Speaker 1 (00:00):
Okay. To walk away from jobs, but sometimes you gotta do it. And it’s something that I, I did have a hard time learning that like I wouldn’t do everything, you know what I
Speaker 2 (00:06):
Mean? Sure. Yep. And I’m sure general contractors Baton Rouge also get it.
Speaker 1 (00:10):
You know, what we could do is we could, I could talk about it in this first, I could talk about it in this first thing, when we’re breaking down material costs, permits and contingencies, uhhuh,
Speaker 2 (00:16):
<Affirmative>, I
Speaker 1 (00:17):
Can say, you know, could start talking about that and be like, you know, one thing we didn’t mention in the prior episode is that, you know, sometimes projects don’t make sense and it may make sense for somebody else, but not for you. And it’s okay to walk away from projects and that that can be something that you, that can really be a good tool.
Speaker 2 (00:32):
Yeah. Know when to fold ’em. Sometimes you have to walk away as a general contractors Baton Rouge.
Speaker 1 (00:33):
Learning when to walk away <laugh>. That’s right. Learning when to fold ’em. <Laugh>.
Speaker 2 (00:37):
Okay. All right. Cool.
Speaker 2 (00:48):
Hey, welcome back to the K-Cup, K-Cup episode 17. This is part two of the five part series, the business of Being a Contractor. We hope you enjoy part one talking about lead generation and client acquisition. Now we’re gonna get into project planning and preparation. And this is a, obviously a crucial part of, you know, really making sure you, you not only close the deal all the way, get that door all the way closed, but also making sure that you set the project up for success in the planning and preparation stage. So, let’s go ahead and dive in, John, to, to you know, part number two of project planning and preparation. And tell us again, I know that you, I know that we have a, a great process for this, but go ahead and tell us what this process starts to look like in when you’re developing that working budget. We kind of touched base on it in the last episode, but we didn’t drill in because obviously that’s, that’s what this episode’s about. So talk a little bit about developing that work and budget, the key points around that.
Speaker 1 (01:58):
Yeah, so I think where we’re in the process now is we’ve, we’ve taken in a lead we’ve qualified it, we’ve made sure that it’s kind of a good fit. We’ve met, we’ve built some trust and rapport between us and the potential client. And and, and probably even come really clo close to the point to d to start discussing contract and that kind of stuff. We’ve, we’ve put a high level budget out there. Yes. And so, so this is where we would actually come in and, and start working on that budget that I think in the last episode we kind of commented, we called it like a firm budget or something like that. Yeah. And at this point, you know, we feel pretty confident this project’s gonna happen. And you know, we, we think that the client feels the same way also. Something to be aware of as a general contractors Baton Rouge.
Speaker 1 (02:39):
So at this point, we’re actually, you know, working off, still probably working off of a, you know, a sketch or at a minimum of floor plan. But we’re bringing in our, our design team, we’re bringing in our subcontractors, and we’re putting together a good working budget that, that we can actually kind of kick this project off on. Yeah. And during that process, we’re, we’re going to go through all the things that they need to know from, you know, cost of the scope, from, you know, every type of work that needs to be done on the field, but also all permitting, all planning all design. Yeah. We’re, we’re, we’re putting everything in one full one full scope so that they can see and, and understand what, what the true cost is going
Speaker 2 (03:22):
To be. That’s right. So part of that you’d mentioned you know, putting together the design team and and all that. You had mentioned something earlier about when you’re in that early stage of breaking down, you know, like permitting and you’re going to the site and you’re looking at the site and you’re, you’re checking out zoning. You, you mentioned something about how, you know, you might, as you start to add those things up, it might not start making good sense. Could you elaborate on that just a little bit? Yeah.
