CANADIAN CONTRACTOR JFEB 2012

East Coast

Builders

Show Their Style

BUILD | GROW | PROFIT

CONTRACTOR

CANADIAN

the Perfect

PORCH Prevent Leaks:

your Dry Basement Formula

Page 44

special report

4th Annual

Salary Survey Page 38

PROFIT Not a dirty word

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CONTENTS

20

features B

BUILD

The Perfect Porch

32

What do you get when your customer tells you what they want, tosses you the keys and leaves for two months?

G

GROW

A Software REVOLUTION

24

The “do everything” software is here...or is it?

P

PROFIT

Special Report SALARY SURVEY

38

For the fourth year in a row Canadian Contractor magazine brings you the facts on who you are and what you earn.

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CONTENTS

CONTENTS

distractions Editorial 08 Life: "Nasty, brutish and short"

Voices 08 Victoria Downing; Mike Draper; Glen Gutek; Becky Freeman Site Notes 16 Blankies for concrete; Cottages for Granny; Bottles for houses;

The

perfect 32

porch

departments Creative Eye 18 East Coast builders show their style

50

P

Win me!

Contractor U 29 Profit: Not a dirty word

B Stuff We Like 44 Preventing leaks: Your dry basement formula Products 48 Trex...Moen...Bosch

48

What’d it Cost? 50 Enter to win a 72" Irwin box beam level canadiancontractor.ca

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ONLINE

ONLINE @

Head to the Web for more exclusive stories and videos…

@

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CONTRACTOR BUILD | GROW | PROFIT

CONTRACTOR DAILY

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Take less than two minutes each day to check out our exclusive daily video that contains opinions, interviews and interactions with contractors in the field!

FEATURES Go Rici’s Construct Canada Reno Roundtable: In this multi-part series your peers discuss the issues and trends of the industry.

WEEKLY E-NEWSLETTER Don’t have time to surf the web every day? Subscribe to our free weekly e-newsletter and stay up to date on current trends, stories and expert opinions.

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CONTRACTOR BUILD | GROW | PROFIT

Volume 13, Number 1 Print 1, Released February 2012 canadiancontractor.ca | Tel: 416 442 5600 | Fax: 416 510 5140 80 Valleybrook Drive, North York, ON, M3B 2S9 Canadian Contractor, established in 2000, is published 6 times a year by BIG Magazines LP, a division of Glacier BIG Holdings Company Ltd.

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Editor: Robert Koci rkoci@canadiancontractor.ca Art Directors: Mary Peligra, Ellie Robinson Publisher: Stephen Dempsey sdempsey@bizinfogroup.ca Production Manager: Barb Vowles vowlesb@bizinfogroup.ca Circulation Manager: Beata Olechnowicz

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YOU CHOSE TREX.® NOT “JUST AS GOOD AS TREX.” AND THAT MADE ALL THE DIFFERENCE. LIFE DECKING RAILING LIGHTING STEEL FRAMING FURNITURE PERGOLA DESIGN TREXPARTNERS.COM

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TRUE

DISTRACTIONS

In leadership, leaders must

“

“

Understand your leadership style

The charismatic leader is an excellent vision-caster and can elicit a loyal and passionate following.

Glenn Gutek

understand this simple truth: style does matter.

By Glenn Gutek

The distinctions of leadership styles could be endless; however, the following six styles are the most prominent in the workforce today.

Charismatic: This is leadership by infusion of energy often embodied in the personality of the leader. The energy ushered in by this leader is closely connected to the leader himself. Once Elvis leaves the building, so does some

OUR INTERSECTION In war you need allies

By Rob Koci

Thomas Hobbes, a philosopher of the 18th century, talked straight. When he wrote these words, he was describing life during war. He goes on: “In such condition, there is no place for Industry; … no commodious Building; … no Knowledge of the face of the Earth; no account of Time; no Arts; no Letters; no Society; and which is worst of all, continual fear, and danger of violent death…”

In other words, war is not a very good condition within which to prosper or get things done, like build homes, do renovations or make money.

As a nation, we are not at war. But there are wars; internal, personal wars forced by difficult choices; immediate

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wars on the job site or in the office with dueling subtrades or uncooperative employees; industry wars between unscrupulous builders and honest ones or between you and your competition over a shrinking market.

These wars require a strategy. A powerful one is suggested in the book, The Art of War, written by a brilliant general of Chinese history, Sun Tzu; “On the ground of intersecting highways, join hands with your allies.” In other words, where your interests “intersect” with another, recognize the value of alliance and exploit it to advantage.

In my war, I see an intersection and it is within the pages and on the website of Canadian Contractor. It’s

br

DISTRACTIONS

Technician: This is leadership by displaying both knowledge and skill. This style is highly valued in cultures where

“Life is nasty, brutish and short.” thomas hobbes

where you are now, reading this. I suggest an alliance. My commodity is information, a key component of waging war. My interest is your attention.

My victory is “readership,” “eyeballs,” “page views” and “opens.” Your victory is profit. What information do you need to achieve it? In these brutish times, I suggest an alliance; Tell me how you think we can make one happen. rkoci@canadiancontractor.ca and canadiancontractor.ca

competence is high in economic value. Some leaders who strongly employ this style can in time be a little like the “Wizard of Oz,” hiding behind the curtain, pulling strings, leaving everyone to wonder “how does he/she do it?” Nobody can argue with the value quality plays in any arena. Keep in mind there is a distinction between leading the best, and being the best.

Voices

of that infectious energy. The downside of this leadership is the reality that some teams don’t need to speed things up, but rather slow things down.

The charismatic leader is an excellent vision-caster and elicits a loyal and passionate following. Where this style will often fall short is in attention to details.

Strategic: This is leadership by connecting the dots. This style is embodied in people who tend to be global and conceptual thinkers.

They are not only able to see the end destination, but they know the path to get there must be identified and paved. Tragically, this style can be marred by the blues.

Team Builder: Here, leadership is by roles and unity. This style recognizes that you can’t just assemble any group of people and claim you have a team. This leadership style is employed by people who look at people individually and find individual roles for them to fill.

Managerial: This is leadership by systems. This style focuses on doing things right. Processes and systems are designed and understood so that current operations function consistently. Though some would argue that managers are not leaders, you have to acknowledge that effective managers have a profound influence on those that surround them. In fact, they have the capacity to lead a culture that prizes management, even at the expense of effectiveness.

Directive: Here we have leadership by control. This style was once enamored with the industrial revolution. Any organization in crisis would love to have a directive leader step forward and bring order out of chaos. There is still a need for directive leaders.

Glenn Gutek is a speaker and CEO of Awake Consulting & Coaching, a firm that helps small businesses and organizations improve their leadership and business development.

Contact Glenn at glenn@awakeconsulting.com.

This is an abridged version of his column posted at canadiancontractor.ca on the Guest Voices page.

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DISTRACTIONS

“

“

There are three basic rules of charging properly.

Ian Szabo

Building to minimum code Sometimes, it’s the smart thing to do

By Ian Szabo

Some renovation reality shows promote using screws instead of nails in the framing process.

The argument is that screws stay tight longer and hold better. That may be true, but the minimum code for framing is nails.

Let me ask you this: how many nails could you put in while framing in the same amount of time it would take to put in one screw? By using a nail gun, I estimate I could put in five to 10 in the same time as one screw.

Using screws is a great idea in theory, but if it were absolutely necessary it would be minimum code to use screws. Sadly, I see contractors doing this kind of thing because they fear they’ll be looked down upon or lose 10

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business if they don’t. Buying into this kind of hype can have a negative effect on our ability to operate a successful contracting business. Most of the time, you should stick to minimum code, and if you customer demands a newfangled process or material, learn how to properly charge for it.

There are three basic rules of charging properly: 1) Know your minimum code expenses – For each aspect of a renovation or construction job, you must know how much it costs and how much you must charge to cover the cost. You must know it very clearly and be able to show customers the proof.

2) Charge appropriately for materials – Whenever a customer demands an expensive product, you must charge accordingly. If your baseline cost for paint is $15 per gallon, and you customer demands $50 per gallon paint, then you must charge $35 per gallon more than normal. Show the difference to your customer on your quote.

3) Charge appropriately for processes – This is the one that trips up a lot of us because we don’t often realize the extra time needed for different processes. The above example (using screws for framing rather than nails) would mean you have to charge 5 to 10 times as much for the labour of putting together the studs.

