We interview Bryan Kaplan, CEO and Founder of Construction Consulting, and have a great conversation touching on topics like how he got into the industry, possible ideas for continuing to work safely through COVID, and best practices to guide your business through COVID-19.
Full Podcast Transcript
Grace Mase: 00:08
Hello, and welcome to the Revivify podcast. I'm your host, Grace Mase. Today, we're really excited to get a chance to speak with Bryan Kaplan, the CEO and Founder of Construction Consulting. With over 20 years of construction experience, he's extremely knowledgeable, and with his 360 approach to helping professionals to grow their business is remarkable. I'm dying to speak with him. And I know Bryan for quite some time, and I'm really impressed with his career. So welcome, Bryan.
Bryan Kaplan: 0:38
Thanks so much for having me Grace.
Grace Mase: 0:40
So why don't we get started? How did you start your career? I know you started as a contractor. So if you might share with our audience, how did you start your career?
Bryan Kaplan: 0:50
A lot of us fall into the business, and that's been my trajectory. So about 21 years ago, we bought our first house, my girlfriend at the time, but wife now, and I didn't really know much about construction. To be honest, I had painted garage doors as a kid in my neighborhood, I had shovel driveways, I'd cut lawns and stuff like that. So it was, I guess, always kind of service oriented in into that kind of home improvement or Home Services kind of nature. As a real youngster, I loved building things out of Lego like I just had these crazy houses that I would build out of Lego. And I think those were kind of the first signs that I was really born to build. Fast forwarding, I fell into the business started working as a carpenter's helper, a few years into it, started my own contracting company. So I was doing smaller scale stuff, kitchens, bathrooms, basements, main floors, things like that. And then my wife and I had also sold that first house after we'd fixed it up, bought another one and kept kind of repeating this recipe so to speak, and I learned a lot of things along the way school of hard knocks, as we call it. In the latter part of my career, the second half of the career, I started working for prominent residential renovation firms here in Toronto, Canada. And custom new home builds as well was part of things that we did, and kind of developed through all the different ranks from that Carpenter's Helper position to in Canada, we have a Red Seal Carpentry Certificate, which is our like certification. So I got I have my Red Seal Carpentry Certificates, I work as a carpenter as a Lead Carpenter as a site super, as a project manager, and also, as a general manager, managing company in the multimillion dollar range and helping to scale and systemize everything along the way.
Grace Mase: 2:30
Wow, you really start from the bottom and work your way up. So now looking back, were there any specific events in your career where you feel like wow, that was a good learning point for you turning point in your life?
Bryan Kaplan: 2:42
How much time do we have?
Grace Mase: 2:45
As much as you want.
Bryan Kaplan: 2:47
There's so many moments that I've learned from, but the biggest thing for me was being able to recognize those as learning opportunities. And to be clear, these learning opportunities are those crap moments, you know, where you're just like, I made this mistake, and I have to deal with it and all that. And that puts you through a lot of head trash, but the truth is that so many of these experiences have been so valuable for me in learning how to grow as not only someone that was building, or doing a job, like project management, for example, but bigger than that is like, a "how do I relate to everybody on my team" kind of thing. And one of the things about my experience and kind of going through starting at the bottom, as you said, and kind of working my way up, one of the really great things about that is I just have this lens for every level. I understand what carpenters are thinking on a daily basis, because that was me, and having your PM show up at your site, super show up or your boss show up, and the communication that would happen between us, you know, I really understand it from all those different levels. So it made me really effective as I grew through it. But, you know, I don't know that there was one defining moment, I just think it was kind of just a recognition and the acceptance that all these things that happen are these opportunities to learn and to grow from and really just kind of have to see it that way to really benefit from it.
Grace Mase: 4:05
That's great. And I think that's what makes your ability to consult and helping your clients have that different lens looking at it and also help them to communicate more effectively, at different levels all around. We're here, it's September 29th. So we're in the middle of COVID. Things have changed in our industry for good and for bad. There's definitely a significant shift. There's a change in terms of a desire to do more, as homeowners spend more time at their home realizing either they need to expand or buy new property or renovating and whatnot. So what are the things that you're seeing that's drastically different than a year ago, let's say?
Bryan Kaplan: 4:43
The big thing is really wherever you are geographically speaking, I mean, pretty much across Canada and I think the US, we're experiencing very similar scenarios. Ultimately, there's been this big shift in our industry to some of the points that you've mentioned. There have been some good and there have obviously been some bad ones. I'm going to start with a good, because let's make a silver lining here. We're chatting on Zoom today. And six months ago, if I said to a builder, "Hey, why don't you have a button on your website that says book a 15 minute meet and greet with me, and you can do that virtually, and you do it on Zoom." They'd say, "Well, what is Zoom? I don't know what Zoom is." And the reality is that, I think it's helped push the industry forward a little bit, I think it's pushed us forward in terms of adopting some technology, which obviously is, you know, is one of the cornerstones of what you guys do. It's really key in terms of keeping up with the pace of the world and getting better information quicker, and just creating a better sort of relationship between these different stakeholders. So that's kind of some of the good stuff. And then on the bad side, everyone sets their targets for the year, that kind of all went out the window when March rolled around, and then everything started to tighten up. And I think that it's been really tough for there's such a wide gamut in this industry. I think we use gross revenue as a predictor of business size, and all that, but if we just kind of think about it from the perspective of real small owner operating type business, versus like a small team, versus a medium or large team, or a much bigger construction company, I mean, there's just such a wide gamut that happens, but everybody's been affected. And almost, I don't wanna say equally, I mean, some of the smaller companies out there have really struggled. Because if they're doing Home Services type work, where it's in an owner occupied home, that has basically been tabled, right, they've just not been able to do that. And so the hope is that, maybe one of the silver linings here is that it's forced people to really look hard at their business and understand what it is that they're doing. Does this make sense? Do I want to continue doing this? Is this profitable for me? What other opportunities can I create for myself that, I don't want to say Covid proof because really, we hope that once we come out of this, that it's for good, and that we don't see something like that again? And that being said, we don't really know. And so I think there's just been so many things that have shifted. One of the biggest things about it, though, that I've been preaching to everybody, since it all started is that we have to be adaptable, we have to be reflective. And we have to be planning for whatever we can get kind of control right now. Because I think there's a lot of stuff that's really outside of our control, and ultimately, as business owners, it can be a bit overwhelming, for sure, but manage what's right in front of you. We do have to think out a little bit three, four, to six, to ten months at a time. It is a little difficult when it seems, at least in March and April and May, it was kind of changing on a weekly basis, or an hourly basis, really not even a weekly basis. So it can be pretty tough for sure.
