”

The project was re-permitted, walls opened up, the kitchen re-wired, and the original contractor’s work cleared out. Roof repairs, including heating pads, have been a priority. In the meantime, Ms. Braden has been living in the house throughout the fall and winter. “Considering this is a job gone very bad, she’s held up OK,” Anderchek says. “She simply didn’t understand the complexity, especially with contractors who are working for free.

We’ve been doing a lot of hand-holding.” Anderchek expects the project, which represents between $70,000 and $100,000 of donated goods and services, to be complete by the end of March.

APPOINTMENT – John Bleasby Rob Koci, publisher of Canadian Contractor, is pleased to announce that John Bleasby has joined us as a

Saskatoon contractor in white knight rescue Janice Braden of Saskatoon had been living a homeowner’s nightmare for over 14 months: an insurance repair and restoration that went horribly wrong. But when CBC News took her story national in December 2014, a series of white knights have ridden to her rescue. TrustedSaskatoon.com, a business referral directory, initiated the rescue mission, with respected local contractor Dave Anderchek of J.A.B.A. Construction championing the cause at ground level.

According to the CBC report, it all started in December 2013 when ice damming on Braden’s roof resulted in water damage to the interior. Armed with a $20,000 insurance payout, she hired a local contractor to repair and restore her kitchen, dining room,

Contributing Editor. John has written for business and consumer magazines in both Canada and Australia.

He has been a small business owner, an investment professional, and recently retired as a commercial pilot and flight service operator. Last year, John built a new home for his family near Coldwater, Ontario, blogging his experience weekly on our website. John also enjoys carpentry and furniture design, and can be frequently seen on stage in Simcoe area theatre productions.

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VOICES

”No good contractor needs more than 10% to start a job.”

Mike Holmes National Post, Jan. 27, 2015

Mike Holmes, in his column in the National Post on Jan. 27, opined that no good contractor needs more than a 10 per cent deposit when starting a job. He did say that there was an exception when the demolition phase of a job exposes some previously unknown conditions. But he mentioned no other exceptions to his ten per cent rule. We all know what influence Mike Holmes has among the general public. So we posted a link to the National Post article online (so that everyone could read it in context, not taking our word for it) and asked for your responses. Here’s what we got…

“Time for Mr. Holmes to leave.”

“I usually don’t say too many things in respect to our industry, but I feel that an individual like Mr. Holmes should maybe listen to contractors that actually make a living in the renovation industry.

He has made money but not from being a contractor.

As we all know, good projects and bad projects of any kind start with trust from both sides. After that is when (trouble) happens. When solidifying a contract, if you are running your company properly, it means that both parties are held accountable with a binding agreement. This is where most contractors fail. The deposit means business and if additional deposits are required for purchase of specialty ordered products it should also be outlined in that section of your contract.

What Mr. Holmes fails to recognize is that comments like no more than a 10 per cent deposit for contractors hurt the industry as far as the good contractors to perform what they are good at.

The contract is the starting point if any homeowner or contractor is legit and (willing to) abide by the promises they made. All of the problems originate after the signing if they are not.

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I have been a business owner in the renovation /construction industry for 25 years in Saskatoon and I think it is time for Mr. Holmes to keep to himself and move on with the money he has made. Because he is damaging to good contractors with his opinions when he has never been a contractor in the real world.

My company contracts are approximately eight pages long and outline everything as far as protection for homeowners. A good contractor will tailor his contracts, as well as deposits, as he sees fit. A good contractor will have standards as to the amount of deposit required based on the size of the project. We would ask for a 10 per cent deposit, as outlined by Mr. Holmes, if the contract is over $350,000. Time for Mr. Holmes to leave.

Dave Anderchek J.A.B.A. Construction, Saskatoon

“Fine and dandy if you know the homeowner well…”

Ten per cent deposit is all fine and dandy if you know the homeowner well, and you have no doubts about whether or not you’ll be getting paid. But what about the brand new customer you’re about to build a $10,000 dollar deck for? Or about to install $6,000 worth of windows for? I really don’t like to feel like I’m gambling when I start a project for a new customer. And if I only receive 10 per cent up front, I’m going to be a bit worried. And let’s not forget, that’s Mike Holmes opinion right now. If you asked him that same question X amount of years ago, when he was getting started, he might have had a different opinion.

Michael Breault

“This is complete BS.” There’s an old saying: A contract is a liability, until it is complete. For both parties. The reality is that whatever the two parties negotiate is what goes. If you are willing to negotiate your exposure and risk for someone else’s comfort that’s your

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VOICES

prerogative. The vast majority of renovations are done to both parties’ satisfaction but it is the very few that go wrong that are used as examples to tell the other good contractors how they should conduct their business.

Mike Holmes has made a career out of ‘feeding on the fear’ of homeowners. And to be fair he has also pointed out to many of them that they missed doing their due diligence in checking credentials. But that’s no reason to imply to the public that “no good contractor needs more than 10 per cent to start a job.” This is complete BS, especially from someone who went broke as a contractor and (has done) unlicensed electrical work on his own jobs. Just a bit of a double standard.

Ben Kuypers

“Holmes’ latest buffoonery…”

What makes Mike Holmes a guru on the subject of deposits and payment schedules? As a TV star first and foremost, he’s removed from the daily life of real contractors. When he was one, way back when, he went broke.

But fear-mongering among homeowners is what Holmes does best. I thought it was up to the homeowner and their contractor to decide a reasonable deposit based on the actual work to be done.

Yes, ten per cent is sometimes fair. We all know this. Ten per cent is far too low other times. We all know this, too.

It’s been widely reported that Mike Holmes’ first business card, when he was 19, read: “The F-up Fixer.” Right from the start, then, Mike Holmes knew the market he was after: People who had been ripped off by contractors. This is called target marketing and, as a business owner, it’s genius. Unfortunately, and clearly, Mike Holmes is not a genius at other aspects of our business – including payment schedules. Nor in some of the other branches of his business that he has closed down in recent years.

Holmes’ slogan is, of course, “Make it Right.” He’s got that phrase trademarked. But he hasn’t always done things right at all. He’s done many things flagrantly wrong. For example, he has talked about how at the age of 12, under his father’s supervision, he finished his uncle’s basement, completing the electrical work and plumbing. I don’t think I can think of a worse example of construction work being done wrong – an unlicensed minor doing plumbing and electrical. No matter who was supervising.

Why would a person boast about their past indiscretions, especially as he spouts to homeowners they deserve better? This means a fully qualified tradesperson and not someone working illegally with electricity, no matter their age at the time.

Maybe Holmes should take all of his money and his ongoing royalties and retire down south. It’s not going to happen

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right now. Maybe, then, he could tackle a new project strictly focusing on unlicensed, cash, fly-by-night contractors – instead of making so many legal, licensed contractors look bad. And it would be really nice if he would stop making these blanket “percentage” statements to the public with zero research behind his statements.

Alec Caldwell Canadian Association of Renovators and Home Services (CARAHS)

“Our company is 1/3, 1/3, 1/3 and has been for decades.”