Ian Szabo is an author, renovator and president of Flip School. www.flipschool.ca. For more from Ian, go to the Voices page of canadiancontractor.ca

DISTRACTIONS

learning from excellent instructors in fabulous shops all through elementary and high school.

The building business will never be what it should be if the best young people are siphoned off to “something better” right after the grade eight prom.

The goodness of shop class The renovation business isn’t the sector where the brightest, hardest working and most creative young people invest their lives.

Steve Maxwell is Canadian Contractor’s tools editor, a freelance writer for the renovation industry and

Why is that?

By Steve Maxwell

“Canada’s Handiest Man.” He lives in Evansville on Manitoulin Island, Ontario. www.stevemaxwell.ca

Don’t try to act like one

By Becky Freeman BASc, ID

Encouraging your client to hire an interior designer is like finding a gratis organizational maven for them. An interior designer becomes a quick, go-to reference guide for all details like material finishes, dimensions, etc.

Many times I’ve heard contractors express frustration at the distraction of having to act like the designer to help choose finishes, colours, layout etc. As a contractor, you are inherently good at knowing how to orchestrate and deliver the bricks and mortar. Having to deal with designer choices brings down your productivity and leaves you uncomfortably accountable if the client

The state of skills training in the Ontario schools I know, is a sad joke.

Steve Maxwell

is not satisfied with your suggestions.

When you suggest to your customer to use a designer, you send two clear messages; you are not going to ‘play’ designer, and interior designers are professionals that will bring value to the project. The opportunity can also be reversed when your designer refers you to their clients to carry out the installation they are designing. I have yet to see where this partnership has gone awry. Each professional is leveraging each other’s skills to build a successful project and earn a very happy client in the end.

Becky Freeman is an interior designer living in Toronto. www.beckyfreeman.com

“

Having to deal with designer choices brings down your productivity and leaves you uncomfortably accountable if the client is not satisfied.

Becky Freeman canadiancontractor.ca

“

You are not an interior designer

“

“

Is it money that drives the smartest kids towards office jobs and suits? Do young people even know they can enjoy a great life building good things?

The social supremacy of white collar work bugs me, mostly because it lures so much talent from where it should be. The last 25 years of national whining about the shortage of skilled trades in Canada hasn’t accomplished anything either, and watching my five kids go through school I can see why. The state of skills training in the Ontario schools I know, is a sad joke – much worse than when I spent time

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DISTRACTIONS

Victoria Downing

“

“

Hiring superstars is a skill.

What your parents never taught you about business If you learn these lessons, you won’t go wrong, and your kids will go to college.

By Victoria Downing

Having worked in and around renovating and renovators for 20 years, there are some important truths I have gleaned about this wild and wooley business. They aren’t neat and they aren’t obvious but they are true.

1. Running a renovation business is not intuitive. Yes, you can get a long way by following your gut... but if you focus on continual learning and becoming a true business person, you’ll find your results multiplying quickly. So gobble up knowledge by being out and about; talking to peers, going to conferences, reading books both within and outside the industry and listening to 12

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webinars and teleseminars whenever you can.

2. Learning to manage by your company’s performance metrics is a piece of cake. If you are going to succeed, you will have to master this.

It isn’t nearly as hard as you think so get going. Sit beside an accountant who speaks your language, take a course, buy a book that specializes in financial management for non-financial people, or do whatever it takes.

3. Hiring superstars is a skill. When you begin hiring employees, you’ll probably hire and fire three to five people or more before you find your superstar. You can substantially improve your hiring skills through–what else–education. Start by developing job descriptions, a policy manual, interview questions and an innovative and marketing-oriented recruitment program.

4. You can buy systems but you can’t buy systematization. Getting organized is a journey that never ends–it is not a destination. It’s a discipline that begins with the owner and then flows through the rest of the company. Companies that use systems to create predictable results are the companies that are the most profitable, have the most satisfied clients, and have employees that thrive. And remember, great employees aren’t driven by money but by appreciation for their contributions to the business.

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DISTRACTIONS

5. Renovators who care about their employees, care about their clients.

Client concern and employee concern are hard to fake. It all comes down to whether you believe people are basically good and honest.

this crazy business, but once you’ve got things humming, your sturdy company will put your kids and your employees’ kids through college, and build you and them a great retirement nest egg. It’s worth learning.

6. When it comes to money, never forget that you deserve to make a good living.

Make sure that you truly understand the right pricing model for your business and never feel badly about asking for it.

Never hesitate to walk away if the client doesn’t value your service.

The learning curve may be steep in

Victoria Downing is president of Remodelers Advantage Inc., a company dedicated to helping renovators be successful at all levels of business. Visit www.Remodelers Advantage.com. More comment from Victoria can be found on the Voices page of canadiancontractor.ca

The final payment Protect your final payment by finishing well

By Mike Draper

I was chatting with some people at a neighbourhood party who had just completed renovations to their homes. Both of them had similar experiences but had used different contractors. Both said the work was great, but unfortunately the relationship ended on a sour note.

Both commented how happy they were with the work that the contractor was doing and how the contractor was keeping them in the loop throughout the project. They would pay the contractor on a regular basis and the work continued along as expected.

Problems started to come up near the end. When 90 to 95 per cent of the work was completed both had to push hard to get the contractor to finish. Why was this happening to two different people with two different contractors, I wondered?

After much discussion, we realized that the communication between them and the contractor was the problem.

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It started to break down because everyone's trust was beginning to break down. The homeowners didn’t trust that if they made the final payment, the last small details would get done and the contractor didn’t trust that the homeowner would make the final payment.

Wow, I thought. All that relationship that was built up during the project is being thrown out the window, along with the opportunity for the contractor to generate referrals and repeat business from a happy homeowner.

How do you solve this? Unless there are heavy warning signs, you should work hard to finish the project on time.

Like fine millwork, the satisfaction is in the quality of the final finish. Don’t throw all your hard work away and the opportunity for referrals by not following through on the finish. There is far less risk on the final payment when the work is completed as promised. Stay in constant communication with the homeowner about what is left to complete the project, when it will be completed and how much you are expecting to be paid on completion. Doing so, will get you paid faster, give you another happy customer and more repeat business from their referrals.

Mike Draper is a business coach for Renovantage and a frequent contributor to Canadian Contractor. www.renovantage.ca

DISTRACTIONS

Reiner’s house A video of our visit to Reiner Hoyer’s Passive House in Toronto inspired these online comments “Since Passsivhaus is such a bizarre concept here in Canada (What? No furnace?) may I suggest what we really want is much more talk of benefits. Technical specs on thick insulation is a feature (Boring-yawn!). Having no fear of baby death from carbon monoxide poisoning or explosion from gas furnace leak is a benefit (Exciting-yeah).

People don’t buy features, they buy benefits. Trying to sell more

insulation (a feature) starts the return-on-investment argument you can’t win.

David Zwarych “Great story and one that needs to get more attention. It is not always about the mechanical systems, but rather retaining the heat that is generated within the spaces and gained through passive solar.”

Brian Baker

killed his on-site business and pushed work underground and offshore. A number of readers commented: “The whole western world has been pillaged by high union wages, which have really undermined the usefulness of unions. Only government workers and union workers can afford these kind of labour costs.”

Ray

How unions encourage the cash economy We posted a letter to the editor from Jim VanderWal, president

Make your voice heard on any topic that concerns the renovation or custom homebuilding business.

Go to canadiancontractor.ca and

of VanderWall Homes and Commercial Group in Petrolia, Ontario telling the story of how the Carpenter’s Union in Ontario

use the “comments” boxes below any story posted. Don’t worry about your writing: we’ll edit for length and grammar.

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YourVoice

canadiancontractor.ca your voice online

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SITE NOTES

By Rob Koci Construction blankie You’re not the only one that needs to stay warm in winter. Concrete and machinery could use a hot cup of cocoa and maybe even a blanket now and then to ward off the elements. A U.S. company now sells the Powerblanket, an electric blanket for your tools, equipment and concrete for just such a purpose.

Concrete is the most likely beneficiary of this cosy warmer.

Tests show concrete will get to higher psi levels quicker when cured under a Powerblanket.

The blankets come in several different sizes and are rated to perform in temperatures as low as -40C. They are powered by 120v electricity, which eliminates the need for open flame heaters. We’re not sure why Powerblanket is better than good old straw, except that we are pretty sure Powerblankets won¹t be eaten by the local livestock when you’re not looking.