Speaker 1 (03:54):
Well, I mean, I think, you know, and, and we probably could have hit on this a little bit in the episode before this, but, you know, sometimes projects don’t make sense, and it’s okay to walk away as a contractor. You never want to do that. I know. I, I’ve <laugh> I’ve struggled with having to tell people no, and not, I mean, I just wanna try to do the job. Yeah. Sometimes a job, it may still make sense for the client, but it don’t make sense for us. Yes. and, and you just have, you can say no, and that can be a very empowering tool Yeah. To be able to say no and to walk away from something at first when you realize it’s probably not a good fit in the beginning, because if you already kind of recognize that, but you continue to dig and you continue to work, you continue to spend a bunch of time, you continue to bring people in together. And then at the end of the day, it don’t happen. You really, you really cost yourself a lot of time and, and money. Yeah. so it’s okay to walk away if the job’s not a good fit. So yeah. No, that’s something that’s definitely considered. Yeah. And if it didn’t come up in that prior meeting, it would certainly come up in this first phase of developing the cost. Another good point for general contractors Baton Rouge.
Speaker 2 (04:56):
Exactly.
Speaker 1 (04:57):
And, and truly, you know, where the project’s gonna
Speaker 2 (04:59):
End up. Yeah. ’cause now you’re really getting down to the, to the nitty gritty, and you’re rolling up your sleeves and, and you’re, you’re starting to request a, a real show of commitment on the part of the client at this point. So, you know, they gotta pass the sniff test, so to speak. And if, if I, I just think you probably, like you said, you need to trust your gut, and if it doesn’t feel right, it probably isn’t. And don’t dig a hole for yourself. Right. Now the other thing on this, this first step of, of this phase of project planning preparation is a thing called value engineering. Could you explain that to those listening that may not really understand, you know, how that plays a part in your putting this preliminary plan together and, and getting your budget, you know, nailed down?
Speaker 1 (05:44):
Yeah. So typically, I mean, we wanna give the client exactly what they want. So they come in, they tell us what they want. We, we get it, you know, in some, in some form or design, whether it’s a full set of plans or just early on planning Yeah. Concept. And we try to you know, we try to, to bid it and, and, and, you know, quote it, I guess exactly the way they hope to see it, and exactly the way they want it to end. Yeah. But if in that, you know, if in that conversation it becomes that, you know, the, the budget’s much higher than they, you know, then they wanna spend or then, then the money they have, then we start to explore options to, to reduce that price. Yes. And that’s where the value engineering comes in. I mean, we start looking at things like, okay, I know you want, you know, I don’t know, factory finished eight foot doors that are super nice, but can we still get what you want?
Speaker 1 (06:36):
Can we still have this thing function in the way you want with a, with a cheaper door? That’s, that’s maybe something that’s finished in the field and maybe it’s just a typical seven, oh, you know, 3 0 7 oh door in lieu of a big, tall nine or 10 foot door. Yeah. and we could, we could value engineer many scopes of the work in that similar fashion. I mean Yeah. You know, your lights or, okay, we got some really nice high-end lights. Yeah. But do clients even come here a lot? Is this something that we could get a functional light that still serves a purpose and don’t look as good, but it’s just a neat something? And I mean, we can do this for every scope of the project, really. I mean, seasons, floors, cabinetry, you know,
Speaker 2 (07:14):
So there’s flex in every scope. Yeah. Most general contractors Baton Rouge understand this.
Speaker 1 (07:16):
You could value engineer almost everything on the project, just depending on the need. You know, I think the need and the want is where it really, you can start to kind of engineer some things. Value engineer some things.
Speaker 2 (07:29):
Yeah. A lot of the cost seems to be in the finishes. I mean, it costs the same to frame any box. Right. You know, it’s gonna cost the same, what changes the, the cost per square foot of a box is how you finish it out. Exactly. So yeah, like you’re saying all those different finishes from exterior to interior and all those things. So, so value engineering, it, it, what it allows you to do is not just throw your hands up and say, oh, well, sorry, we couldn’t come to terms, when you present a budget and the, you know, the project owner says, well, this is just too much. It gives you another option to go back and, and dig a little deeper and maybe still put this project together and and make everybody happy. So, all right. Cool. So let’s talk about contracts. Now, you, you’ve put this budget together. It’s, it’s getting pretty serious now. The budget’s been, you know, nailed down. You’ve, you’ve gone through design enough to be able to have the design you know, be informed by the budget, where if you had to make some adjustments and value engineer some stuff, you’ve done that. And let’s say that you’ve got all that worked out with the owner and, and the, and the design team, and everybody’s on the same page. So now it’s time to make this a, a thing. Yeah.