Our company is 1/3, 1/3 and 1/3 and has been for decades. It’s fair and all in writing and clients have accepted this as a fair means of payment. Often what happens is TV creates a larger than life persona and individuals get caught up in what is good for TV and what is reality. For those of us in the trades, we get it. But clients don’t: they see a whole renovation in 30 minutes. Baeumler’s show is often more realistic but still falls short. Jim Caruk’s was the most real – which is why it’s not on – not enough sensationalism!

Jacked up reality shows are here to stay. Like them or not, they sell.

D. Brian Baker

“People would pay this guy just for one of his farts in a bottle.”

Mike Holmes is riding on his celebrity status. People would pay this guy just for one of his farts in a bottle. The average contractor can’t be gambling – otherwise head to the casino, at least you won’t blow out your back while the money is carefully removed from your wallet.

Bob2

“Holmes’ shows are like a free night out at a comedy club.”

Mike is not reality – which is working for Mike. He chooses to bad mouth the hard working legit contractor – and size them up with the fly by nighters… If we look back at Mike’s first years of Holmes on Homes, we can all have a laugh. He now has skilled people around him to teach him and show him how it is done right. However, this did take a ton of money and a huge team.

A true tradesman laughs when watching his shows. It’s like a free night out at the Just For Laughs comedy club. And I haven’t figured out yet why Mike isn’t a master electrician yet, as he has been doing (electrical) from 12 years of age.

Chad

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continued…

Not worthy to be called a contractor In February, we reported online that Charlesworth Carter, operating a business in Toronto area known as Jayanaca Kitchens, had been convicted of the charges under Ontario’s Consumer Protection Act. Carter was sentenced to 225 days in jail, and two years’ probation. In addition, he was ordered to pay a total of $23,000 in restitution to three consumers. In 2013, Carter had entered into contracts with two individuals in Brampton and one in Toronto to renovate rooms in their homes. The consumers each paid deposits and work was started and abandoned. Their deposits were not refunded. The consumers hired other contractors to complete their projects. We wrote a headline on this story that called Carter a “repeat offender fly-by night contractor.” That headline provoked Terry Ferguson to post this comment…

“Not a contractor… a run of the mill crook!”

Re: Charlesworth Carter. Do you not think it may be time to change the way things are worded? Your headline said this man was a “repeat offender fly-by-night contractor.” That, in itself, brings suspicion to the good contractors out there. We are all being labeled by this type of propaganda and I’m tired of it.

Do you think maybe we could say “a repeat offender posing as a contractor”? Just a thought. There are a lot of people posing in other professions and ripping people off: doctors, lawyers, people posing as police officers. Why do we contractors have to be continually labeled this way? I bet he doesn’t even have construction experience. So who actually knows if he is a contractor? Sounds like he’s just a plain run of the mill crook!

Let’s go with that one!

Terry Ferguson

WSIB’s top bureaucrat gets his $400,000 bonus – and two more years David Marshall, for the past five years the Ontario WSIB’s top bureaucrat at $400,000 per annum, was awarded a $400,000 performance bonus this spring, at the conclusion of his contract.

Marshall, 69, qualified for the $400,000 thank you by coming up with a scheme to reduce the WSIB’s unfunded liability. It dropped from $14-million to $9-billion, according to the Toronto Star.

Part of that shortfall reduction plan was the provision, in Bill 119, passed two years ago, that forces owners and independent contractors – many of whom had not been required to pay into WSIB before – to start paying premiums. Now, many of us were wondering if Marshall would find his way to another public

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sector appointment after pocketing his $400,000 bonus. Actually, no. He has, instead, been given another two years at the helm of WSIB.

“Mr. Marshall, you should be ashamed of yourself.”

I can’t understand WSIB CEO David Marshall getting a $400,000 bonus on our backs. Isn’t he already well paid to do his job, to find savings, to consult and to partner with stakeholders, etc.?

I’m a self-employed contractor. Since I pay my wife to income split and do the books, we must register her for WSIB. We pay $2000 for her – 9.1 per cent. She might get a paper cut! Enough already, it’s no wonder the underground economy is growing exponentially. I’d be happy to take Mr. Marshall’s job and give taxpayers a 50 per cent reduction of his salary. The trough these bureaucrats feed at has to stop! Mr. Marshall, you should be ashamed of yourself!

Thomas

“25 per cent of any invoice I hand a client is taxes, WSIB, licensing, etc.”

The WSIB and Ontario College of Trades are designed to help the unions take over the home renovation market. For their support in the last few provincial elections the Ontario Liberals gifted the unions these new regulations which make it more difficult and expensive for non-unionized independent contractors to operate in the province. Currently about 25 per cent of any invoice I hand a client is made up solely of taxes, WSIB, licensing fees, etc.

Think about that. Pretty much one quarter of the cost of any home renovation project goes to the government. I don’t care what planet you live on, that is unreasonably high. And when I explain this to clients… they are more often than not flabbergasted. The fact that such a massive percentage of any quote is essentially taxes shows that this provincial government, if you could even call it that, has completely failed not only homeowners but also small business operators in Ontario.

Dolton McSquinty Editor’s Note – Quite possibly not his real name

“What plan does he have up his sleeve for the other $9-billion?”

Am I the only one wondering what’s coming next? He managed to reduce the liability by $5 billion by taking the money out of my pocket and every other contractor who used to be exempt.

What plan does he have up his sleeve for the other $9 billion?

Significant increases in our premiums?

Patrick Grieco

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Deck it right the first time.

BIG MONEY

If you’re not making big money yet, take heart. Start by studying these pages closely for clues to what your profits could be – and how other contractors are making them.

Our 7th Annual Salary Survey We take the pulse of renovators and custom homebuilders from coast to coast, to see who’s charging what, who’s making a decent buck, and where the money is flowing.

By Steve Payne 18

March/April 2015

www.canadiancontractor.ca

$

Y

ou’ve come a long way, baby. In the seven years we have been surveying contractors on their financials and operating methods, we have seen Canadian contractor profitability grow incrementally.

Of course, there were some down years right after we did our first survey based on 2007 numbers. In 2008 and 2009, most of you reported substantial drops in income. But since 2010, things have elevated nicely. The survey results published here were based on responses in December and January, based on the 2014 business year. These charts are based on responses from renovators (39%), custom home builders (18%), subtrades (25%), service/repair contractors (10%), ICI contractors (industrial, commercial, institutional) (5%), damage repair specialists (1.5%) and tract home builders (1.5%). We had 377 responses, about the same as last year (384). Thanks to everyone who participated.

Y

The

BIG MONEY

TAKE HOME PAY

$

The median paycheque of our respondents is just under $70,000, almost $20k higher than the average Canadian full time wage.

ISSUE OUR SEVENTH ANNUAL

SALARY SURVEY

The median take home pay of our reader respondents remains just shy of $70,000. However, the top end earners took home less money in this survey: 9% of you took home more than $150,000, compared with 11% last year. And 14% of you took home six figure incomes, versus 16% last year. As we all know, home building is not growing anywhere near as quickly as home renovating, and that is affecting the top end incomes in our survey, which drags down our median incomes.

How much did you personally take home?

14%

Under $30,000

18%

$30,001 - $50,000

28%

$50,001 - $75,000

17%

$75,001 - $100,000

14%

$100,001 - $150,000

9%

Over $150,000

What were your company’s estimated total gross sales for 2014?