Granny in the backyard As Canadians get older and their children get busier, it becomes harder for the children to provide the care their parents need. Couple that with general reluctance of both parents and kids to live together at that point in their lives and you have a problem in need of a solution.

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U.S. builder Nationwide Custom Homes has developed a mini home it calls the Care Cottage to help out and (no doubt) keep the Committee of Adjustment departments in cities across Canada scratching their heads.

These cottages are designed to be placed on existing properties as grannie flat homes where elderly parents or the disabled can be cared for by their families and enjoy a measure of independence as well. It is a beautiful, human idea if it can get past bureaucratic building inspectors and antiquated bylaws. Go to www.nationwide-homes.com then search ”Care Cottages.’‘ Canadian world beaters The 2011 worldskills competition in London ended in October with Canadians taking four medals and 17 Medallions of Excellence.

Top construction-related skills contestants were Ontario’s Jonathan Sinke who took home a

bronze medal for cabinetmaking and Quebec bricklayer Nicolas Richard and HVACer Sean Donnan of Alberta who both won a medal of excellence.

Well done, guys. We’ll see you on the job site. www.skillscanada.com Down a bottle, build a house Smartboard, a Canadian construction materials company, is using a revolutionary cement wall system to build homes for thousands of families in thirdworld countries, including Haiti’s relief effort. Lightweight and weather-resistant, the cement boards are made from postconsumer recycled glass. Not only is it a sustainable material, but the lightweight easy to install system allows thousands of homes to be constructed in the time it would typically take to build 50. Great for LEED credits, the environment and the developing world. Drink up, save the world.

SITE NOTES

Brick works “A recent study shows that 89 per cent of homebuyers prefer a home built with the beauty of masonry,” says the Association of Aluminum Siding Installers of Canada who commissioned the survey.

Kidding. Actually the new homebuyers survey was commissioned by MasonryWorx, an organization “committed to providing homebuyers, homeowners, architects,

engineers, builders and government leaders with current information about the use and benefits of brick, block and stone masonry products.” Just imagine the odds of this survey coming out so heavily in favour of using brick? Amazing. The study was

because we wanted to ask you if you have tried Liquid Nails and, if so, what you thought of it? We remember using it a long time ago. Back then, it was thought of as a consumer product and something only rookie contractors would use.

Is that still the case? What do you consider the best

conducted using The Pollara Townhall, an online panel of more than 250,000 Canadians, recruited entirely from randomdigit-dial telephone surveys. www.masonryworx.ca

application for it? If you tell us the truth (and we know when you’re not), we’ll send you a few tubes to say thank you. Email rkoci@ canadiancontractor.ca or go to our website, find Liquid Nails under the Products tab and leave a comment.

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THE CREATIVE EYE

East Coast

STYLE Not just lobster pots and clapboard

DELMAR CONSTRUCTION LTD. YARMOUTH, NOVA SCOTIA

“The overhang out over front fin is about 40 feet. We had to build scaffolding 50 feet above the beach to install the structural steel.

One of the biggest challenges was installing the prefinished exterior siding. Normally, you put it up and nail it. This stuff was like furniture.

Every nail was set individually.”

We are commercial builders, but no residential builder would touch the project. That’s how we got involved.”

Avery Amirault, estimator/project manager, Delmar Construction Ltd.

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THE CREATIVE EYE

Photo: Greg Richardson Photography Architects: MacKay-Lyons Sweetapple Architects

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THE CREATIVE EYE

LANDMARK MANAGEMENT INC. HALIFAX, NOVA SCOTIA "The most dramatic feature of this home is the Great Room. It faces Prospect Bay and is wrapped on three sides by continuous eight foot windows.

Structurally, the timber frames above the windows sat on LVLs with the windows underneath.

It provides an incredible view of the bay and the feeling that you are connected to the outside."

Douglas Reid, president Landmark Management Inc.

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THE CREATIVE EYE

Photo: Greg Richardson Photography Architects: MacKay-Lyons Sweetapple Architects

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THE CREATIVE EYE

GARIAN CONSTRUCTION LTD. YARMOUTH, NOVA SCOTIA The project was fast tracked. “It began with only basic sketches and a budget...actual building plans developed as we constructed.

The design developed as we progressed.

We had never done a project of this style before the owners approached us and we are very proud of the results. Both the owners and the architects were great to work with.

Ian McNicol, president/owner Garian Construction Ltd.

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THE CREATIVE EYE

Photo: Greg Richardson Photography Architects: MacKay-Lyons Sweetapple Architects

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DESIGN BUILD

a software The “do everything” software you dream about is here, but it’s not exactly plug and play

By Bruce MacKinnon headaches as he prepares to expand his business dramatically. “DesignBuild depends heavily on the internet, smart phones and tablets to be effective,” says Foot. “It seems intimidating at first, but once you get used to it, technology saves a lot of time. This product (the BuildTools software) is a logical progression for us and the next step for technology in the construction industry.”

Andy Foot and Pete Koladich, Dwell Design Build Inc. Photo: Arnal Photography

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BuildTools (www.buildtools. com) is about to change the way renovators run their businesses and Dwell Design Build Inc. of Toronto is its first beachhead in Canada.

Andy Foot, partner of Dwell Design Build Inc., says he is looking forward to getting rid of red tape, piles of paperwork and endless administrative

How the software works BuildTools in an online tool that starts with the contract between the renovator and the client.

All its components (schedule, Bill of Materials, payments, etc.) are put in categories and the categories are password protected according to the access needs of everyone involved. The amount of access for each trade, supplier or employee is determined beforehand by Foot and/or his partner in Dwell Design Build, Pete Koladich.

Once Foot gets the specs for the proposed job from the

DESIGN BUILD

“This will revolutionize the way business is done.”

Chad Mayes, director of business development at BuildTools.com

customer or architect, he sends emails through the BuildTools site to the trades and suppliers, giving them access to files appropriate to their involvement so they can submit their bids.

“Once the bidder receives the email and clicks on the link, it takes him to the system and not to me. They just follow the directions and enter in their data,” Foot says. One of the advantages of conducting the bidding process through BuildTools is that Foot can see the activity around each bid on the site in real time. He can tell if a subtrade is interested in bidding by whether they are downloading the information, or asking follow up questions or confirming their attendance at the pre-bid site meeting.

Once a subcontractor works up a price, he can submit his bid online where Foot then studies the details. Questions can be sent back and forth via email and then, once a bid is accepted, the program will send an email to the trade or supplier confirming they are

the successful bidder and then provide the project schedule.

“It’s not that hard to use really, and it gives us an advantage over a lot of other builders who are not as eager to accept technology-driven systems like this,“ Foot says. “My partner Pete Koladich and I come from high-tech backgrounds (in the software industry) and so we really appreciate this.

“Our main leverage in this business is our ability to incorporate high-tech solutions in our design and build process. We have gratefully embraced new technology like BuildTools and 3-D rendering. We also use job clocks on all of our smart phones to punch in and out, and use job cost codes. As well, all of us are using iPads to track everything.”

New tech tools Chad Mayes, director of business development at BuildTools.com, says the building industry has always lagged behind in technology. But the advent of mobile tools like the iPad and smart phones have

made emerging technologies more user friendly and easier to incorporate. “This will revolutionize the way business is done. We used to have to rush to the nearest phone to answer our pager messages, then the cell phone made it so much easier to stay in touch and to communicate better and faster,” Mayes says. “And now we have BuildTools, which puts all the information you can possibly need right in front of you immediately. Now everyone has the same starting point and can always be current with the right information, within minutes, not days.”

BuildTools provides a detailed change order history, with a view history and list of approvals and rejections. Subs can’t say they didn't agree to a price when the record shows all. Mayes believes BuildTools will help contractors stay competitive or even give them an edge in an industry where not everyone is tech savvy.

In an industry with so little profit margin, any advantage can help a business grow.

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25

DESIGN BUILD

BuildTools has a full feature change order module. Once the change order has been electronically approved by the client, BuildTools updates the budget automatically.

Tech clarity “This literally takes all the ’yousaid-he-said’ out of the mix and clarifies the entire estimating and building process,” Mayes says. “For example, the minute I update the plans, specs, schedule or documents, my carpenter in the field will be notified by the system and will see the changes.”

The software was developed by builder Sven Gustafson (Chad’s partner) to clear up the endless details that plague the renovation business. Within the website’s layout are tabs that include Dashboard, Messages, Tasks, Schedule, Documents, Budget, Selections, Change Orders, Financial and Service.