Grace Mase: 7:37
And I love what you're saying about being adaptive and reflective. And I think Covid definitely helped us really focus on what things that we have control over and what things we don't have control, and how to be creative and problem solving with those things that we do have control over. Just looking at, and I appreciate you talking about different range of sizes of the firms because it does impact how they do things on the tactical level, what have you been able to tell your builders and contractors, the things that they can do, or what we consider the things that they have control over?
Bryan Kaplan: 8:09
It really comes down to recognizing first and foremost, who is in your pipeline in your marketing and your sales pipeline? So we can control that, because those are people that have either reached out or we've captured them, you know, some form of value offered, on our website, or whatever it is, and we're nurturing those people through the journey. There are people that maybe we have actually been talking about doing a project for and so of course, those people are right in our sales process. From the very beginning, I told people, I always say this, "Your past clients are your greatest marketing asset, and so you should always be in touch with them." If it's been more than three months, since you've spoken to all of your clients, then take this as your call to action right now to go and do that. And I was telling people in March, April, May call your clients up and just ask them a very simple question is like, "Hey, how are you doing?" There's no marketing sell here. It's really just continuing to deepen that relationship, to let them know that you're there, to let them know that you're willing to listen and hear them and help them as best you can just very much be present. And of course, there's a soft sell there in the sense that you are part of a brand that they've either interacted with before, or they might in the future. So first and foremost, there's lots of things that we can do to our past clients, to everybody that's in our sales process funnel. One of the things that I've been really sort of a strong proponent of and been talking about pretty much since April, May when everything really tightened up here, and they created restrictions on new projects starting was to push all of your projects through design, through permitting. And in Ontario, here we have something called a Notice of Project which is basically just the registration of the project with the province. I'm sure in states, other states, in other provinces, there's a very similar thing. Basically get yourself to the end of that, so that you have all of your permissions in place, you're ready to go. The other thing I would say is that if you can focus on those projects, where there's not going to be an owner living in the home while you're doing the remodeling work. Or if it's a new custom home build, of course, they're not living there. So if you can put some priority, if you're in that position, where those are the types of projects that you do and you do have some of those people in your pipeline, focus on those relationships, focus on those projects, focus on pushing them through those steps that I just outlined. Because if things do tighten back up again, which, you know, at least here in Ontario, it's looking like we're going backwards a little bit right now. But you'll still be in a position where you can continue working, and it'll be at a slower rate, you know, the money won't be the same, but there still will be dollars coming into your business.
Grace Mase: 10:42
I think, as you mentioned, building relationship, I think it's a huge part of our industry, it is the foundation with this industry is all about building relationships, even just a soft skill, just let them know, be present be real as to, "Hey, how are you doing?" And during this time, everyone's sensitivity is a lot different, and people are probably some more heightened due to some circumstances that they're experiencing. But be there, be empathetic and know how they're doing will pay long dividends and at the end of the day, it's about people to people and really humanize or this whole event that's we all experiencing together. And then also the fact that you're also advising them are things that they can do they have control over, getting permit getting things prepped, just so anticipating things they can't work on. But how are you advising somebody occupies space? Some spaces are, for example, ADUs, Accessory Dwelling Units, they may be able to show off separated and then adding an additional space or potentially independent units. How are you working on what those builders on advising them what they can do to continue to move forward?
Bryan Kaplan: 11:47
Yeah, that's a great question. Because I think a lot of people that might be listening to this will be like, "Hey, that all sounds great. But a lot of my business is in owner occupied homes. And so how do I manage this?" And the challenge is that when we talk about, say you want to go remodel a bathroom, or kitchen or something like that? The truth is, is that, yeah, we can separate a lot of it. But we can't fully separate in the sense that we will need to get to the electrical panel, we might need to get to the plumbing shut off and things like that. And so it really comes down to being super organized in making sure that we have a proper plan in place for this in staging our work appropriately. The overarching thing I would say, though, is and I would say this, regardless of COVID or not, is if you can get your homeowner to move out of the house, please do that. So you know, we all know that time is money, and it's such a stressful experience for homeowners to be living in their house when a project is happening in normal times, let alone in these like sort of heightened restriction times. So I would say that, if you can encourage them to do that, that's great. Now, the flip side to that is that they might say, well, I can't do that, and maybe I'm not comfortable having you do the work while we're here. And look, at the end of the day, you can't really change that perspective. Other than explaining to them this is what our response to COVID is, this is what our protocols are going to be in our procedures to try to help them understand that you're doing your absolute best to keep them safe. At the end of the day, if they still can't get past that, then they can't get past that. We always say the solution to your sales problems is having a bigger pipeline, that's really the solution. Because if you have more leads, if certain things disappear, there's more people to fill those spots. Right? And so if you've got those homeowners that are saying, look, I can't commit to doing this, etc, etc. Go back to your pipeline, because that's where the answer is.