Under $50,000

GROSS SALES

Four out of ten of you are billing a million bucks a year or more

Exactly 40% of you did gross sales over $1-million last year, compared to 38 per cent in that bracket last year. Inflation, currently running just shy of 2% nationally, accounts for half of that slight increase.

The rest of the increase, we don’t think is statistically significant – different respondents, different data. In the grossing-over-$3-million club, we are up from 12% of respondents last year, to 17% this year.

$50,001 - $100,000 $100,001 - $250,000 $250,001 - $500,000 $500,001 - $1,000,000 $1,000,001 - $3,000,000 Over $3,000,001 www.canadiancontractor.ca

6% 6% 16% 15% 16% 23% 17%

March/April 2015

19

The

BIG MONEY $

You are very slightly

The Same 52%

ISSUE

more optimistic than you were at this time

More 39%

Do you expect to take home more or less money this year?

last year. 39% of you expect to take home more money in 2015.

Last year, 36% of you were expecting take home pay

GROSS SALES INCREASE

increases.

Less 9%

64% of you reported increased sales in 2014 Almost two-thirds of you (64%) reported gross sales increases last year. This is up from the 56% of contractors who reported gross sales increases in 2013. And about half of you (46%) were up more than 5%.

What percentage increase or decrease in gross sales did you have last year?

20

0-5% increase

18%

5-10% increase

16%

10-15% increase

7%

15%+ increase

23%

No change

13%

0-5% decrease

8%

5-10% decrease

5%

10-15% decrease 15%+ decrease

March/April 2015

GROSS MARGIN %

BY SIZE OF JOB The bulk of your gross margins are falling in the 20% to 30% range, depending on the size of your projects.

This chart will tell you the average margins for different sizes of jobs, as reported to us. It looks very similar to last yearâ&#x20AC;&#x2122;s chart.

The one number that has significantly changed from last year involves jobs between $50,000 and $100,000. In that row, 30% margins have grown from 20% last year to 29% this year. Those are, obviously, renovation jobs. We are glad to see that 30% margins are on the increase, since margins of at least 30% will allow a contractor to add people, systems and equipment to get to the next level.

When estimating jobs in the following ranges, how much is your gross margin?

0%

10%

20%

30%

40%

50%+

Jobs below $10,000

2%

12%

29%

24%

20%

14%

3%

$10,001 - $50,000

4%

14%

34%

31%

13%

3%

6%

$50,001 - $100,000

10%

20%

34%

29%

6%

1%

Over $100,001

12%

26%

35%

22%

5%

1%

www.canadiancontractor.ca

Gross Margin

The

BIG MONEY $

25% - 50% of sales 10% - 25% of sales

3%

ISSUE

1%

CASH WORK As last year, 71% of you do zero cash work

Up to 10% of sales

25%

Zero cash sales

71%

Well, the number of “no cash deal” reportees is unchanged this year. 71% of you said you did zero cash deals WHAT % in 2013 and 71% of you are going to OF YOUR Revenue Canada Heaven for your 2014 SALES upstanding citizenship, as well. As for COME FROM the other 29% of you, you’re taking CASH JOBS? some cash-stuffed envelopes – and you fearlessly told us so (we don’t track the individual names and companies on our responses, RevCan auditors, so don’t bother asking). The vast majority of the cash-deal reportees are taking up to 10% cash only. 4% of you are accepting more than 10% of your revenue in cash.

MARK-UP BY SIZE OF JOB The bulk of the reported mark ups are in the 1.2 to 1.3 range (20% to 30% mark up) Since mark ups are directly related to gross margins, we would expect this mark up chart to correlate closely with the gross margin chart on the opposite page. Yet, the mark ups reported below are slightly lower than our reported gross margins. Go figure. To recap, a 1.1 mark up (10% mark up) gives you a 9% gross margin. A 1.2 mark up gives you a 17% gross margin. A 1.3 markup gives you a 23% markup. A 1.4 mark up gives you a 29% gross margin. Etcetera. Everybody gets this, right? Perhaps not.

For completed projects in the following ranges, how much mark-up do you apply?

Mark up

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

Jobs below $10,000

11

21

22

17

14

4

3

7

$10,001 - $50,000

10

28

25

16

14

3

1

3

$50,001 - $100,000

18

31

25

11

9

2

1

1

Over $100,001

25

31

23

9

8

2

1

2

www.canadiancontractor.ca

March/April 2015

21

The 2015

BIG MONEY $

9%

1 Job

ISSUE

16%

2

21%

3

15%

4

8%

5

HOW MANY JOBS AT ONE TIME?

6%

11 to 25

4%

25+

Almost one third of you are juggling six or more jobsites at a time.

MAIN CAUSES OF INSUFFICIENT PROFIT Once again this year, competitive pressure is the number one reason for not making more money.

20%

6 to 10

0%

22

March/April 2015

www.canadiancontractor.ca

20%

Many of you are juggling more jobs at once this year. Last year, 12% of you were running only one job at a time – that has dropped to 9% this year. And last year, only 24% of you were tackling six or more jobs at a time. That’s up to 30% this year.

Those folks with 25 or more jobs on the go at once, take a bow.

In your experience, which of the following are the main reasons that you attribute to not making sufficient profit?

Competitive pressure Excessive demands of the customer

Not much has changed in this chart since last year: Competition is still the number one margin killer. (Good old capitalism, eh?)

There’s some good news on the “poor money management” reason for not making enough money.

That problem area was identified by only 4% of respondents, down from 9% a year ago.

10%

Errors in estimating Employee/subtrade problems Cost overruns Errors in building Problems with suppliers Poor money management Other

47% 33% 29% 21% 20% 7% 7% 4% 12%

30%

The

BIG MONEY $

ISSUE

WHAT’S GIVING YOU GRIEF? Marketing continues to be your biggest challenge, as per last year’s survey responses.

We asked you to rate, on a scale of 1 (little difficulty) to 5 (a lot of difficulty) each of the following non-building areas of running your contracting business. Marketing rates as the biggest challenge, which it does consistently, every year. The old days of a Yellow Pages ad and a lawn sign are, alas, long gone.

MARKETING

2.10

ESTIMATING

2.01 1.96

30%

PROJECT MANAGEMENT

ADMINISTRATION

1.94 1.84 1.81

ACCOUNTING AND FINANCE

1.76

EMPLOYEES/SUBTRADES CUSTOMER RELATIONS

JOIN TH

TYPES OF MARKETING YOU ARE USING

Contractor

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For the first time since we began the Salary Survey (2008), your reported useage of web advertising has dropped: from 55% last year to 52% this year. Print advertising actually grew, from 37% last year to 40% this year.

We will have to wait another year to see if this is a trend.

TION

MAG A

Online advertising has dropped, print is up

THE

CANAD E CONTR IAN A REVOLUCTOR

ontracto

r.ca

www.canadiancontractor.ca

March/April 2015

23

The 2015

BIG MONEY $

ISSUE

SUBTRADES OR EMPLOYEES? We asked you tell us which percentage of labour costs you were spending on subtrades versus your own employees.