Speaker 1 (08:49):
To, so we, we’ve kind of put a bow on that by sending out a proposal that explains everything you just talked about. You know, what’s the design cost of the project, what’s the construction cost of the project what are the obligations, you know, as a contractor, what are we giving ’em in all these items? So you have a very designed or, or very detailed Yes. Proposal before moving into this, into this contract phase.
Speaker 2 (09:14):
Yeah. Now, part of this contract phase I would imagine you’d want to address things like the procedure for change orders. Yes. And, and what about lien waivers?
Speaker 1 (09:25):
Yeah. I mean, I didn’t know you was asking this question. I may ’cause I brought a contract with us <laugh>, but I mean, you know, the, in the contract, obviously we want, we wanna have all the specifics concerning, you know, the contract, the amount of, you know, the contract mm-hmm <affirmative>. How payments are gonna be made. Yeah. the obligations of each party. What information should the owner be providing to us? Yeah. we wanna give them, you know, timelines on when payment will, you know, when will payment be made? Yeah. What kind of time do
Speaker 2 (09:52):
They have to do that? What triggers that? Yeah.
Speaker 1 (09:55):
And we’ll provide a schedule of values, you know, that’s the, the payments are based off of this. And, and then we will address, you know, insurance requirements for us, if, you know, and, and there’s times where we ask, you know, the owner to provide builders risk insurance or what other policy they may want. All that’ll be very clear in the contract. Yeah. And I mean, we do have a, a standard contract here that, that kind of spells all this out for us already. Yeah. And just makes a consistent experience, kinda like we’ve talked about with other, with other things. And then as far as lien waivers and stuff like that, we explain all that and how it works Yeah. In the contract. And yeah, that’s very, I mean, that’s a very important very important aspect of, of our business. That, you know, gives, gives us some protection, gives the owner some protection that just kind of, you know, lets us know that our subs are staying on top of everything that they’re supposed to stay on top of.
Speaker 1 (10:47):
Yeah. so all that stuff’s spelled out in the contract very, very clearly. And that’s a big part of just making sure you sit down. ’cause That can be an overwhelming document for an owner that, that’s never seen that It can, I mean, I’ve literally had people say, man, do you have something shorter that we can just sign that <laugh>? You know? Yeah. But there’s a lot of there’s a lot of important stuff in there that’s, that’s really easy to explain. Yeah. it’s kind of overwhelming on paper, but but at the end of the day, if you sit down and just like everything else we’ve talked about, if you com clearly communicate what that contract means and how it protects both parties Yeah. Then they’re almost always willing and actually happy to sign it at that point once they have some understanding of, of what it entailed, you
Speaker 2 (11:30):
Know? Exactly. something that, you know, we can make clear to clients is that we don’t want the contract to be any longer than it needs to be either, but a lot of times the legal leads that’s included in those contracts is there because it addresses something that became a thing at one point. Right. A thing enough to where even keeping a a contract to its bare minimum would require you having that in there because it’s, it’s something that’s occurred enough in the industry where Right. Everybody needs to be protected for it. And like you said, it not only protects you, but by having it in there, it protects the client as well from really ever having that situation developed. Yeah.
Speaker 1 (12:10):
And I mean, you ask about the lien waivers. I mean, that shows an area that we protected them you know, change orders. We do spell out a specific manner on how change orders will be addressed. That way they can feel confident going into the project that if something does arise, that we’re not just putting this high price on it you know, that they’re going just get drug over to Kohl’s. Yeah. So that, that gives ’em confidence in seeing that, you know, that verbiage. We also talk about in our contracts, you know, what happens in, in the event of a dispute if if we are not on the same page. Yeah. Like, we gr we agree, you know, firsthand before the project starts, how we’re gonna handle that. Yeah. So all that, all that really you know, builds confidence with the owner that, that we’re trying to do things the right way.