Grace Mase: 13:40
No, that's great. And I think about when you are prepping the contractors mentally, sometimes this is a huge shift and what they've been doing, and they expect people to be more sensitive and understanding. But it's good that you help them to focus on prioritizing the health, first of their client, the homeowners, and also your team and what it means for all of us, the collective good. Make sure that we do our best to keep each other healthy and safe. Obviously health is a big concern in today's climate, for even construction and so forth. And how are some of their clients working with their homeowners think about I mean, even potential options, obviously, any finishes, it could specked out early, but things have changed. Are there things that you are also advising your builders and contractors of, hey, here are some of these kind of healthy options that they may consider for finishes, even like touchless faucets and things like that, or even door locks? Those are the kind of things that we're seeing as a trend. Are you guys able to encourage them to help them to think or helping the homeowner to think from that perspective?
Bryan Kaplan: 14:47
Yeah, it's a great question. You know, I'll be completely blunt, honest, I hadn't really even thought of it, and it brings up a couple of things in my mind. We talk a lot about aging in place, right? That's a big thing. Of course it's happening but the concept of like, yeah, this touchless sort of scenario, right? Like, we live in a very contact filled industry, and in our houses, everything is tactile, for the most part. So it's really interesting, and it kind of dovetails a little bit with the concept of automation. As you know, as of course, technology, and all of this develops, I mean, we're seeing a lot more homes that have a lot more technology baked into them. So to be honest with it, you know, I hadn't really even thought about that kind of choosing selections and stuff like that. I was the general manager of a green building company, and so that sort of holistic approach to house design and all of that in terms of the types of materials that we're putting in and what the impact could be to us as humans and things like that has always been at the forefront of my mind. But I hadn't really thought of it in the context of like, how do I think about those and marry all these things together with like, this contactless type of world? So it's an interesting point.
Grace Mase: 15:49
Yeah, well, I mean, like you said, with your past experience on the sustainable green building aspect of engagement, I mean, everything, what we put in our house has a huge impact on our health. What we breathe in, and the materials that's being produced, you know, off-site, when you bring into your own site, what kind of toxins can be spray throughout your house. And those are things are important, as you mentioned, about building relationships, for your contractors and builders with their clients. This, I think, is one of those key points where you continue to think about what's best for them, and helping them to helping homeowners making the right decision that's good for them for long term.
Bryan Kaplan: 16:25
That's always been our lens, it's always been the way that we want people to try and think. Sadly, I think a lot of people are driven by the dollar. And I recognize and having been someone that's been selling these types of projects to people for multiple years, I've heard lots of different objections and understand the psychology behind it immensely. But that said, I think it's important that we do pay attention a little bit to how we're actually building our homes, what we're putting in them. What does this all look like for us from a health perspective, we talking about aging in place, but we don't think about living in place in the way. You're living with all of these chemicals, you're living with all these products, and to your point, like they're made off-site, and then they come into our space. What is the off-gassing that's happening, really start to dissect it? What are they made out of? Right? Like what is actually this product that's in and that we interact with? And I don't think a lot of people think about it, they think they think you build out a wood, you put some bricks on your house, you put insulation in the walls, you put drywall on the walls, you put trim, etc, etc, and you paint the walls. And I don't think we really compute what it means to be living in this place with all these sort of materials and chemicals.
Grace Mase: 17:16
Now, I think you mentioned earlier of how Covid have bring some good silver lining like adapting technology using Zoom. And I think this is another great opportunity for us, as an industry, to live up the overall what we should be doing looking much further ahead beyond the next three months, and so forth. It's about how do we serve our client in a way that's meaningful, that will have a huge dividend down the road, paid off just merely of knowing that you do your best to provide a safe, healthy environment for your clients. And I think it's pretty special what we do. Looking at as a business owner, clearly, you've been through many years of different skills they have to adapt, were the key things as a business owner now so than ever to need to learn to adapt?
Bryan Kaplan: 18:22
Yeah, I mean, it is hard when you're trying to narrow it down to like, you know, a few because there's just as we know, you wear so many hats, and you could make an argument for every single one of them. But I think ultimately being control, I think money talks to everybody, whether you are a business owner, or a client or whomever it's going to speak to you. And so I think understanding your numbers is really critical. Understanding there's power in that information, right? And a lot of people take a bit of a head of head in the sand approach to their finances, and just being really aware of where you sit kind of thing versus the targets that you set for the year. Also just understanding on a personal level, how can you change your outgoing cash flow, right? Like in other words, how can you reduce your expenses and, and kind of ride out a bit of this wave that we're seeing? So for me, finances is really it always comes back to that for me simply because the finances will tell you the story of your company if you're willing to listen to it. So that's a really important one. The other side of this, as we touched on it as well is pipeline. So marketing and sales, is really focusing on what we have currently. What can we do to bring more people into our pipeline? And where can I put people so I can stay present with them, right? And I always talk about this. We have to meet clients where they're at, in this day and age, there's Instagram, there's Pinterest, there's Houzz, there's all these different platforms, right, where people are hanging out. And some people are going to communicate and be more willing to speak to you on different platforms, right. They're also just going to be spending a lot of time on these different platforms. So catching them there and catching their attention is super key. So It's kind of a challenge I would give to anybody listening to this is like, try to think about the people that have reached out to you, right? Where are your different traffic sources are right? So you get people that dm you on Instagram, say, "Hey, I saw a kitchen that you did, and we're thinking of doing one, we really love this one," that is a lead opportunity right? Now that client found you on Instagram doesn't mean that you only communicate with them on Instagram. But it means that you can develop a conversation on the relationship a little bit, then take it offline. So just be aware of all the different lead channels that you have. Because these are all spots where people can find you. Bigger than that is really the marketing, your whole strategy is like start looking at your metrics and say, "Where are people finding me? Let me put some attention there, right?" Not saying go and you know, spend 10s of thousands of dollars on ad spend on Facebook or on Instagram or wherever. But pay attention to where leads are coming in and really start to focus and see what's working well, where you're getting larger amounts of leads? Well, what's working well about it, what can I take from that and apply to these other channels that I'm using, again, the solution to your financial and your sales problems is in your pipeline. So that's really where I would tell people to really be considering and then much bigger than that we go right up to the clouds for a second is, is just start thinking always be looking months ahead, always be thinking about what is coming. And it's kind of like, people might say to me, "Well, I don't have a crystal ball, how am I gonna know what's coming." But you've got to use the information that you have right now and make your best assumption and work towards that. And if you just keep swimming in the lake, and it's foggy, and you can't see the other side, you don't really know if you're getting anywhere kind of thing. And so you kind of really want to be able to like, picture what the other side looks like, and really start to unpack those individual 30, 60, 90 day goals inside of each quarter for how we're actually going to get to that other side.