Contractors are using employees all the way from zero percent of the time to 100 per cent of the time in almost equal increments (from 5% doing zero percent of their work with employees, to 9% of them using employees all the time, with every percentile in between having in the same range of percentages). There is no easy answer as to whether employees or subtrades are the growing trend.

Itâ&#x20AC;&#x2122;s a mixed bag all the way through our industry.

PERCENTAGE OF LABOUR COST 0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Employees

5%

6%

10%

14%

9%

7%

6%

9%

9%

16%

9%

Sub-trades

7%

22%

14%

14%

7%

8%

7%

8%

6%

4%

2%

Percentage of Respondents

TIME AND MATERIALS VERSUS FIXED PRICE? When you pay your subs, do you pay them time only, time and materials or fixed price?

Just as the subtrades or employees ratios, above, range all over the map, so do the methods used to pay subtrades. There is no real consensus in this data, below, as to whether our respondents prefer to pay their subtrades by time only, time and materials, or fixed price. Yes, fixed price is used 100% of the time by 21% of respondents, itâ&#x20AC;&#x2122;s never used (0%) by another 20% of respondents.

PERCENTAGE OF SUB-TRADE COST 0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

30%

20%

14%

6%

6%

4%

3%

1%

4%

4%

7%

Time and materials

20%

16%

13%

8%

6%

7%

7%

3%

8%

3%

10%

Fixed price

20%

7%

7%

6%

6%

7%

4%

9%

8%

4%

21%

Time only (no materials)

Percentage of Respondents 24

March/April 2015

www.canadiancontractor.ca

The

BIG MONEY

WHERE ARE YOU MOST LIKELY TO SHOP FOR THESE ITEMS?

$

ISSUE

LUMBER BUILDING MATERIALS FASTENERS LUMBER/BUILDING SUPPLY STORE

TOOLS/ ACCESSORIES

BIG BOX RETAILER

FINISH MATERIALS

NEIGHBOURHOOD HARDWARE RETAILER

(TRIM & MOULDING)

SPECIALTY SUPPLIER

PAINT FLOORING ELECTRICAL

PLUMBING KITCHEN/ BATH 0% 0

10% 10

20% 20

30% 30

40% 40

50% 50

60% 60

70% 70

80

PRICE ISN’T EVERYTHING! We asked contractors to rate the reasons WHY they shop for tools and supplies where they do. Notice how, in the first column, most important, price is only the number one factor for 28% of respondents.

1 – MOST IMPORTANT,

5 – LEAST IMPORTANT

1

2

3

4

5

Incentive Card

3%

4%

6%

12%

75%

Selection

23%

27%

24%

23%

4%

Service

23%

21%

23%

10%

2%

Price

28%

22%

27%

11%

3%

Convenience

23%

20%

19%

31%

7%

Percentage of Respondents www.canadiancontractor.ca

March/April 2015

25

The

BIG MONEY $

ISSUE

YEARS IN BUSINESS A third of our respondents have been in this business for 30 years or more. 85 per cent of respondents have been at it for more than a decade. As much as we all like to complain about the increasing difficulties of making a good buck in renovation contracting and homebuilding, for many of us, itâ&#x20AC;&#x2122;s a lifelong calling.

ARE YOU A MEMBER OF AN ASSOCIATION? Renovator organizations like CARAHS (Canadian Association of Renovators and Home Services, www.carahs.org) are growing by leaps and bounds.

Less than 10 Years

15%

10 - 19 Years

23%

20 - 29 Years

29%

30+ Years

33%

YES 49%

NO 51%

26

March/April 2015

www.canadiancontractor.ca

The

BIG MONEY $

ISSUE

SOCIAL MEDIA Once again, LinkedIn is the most-used social media platform of our contractor respondents. But this year, it’s Google Plus, not Facebook, that comes in second. Facebook has dropped to third.

Twitter is being used by 21% of our respondents, a giant leap from the 9% who reported using it last year.

WHICH OF THE FOLLOWING SOCIAL NETWORK SITES DO YOU USE FOR YOUR BUSINESS?

56% LINKEDIN

50% GOOGLE +

0-1 Hours

34%

1-2 Hours

42%

3-4 Hours 17%

49% FACEBOOK

21% TWITTER

4-5 Hours 5% 6-7 Hours 2%

8%

PINTEREST

SCREEN TIME No surprise here. Our contractor respondents are spending more and more time online, every year.

Last year, only 4.5% of respondents were online four or more hours each day. That has nearly doubled to 7% this year. We think it’s the faster, larger smart phones.

28

March/April 2015

www.canadiancontractor.ca

5% INSTAGRAM

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The

BIG MONEY $

ISSUE

DO YOU HAVE YOUR OWN WEBSITE?

No 71% of our contractor respondents have their own websites. If this sounds like a low figure, keep in mind that, according to a report last year from the Canadian Internet Registration Authority, amazingly, only 45% of Canadian businesses are online.

29%

Yes 71%

HOW OFTEN DO YOU UPDATE YOUR WEBSITE? We have data that shows that weekly updates are correlated with sales increases, 88% of the time.

3% DAILY 11% WEEKLY 13% MONTHLY

OFTEN THAN 73% LESS ONCE A MONTH

30

March/April 2015

www.canadiancontractor.ca

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The

BIG MONEY $

ISSUE

HOW IMPORTANT IS YOUR WEBSITE TO YOUR BUSINESS? 16%

Essential

21%

Very important

24%

Important Somewhat important

1%

Not important

7%

The importance of a good website to a contractor can’t be underestimated. This chart shows the opinions of the almost 7 out of 10 of our survey respondents who have an active website for their contracting business.

Why are websites so important for contractors?

Because most homeowners, when they want to put in a new kitchen or renovate a basement, don’t have a “go to” contractor top-of-mind, but will start by researching, online, the looks and styles they want.

From there to a contractor search online is a simple step. But the “conversion” factor of your website – whether your website actually generates an email or a phone call that is a real sales lead – is where your business either benefits from your online presence or remains unaffected by it. For a terrific article on how to make a contractor website into a lead generator, visit canadiancontractor.ca, scroll down to Digital Editions, and visit pages 30 and 31 from our March/April 2014 issue.

That article, by Carrie Shaw of OutRank

by Rogers, Rogers tells you exactly how to get your website to generate leads for you.

32

March/April 2015

www.canadiancontractor.ca

31%

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FINANCIALS

Case Study

An Ottawa contractor, Jake (not his real name), recounts his highs, lows and still uncertain rebound

By J ohn Caulfie ld

Sales 2007 $591,681 COST OF SALES GROSS PROFIT OVERHEADS

NET PROFIT

501,770 89,911 90,427

2008 $526,000 417,965 108,035 79,214

2009 $624,452 512,662 111,790 80,626

2010 $680,527 631,977 48,550 112,393

2011 $855,774 735,766 120,008 160,473

2012 $641,748

2013 $322,643

585,320 56,428 171,664

255,865 66,778 66,887

($516) $28,821 $31,164 ($63,843) ($40,465) ($115,236)

($109)

Profits 2008 $28,821

2009 $31,164

2007 (516) Anonymous Ottawa contractor 'Jake' sent us his financials demonstrating the bump effect of the federal Home Improvement Tax Credit in 2009 (which gave him a lift for the subsequent two years). The top graph shows his revenues.