Speaker 2 (12:56):
That’s right. Yeah. they, they figure out pretty quick that the contract isn’t you know, doesn’t contain just a bunch of language that just protects you and, and leaves in twisting in the land. Right. It really is just a fair legal agreement. ’cause You want to do the right thing, but you at the same time, don’t want to be taken advantage of. Yeah. We don’t need practice as a general contractors Baton Rouge.
Speaker 1 (13:14):
I mean, I think it goes without being said too, but obviously we always give them a draft copy of this contract and they’re, they’re more than welcome to seek their counsel and, and see, you know, if, if there’s anything that needs to be addressed. Yeah. Almost always our, our contracts end up pretty fair and we don’t get a lot of comments back. So that is a good practice for general contractors Baton Rouge.
Speaker 2 (13:31):
Yeah, it seems that way.
Speaker 1 (13:33):
But yeah, we always give ’em that opportunity. Hey guys, John Kelly here, founder, CEO Kelly Construction Group. Like I just wanted to say, we appreciate you guys tune into the podcast. We try to put some good information out there. Hopefully you guys are enjoying it. We’re gonna continue to do it. You know, please like, and subscribe. Let us know if there’s anything you guys wanna wanna hear about. Feel free to leave some comments. Also wanted to let you guys know we’re putting together a, you know, a mastermind class or a workshop on commercial development. We’re looking to have a few speakers in the area. We’re gonna have a, you know, somebody from a financial institution, architects engineer. We’ll be there speaking as well. You know, we will end that with a question and answer session, give you guys an opportunity to ask some questions to all the professionals that, you know, take, take part in it. So we’re gonna leave a link in the in the, in the description of the show that you guys can, you know, fill out just to gauge some interest. We’re not gonna reach out to you, we’re not gonna bug you. We just simply wanna know, you know, what the interest level is and would love to have you guys attend. So look for that link, fill it out. And again, we appreciate you guys tuning into the podcast and hopefully you’ll keep doing. So. Have a great day, guys.
Speaker 2 (14:50):
Great. Alright. Right. Well, let’s move on to the, the third part of this project. Planning and preparation. We, we’ve touched on, you know, design and, and all that, the preliminary stages of it. And I know in some of our you know, projects that we do, particularly in the private work, you know, we’re able sometimes to, as we’re cultivating or going through that first initial consultation with a client, a potential client we might do some preliminary drawings ourselves. Sometimes you, you’re, you’re skilled in cad, we, we have other people at our disposal that can throw together, you know, some preliminary elevations, floor plan, things like that. But let’s say that now this is, you know, pretty involved. It’s, let’s say it’s not, you know, your typical you know, white box build out that this is like say new construction and, and you know, maybe it’s several million dollars or so. And so there’s some serious design aspect to it. Talk about design team assembly and, and some of the aspects like you know, our, you know, this one sheet that we have that we’re going by talks about for our process. Yeah.
Speaker 1 (16:03):
I mean, as far as, you know, bringing in an architect and that kind of thing. I mean, to your point, depending on the scale of the project, we’re pretty capable of coming in here, drawing up a floor plan getting something that can, you know, the owner can see some progress and they can feel like we’re making some ground Yeah. Can start to lay out, you know, their project and move stuff around and get it kind of where they want it. Mm-Hmm <affirmative>. But I do like to bring in an architect fairly early. I mean, I, I like, you know, they do see things that we don’t see. They do have ideas that we don’t have. Yeah. It’s good to get good feedback, you know, from somebody who’s invested in that field. Yeah. so if it, if it’s a serious project and you know, something that is gonna move forward, I we bring in the architect probably in the second meeting or something Yeah.