Grace Mase: 21:52
That's great. That's brilliant. And I think, as you mentioned, these kind of acquisition strategies needs really locked in to make sure you have continuous stream of leads coming through your pipeline. Now let's dive in a little bit more on the retention part of now you got you secure these leads and there they're beyond warm leads, they're ready to move forward. They're asking for your estimates, and they are ready to hire you. Let's talk about that segment of engagement. How do you advise these builders and contractors of what's the best way to really lay out their estimate?
Bryan Kaplan: 22:24
You know, I'll jump up a level for a second and just say that, you know, we look at it from an overall perspective, the most important thing is we have to have a process first and foremost, because it's about walking somebody through, always I always sort of paint this picture to people is that when you go to land on someone's website, you want a very clear method. Here's step one, here's step two here's step three, I want to know how am I supposed to interact with this? How am I supposed to actually purchase, learn whatever it is that I need to do? Guide me through the steps kind of thing. So when you ask what's the best way to set up their estimate? First and foremost, I would say it's really important to just have our sales process really flushed out so that we know and does not need to be super complex four or five steps is all you really need to do in that sales process to kind of manage that lead properly. Ultimately, what we want to do is make sure that we are adding value to someone's journey, clients are typically in that sort of awareness and consideration phase for a very long time in the marketing journey of doing a project until the point where they get to the kind of the shopping or the actual decision side, which is really where that estimate kind of falls into right. It's in that steep kind of rise in attention to the project kind of thing as we'd say, like the volume of time that they're going to spend there. So, but yeah, they're gonna they're gonna be in that consideration phase for a long time. So when we get to like setting up the estimate, how do we best set it up? Well, the truth is, is that it's going to be different for everybody, right, and some people are going to be fixed cost builders, some are going to be cost plus builders, some of them and even within those two types of contracts, you're going to have a different lens on how much transparency you're showing you just imagine a slide bar right now like a volume slide bar, you know that transparency can go all the way to the right, where you're showing every granular cost, and it can go all the way to the left, where it's just a lump sum price, I think that's going to be very business specific. General guidelines I tell people is that if you are getting into the business, start in fixed costs, simply because it's easier for you to control the actual price that you're giving to a client. What I mean by that is that if you need to charge 40% to 50% of a markup to be profitable, it's a lot easier to put into a lump sum price than it is to show on the far right hand spectrum of that slide dial where it's completely visible. That's going to be a very hard sell to sell to a client. And so that's kind of some of the challenge with transparency. So yeah, it's gonna be, I would say it's going to be very different. And then in terms of like the level of information that you show, again, that's going to range. One of the biggest things that I will always talk about and it's I run an estimating masterclass that I teach this in the big premise of this class is that you're not actually solving numbers problem, you're solving a scope of work problem. So if you just, everybody listen to that and think about it, think about every change order that's come up, think about every cost that's gone over, the reason that that cost has gone over, or it's different than what you initially estimated, is because you didn't have the scope of work fully defined, right. And it's not a comment to say that you didn't do your job. It's things like we open up a wall, and we find something, that is a scope of work problem that has nothing to do with the actual numbers of it. It's really that it was just a latent condition that was there, that became a scope of work problem, right? So you can kind of think about this in all different contexts of your estimate, as you go through it. Really, it's about defining that scope of work, first and foremost. So again, you can set up the format any way which way you want. But I really try to get people to hammer in on developing that scope of work, use your client, use your design partners, your architectural partners, inspiration photos, all these different things, to help you really fully define that scope of work right at the beginning.
Grace Mase: 25:58
I'd love it. I mean, you're absolutely right, the scope of work is key to providing estimates of what the potential costs may be. And you mentioned earlier, like renovation, especially, there's always something behind the wall you don't see and you don't know enough, until you actually break it open to see what's behind it. So how do you manage those kind of properly define the scope of work when there's knowing that this house is at least, you know, a few years old, and you've got some issues along the way?