The bottom graph shows his profits. Jake says that some large projects that went south (including bidding too low) were to blame for his net losses from 2010 to 2012.

34

March/April 2015

www.canadiancontractor.ca

2013 ($109) 2010 ($63,843)

2011 ($40,465)

2012 ($115,236)

FINANCIALS

B

usiness reporters rarely get the full story about any company. We are subject to how much our sources are willing to tell us. And owners who talk freely and openly when business is good have a tendency to clam up when times get tough.

Their reticence has several explanations, but it often comes down to the perceptual overlap of professional and personal failure. No one likes to admit even temporary defeat, and less so to have a chronicle of their setbacks published for colleagues and competitors to read and gloat over.

There are occasions, however, when owners, for whatever reason, will speak straightforwardly and objectively about mistakes made and lessons learned. In exchange for their candor, these owners often request anonymity, probably to mitigate some of their embarrassment and to protect themselves and their businesses from potential competitive or legal assaults.

One such owner, whose Ottawa-based remodeling company is slowly getting back on track after several profitless years, recently agreed to sit down with Canadian Contractor to discuss how his misreading of market conditions and homeowner purchasing habits nearly capsized his boat.

You never know with complete certainty whether an owner has ulterior motives for asking that neither he nor the company be named in an article. That’s why reputable magazines and newspapers grant anonymity guardedly. But in this case, we made this concession because we felt our readers would benefit from the retelling of his story, which includes this owner’s cautionary embrace of Ottawa’s Home Renovation Tax Credit for projects done (mostly) in 2009 (see next page). Another factor was this owner’s willingness to share financial information, something that most owners of private companies won’t do under the best of circumstances.

A strong start, undone by recession We’ll refer to this 45-year-old owner as Jake. His background is pretty much like a lot of small contractors. After graduating high school in the 1980s, Jake worked with his dad building and renovating houses. He spent several years toiling at a lumberyard.

In 2000, Jake became the GM of a design/build firm that specialized in large additions and custom homes. Three years later, Jake broke away to start his own contracting company, which he initially ran out of his house. “I saw a need for a legitimate small-renovation company. At the time, most of that work was being done on the

side by firemen and policemen. And the renovation market around Ottawa was really starting to take off.”

In its first four years, Jake’s company grew by 20% to 25% annually. It expanded from himself and another worker to nine employees. Most of the projects it did were in the $10,000 to $50,000 range, and nearly all of them came from direct referrals. The company didn’t bother to advertise because, recalls Jake, “I could barely keep up with the referrals we were getting.”

Then, in 2008, the market started to change, and not just the economy. Jake’s business was now one of four or five renovation companies competing for the same customers, and those competitors could offer clients computer-aided design, something that Jake says was beyond his financial wherewithal at the time.

Jake admits now that he fell into a false sense of security about his prospects. Ottawa was a government town, so the economic downturn that was hitting the rest of Ontario didn’t affect his company immediately. And referrals kept coming in. “We were actually busier than everyone else,” he recalls.

In its first several years, Jake’s company generated 5% profit on its annual revenue. But as competition intensified and the economy sagged, profits shrank as the company booked fewer highermargin smaller jobs. Jake now acknowledges, too, that he probably underpriced the one or two $100,000 to $150,000 projects his business took on each year. And as the company expanded, its labour and overhead costs increased.

One of Jake’s biggest mistake, he now admits, was not seeing the Home Renovation Tax Credit for what it really was: a one-year stimulus that artificially created demand and inflated contractors’ sales.

Even after the tax credit expired in early 2010, Jake’s revenue kept increasing for a while longer (see opposite page). But his business reported losses in 2010 through 2012, partly because the market got more cutthroat, with as many as 10 contractors of varying sizes. (That number has since been whittled to three or four.) With virtually no marketing program in place, Jake’s company was reliant on referrals that were suddenly drying up.

Diversification has helped Over the past three years, Jake’s business “has been all over the map,” and at the mercy of how quickly the local economy recovered. Its sales dropped precipitously in 2013, but the company still managed to break even that year after Jake laid off several workers. (It currently has three full-time and one part-time

www.canadiancontractor.ca

March/April 2015

35

FINANCIALS

employees.) The company turned a small profit in 2014, but only because Jake didn’t pay himself a salary.

Along the way, Jake’s marriage broke up. The divorce pushed Jake to relocate the business from his house to a commercial location in the next town over, something he had been thinking about doing anyway for a couple of years. The new headquarters has a shop that’s twice as big as the one in his house, so his employees “can work comfortably.” It also has parking, so employees aren’t taking the company’s trucks home with them after work.

Business rebounded in 2014, Jake explains, because “we became more aggressive about seeking out work from former customers,” who in the past may have requested an estimate but got overlooked.

While it still does a lot of kitchen and bath remodeling, Jake’s company also started taking on commercial work for the first time, mostly office prep like drywall, framing, and so forth. Jake says the commercial work is more profitable than residential, “and it’s certainly easier” because there aren’t as many change orders during the construction, and most of the specifications for details like exits and windows are predetermined.

Jake is now playing a game of beat the clock: can his company generate sustained profitability quickly enough to achieve the goals he’s set out for it? That’s still an open question, he says.

The company’s 2015 fiscal year, which began on December 1, started inauspiciously. Sales in December were off 30% from the same month a year earlier. And the company experienced the quietest January in its history, with sales down 80% from the same month in 2014. What Jake is hoping for now is that lower gas prices will give homeowners more discretionary income they can direct toward home-improvement projects. If that happens, Jake might hire two more workers this spring, and there’s a chance his company’s revenue could equal last year’s. In early 2015, Jake was talking with one of Ottawa’s larger design/build firms, which subs out all of its work, about managing its projects. “For companies my size, we need to start working in this capacity,” says Jake, who would like this kind of work to eventually account for half of his revenue.

If the alliance with the design/build firm materializes, it would also give Jake the opportunity to learn CAD, something he says he must be able to offer customers within the next two years to survive. “A fear of mine is that people can’t envision things for themselves anymore. And if we can’t show them a 3D drawing, we’re not going to get the work. Ultimately, our customers are in control.” cc

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Should Ottawa’s Home Improvement Tax Credit be reintroduced permanently?

W

as the euphoria worth the hangover?

That’s what some contractors are probably still asking themselves in the aftermath of the Home Renovation Tax Credit (HRTC), which applied to eligible purchases of homeimprovement-related goods and services up to $10,000 from January 27, 2009 through February 1, 2010.

Canada Revenue Agency estimated that the credit—15% of allowable expenses during that period—provided Canadian homeowners with $2.3 billion in tax relief. The government also estimated that home improvement spending increased by an average of 18% per quarter from the second quarter of 2009 through the first quarter of 2010.

Jake, our small contractor, rode the tax credit’s wave for more than two years. And when that wave subsided, his company’s sales and profits plummeted.

He is one of many contractors who argue that the tax credit should have been made permanent. The problem is that no one in authority is listening at the moment.

The tax credit indisputably pushed homeowners who were on the fence about renovating their houses to take action. Jake thinks that if the tax credit were permanent, the number of renovating homeowners would be more balanced from year to year, rather than simply causing some work to occur sooner.