They give the builder the ability to manage all aspects of the job. For instance, with finances he monitors his draw requirements as per the contract and his invoicing. In the project management module, he manages the punch list and warrantee issues. Schedules and completion dates are all

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input so he has a constant record of every task ordered and completed.

Change orders “Each change order entered and approved automatically changes the budget so the client and contractor can see exactly where they are,” Mayes says.

“Designers can interact with the system to keep the project current and people on task.

Everyone gets a change order summary, which saves a lot of running around.”

There are numerous views within the software: Project Tracker, Initial Costs, Current Costs and Percent Complete.

Program-generated messages broadcast the schedule and create and then assign tasks for every trade and supplier.

Meanwhile documents, gantt (bar) charts and a general overview for each project are a few clicks away. Each trade can input their own relevant information to the website, too, which adjusts the schedule chart

to reflect reality. And it all gets republished immediately.

Simplify systems Every contractor knows the fastest way to promote company growth is to simplify systems and remove things that choke out growth, such as chasing approvals for change orders.

“One of the bigger things in the building industry is change order management,” Foot says.

“Here we can update items the customer has agreed to immediately, often right in front of them.”

There are literally hundreds of decisions to be made regarding fixtures, paint colour, carpentry finishes, location of walls, wiring systems, HVAC issues, that could involve half a dozen trades. BuildTools tracks all of them and provides a running record of each decision by those involved.

DESIGN BUILD

“BuildTools helps us improve client satisfaction and streamline communication with everyone involved. Computer savvy trades will be able to bid on our jobs from now on.”

Andy Foot, Dwell Design Build.

The customer’s view The customer can log into the client portal online and check all of the changes pending approval, then click on them to approve them or comment if they need correction. BuildTools also lets the customer see their whole job at a glance. The most popular view being where the client can see a budget increase on change order approval as soon as they confirm them.

As part of the implementation, Dwell Design Build is using BuildTools with a client as a Beta test. So far, the client is loving it. “The more information and communication you have with a client, the happier they are,” Foot says. “BuildTools helps us improve client satisfaction and streamline communication with everyone involved. This makes it obvious that only somewhat computer savvy trades will be able to bid on our jobs from now on.”

The transition “You have to have a fairly open mind as to how to incorporate BuildTools,” says Foot. The challenge is in the setup process since it covers every element of a renovation business. In the case of Dwell Design Build, it helped a bit that so much of their processes were already computerized, but it hurt, too. “When we started, we decided to start with our own categories but we quickly had to back up and use their system.

Our original system used 16 categories, but we found we needed to segment off each trade into its own category.

BuildTools’ framework is much more detailed, with 50 to 60 categories and codes, which really drills down to every detail of a project.” Foot is integrating the system slowly at first to find out what customers, managers and subs need to see. There is still fine tuning to do.

Not for the faint heart “If you are not computer savvy,

this is a big thing to bite off, and therein lies the challenge,“ Foot says. “It’s important to understand how windows-type computer models work.” So far, however, feedback from trades, suppliers and customers has been positive. “No one has to come to the office to pick up documents and they all can see how the job is progressing by going online,“ explains Foot.

“The program will automatically send an email notification a week or two ahead of time to let the trades know when to start.

The trades love this. BuildTools saves everyone a lot of time and they then have no excuse not to show. It allows us to be tighter on the schedule.

“Last of all, this helps pop out the punch list for us, and all the straggling items. The client could log in to report a warranty issue, which would then be sent to the appropriate trade. It can be dealt with, logged in and then signed off by the client. End of story, end of job. Neat and efficient.” cc

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27

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1/16/12 3:44 PM

$

CONTRACTOR U

Time to

profit

This T his year Contractor U will focus on profit. We will explore what profit really is, why you need to make a profit and how to make more.

What profit is not Profit is not “How much can you squeeze out of this homeowner?” It is, however, about how to squeeze more out of your business by making it better. How can you make your business more systemized so that it runs more efficiently? How can you reduce your costs, yet still deliver on your commitments and standards? How can you sell projects with higher value? These are some of the questions to ask yourself when you look at making more profit.

Key numbers There are three key numbers that every business owner must look at when assessing if their business is making enough profit. Only when you understand these three numbers can you evaluate your profit. You deserve to make a fair profit and must structure your business to do so.

The first number is how much you need to pay yourself for the work you do for the company.

Second, how much profit the business makes in relation to the company’s sales and finally, what return on investment (ROI) you receive for the money that you have invested in the company.

PART I

Profit is not a dirty word. In fact, it is a great word!

Other than freedom, there isn’t any other reason for running a contracting business.

But, what exactly is profit?

By Mike Draper

Gross and net profit This is the perfect time to talk about gross profit versus net profit. They are not the same thing. Gross profit is the difference between revenue and job costs before deducting overhead expenses such as office rent, phones, vehicles, insurance, office expenses and supplies, computers, accounting and bookkeeping, interest payments and the like. Net profit is what is left after subtracting all job costs and overhead expenses. Here is an example:

Wages are wages, not profit Revenue (total billings to clients)

$800,000

Job costs $560,000 (total materials, labour, sub-trades, licenses) Gross profit

$240,000

Gross profit % ($240,000/$800,000)

30

Overhead expenses (must include owner’s salary)

$160,000

Net profit

$ 80,000

Net profit %

10

($80,000/$800,000)

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29

CONTRACTOR U

You should pay yourself a competitive wage or salary for all of the jobs that you and your family members perform. These wages are not profit!

You are performing duties that are necessary for your company to sell and deliver services to your customers. Somebody has to do the work. Profit is what is left after all expenses have been paid, including the owners salary and those of family members who work for the company.

Here are a few guidelines as to how much you should pay to have various tasks performed in your company. The amounts suggested are what a typical renovation company pays as a percent of revenue:

Job supervision or project management

4%

Sales

5-7%

Bookkeeping

1-2%

Owners salary

6-8%

Total

16-21%

Let’s go back to our example where the business generated $800,000 in sales. If you are the owner and you are performing all of these functions yourself, I guarantee that you are not working 40 hours a week. Most likely you are working 60 hours per week or more. If you are doing the equivalent of two full-time jobs, you need to pay yourself accordingly. In our example of an $800,000 business where the owner performs project management, sales, bookkeeping and the entire normal business owner tasks, the owner should be paid a salary between $128,000 and $168,000.

Think about it. Could you hire two people to do all of that work for $128,000 per year? I doubt it.

The break even point The break-even point is when your total sales match your total expenses. The cost of the work

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that you do must be included when looking at your break-even point. To calculate break even, use this simple formula: Overhead costs/percent of gross profit = Break even point.

The break-even Point in our example is: $160,000/.30 = $533,333.

Return on sales The second area to review is how much profit does the business make in terms of return on sales (ROS)? Comparing profit to sales volume is not a calculation many contractors make. I am surprised, since this number is what enables you to make investments into your future growth. Without a ROS, the business can’t invest in its own future. And a business that is not growing will eventually die.

So what is the ROS number anyway? It is a simple calculation done by taking your net profit and dividing it by your sales. Show the result as a percentage and that is your ROS number.

In the example above, after the owner paid himself for the work he had done and covered all overhead expenses, his business made a return of 10 per cent. You should target eight per cent as the lowest percentage that your company should make, while 10 per cent is okay and 15 per cent is considered healthy. At 10 per cent, your company has money to invest in its future and can give shareholders a return on their investment. You might need to redo your website, buy a new truck, and invest in marketing to fuel your growth or hire a project manager so you can reduce your hours to a more manageable level. Whatever the reason, you need to be making a respectable ROS. Return on investment The third number represents the return on any money that has been invested in your company.

There might be a lot of reasons why you have money in your business. You might have bought the company tools with your personal credit cards and not paid yourself back. You probably needed

CONTRACTOR U

start-up capital money when you first started. You might have put in personal money to help with cash flow. If you have any of your money invested in the business, then the business needs to be able to generate enough profit to pay you a competitive ROI. After all, if the company had to borrow the money from the bank instead of you, the company would have to pay interest on the money. Now you might be thinking “I had to make the investment because the bank wouldn’t lend my business the money.” Regardless of the reason, if you hadn’t lent the business the money it would be earning you a return somewhere else.