Bryan Kaplan: 26:24
Yeah, it's a great question and don't have X-ray vision yet. So I imagine at some point, we're going to have this I mean, really, a we put people on the moon, it's, you know, and that was hard to say, it's hard to imagine, we don't have X-ray vision already. But nonetheless, you know, it comes down to, you've got to use your best educated guess in your experience, right, you we know, relatively speaking kind of what to assume. A great example of this would be we're in a home, and we want to take out a lot of the partition walls on the main floor to make a nice open concept space. If the basements unfinished, we can see up through that we can kind of tell where walls are, we can tell where services are going up, so we can start to anticipate some of this. I think one of the big things that and it's a head trap that I think we get in as builders is we try to minimize the cost of something and look at that as a competitive advantage when we're in that estimating or bidding phase, when we know we're competing against other builders. And the problem with that is that ultimately, you're just making your future your future life a little bit more difficult by doing that, simply because you have now all these conversations that are going to present themselves because once again, they are scope of work issues, right? They are going to present themselves, and you're going to need to manage kind of that change order process, which is like the term that everyone gets all uptight about when we start talking about change orders. And I always kind of say to people, like, look, it doesn't have to be the elephant in the room, like, let's just get it out on the table. So my best advice for people is that during that initial sales process where you're getting to know each other, is to actually bring that out on the table and talk about it and say that look, here's four reasons why change orders are going to happen, right changes in the work are going to happen. And one of them is that you Mr. & Mrs. homeowner might change because really where you're starting this journey, and where you're going to evolve to are likely going to be to different places. We're going to discover things in kind of this, what we call a discovery period, which is like we open it up and we find some latent defects or some things that we weren't anticipating. So as a little side note there for all the builders listening to this, I highly recommend that you have that conversation with people really early on and help them understand and call it something, make it a label it call it a "Discovery Period," which basically means that once we do the demolition, you know, to your point we can't see behind the walls. So just be prepared that when we open it up, we've done our best to estimate or guess at what we think we might find, but chances are there will be some things that we couldn't anticipate or expect. At that point, we're going to walk you through it, explain it to you and help you understand what the costs might be too, either immediate, or maybe we have to shift the design plan a little bit, whatever it is. But the big thing I hope that people get out of this as I'm talking whether it's change orders, discovery period, is just get these items out on the table, start talking about them with your client communication is everything as we know. And so just help them understand and come from a place of education as opposed to a place of like, almost like directing, so to speak. Right, like help them understand it as opposed to tell them about certain things. If that if that comes across clear. And then yeah, I mean, basically, it's just all about communication to sum it up. Like, change orders do not have to be this taboo thing. They are reality of construction. It is a very fluid and organic process, sometimes a little disjointed, because that's just the nature of of what it means to actually remodel or build a new house. And especially more in the remodeling side, I would say but you're really there as the clients guide through all of this. So take that approach and guide them through it from a place of education.
Grace Mase: 29:51
That is so important, I love it. I mean a change order, you're right, is the elephant in the room. Everyone has this taboo association of oh you shouldn't have any change order and that's about it. You don't have any change order that makes you a perfect project. Right? That may not be true, especially remodeling, because things happen and you don't know what's behind the wall. And maybe the previous builder didn't do such a good job and you need now you need to with a current building code, you need to do something about it.
Bryan Kaplan: 30:19
Sorry, I was gonna jump in and say that, like on that point, I've been part of probably over 350 projects in 21 years, there has never been one that has not had a change order, not one.
Grace Mase: 30:30
I think it's important to desensitize this taboo and just knowledge, it is what it is, and how do we minimize those drastic changes that could have been caught in the beginning during the estimation phase of defining the scope and properly understand the scope. So there's not a whole lot, I thought you meant this, and you thought this must be this and there's a lot finger pointing. By that time, the trust will be eroded, and that will be unfortunate.
Bryan Kaplan: 30:53
There's one thing I'll add to that is just use other people's eyes as well. And I always talk about this we talk about, it's our team, or it's not me. And what our team means is that it's our trade partners. It's and I have internal team members in my company. So I have like a project manager or site supervisor, I'm going to bring that person with me. And we're going to actually make this a process, right and discovery process, before the first hammer flies kind of thing. And the first shovel goes in the ground, is let's really use other people's opinions and what they see, like, I know a lot about electrical, but we would do these things called trade days. And we would have all of our trades come to these, especially these projects that we were modeling. And we would have the electrician walk around, they'd have a defined scope, but then they would help contribute to that, because they would see things that I didn't see, or code changes to your point earlier, like things have changed. Oh, now we need to do this. Well, I didn't know that. And that's how I would learn so that now I can better my estimates moving forward. But to your your question a moment ago, which is like how do I minimize those additional scopes of work before the project actually starts? Involve your team!
Grace Mase: 31:56
No, that's awesome. And I think everyone actually had that growth mindset to understand, hey, there's a learning opportunity and things I don't know yet. And I can gather my troops and help me to understand well learn better, that's even better. And that's a benefit for everyone who's working on the team. So there's a lot more trust building along the way as well.
Bryan Kaplan: 32:17
The older I get, the less I know, is kind of what I've been talking about recently.
Grace Mase: 32:22
I subscribed to the same kind of mentality. So let's talk a little bit about change order. I know you have a class on change orders as well, and can you help, you know, are listening to understand what things they should be mindful about change order? Often people just put this knowing there's some changes, here's material costs, and maybe there's a labor costs. And they just put that quickly together. But by the end of the project, somehow, they realize they can make money as much as they margins just barely surviving. So I know, change orders, one of the things that it's not so much making money, per se, but just make sure they do the right thing, and they're not losing money more specifically.