Before the tax credit was in place, between five and 15 customers annually wanted to pay Jake’s company cash to avoid taxes. “I wouldn’t do that, but there were plenty of truck and ladder guys who would and did.” When the tax credit was in effect, however, Jake’s company had only one request for a cash payment, because, he contends, customers needed receipts to declare expenses for the credit. Consequently, if the tax credit were permanent, it could help to minimize the “underground” homeimprovement market a lot more effectively than the government’s more controversial efforts to register pros through the Workplace Safety and Insurance Board.

Lastly, Jake notes that the 13% Ontario HST his company collects on invoices is paid to the government quarterly, whereas a tax credit for those expenses would be paid out to homeowners annually. This tax “float” could be invested or put toward the government’s general fund.

Unfortunately, all of this is conjecture, because resurrecting HRTC isn’t on the legislative table. Jake says that at one point he sent letters to every cabinet minister he thought might have some influence. “I didn’t hear back from one of them.” JC

What do you think?

Should the Home Renovation Tax Credit be renewed permanently? Email us at: spayne@canadiancontractor.ca with your opinion.

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CREATIVE EYE

Plateau Mont-Royal Montreal, Quebec Victorian Row House, Renovation of Second and Third Floors Architect: L. McComber Ltée.

General Contractor: PA Construction

By John Bleasby Residential real estate prices in Canada’s largest metropolitan markets continue to increase, particularly in high density neighborhoods near downtown cores.

Therefore, blending the efficient utilisation of interior space with the desire to remain historically relevant to the traditional street-side façades becomes both an architectural and construction challenge.

The Plateau Mont-Royal neigbourhood in Montréal speaks to the unique nature of the city’s residential style, the most obvious being the street-front exterior staircases or iron railed balconies typical of the row duplexes and triplexes located throughout the city. In these pages, you can see how one of the heritage row houses in this Victorian-era enclave was exquisitely renovated.

“Many of these homes were built in the late 1800’s, using techniques and materials of the day. We had some surprises waiting for us,” explains architect Laurent McComber, principal of L. McComber Ltée.

The project involved reimagining and repurposing the second and third floors of this property to suit a family with children. What was soon discovered was that the home in fact had two roof structures: the current flat roof was actually built on top of an original sloped roof, thus compressing the potential living space on the third level.

Continued on next page

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REACHING A NEW

PLATEAU

CREATIVE EYE

All Photos: Steve Montpetit/V2com

www.canadiancontractor.ca

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CREATIVE EYE

Plateau Mont-Royal Montreal, Quebec Continued from previous page

“There was no insulation in either roof,” McComber says. “There was simply air space, multiple layers of tar, asphalt, and gravel.” Both roof structures were demolished and reconstructed in halves, resulting in exposure of the building’s interior to the elements for considerable lengths of time as each side was opened up and re-built. The contractor (PA Construction, Montreal) met this important challenge using numerous weather-proof tarps and temporary supports. New trusses and beams were installed to support the open space envisioned for the third level.

“We avoided a full demolition permit by only removing and replacing the roof. The street-side façade was simply cleaned up and repainted, and the rear only modified to allow for new windows.” However, masonry was required to extend the brick walls to the new roof level elevation due to fire regulations, and the entire interior envelope fully insulated with fibreglass and BP Enermax panels for both energy and acoustical reasons.

Removal of the sloped roof inside the building opened up five additional feet of ceiling height on the third floor, for a total of 13 feet, creating in turn a number of exciting possibilities for a private living space. In opening this third floor space, McComber illuminated the area with natural light and white walls. For example, the space dedicated to the new master bedroom and adjoining artist studio gains natural Continued on next page

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CREATIVE EYE

All Photos: Steve Montpetit/V2com

www.canadiancontractor.ca

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CREATIVE EYE

Plateau Mont-Royal Montreal, Quebec Continued from previous page

light with the integration of a ribbon window at the top of the now-higher end wall; a tempered glass ceiling allows that light into the marble tiled shower.

Care was taken to allow re-use of the original hemlock roof beams with their extravagant patina, transforming them into eye-catching, wrap-around bookcases that are integral to the central wall structure. â&#x20AC;&#x153;The shelves seem to protect a secret.â&#x20AC;? explains McComber.

Floors on the third floor are original, but epoxy-coated white in order to bring out their texture while emphasizing the impact of the natural hemlock wood grains elsewhere.

While the scope of work on the second level was less structural than on the third, it included restoring the lustre and grain of the natural wood floors. Other changes on that level support a contemporary family dynamic. Space distribution can be modified through the use of large moving doors, allowing easy adaptation to everyday needs with new areas dedicated to children and parents, all with the added possibility of privacy.

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CREATIVE EYE

All Photos: Steve Montpetit/V2com

www.canadiancontractor.ca

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FINE FINISHES

T I L E

Murals Practical Beautification for Residential and Commercial Clients

By Steve Payne

”We’re starting to see designers and contractors taking the lead and introducing the tile mural concept to their residential and commercial clients.”

A designer-recommended tile mural installation in a wine cellar at a new home in North Toronto.

Photos: Steve Green

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FINE FINISHES

I

n Mediterranean and Latin American countries, it’s quite common to see residential and commercial buildings beautifully decorated with customized tiles that have been painstakingly created by artisans. For a large, multi-tile mural, the creative effort would often take months. Now, thanks to new image transfer technologies, world-renowned artwork can be applied onto tiles quickly, easily and affordably right here in Canada. The company that makes this possible, The Tile Mural Store (tilemuralstore.ca), provided the photographs and projects shown on these pages.

Unlike most traditional decorative artwork, tile murals are a practical option for beautifying kitchen backsplashes and floors, shower walls and wine cellars because they’re impervious to moisture and can be easily and frequently wiped clean. These characteristics also make tile murals ideal for commercial environments such as spas, restaurants, nursing homes and other medical facilities.

“Until recently, the interest in our tile murals has been driven primarily from homeowners who are renovating for the long term or are building their dream home. Both groups are looking for a unique way to personalize and enhance their living spaces” says Steve Green, The Tile Mural Store Canada’s founder and president.

“But increasingly, we’re starting to see designers and contractors taking the lead and introducing the tile mural concept to their residential and commercial clients.”

Continued on page 46

Hundreds of original art backsplashes are available from the Tile Mural Store.

www.canadiancontractor.ca

March/April 2015

45

FINE FINISHES

Photos: Carlos Amat

Continued from page 45

The tile murals shown here were recently installed at Carewest’s Dr. George Boyack seniors’ medical facility in Calgary.

This was the second of three Carewest facilities to implement Tile Mural Store creations in its treatment rooms.

The very affordable murals can be custom made to fit virtually any space.

“We have produced complex murals over six feet in width and we can provide single accent tiles that can be embedded in plain tile applications,” Green says. If clients are unable to find a suitable image in the library of several thousand licensed artistic images displayed on The Tile Mural Store’s website, they can also have a custom tile mural created using one of their own digital images.

The imaged tiles are applied using unsanded grout to prevent scratching of the tile surface, but otherwise the process for installation is the same as for any tile application.