Here is an example of the profit that a well run business makes: • Business startup costs, $15,000 • Owner purchased some materials on a personal credit card, $20,000 • Costs to set up a home office and use of the business owner’s personal furniture and desk, bought a computer, etc., $5,000 • Owner’s capital injection to meet cash flow requirements, $25,000 • Owner worked for many years without adequate compensation (also known as “sweat equity”), $50,000 Owner’s total investment is $115,000.

Typically you would expect a three to four per cent return on ROI if you put your money in GIC’s, Canada Savings or Blue Chip Corporate Bonds.

You would probably want to earn seven per cent or more if you invested your money with a stock broker. Money invested in a small contracting business is significantly more risky than putting your money in the bank, so you need to earn a far greater return.

A well run business with consistent cash flows and profits could expect to sell their business for 2.5 to 3.5 times earnings. Most renovation companies are worth nothing because without the owner being there, there isn’t a business. As such, you could only attract outside investment in your business if you

were to offer at least a 20 per cent ROI. Typically, you would need to offer 30 to 40 per cent ROI to attract an outside investor. If that’s what you would need to pay for outside funds, that’s what you should make on your investment. In our example, you should earn between $34,500 and $46,000 on your $115,000 investment.

What profits are for Profits belong to the company and are typically used for the following: 1. Pay dividends to shareholders.

2. Retained in the company to pay for future investments in order to grow the company, such as hiring new employees, buying new technology or increased marketing expenditures.

3. Create a Capital Reserve Fund so that the business has enough cash to weather a downturn or a cash flow crunch (we recommend a Capital Reserve Fund).

This means you need to earn a sufficient gross profit to cover all of your overheads and still have an adequate net profit. If your salary is 16 to 21 per cent of revenue, add in all of your other overhead expenses and then you add 10 per cent for profit, you will typically need a 30 to 35 per cent gross profit.

In the next issue of Contractor U we will discuss how much markup you should charge for the same level of margin and profit. cc Mike Draper is a business coach for Renovantage and a fequent contributor to Canadian Contractor. www.renovantage.ca

This is an abridged version of the first installment of our six part series “Time to profit.” For the full story, go to canadiancontractor.ca

canadiancontractor.ca

$ Print 1, 2012

31

Before

THE PERFECT PORCH

“ make it perfect” Here’s the house, here’s the keys,

The challenge? Transform a classic Kelowna residence by replacing an existing porch with a large, covered veranda that would perfectly match the house’s traditional design.

The owner’s solution? Hire a tried-and-true contractor, outline the vision, toss him the keys and leave the country for two months. Contractor Ken Reid, owner of KSR Construction of Kelowna, B.C., admits he was “humbled” by the trust the client showed in him.

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By Jim Barnes

THE PERFECT PORCH

Design experience Reid has worked across Canada, mainly on residential and light commercial work. KSR has served Kelowna and surrounding areas since 1986, providing renovation, project management, design and general contracting services. Residential renovation is the firm’s bread-and-butter and almost all the work comes by word-of-mouth and referrals. Designbuild is a featured service, and Reid credits his experienced staff for giving him the time to focus on the design side of the business. “The design portion of the design-build business happened out of necessity, a number of years ago,” he explains. “We were finding, with clients who had hired designers and architects, that the drawings just weren’t complete enough.” Reid would offer his suggestions to clients and get an enthusiastic response. The next step was getting his ideas on paper. “I was constantly doing little hand sketches and that sort of thing to get my point across,” says Reid.

“I am self-taught as a designer. I’ve been a journeyman carpenter for 27 years.”

Change in lifestyle Several noteworthy projects over the years have involved large deck additions and the Ladner residence is one of the more significant, according to Reid. The owners gave KSR a general idea of what they wanted and then left the country. “They trusted my judgment and creativity more than I did!” says Reid with a laugh. “I take it as a huge compliment when someone talks to us about what they would like to do and then says they are going away for a couple of months – they’ll leave it with us,” says Reid. “It was like, ‘Have fun, guys,’ and off they went!” The home was a traditional “I-house,” sited near a brook on a 20-acre parcel of land surrounded by orchard and farmland

in Kelowna. The family had spent most of its time at the back of the house, until a large development began on a nearby property.

That led them to decide on finally expanding the front porch, long on their to-do list.

Process The total project cost in the $70,000 range and KSR completed the work, including interior and exterior painting, in just over three months. “We transformed the traditional exterior from a plain, concrete stoop with four-inch posts to a large, covered veranda with a recessed second floor deck accessed off both the master bedroom and a guest suite. I like to think we captured the look they wanted and still maintained the traditional look and feel of the home,” says Reid. He wanted to build something that would complement what was already there – not take away from it.

The permitting process went without a hitch, partly because it was such a large property. Work began early in the spring, with bad weather hampering things early on. “After that, it all went smoothly,” says Reid. It was very standard construction.

“The whole thing was based on pads and posts for the footings for the deck. The home had a basement, but we didn’t really impact that.” Drainage of the upper deck levels required some thought. “The drains are all concealed inside the porch columns and then tied into an underground dispersion system,” explains Reid.

Strong staff Some of KSR’s staff have been with Reid for quite a while. “They are very wellversed in handling the adverse situations that you occasionally run into when doing

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33

THE PERFECT PORCH

renovation additions,” says Reid. “One fellow has been doing this for close to 30 years now,” he explains. “They have a great wealth of knowledge and skills.” The result was a straightforward project that required no special equipment.

KSR usually employs from four to six people and Reid had four working on the Ladner residence, as well as subtrades.

The design process was interesting given the very open-handed mandate. “Things kind of pop up on the fly. With myself and the guys that I employ, the creativity

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canadiancontractor.ca

is very exciting,” says Reid.

“You can’t rule with an iron fist in these things, you have to be open to ideas, suggestions and criticism as well.”

A good example was the decision to add a second-story deck to the structure. That idea came out of a discussion about the roof height. “We said ‘Hey, this roof’s going to be a little high – how are we going to cut it in? It would be nice if we could knock it down flat,” says Reid. “That progressed into, ‘If it’s flat, why don’t we make it a deck?’”

It was crucial that the

concept complement the house’s traditional appearance. With the roof line going over top and tying into the second floor, it was visually and aesthetically important to balance everything.

There is a master bedroom on the left side of the deck and a guest bedroom on the rights side, explains Reid. “Just through evolution, we decided it would be nice to build a little deck off of those rooms.” KSR created a flat section of roof that was concealed inside the roof section. They took a couple of windows out, transferred them

“

RENOVATED

...Get MORE marketing mileage with Canadian Contractor MORE... Print

Exposure

MORE... years serving residential contractors and renovators

12 Years

MORE audited distribution MORE average # of readers per copy MORE Qualified Readers

29,023 4.3

MORE readers who requested to receive the magazine MORE magazines mailed by name, title and/or occupation MORE contractors re-qualified within the last 12 months

60% 98% 71% 76%

MORE contractors that visited the website of an advertiser

124,799

or supplier mentioned in Canadian Contractor

MORE contractors that recommend Canadian Contractor to others

70% Sources: Audit Bureau of Circulations • Publishers Data

MORE... Online

Engagement

MORE average page views per month MORE average unique visitors/month MORE average time on site MORE % returning visitors

6,777 1,830 2:32 43%

MORE e-newsletters sent to contractors MORE e-newsletters sent/year

14,000 45 Sources: Google Analytics • Cheetah Mail

“

I’m Steve... your residential construction and renovation marketing expert. Let me help you crush your 2012 marketing objectives with our proven results.

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THE PERFECT PORCH

indoors and put in a little dormer roof. “It just kind of helped to balance the whole structure,” says Reid.

Rustic look The owners wanted a rustic, natural look for the porch. “They didn’t want a high-end finish on it, because it’s a working farm.

They have everything from dirty shoes and boots to dogs on there. In fact, a horse made its way up there once!” he says.

The porch flooring is all 2x6 tongue-and-groove pine. The ceiling is tongue-and-groove cedar. “It’s all natural, with just some clear coat on it,” says Reid.

“All the shake siding out front is all-natural cedar shakes that were stained and applied.” The trims and finishes used were labour-intensive, explains Reid.

“There wasn’t much that we just could go out and purchase.

It was all created and crafted

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on-site,” he adds. But that was a positive for Reid and his team. “That’s what we take a lot of enjoyment out of – putting our own touches on these projects.”