Bryan Kaplan: 33:01
Great question. Yeah. I mean, I could talk for hours on change orders. But so really big picture for a second, let's just call it out and say that they're uncomfortable. They are, you know, it's uncomfortable for a lot of people. I've coached teams of project managers before, in week after week, after week, I would hear every reason under the sun, why a change order hasn't been issued to a client. And slowly, what I helped them see is it's a reflection of themselves. And typically, it's our own relationship with money that stands in the way of our ability to go and actually report to a client and say, "This is what's happening." Because we have like these good human principles inside of us, which is like, we want to minimize the cost to our client, we're very sensitive to their situation, maybe we know there's something happening in their personal life. So we're like, Okay, I'm just going to wait till that passes, and then I'm going to approach it. My message would be to everybody listening is that you feel like you're doing your client a service, you feel like you're doing your team, a service and all that you're doing everybody a disservice by not approaching these these topics early and often. And remember those three words "early and often" because that applies to a lot of things in your construction business. But ultimately, you do as soon as you know, as soon as you become aware of something, you do need to bring it to your client, you do need to make them aware that there is a change so that they can understand that. The words you never want to hear a client say are, "if I had only known insert blank," right. And I've heard those words before. And what it means is we we failed as being able to guide them through the process and properly manage the expectations properly manage the budget. So change orders are a necessity of this business. There's several reasons why they happen. We obviously have the site conditions, which we've talked about already. so far. We have maybe an engineering requirement or an inspector requirement. We've had lots of scenarios where they've had us do additional work to your point earlier about bringing things up to a certain code level or whatever it is. So there's that sort of reality. There is also of course, the client driven change order because we have clients that call us up they go to a dinner, maybe not in Covid times, but in regular times they go to a dinner party, they see something that they really like. And they're in the middle of renovating or building their house. And they're like, "Hey, could we do this?" kind of thing? There's a lot of reasons why these things happen. So when that client says to you, can we do this or your Lead Carpenter calls you says, Hey, we found a problem, or your plumber says this wood or whatever, whatever it is, whatever cost that presents itself, here's two fundamental things that have to be done on a change order. The first is the cost. And the second is the time, because time is always affecting the timeline of the project when you have a change order. And so most people that are doing change orders, and I would, and I would admit that a lot of clients say to me, we could they use the words of we could do a much better job in being more consistent with our change orders. So be consistent. But they'll say that they put the money in, then I ask them, well, how much time do you add, and then I'm quiet. And then usually it's crickets. And there's a little smile that starts to form and there's no time being added. So we all know that the two biggest problems in construction is that we're over budget, and we're over time, right? So over scheduled. So if you get to the end of the project, along the way, every single time, a change in the scope of the work has presented itself, and you've approached it from a place of this is how much it will cost and this is how much time it will add to the schedule. Cumulatively, there's a money pool there, and there's a schedule pool there right at a time pool there. There is no conversation with a client at the end when you are $80,000 higher than what your initial estimate was because you've communicated to them all along the way. Now, let's talk about the profit part of this because you said they maybe they're doing change orders, but they still aren't profitable when it comes down to it. And here's where there's a little bit of a trap when it comes to pricing change orders. So I always talk about what is your opportunity for profit in your fiscal year. So fiscal being financial year for for people that aren't familiar with that term. So when we talk about opportunity for profit, we say, and this is why we always add time to the change orders because those change orders take time. Now, if the change order is only $10,000, in, say, you're charging, I don't know 20% on that money. And that's going to eat up three weeks of your schedule where you can't really do much else in terms of moving labor around or taking on another project, whatever it is. But in that same three week period, you could be on a different project that had a larger amount of billing that was going to happen. That's the distinction between opportunity for profit. So in other words, we should be charging a higher percentage on our change orders than we do on a regular contracts. And that is a tough concept for people to gravitate towards, tough for them to reconcile in their minds, and then project and sell that to their client. If you're a fixed cost builder, and you're doing change orders, and it's a lump sum, that's not really an issue because they don't really see it. And even if you're a cost plus builder, I would be building that in to the cost. Personally, I wouldn't actually be you know, not charging more, it's a little harder on that fully transparent side. But basically, the message here is that you've got to employ a little bit of sliding scale margin when you think about this, because you are actually reducing, if you just look at, we only have, 2080 hours in a typical work year to actually build and bill and kind of collect money. So if you are spending a lot of time on these, all these change orders, they need to be priced at a higher percentage. And if you are a cost plus builder have that in your contract, say that changes are charged at 30%. Even though our regular thing is 20%, whatever it is, I mean, put that out there early, but just understand that concept that profitability will change as the project duration goes on, meaning that changes in the work have an exponential cost to you a builder and your opportunity for profit as time goes on.
Grace Mase: 38:46
Now, that's really key. That's brilliant, because we hear this over and over again, and that's part of our as you know, don't need to do much a plug. But BEYREP we focus on that, because we do see that happening in the industry. And so what we have seen in the feel is that our builders and contractors would literally pick up their phone, type in the change order, or they're having a meeting with their homeowners during their site meetings. And that really creates an education opportunity as well as building relationship and informing them and showing them where things that's not working right, and what things they need to change. And they can literally on their phone type in the change, you know, change order. And if they need to modify they could do so. And I've seen it many times where the owner will rail as soon as the builders submits the change order and the homeowner get their phone ding up and they looked up and approve and that's the brilliant part because the trust is already built. They know why you're doing what you're doing and how is impacting and what they need to make decision on and how information you provide them to make decision on so they can do so quickly. And that to us is beautiful when things are working so well. That way using technology into helping them to advance their career, and also educating their homeowners at the same time keeping them at the moment where they're eager to learn and want to to figure out what's the right thing for them.
Bryan Kaplan: 40:11
Yeah. And, you know, you said something that just made me think of what we talked about at the beginning of the conversation about what should builders be focusing on, and the concept that you just kind of went through is that it was all in real time, right? In other words, you know, this is what we're talking about with change orders, right? It's like, you want to advise your client in real time, you don't want to just like, head in the sand approach to it, and you know, just kind of stack these things. And then I'm gonna, like, go and approach the client and have this conversation, right, that's really hard psychologically. Just as a little detour here for a second, like, if you have all these things you have to talk about with the client. As soon as it builds up to more than like two or three, there's like a huge psychological barrier that we have as humans to actually confront that. And some of us, personality wise also don't like confrontation, right? I mean, most people actually don't like confrontation. So it gets overwhelming. So definitely don't let them stack up, but the big thing there is real time, right? Like you said, you basically punch it in. And I'm not saying you have to do this right at the meeting, but don't delay, right? Just get it done, send it off as to your point, there's trust that's built there, keep everybody informed, like right in real time as to where the project is. Because it's like I said a little while ago, where I said, like, you never want to hear a client, say, "if I had only known insert blank" is because maybe there's something like a fireplace that they wanted that they're about to decide on and say, yeah, let's add this to the scope, and that's $10,000. But if you don't tell them, hey, by the way, we found this thing in the wall, it's gonna cost you a bag of money. $5,000, let's just say they might make that decision on the fireplace differently, right. And so this is the idea that real time and I think that's such a great point that you brought up.