Green first became aware of decorative tile murals about 15 years ago, when he was working in Southern California and would take frequent business trips to Mexico. “When I wanted to renovate my own family’s main bathroom back here in Canada, I knew I wanted to install a tile mural but was very surprised to find that there were no Canadian suppliers,” Green says. “I ended up ordering a tile mural from The Tile Mural store in San Antonio, Florida – and was so delighted with the results that I decided to acquire the Canadian distribution rights to this online business.”

In a relatively short three years, The Tile Mural Store has built a strong reputation among their hundreds of very satisfied residential and commercial clients across Canada. cc

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March/April 2015

Tile murals recently installed at Carewest’s Dr. George Boyack seniors’ medical facility in Calgary.

www.canadiancontractor.ca

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Why renovating in the rafters makes sense Page 52

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MAXWELL’S MIND

CANADIAN CONTRACTORS:

WORLD CHAMPIONS OF TOUGHNESS

By Steve Maxwell

I

n February I was at a tool show, and an opinion I’ve long held about Canadian contractors was confirmed with a story I heard. The event was held by Stanley Black & Decker, and those of us in the media were seeing some of their new tools for the first time. As this was going on, I got chatting with a well-known TV contractor.

Originally from small-town Ontario, he mentioned that he often does filming for his show outside of Canada.

When I asked him about that, he brought up a point that I’d heard from other Canadian contractors who have worked abroad.

“Wherever we go outside Canada and build,” he said, “their contractors are surprised at the pace we set.

We build all our own stuff for the show, and we work just like we do in Canada: 12 hour days – or longer – in all weather, moving fast, getting lots of stuff done.

Canadian contractors are often way different than many you’ll find in other places. We’re used to working hard in nasty, winter conditions, and that makes everything else seem easy.”

I’ve noticed the hands-on nature of Canadians in general, and it goes beyond just the toughness of our contractors to the culture itself. Ever been to Europe?

Most homeowners there are no more likely to tackle home improvements than they are to do their own dental work.

Have you ever talked to someone from South America about the amateur woodworking scene south of the equator? Most have never heard of such a thing. Even our TV entertainment includes hands-on construction dramas that could only connect with an audience that has at least some small sense of what it means to build.

I’m not sure why Canada has a culture that breeds tough contractors, but I have a theory. Could it have something to do with the fact that many of us are no more than three or four generations from ancestors who cut firewood by hand to stop from freezing to death, farmed under primitive conditions, and either built things, fixed things or did without?

Now, unfortunately, we seem to be producing a new generation of young Canadians who are more interested in fixating on their smartphones rather than getting outside and tackling wet, cold, tiring outdoor challenges, So I’m not entirely sure Canada will keep producing great contractors. But for now, at least, we can be proud to come from a nation that breeds some of the world’s hardest working, most hands-on, most get-it-done-no-matter-what contractors anywhere.

Steve Maxwell Tools Editor

steve@stevemaxwell.ca

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

LIVING ATTICS Helping your clients get more life from the same space

By Steve Maxwell 52

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More living space, better household ventilation and greater style are the reasons why finished attics are trending. Iâ&#x20AC;&#x2122;ve designed, built and lived in homes with attics that are fully accessible and comfortable year-round, and I know they make people feel great in ways no other home feature can match. But success depends on more than just wishful thinking and designer notions. As with most things in the building business, it comes down to nuts and bolts. Here are the three biggest challenges of living attic construction and how to meet them.

MAXWELL’S S t u f f We L i k e

Attic Challenge #1: Not Much Room for Insulation Excess heat loss and rooftop ice dams are a big danger when finishing attics because there’s not much space for insulation when all you’ve got is the roof structure itself. That’s where one of three attic insulation strategies makes sense.

Batt-and-Foam Insulation With Ventilation Channels

attic space, but it makes the most sense for new roofs. A ridge beam runs across the center of the building, with SIPs anchored to the top of the wall and the ridge board. There’s no need for rafters at all, so there’s full use of interior space. You could also add 4 1/2”-thick SIPs on top of an existing rafter roof to add insulation from above, or simply layer rigid foam and plywood on top, all anchored with large-head structural screws sinking down into the rafters.

Attic Challenge #2: Attics Are Dark

You can insulate between rafters with batts, but only if you leave ventilation spaces open from eaves to peak to prevent condensation build up and roof overheating. Site cut foam baffles held back from the underside of the roof sheathing by 1” allows air circulation, with soffit vents at the eaves and ridge vents at the top. This works well within existing rafter roofs. Install 1” or 2” sheets of extruded polystyrene foam on the inside of the rafters for more insulation and no thermal bridging. Fasten the insulation with washers and screws, then secure drywall on top with 3” or 4” deck screws. They work just as well as drywall screws for long applications like these.

Spray Foam Between Rafters It’s fast and easy to have the spray guy come in and fill rafter cavities, and the results are highly effective and condensation proof. But besides the issue of cost, spray foam makes the roof surface sizzling hot in summer. Fiberglass shingles will be able to last just fine under these conditions, but organic asphalt will curl in a few years. Whether or not your client wants to spring for a new roof (and the higher cost of the foam) will probably determine if you use spray foam, as good as it is.

Structural Insulated Panels Structural insulated panels are one excellent way to build living

Don’t ever agree to build a living attic if your client isn’t willing to invest in skylights, roof windows or both. They won’t be happy and that won’t do you and your reputation any good.

Attic Light Solution: Skylights Skylights are available in either opening or fixed models, but every living attic needs some type of ventilation to allow hot air to escape. How much vent space? That depends. The easiest skylights to install sit right on the roof deck and includes an insect screen. The best models also open and close electrically with a remote or on a programmable schedule, and they automatically close in the event of inclement weather. VELUX is the only company so far to make solar powered, programmable skylights that need no wiring to operate. The sun energizes a small photovoltaic panel that keeps an internal battery charged. I know from experience that this system works even on cloudy days and is a breeze for renos because it’s wire-free. www.canadiancontractor.ca

March/April 2015

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MAXWELL’S S t u f f We L i k e

Sun tunnels are those shiny tubular devices that funnel daylight down and into specific places. They also allow for natural lighting without taking up any headroom – a bonus for any finished attic. A sun tunnel can be used as a nighttime light source if an electrical light kit is purchased and connected to household wiring and switches.

HOW A LIVING ATTIC TRANSFORMED A COTTAGE PROPERTY

Attic Challenge #3: Attics Get Too Hot Even with the best insulation, no living attic will stay cool enough in summer without some kind of ventilation. But with little or no wall space available in most attics, regular windows either can’t be installed or they’ll be too small to deliver enough air on their own. Use wall windows wherever you can, but make sure you install venting skylights or roof windows, too. Since roof windows open much more than skylights, you’ll get more ventilation per unit. So, how much ventilation area is enough in a Canadian climate? I’ve found 7% to 10% of floor area devoted to roof windows does the job. You should go with 10% to 14% for skylights since they don’t open as far. Either way, the benefit to the client goes beyond just a comfortable attic in summer.

How many times have you heard complaints about upper levels of a home being way too hot in summer, even while central air makes the basement feel like a fridge? A properly vented living attic can fix this problem over the whole house. By opening a skylight or roof window at the highest points in the house, it lets overheated air escape, making room for conditioned air to come up from down below. It doesn’t take much of an opening, either.

An inch or so on the hottest days allows central AC to do its thing.