The finishes turned out to be one of the challenges with the project, simply because of the springtime weather. “Once you get out of the rough framing and start on the actual finishes, keeping the finishes in good condition prior to getting the actual finish coat on them is a real challenge in bad weather,” says Reid. The protection of the finishes meant that a lot of the work had to be tarped. As well, KSR put plywood

THE PERFECT PORCH

shields over some of the wall finishes so workers could move material and tools around without worrying about denting or marking anything accidentally.

The porch also has recessed lighting throughout the deck as well as some lighting in the dormers on the upper balcony.

While not specifically aiming for a “green” project, the rustic look the clients wanted called for natural products and latexbased finishes, says Reid.

The acid test The project was definitely a highlight for the firm. “Without blowing our own horns, the work speaks for itself. It was a fun project. It was very humbling

to have a client trust your judgment and your creativity to the point where they left you completely on your own to transform their home,” says Reid.

It was one of those projects where you show up for work in the morning with a smile on your face. “The guys that work for us enjoy being able to put a little bit of their own creativity into the project,” says Reid.

The acid test was going to be the owners’ reaction when they returned from their trip. “Not having the owners around to bounce ideas off certainly lends itself to a bit of concern; you are really hoping that what you’re doing is going to work,”

says Reid.

The reaction? “We blew their socks off,” says Reid. “Their jaws dropped when they saw the house, for all the right reasons!”

Then, they offered what Reid considers to be one of the nicest compliments he could get: the clients said “It looks like it has always been there.”

Is there anything Reid would have done differently, given a second chance? “There isn’t much I would change on it. It was a neat progression of ideas that just kind of came together.” cc Jim Barnes is a Toronto-based freelance writer with more than 30 years of experience as a business journalist and editor.

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37

$$$$$$$$$

$

SALARY SURVEY

Who you are

What you earn For four years now Canadian Contractor has surveyed you, the Canadian renovation and

custom homebuilding contractor, to find out who you are and what you earn.

This year, we received 50 per cent more responses to our survey than for any other year. The respondents were older, and are making more money than ever. One third of you have only one site supervisor and one quarter of you use subtrades on fixed price contracts. Fifty-seven per cent of you are not members of some kind of association, and association members are holding the line on the amount of cash work they do.

How many site supervisors do you have?

Six to 10

3%

10+

1%

Three to Five

15%

None

Two

32%

15% One

35%

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canadiancontractor.ca

By Rob Koci

Who you are This year’s respondents reported that a little more than half of their income comes from renovations and improvements (55 per cent), while 19 per cent comes from home additions and 30 per cent comes from custom homebuilding ((numbers are averages of all respondent’s answers, so do not add up to 100 per cent cent).

How you do it A quarter of you have three jobs in progress at a time and 30 per cent have one or two. Twelve per cent report having 11 or more in progress at any one time.

The split of labour costs between your own forces and subtrades is close enough to call it 50/50, with employees getting the slightly higher percentage. When you hire subs, 56 per cent of your costs are tied into a fixed price contract, while 32 per cent come from time and materials contracts and 30 per cent from labour only agreements ((numbers are averages of all respondent’s answers, so do not add up to 100 per cent).

$$$$$$$$$ SALARY SURVEY

Experience This year’s additional respondents are coming from an older demographic. In 2010, 62 per cent of our survey claimed more than 20 years experience in

How many years have you worked in the residential construction industry?

38%

40 35 30 25 20 15 10 5 0

32% 26%

30%

29%

20% 12% 13%

<10 years

10-19 years 20-29 years

30 years+

the renovation business. Just one year later, that number is 67 per cent, with most of that number claiming more than 30 years experience. In fact, there is a steady rise in the “30 years or more” segment going back three years; from 26 per cent in 2009 to 30 per cent in 2010 and 38 per cent this year. Age wise, the number of respondents over the age of 50 jumped almost 10 per cent over last year.

That bodes well for the accuracy of the survey and is a testament to how seriously it is being taken by committed, long-term renovators.

Where is your business located?

2010 2011

80 70 50 40 30 20 10

6%

4%

0 Atlantic Canada

1%

5% 5%

4%

Quebec

Ontario

Association membership Here also, contractors reported consistent representation. Membership in some kind of building association increased one percentage point between last year and this year.

The underground economy This survey may be the only national survey that tries to shed some light on the cash economy. What

How many workers do you have that work by the hour, but are paid on invoice as an independent?

80 70 60 50 40 30 20 10 0

2009 2010

11%10%

Manitoba/ Alberta Saskatchewan

18% 14%

British Columbia

62% 63% 58%

2011

16% 15%

1

64% 58%

60

Education The level of education of our survey respondents has remained within the ranges set by previous surveys. Over the four years, those with less that high school education counted between seven and nine per cent, for high school graduates between 34 and 37 per cent, between 50 and 53 per cent for college or university degree levels, and between five and six per cent for post grad contractors.

11%

13%

10%

2

13%

9% 8% 7%

3-5

6% 3% 4%

>6

None

we are seeing is not necessarily good. Over the last three years—all post-recession years—the percentage of all contractors willing to do some cash work has steadily increased from 29 to 33 per cent. An interesting observation is the percentage of contractors that are members of an association that confessed to cash work stayed the same at 21 per cent versus last year. canadiancontractor.ca

Print 1, 2012

39

$$$$$$$$$ SALARY SURVEY

WHAT YOU EARN In general, the largest proportion of you are taking home between $51,000 and $75,000 per year.

How much did you personally take home?

50

43%

2009

40

2010 33%

Whatâ&#x20AC;&#x2122;s different this year is the drop in the number of contractors that are taking home less that $50,000 and the increase in those taking home more than $100,000.

33%

2011

30

Going hand in hand with the decline in gross sales, are the reasons for not making sufficient margins on a job. The trend that contractors reported on was a combination of errors in estimating (up 3 per cent over 2010) and cost of overruns (up 5 per cent versus last year). Competitive pressure saw a signicant drop and this may be tied to the increased decline in gross sales across the industry. If nothing else, your customerâ&#x20AC;&#x2122;s execessive demands have stayed consistent over the past three years.

40

Print 1, 2012

21%

20

17% 17%

17% 16%

10 0 Under $50,000

One of the most startling results of the survey is the increase in the number of contractors that are reporting a decrease in gross sales in 2011 versus any other year over year change.

Only 26% of contractors reported a decline in revenues in 2010 versus 2009 but 45% reported a decrease in 2011 versus 2010 with the the greatest margin being more than a 15% decline year over year.

27%

25% 24% 23%

$51,000 - $75,000

$76,000 - $100,000

Over $101,000

% change in gross sales versus prior year

60 60

54

2009

50 50

50

2010

45

45

2011

40 40

%

30 30 20 20 10 10

00

40 40 35 35 30 30 25 25 % 20 20 15 15 10 10 55 00

canadiancontractor.ca

30 26 21

19 14 13 9

11

11

13

16 11

9

14 13

12

12 11 5

8

7 7

19 20

4

11

5

3 2

Increase Increase Increase Increase Decrease Decrease Decrease Decrease Overall No Overall 1-5% 6-10% 11-15% >15% 1-5% 6-10% 11-15% >15% Increase Change Decrease

Which of the following is the main reason that you attribute to not making sufficient profit on a job?

38

28

2009

24

2010 16 16 15

17 16

18 15

14 10

2011 14 9

9

1

Competitive pressure keeping mark up low

Excessive demands of the customer

Errors in estimating

Cost overruns

Employee/ sub trade problems

2

1

Problems with suppliers

2

2

1

Poor money management

3

1 0

Errors in building

$$$$$$$$$ SALARY SURVEY

The internet What appeared to be a rapid move toward online presence last year has apparently stalled. Where the increase of contractors online that occurred between 2009 and 2010 was the biggest of any change we saw last year, there was no change at all from 2010 to 2011. The use of social networking also stalled. Both last year and this, only 33 per cent of online contractors use social media. The only difference recorded this year was within the group using social media. Last year 50 per cent of them used social media to market their companies.

This year, it’s up to 57 per cent.

And just to keep us all honest about the appeal of the internet, the number of you with websites actually fell by four percentage points from last year; 63 to 59 per cent.

Your challenges Marketing still eludes you somehow as it continues to score at the top of the “a-lot-or-some-difficulty” list of things that business owners deal with.

Fully 25 per cent of you are struggling with it.

After marketing and in order of difficulty are:

% who reported having a lot/some difficulty retaining employees or subtrades 35

35%

30

30%

25

27%

27%

2009

2010

2011

2012 Forecast

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As Canada’s preferred window and door manufacturer, we are committed to delivering expert advice and outstanding service for new build or renovation projects from coast to coast.