Grace Mase: 41:45
Right, at any point when there's money involved, and you stack them up, and it's gonna be overwhelming when they just walk away and think about on their own time. And they're not getting the benefit of you walking them through educating them. And they started making their own stories, what could happen, and they started looking at bank account and start questioning about all the different reasons why they shouldn't do this. And so it's not so much that you don't want to help them. But it's, it's about doing the right thing for them to feel, make them sure make sure that they feel like they're making the right decision for themselves.
Bryan Kaplan: 42:16
Bingo! That's brilliantly spoken, and that's exactly what we're talking about, right? Just put them in a place to succeed, put them in a place where they have all the information in real time. So they can make the right decision, and not to overwhelm, not to give them three, four or five, ten things all at once. Because as humans, we're just not wired to process that much. So and this becomes very, and the other side, the whole other sides of this is that when we talk about money, as emotional as it is for you, it's very emotional for them, right? This is hundreds of thousands of dollars, typically, if not a seven figure number that they're investing into their home, it's likely money that's not liquid. For them, it's money, they're going to spend their entire life paying back kind of thing, or at least the next 20, 25 years. It is a big deal. And I don't think as builders, we often give that enough credit or enough weight, in terms of how we actually present to our clients is that help, we have to understand where they are emotionally? Because it is. I mean, I've been through it myself as both the contractor and homeowner and it's, it's not a great experience sometimes. So and like I was the same person. So I can only imagine what it's like for some of these clients.
Grace Mase: 43:23
Okay, this is actually just a side note. Have you had experienced any horror stories in your life throughout the project or your clients? What did they learn from it?
Bryan Kaplan: 43:35
Man, I mean, I've got nothing but horror stories, that's for sure. I mean, as I opened with, I spent a lot of time in the school of hard knocks. And so you learn a lot on the way. And there's one project in particular that stands out as we're talking about change orders and real time information and all of that. And this was a project where I had started working for a company, I came into the project, it was just at the demo phase, as we know, like there's so much work that happens from an administrative level to really have a project succeed well before the demolition phase. And I guess when I came into this project, I thought that there was a lot of that back work done, but there hadn't really been. And nonetheless, as we went through the project, the estimate was just hadn't been given enough space and attention so that it was accurate. Again, we hadn't defined that scope of work properly, hadn't talked through all of the sort of design choices and things that the clients needed to select. Just on the overall feel level of finish, all that kind of stuff, which all impacts that bottom line. And so I think what happened along the way was that there was constant conversations that I would have with them about this cost and that cost and this is a difference from what we were expecting or what's on the drawings to what I think you want or what's reality, in my fault in this and this is why I'm so adamant about preaching to go early and often with change orders. And that doesn't just mean having the conversation like I did is learning from my own mistakes here is getting it in writing. Whether If you're using a tool like your product, whether you're using a piece of paper that literally just has the date, the client name, the information, the price, the time, and a signature line, the best system is one that you're going to use. If it has to be paper right now, just to get you started, then just start using paper, it doesn't really matter. But the horror story I would say is that we got to the end of the project, I had talked about their costs all the way along and clients have, we always we always joke, we call it client amnesia, clients are always gonna remember things a different way, right? I think as soon as we all right? Like you go and you look at a house to buy, the first time you go in there, it's always seems bigger than it is when you go back the second time, the house is always smaller, right? I don't know why that is. But the psychological thing that happens to us, we all remember things a little bit differently. If it doesn't get put in writing, whatever that looks like, right, then you're not going to be able to go back and refer to it and have everybody on the same page where there was a signature, there was an amount, and there was a schedule, when there was a scope kind of thing. So the horror story there is we got to the end of this project. I think we were the shortfall was about $150,000. Granted, it was a large project, it was over a million, but still, that's a lot. Yeah, it's still a lot. And it's one of those things that yeah, you can talk to people and say maybe there's some builders here thinking, Oh, I tell my clients always have a 10 to 15% contingency. And we had that conversation. But a client will turn around and say to you "Well, if we knew that these were the cost going along, then why didn't you tell us," or why didn't you and all you can say is well, we did have the conversation, but without a recorded date. Without a paper trail, it's very hard to go back and actually prove that. So I would say that that was a very defining sort of moment for me in my change order life, or change order journey kind of thing to be like, Okay, this has got to get documented, because if it doesn't get documented, it didn't happen.
Grace Mase: 46:48
Right. And sometimes reality is, as a homeowner, they often think about what was originally agreed to. And that's what they fixate on, whether it's a target completion day, or the entire project costs. And that's what they think about. And back in their head. Even though you may have numerous meetings, you have meeting notes, document and things to change and document change order. Sometimes their mind is like you say a ninja just stay back where they were. And it's not so much that they intentionally want to forget all the conversation all the documents and provided, it's just what happens. And so it's really funny, that was one thing we caught a lot. During our research, we found a lot, that homeowner kind of is developing that kind of behavior. And so we end up part of our change order in logic, when our system, BEYREP, is to a lot of approaches specify is it going to change impact the rest of the project? If so they just click on one checkbox, everything's changed. And the dashboard immediately updates. Here's the current projection of target completion date. And here's current projection of the total project costs and what's remaining to be paid. So everyone is on the same page. So it's not so much of what was original, but now it's all about what do we have right now to focus on?
Bryan Kaplan: 47:59
Yeah, communication in real time.
Grace Mase: 48:01
Yes, absolutely. Now you have a lot of experience in working with homeowners, what would you advise homeowners to do when they start a new project?