After installation of venting skylights, it’s not unusual to hear a client say “finally air conditioning works upstairs!”

Not every house has what it takes to accept a finished attic, but far too few are appearing in Canadian homes. Get good at selling the idea of finished attics and building them, and you might just carve out a nice specialty niche for yourself. cc 54

March/April 2015

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When Mike and Alice Ogden’s cottage burned in June 2009 they didn’t know how much a living attic would be part of the silver lining to their dark cloud. Building regulations only allowed them to rebuild on the same 16’ x 24’ footprint, but those regulations didn’t say anything about what happened above the ground. A living attic made with SIP’s added 50% more living space to the new building, enabling them to move into the rebuilt place full time after retiring and selling their city home.

MAXWELL’S S t u f f We L i k e

KNEE WALLS MAKE SENSE Most attics include roofs that angle down to meet the floor at a point, and this poses three problems that knee walls solve. This is why even short attic knee walls 18” to 24” high make sense. They eliminate the need to struggle installing drywall or finished ceiling materials while lying on the floor. Knee walls also let you install baseboard and quarter round, which would otherwise be impossible. Knee walls also provide a place to mount electrical outlets, and they create a little bit of storage space behind them, too.

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55

MAXWELL’S PICKS

DEWALT DWFP55130 Quiet Trim Compressor This trim compressor beats all others I’ve used and used up over the years. It’s easier to carry and tougher than most because of the wrap around steel frame. At 36 lbs., it’s also light enough that weight isn’t an issue, even while climbing ladders. High operating pressure of 200 psi means it packs a lot of air into the industrial-type steel cylinder tank, and the 3 cfm air output is enough to keep two guns firing non-stop. I don’t know if DEWALT recommends it, but I know that the compressor starts and runs fine at -20ºC. Quiet operation is also a big bonus in my book. Rated at 71.5 dB, this model doesn’t startle me when it starts up, like those loud-boy compressors do. Like a work buddy who doesn’t talk your ear off, this thing is just plain nice to work around. The only thing I can’t comment on yet is how this model will stand up over the years. Time will tell, but visible build quality is more impressive than any other trim compressor I’ve used. A great price too, at $260.

MILWAUKEE 2667-22 M18 Cordless Right Angle Impact Driver Kit Impact drivers rule because they’re so fast and sure with screws. But as short and handy as ordinary impacts are, they’re not short enough to get into tight spaces. My solution has been to use a long bit extension to sneak in from an angle, but I’ll be using that extension a lot less now. Milwaukee’s 18V right angle impact is about as short as any close-quarter screw driving tool can get – short but powerful. The distance from the front of the bit holder to the back of the tool body is 2 1/4”. Add a stubby driver bit and you’re looking at a tool that only needs 2 1/2” plus screw length to operate. Two torque settings let you throttle back for finesse jobs, and a paddle switch controls driving speed, ON and OFF. Although I would have preferred the paddle switch to control rotation direction too, there’s a slide button for that.

The 2667-22 kit comes with two 3 amp-hour batteries, a charger and a case for $360. It’s the best right angle driver I’ve used so far, and good enough that you’ll probably find yourself grabbing the tool whenever it’s handy, even for ordinary jobs.

© 56

March/April 2015

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WHAT WOULD YOU DO?

The Dilemma John Thatching, the best painter in the city, is going underground. He only wants cash deals from now on. Which leaves his number one GC, Westbrook Construction, with a dilemma.

By Rob Koci

A

ble Painting was Westbrook Construction’s go-to guy for all finishes. Owner Jesse Westbrook considered Able’s John Thatching to be the best painter in the city. Not only that, John was a charmer and if any serious tension had built up over the course of a renovation between Westbrook and the client, John would usually be able to smooth it all over.

By the time John and his painters were out of the house, the customer would usually be smiling, and writing the final cheque.

Suddenly, John confessed to Jesse that he had gotten himself into serious financial trouble. Able Painting as a legal entity would declare bankruptcy: John told Jesse that he was going to go underground – cash work only. And he would want cash deals from Jesse, too.

But Jesse was a fervent above-board contractor. With a heavy heart, he told

his now ex-painter no deal. They parted ways.

Then Westbrook Construction’s Fallion Street job went south. Jesse was four weeks late and about two mistakes away from getting a lawyer’s letter to pack up his tools and leave the site. The finishes were high end and the relationship was in the dumpster– just the kind of situation Jesse had always thrived in. Jesse phoned John, almost begging him to bale him out.

“I’ll do it,” said John, “but you know how I work now.”

Jesse has a CRA installment of $15,000 coming due and it wasn’t getting paid without a progress payment from the Fallion Street job.

And THAT wasn’t happening without Able Painting’s influence.

What would you do if you were Jesse?

See the options at right.

LAST ISSUE’S WINNER – “POT OF GOLD” In our last issue, odd jobs man Henry Bugden is offered a job as full time Property Manager, Zoller Jewelry, by one of his odd jobs clients, Gunther Zoller. It will double his annual income. But Gunther wants him to work half the time for Mrs. Zoller, Mathilde, at the Zoller mansion. And ditch all his existing odd job clients. We asked you if Henry should take the job.

Here is the winning entry, from Wayne Jackson, Wayne Jackson Handyman Services, Amherstburg, Ont. “My advice to Henry would be to thank Mr. Zoller for his offer and let him know he would be happy to take care of his work, as he does with all his other clients, but he is not prepared to take on the position of working strictly for him and his wife. Putting all your eggs in one basket can be disastrous in this business. What if Mr. Zoller goes bankrupt, or his wife doesn’t like Henry, or Zolller drops dead?”

WHAT SHOULD JESSE DO? 1. Hire John, pay him cash and let him fix the client relationship.

2. Find another painter, pay the CRA late, risk the job and pay the late penalty.

3. Try to convince John to become an employee, have him complete the job and pay the CRA. 4. Convince John to work this job legit, and offer to help him clear up his financial problems some other way.

5. Report John to CRA, WSIB and MOL.

WIN!

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

HOW TO ENTER Send the number that matches your best answer, with your comments, to Rob Koci at: rkoci@canadiancontractor.ca.

We will select what we think is the most sensible answer and send a ΔDEWALT cordless framing

58

March/April 2015

www.canadiancontractor.ca

nailer to the winner.

INTRODUCING DEWALT’S LINE OF LIGHTWEIGHT CORDLESS TOOLS - XR. THE DEWALT XR LINE WAS DESIGNED TO COMBINE THE ADVANCED TECHNOLOGY OF A BRUSHLESS MOTOR SYSTEM AND THE POWER SUPPLIED

BY THE HIGH CAPACITY XR LITHIUM ION BATTERIES TO PROVIDE EXTREME RUNTIME ON ANY JOBSITE. GET MORE DONE. GET DEWALT XR. Copyright ©2015 DEWALT. The following are examples of trademarks for one or more DEWALT power tools and accessories: The yellow and black color scheme; the “D”-shaped air intake grill; the array of pyramids on the handgrip; the kit box configuration; and the array of lozenge-shaped humps on the surface of the tool. *With respect to the DEWALT 20V MAX*: Maximum initial battery voltage (measured without a workload) is 20 volts. Nominal voltage is 18.