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-

Kelowna

-

Edmonton

-

Red

Deer

-

Calgar y

-

Lethbridge

-

Saskatoon

-

Regina

-

W innipeg

-

To r o n t o

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$$$$$$$$$ SALARY SURVEY

accounting and finance (12 per cent), administration (11 per cent), estimating (10 per cent). What you find easiest are project management, customer and employee/subtrade relationships.

How do you make more money?

Now the question is: what are the indicators that suggest you will make more money in renovations than someone else? We used $75,000 annual personal income as a watershed mark for our analysis and following are the key factors to earning more than that threshold.

3. More gross sales = Less marketing trouble As noted earlier, marketing is the biggest of all the challenges you face. But for those of you with more than $500,000 in gross annual sales, it is less of a concern. Only 19 per cent of you over 50

Online presence/gross sales comparison 42%

40 30 20 13%

10

1. Experience increases take-home pay The survey results reported that of all contractors taking home more than $75,000 salary, only 11 per cent have less than 10 years experience. As you go up the age scale, you find that for each additional decade of experience approximately another Experience pays Years of Experience Less than 10 years 10 to 19 years 20 to 29 years 30 years or more

% Contractors making more than $75,000 11% 20% 32% 38%

10 per cent of you enter into the $75,000-or-more cohort. The good new is, maybe, after 20 years of experience running a business, working 50 hours a week and never taking holidays there is 70 per cent making more than $75,000.

2. Association membership Here we matched the gross sales of the company with association membership. Above the $250,000 gross sales mark, it’s a push; half of you are members, half are non-members. But of organizations reporting gross annual sales below $250,000, only 21 per cent are members of a building association.

There is a chicken and egg argument here. Does being a member increase your sales? Or do higher sales make you want to become a member?

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0

5% Less than $250,000

$250,000 - $500,000

Over $500,000

that threshold have a lot or some difficulty with it, whereas 34 per cent who have companies below that threshold have a lot or some difficulty with it – nearly double.

4. How much does your company have to gross?

One of the most important questions we wanted answered was how much gross income your company needs to make before it can afford to pay you $75,000 or more. The quick answer appears to be $500,000. Less than that and only 10 per cent of you manage $75,000 in take-home pay. At $500,000 to $1 million, 21 per cent are taking home at least $75,000. Once gross sales reaches between $1 million and $3 million, 42 per cent of you are there.

Those of you with companies that gross more than $3 million represent 27 per cent who are making $75,000 or more per year.

The surprise in the results is that there are 13 per cent whose companies are reporting $1 million or more in gross sales but are still making less than $75,000. If that’s you, it might be the right time to read this issue’s Contractor U by Mike Draper on profit. (page 29).

$$$$$$$$$ SALARY SURVEY

5. The value of education The renovation industry may be the only industry where education is not a predictor of personal income. When we compare personal income against the highest level of education completed, the results could be called shocking.

are over 65), when asked if you have a succession plan for your business, only 39 per cent said yes.

Succession Planning Those who have a succession plan for their business reported they are planning to:

The value of education Level of education

Less than $75,000

More than $75,000

Less than high school

7%

9%

High school graduate

35%

38%

College/University graduate

52%

49%

Post graduate degree

7%

4%

The future Every contractor has his/her reason for starting your own business; but it would appear not everyone has a plan to end it. With 61 per cent of respondent’s reporting that the principle owner of the organization is over 50 years old (seven per cent

Pass the business on to their children

38%

Sell the business

50%

Close the business

13%

FROM THE EDITOR With the significant increase in respondents, the Canadian Contractor Salary Survey is clearly a credible, critical component for understanding what is happening in the renovation and custom homebuilding segment of the construction industry.

This survey is the only one in Canada that is reaching contractors who are not members of some association.

$$$ HOW YOU BUY

This year, we asked questions about how you buy your building materials, tools and supplies.

Here’s what you told us:

• When you were asked if you tended to be loyal to one store or shopped based on convenience, 72 per cent of you said you were loyal to one store.

• You ranked Service and Price as the two most important factors in choosing where to buy.

You ranked “incentive card program” fifth and last this year where it was ranked first last year.

• When you visit a hardware/building supply store, inexperienced staff ranks as having the biggest impact on your in-store experience. The factor with the least impact? The returns policy.

• It is a virtual tie between those of you who check pricing and availability on line before you buy and those of you that don’t.

• An incentive program being offered by a hardware/building supply store is not likely to bring you into the store.

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STUFF WE LIKE

Super Dry Don’t make basements leaky

Sooner or later, holes in the ground usually fill with water. That’s why leaky basements are a perennial possibility. The challenge of building reliably dry basements can be pretty simple if you do the right kind of work at the right time during construction or renovations, and if ground conditions are favourable. But the stakes are high, too. Leaks can bust your reputation and business if your basements flood. There are also site conditions where you should do all you can to convince your clients to forget about building a basement in the first place because it’s virtually impossible to prevent leaks, no matter what you do.

There are three main categories of

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By Steve Maxwell

features that work together to make a basement reliably dry: an impervious foundation wall; vertical drainage channels that allow water to move downwards on the outside of foundation walls while preventing soil from creating hydraulic pressure; and horizontal drainage pathways that allow water to flow away from the lower parts of a basement and footings. There are plenty of dry basements in Canada that don’t have all or even any of these features in place, but why tempt fate? You never really know for sure how a basement will behave just by looking at the site, and that’s why it pays to get the waterproofing protection working on your side early on, creating multiple layers

STUFF WE LIKE

Solid foundation walls, vertical drainage channels and horizontal drainage pathways will keep a basement dry. Without these measures, water leaks are sure to happen in these two foundations sitting on bedrock. Even a crawlspace is bad news because cold bedrock surfaces encourage condensation during hot weather.

of safety, while diligence is still easy.

There’s no shortage of exterior foundation coatings that claim to keep basements dry. And while it’s up to you to determine whether or not any particular product actually works, something effective applied to the outside of the basement wall is necessary for the most reliably-dry basements.

That’s because all masonry is remarkably porous. Blocks are especially vulnerable because they’re mostly hollow, but even an 8-inch or 10-inch-thick poured wall offers very little resistance to moisture that wants to get in – cracks or no cracks.

Vertical drainage membranes

offer the single most effective improvement in basement moisture control, which is especially surprising since they look so ineffective. These dimpled plastic sheets fasten to the outside of masonry foundation walls, leading from soil level at the top, down to weeping tiles at the footing.

Seams simply overlap, with the membrane held against the wall with fasteners until backfilled soil does the job permanently.

Even though unsealed seams on vertical drainage membranes prevent the installation from being completely waterproof in and of itself, these products go a long way to keeping out water by greatly reducing soil pressure

against the foundation wall.

Without soil pressure, water is free to trickle downwards by gravity unimpeded, with no reason to travel horizontally through the foundation wall and into the basement.

Keeping water from penetrating foundation walls is one thing, but you need to direct it away from a structure afterwards for a basement to stay dry. This is the third ingredient required for building reliably dry basements, and it’s where drainage tile comes in.

While there’s no secret to how drainage tile should be put in, sloppy installations often cause trouble. Tiles need to be nestled in clean, crushed stone, oriented

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STUFF WE LIKE

Untreated concrete is physically solid, but it's also quite porous when it comes to water. A vertical drainage membrane (right) holds soil back from foundation walls, creating a pressure-free gap that allows water to drain downwards to tiles.

Cementaid makes concrete so structurally waterproof that it has even been used to make successful roofs.

with a transit and covered with landscape fabric to prevent silt from clogging the passages.

You’ve only got one easy shot at building a dry basement, and remedial work is so much more trouble and expense than doing things right the first time. And while success isn’t complicated, results usually boil down to the same old question: Do you care enough about your work and your clients to do a good job, even when nobody’s looking?

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Waterproof concrete If project plans call for a poured foundation wall, then you’ve got a powerful option for keeping basements dry. That’s where a product called Cementaid can help. It was developed more than 50 years ago and remains relatively unknown, even after proving it can make concrete absolutely and completely waterproof. Where conventional concrete mixes are highly porous after they cure,

Sewer back-up protection Any sewer can back-up into a basement given the right conditions, but a backwater valve is cheap insurance against nasty surprises. The valve is plumbed into the outgoing drainpipe as it leaves the home, and uses a swiveling gate that allows water to flow one way only. Encouraged by a growing number of municipalities, the $100 price tag of a backwater valve is low enough to make this plumbing feature an important part of any basement construction or renovation.