Speaker 1 (16:53):
And kind of start introducing those guys as a part of the team and somebody that’s gonna be involved. Yeah. and, and there’s, there’s, we have agreements with, you know, a couple of architects and there’s, it’s, it’s a little different than them just going to hire their own architect. There’s benefits to you know, to working through us and, and working with the architect in conjunction as a team. Yeah. We’ve already outlined a lot of those in, in different shows, and I’m sure we’ll hit on all that again. Yeah. But but they can be, they can be, they can be valuable in a good part of the team for sure.
Speaker 2 (17:24):
Yeah. So how do you go about setting up expectations for communications when we have this team assembled? I know like with the, the public bid sector, a lot of times it’s the architect that’s dealing directly with the client. And in this situation we like be in the driver’s seat, you know, more of a design build you know, framework that we like to work with. And so what expectations do you set about communication between the owner, the architect, and and us as the gc?
Speaker 1 (17:54):
Yeah. I mean, obviously you want to be privy to all the information that’s being communicated. We typically set up a group email you know, between us, the designer and the owner, and everybody kind of collaborates as a team. You know, I know it’s real critical in, in, in these other you know, public bid type things or, you know, even some of the low bid or invited bid type situations to, to really kind of follow the chain of command. You know, you don’t want subs jumping ahead talking to, to the architects or Yeah. The engineers and that, because it can really, really misconstrue things where a sub feels like they got some information that they needed to do something and yeah, maybe that was from an engineer architect or the general didn’t even know the sub performs the work, and then it’s just a mess.
Speaker 1 (18:43):
So it’s really important to keep that chain of command just as important. So in this in this side of it, however, I feel like it could be done in a group. I feel like that, you know, it’s okay for the, for the architect to communicate as long as everybody’s looped in on that communication and everybody understands what’s going on, not as formal yeah. But still important that everybody knows what’s happening and that everybody’s looped in. Yeah. I, I don’t, I don’t know if I answered your question real good there, but I, that’s kind of the way I see it. I think that, you know, I think it’s okay as a team for us all to communicate in one space. And it, it don’t have to be linear, it can be back and forth as long as it’s, it’s happening in a manner that we all kind of know what’s going on.
Speaker 2 (19:29):
Yeah. And that would strictly be with, with between yourself and the design team and yes. The owner itself like you said, you wouldn’t want every person that’s performing work on the project to be
Speaker 1 (19:45):
Loop. No. I mean, once, once project started construction, it would, it would kind of go back to the the typical chain of command, if you will. Yeah. However, I mean, we would kind of be, I guess the end of that chain of command at that
Speaker 2 (19:59):
Point in our
Speaker 1 (20:00):
Model in the
Speaker 2 (20:00):
First Yes. Yeah. Gotcha. And, and that just by setting those expectations, like you said, you had, you had that conversation early on in, well, it’d be in this phase in the preparation and planning phase, that you’d have this very clear conversation about how communication is gonna be, you know Yeah. What that, what that process is gonna be like and, and how it’s gonna flow
Speaker 1 (20:24):
So well too, in, in this model too, the architect is mean. I’m not gonna say the architect’s not a player once construction starts, because we, we still wanna give our architects an opportunity to visit the, the job site to make sure that things are going, you know, the way they designed it and that kind of thing. Sure. But we’re, what, we’re not looking for ’em to, to, you know, administrate the contract in any way. Neither is the owner. Yeah. so, so at that point, it really becomes direct communication between subcontractors, our staff, and then the owner. Yeah. And if there’s questions or whatever, then yeah, we wanna go to the architect and, and get clarity. But I feel like in these projects, we’ve typically worked through those details pretty good. Yeah. And and and outside of the architect coming to inspect the site a couple times just to make sure that, you know, things are the way they want to do the way they like to see it. Yeah. They’re, they’re kind of out of the daily communication project at that
Speaker 2 (21:20):
Point. Yeah. They, they’ve become more of a, almost a, a consultant at that point. And like you said, it’s because we have early access to them through the design phase while we’re budgeting. So we know a lot more by the time you get to a contract about the project than you ever would with you know, like the public bid sector where Yeah. You might go through the spec and all that to get, you know, the estimate together, but you still don’t really have that intimate knowledge of the project. You haven’t had the time Right. To, to talk about how it’s gonna unfold with the design team and imagine it being built and, you know, go through all those things that you’re able to do Right. When you’re in that mode. Yeah. So well, you kind
Speaker 1 (21:58):
Of have to discover those projects through the plans and through the specs. You’ve never seen it, and then all of a sudden you get it. Well, in these projects you create it that, so you kind of, yeah. You’re part of that at this point. You already know and understand all of these things.
Speaker 2 (22:11):
Yeah. It’s way more ingrained in, in your whole thought process. So, and that’s what we love about private type work. So anyways, that’s why we wanna pursue more of that. So the one last little point there that it kind of brings out is just talking about making sure that you, you’ve synced your budget with the design. And I know we’ve touched on this before, but maybe you could just highlight again, the benefit of being able to get to do a project like this how that, you know, having the design and the budget happen together, you know, did coincide at the same time how that’s a benefit to everybody involved, including, you know, the project owner.
Speaker 1 (22:50):
Yeah. I mean, I think, you know, we’re working off of a budget that, that the owners already approved you know, are already fairly familiar with and feels comfortable with. Yeah. And, you know, we’re working back and forth with the designer or the architect at this point. Yeah. You know, it may be to the point where he’s calling and saying, Hey, you know, we got this much square footage we’re gonna do, you know, how do you wanna do it? Do we need to stick, do we need to stick build it? Do we need to do, you know, pre-engineered metal building what makes more sense with the budget? Yeah. And we going back and forth in that type of stuff as this project’s being designed mm-hmm <affirmative>. So that we can make sure we hit the number. Yeah. In lieu of just having the architect design something without any communication from a builder Yeah. To find out that it’s, it ends up way over budget and then yeah. There’s more costs incurred with redesign after a contractor’s had time to put a proposal together or a budget on it, you
Speaker 2 (23:42):
Know? Yeah. Not only is it, there’s cost associated with that, but the time is really probably one of the, the biggest factors. ’cause Everybody is so busy and when you go to enter into a, you know, a undertaking like this time becomes super valuable, right. So if you’re losing it over something like that, it’s, it’s not great. Right. But all right. Well that’s great man. I think we’ve covered some, some, you know, highlights and some key points that would help any of y’all out there wanting to be a contractor. This is like preliminary planning for preparing for a project, stuff that you’d want to consider. And again there’s corresponding articles on LinkedIn to all these five parts. So you can go there and get more detail, get the outline for these parts, and you can check the show notes on YouTube side of things, and get the chapters for all the different points that we’ve touched on here.
Speaker 2 (24:39):
So you can get clarity if you need to listen to something over again. But we hope you enjoyed part two of the five part series of the business of being a contractor. And we’re gonna be back again soon with part three. So come back and check us out. And thanks for being here at the K-Cup. Please like, follow, subscribe, comment, all the above. We’d love to have your feedback, but we also it, you know, they say it’s 70% of those who actually listen to podcasts on YouTube are not subscribed to the podcast that they watch, even if they watch regularly. So please just take, I think it’s like three seconds and just press that subscribe button and it’ll really help us continue to see the value of bringing this information to you in making shows in the future. So thanks for being here. Any part words, John?
Speaker 1 (25:33):
No, I mean, hopefully we gave some good information. I mean, I think that, you know, we try to put stuff out there that can be useful. We try to put stuff out there that we’ve learned through the years. So yeah, hopefully we are providing value and, and if we are, we, we’d love to hear,
Speaker 2 (25:45):
So. Yeah, absolutely. I think, I think definitely just having somebody who, you know, you’re giving insight and you might not you know, see that it’s hugely valuable to you because yeah, it’s something that’s so common and normal to you, but some of those insights only come at, at the end of years of experience. So I’m sure that some of those nuggets have been shared this episode, like, like all the other episodes and that’s really the real value. So anyways, we hope you got some of that, those nuggets and that value. Come back and see us again for part three. Take care.
Speaker 1 (26:22):
Cut
Speaker 3 (26:23):
<Laugh>.