Reliably dry If any of your finished basements depend on a sump pump to prevent ruined floors and walls, then you need to advise your clients to go for more than the

STUFF WE LIKE

regular, plug-in sump pump.

Reliability during a power failure is the reason why, and battery-backup sump pumps are one option. Designed to operate on a 12-volt car battery, these sump pumps are typically installed to kick in at a slightly higher water level than a main sump pump. And though they only operate as long as the battery holds out, the best models can pump quite a bit of water on a single charge– thousands of gallons in fact.

You’ll also find sump pumps that use running municipal water as a power source. The units I’ve looked at use about one gallon of water for every two gallons pumped, and they only come on if the water level rises above the point where the regular electric sump pump is supposed to kick in.

Bedrock blues Depending on where you build in Canada, bedrock is something you may never have seen on your jobs, or something you see all the time.

And whenever bedrock exists anywhere near a basement, it poses two challenges when it comes to creating reliably dry basements. First, if bedrock is at basement floor level or several feet below, it always prevents downward movement of rain and meltwater, typically forcing water to flow horizontally as it follows whatever slope the bedrock’s got. I know because I’ve seen this in several situations, and no amount of weeping tile, drainage membrane or waterproof coatings are going to keep bedrock-blocked water from moving into a basement. The only effective way around the problem is to create a concrete floor on top of a 6-inch to

12-inch layer of coarse and clean crushed stone laced with drainage tile. Draining this underfloor cavity (either with drainage tiles or a sump pump) acknowledges that the water will come in, but keeps it hidden and deals with it out of sight.

Wherever bedrock is present in a basement, there’s another problem, too. The surface of bedrock is usually cold enough during summer to trigger large and damaging amounts of condensation if warm, humid air is allowed to touch the surface.

The rock cools down the air to below the dew point, causing liquid water condensation to develop. Fiber-based insulations can’t prevent this because moisture-laden air simply moves right through it. The only option for preventing bedrock from sweating condensation is by sealing it behind impervious, closed-cell insulation, either spray or sheets. cc

Drainage tiles around the perimeter of the building can travel directly away from a building, or connect to piping installed under the floor before backfilling and floor pouring (left). In situations where a sump pump is essential for a reliably dry basement, supplement the main pump with a back-up. Battery-powered sump pumps (below right) are one option for keeping things dry during power failures.

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47

PRODUCTS

2

1 5

1. TREX

2. MOEN

3. CERTAINTEED

Trex Company, a leading manufacturer of wood-alternative products, has introduced Trex Pergola kits manufactured of durable cellular PVC TresTrim. These kits are available in a variety of sizes and designs to complement any residential or commercial outdoor space. Each kit includes pre-cut components and all the hardware needed to construct the pergola, which can be free-standing or attached to another structure.

Standard white but can be painted. www.trex.com

Moen Canada has added a twist to the daily shower experience with the introduction of the Twist Handheld Shower. The Twist allows users to easily switch between the handheld showerâ&#x20AC;&#x2122;s four spray patterns with one hand. The showerhead simply swivels around the handle with the push of a thumb pad to change modes. The Twist shower fixture delivers a water flow rate of 9.5 litres per minute. www.moen.ca

CertainTeed Gypsum has introduced Easi-Lite Interior Ceiling Board.

Designed to be a more ergonomic alternative to typical ceiling board, Easi-Lite is up to 30 per cent lighter than typical boards, according to the company. Easi-Lite has a highstrength, sag-resistant gypsum core with 100 per cent recycled face and back paper and can be used on interior ceilings with framing up to 610 mm (24 in.). The lightweight core makes Easi-Lite installer-friendly without compromising the superior sag resistance needed for ceiling installations. www.certainteed.com

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duced . mic ard, hter to ghcore and n p to t core ly erior ng

PRODUCTS

3

6

4

4. BOSCH

5. TVM

6. MILWAUKEE

Bosch Power Tools introduced the PS11 12-volt Max Angle Drill/Driver.

This tool features a five-position articulating head that allows the chuck to move from 90 degrees to 180 degrees while providing better balance and control when working in tight places. Weighing in at just 2.75 lbs., the tool is light enough to control when the reach is awkward, and a 3/8-inch auto lock chuck allows for quick bit replacement for driving screws, drilling pilot holes, or using a spade bit. www.boschtools.com

TVM Building Products has introduced the Twisted Top, a new 360-degree turn-able silicone nozzle for caulking applications. Developed for both the professional contractor and the DIY consumer, the Twisted Top nozzle is designed to replace all removable sealant nozzles for caulk, silicones and adhesives. This product performs all the functions of a straight nozzle, while also giving easier access to hard-to-reach areas such as around corners and plumbing. www.tvmi.com

Milwaukee Tool has expanded its hand tool offerings with the introduction of six new snips made with corrosion-resistant metal that extends the life of the tool. Each of the new snips has a forged metal head and is machined for maximum strength and durability; forged heads provide 10x the life of comparable cast heads. These snips are available in several models designed for specific applications and particular user preferences. Sub-flush bolts prevent the tool from getting hung up while cutting sheet metal. www.milwaukeetool.com

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49

WHAT’D IT COST?

Win me!

The IRWIN 2550 box beam level.

It’s accurate, rugged framed, and with a continuous edge for scribing complete and

Email us with the cost of the job below & win a level.

email rkoci@canadiancontractor.ca

Mortarfied?

accurate lines anywhere. It includes Irwin’s Plumb Site feature, which provides dual viewing from awkward angles. Embedded earth magnets allow for hands-free use.

BEFORE

NAIL THE COST, WIN A LEVEL. A Toronto homeowner put this 1,500-sq.-ft. bungalow on the market last year. The first home inspector to evaluate the house left his potential buyer mortified at the condition of the outside wall (see 'before' pics, right).

The wall was not only cracked along a number of joints, it bowed away from the interior block wall just below the window by about 1 ½ inches. It looked as if water had made its way behind the brick through leaks in the window caulking, froze and then pushed the brick out.

The homeowner wanted a quick fix–just enough to get the house back on the market. The general contractor estimated the job the first week, and the work was finished by the end of the next. (see 'after' pics, below) It took one bricklayer four days from start to finish.

So, what'd it cost the homeowner?

Email rkoci@canadiancontractor.ca to send in your answer. Everyone that responds gets a subscription to Canadian Contractor’s weekly e-newsletter and the three respondents that come closest to the exact cost will win a very cool Irwin level.

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AFTER

EB5000X3C

Trust Honda.

Contractors like you, know that tough jobs call for tough equipment. Discover industrial-strength Honda Power Equipment and ATVs, all built with the durability, quality and reliability Honda is known for. Trust Honda to get the job done right.

WT40XK2C

TRASH WATER PUMP Count on commercial-grade, long-lasting performance with an easy-start, 4-stroke OHV engine, Oil Alert™, cast iron conical impeller, and easy-access door to remove oversized debris. Built specifically for commercial job sites, this heavy-duty water pump offers legendary Honda quality wrapped in a heavy-duty steel frame.

PREMIUM INDUSTRIAL GENERATOR Built with the commercial user in mind the Honda EB5000X3C has a powerful, easy-start commercial-grade GX390 engine. Featuring Intelligent Auto Voltage Regulation (iAVR) which provides stable power and 7,000 watts of reactive power for 10 seconds. With GFCI, dual voltage technology and a large 23.5 litre gas tank you can count on flexible and consistent power for long days on the job.

TRX500FM FOREMAN

EU3000iC

Built to consistently perform in harsh environments and withstand commercial workloads. Featuring a fuel-injected, 475 cc, liquid-cooled, high compression engine, solid rear axle and back-up recoil starter. The Honda TRX500FM is made to work and is backed by legendary Honda durability, quality and reliability.

Designed to quietly produce clean power for sensitive electronic equipment. Featuring inverter technology, 12 VDC battery charging and automatic internal circuit protection. Built to power, the light and compact EU3000iC is an efficient and reliable companion.

INVERTER GENERATOR

UTILITY ATV

Built to Work: Get the right equipment for the job.

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Models and colours may not be exactly as shown. Specifications subject to change without notice. For optimum performance and safety, please read your owner’s manual before operating your Honda product.