Bryan Kaplan: 48:09
If I was if I had a megaphones, every homeowner out there, I would say that this industry, in specifically on the contracting side, like contractors, builders, remodelers, I think there's there is a stigma, of course of like, you know, who that group of people are, just to understand that, like, seek to understand before we judge. I think, you know, coming into it as a homeowner with a jaded view of what the industry is like, as opposed to coming into it with the sort of the kind of knowingness that there, we're all just good people in this industry. I mean, literally, they're, I mean, I'm plugged into this industry now, nationwide, both countries, and the clients that I work with these people are just incredible people. That's what inspires me to continue doing what I'm doing. And I think homeowners need to understand that we're all just people here and that, yes, there is a fiscal exchange as a monetary exchange and all that it is we're business owners. But like, we're also just people, you know, you said this really early, you said it's people, the people, right, that's really what we're doing business with. And so for a homeowner perspective, look, I would love you to come in with that approach. But also do your research. Yeah, go in and actually speak to past clients. That's a great way to kind of determine how a client or how contractors, not just their finished product, but ask them about the experience in the process. Ask them specific questions like when it change came up to the scope of work? What was the process for that? Right, that one question alone, which pretty much, you know, we've given you all the answers in this podcast, but that one question alone will help you understand is this builder someone that puts way too much on their plate? That doesn't communicate in real time? That doesn't allow you to be part of the decision making process? I mean, there's so many answers there, because that's really where the stress comes from in a project, right? It's all as we always say, it's all puppy dogs and rainbows at the beginning of a project, but as time goes on, that's where, and the stress kind of enters the changes, enter. That's where you see these things start to go sideways. So ask questions about those points in the process, not just seeing the finished product. I mean, that's obviously important. We want to make sure that the quality of work is up to what your expectation is. But so go into it with that open mindset. Do your research and ask those questions, the harder questions about the harder times in the process so you can understand it. And of course, see the work physically if you can, maybe a little bit difficult in today's day and age with Covid restrictions. But generally speaking, if you can see the quality of work firsthand, that's really good. And then the last thing I'll just say is like when you speak to those homeowners, those testimonial, referral people, if you can get in front of them physically, most people are really bad at hiding, whatever they're trying to hide that whatever their tell is, they're playing poker, like, they brush their nose, or their eyes widen or whatever, or they start to perspire, whatever it is, most people are bad at controlling those and especially a homeowner that is giving a testimonial for somebody they don't, they're not really thinking like they need to kind of control the little drop little breadcrumbs for you. So you just got to be aware and kind of pick them up. So getting in front of them is really helpful. You get that body language, those subtle cues that you know that you can't get over the phone kind of thing.
Grace Mase: 51:16
And I also heard for homeowners where they get turned off where the builders or the contractor bad-mouthing of their competitors. And that itself is no question about it that that is a turn-off. And so this is really funny, we talked about the other advice you gave are brilliant, they're spot on. But it's really tied back to the relationship, right? Building, we're building that relationship, even just think about dating, when you are interested dating somebody and you kind of do some background check then to figure out is this the right person? Are we compatible? Do they respect what I want, you know, things I value and just to know that if everyone treat this kind of relationship interacting with their professionals, or when you're courting phase of getting to know them, it's also important to do the same kind of technique that you deploy, when you looking for a date, or someone that you may be interested to have a longer term relationships that just actually hired them do build your homes. And that itself is key about having open minded and knowing that yes, as a profession, the people we associate with are tend to be very good folks and want to do the right thing for their clients, and also grow their business at the same time. But they are also reality is there are some bad actors out there doing intentionally to hurt the hurt everyone else. And that's not that shouldn't be a benchmark as as an industry. Homeowner should recognize that that is just knowing just like dating, there will be some bad actors. And but if you can ask the question appropriately, then you can weed out those guys quickly as well.
Bryan Kaplan: 52:46
For sure, yeah. And relationships, it's all about relationships, we're in a relationship industry, that's really what it comes down to. And I think the lens that goes, it's bi-directional, for me in the sense of what you were talking about, of like, focusing on the relationship for homeowners. So look at it, from that perspective, exactly the same for our builders, we want them to look at it that way. So one of the subtle shifts that I can give the builders listening to this is think about and speak about, you know, the relationship you're building with a client as something that never ends, I always used to say that our relationship really starts when the project ends kind of thing. And that just the mindset of that to say now, I'm not saying you have to be all sudden create a service division in your company, but be a resource for your client. We talked about this earlier in this podcast, your past clients are your strongest marketing asset, if you go into it, approaching it from the concept that you're gonna be part of their like, we always say like use language, like you're part of the whatever your company is family kind of thing. So you hear the word family, you think for life, you don't think you're not part of a family for a year, right? Like it's a lifetime event. So kind of go into it that way from both the homeowner and the builder side.
Grace Mase: 53:56
I love it. And even just from that perspective, what would you do for your family? I think the answer would change drastically, rather from homeowners perspective versus home builder and contractor perspective. And if you treat each other as a family, what would you do for them? And I think the answer will often turn out to be much better for everyone else at the end than just looking at this as a monetary relationship.
Bryan Kaplan: 54:18
Yeah, for sure. And as we say that some guys are probably thinking because I that's the first thought that comes to my mind is like I don't want to build a house for my family. Because you know, because that can be fun. Right? But, you know, so we're speaking more in literal, or in theoretical terms, as opposed to literal, because I know we've all done stuff for our family that would do for free or, or you know. But no, definitely is a great point. And I love that perspective is think about my might have to use this one. But thinking about it from like, what would you do for your family versus, you know, a stranger you met on the street kind of thing. And I just think going into it with some of those mindset principles is really, really key to developing that stronger kind of connection.
Grace Mase: 54:59
Right, and it humanize our relationship versus just treat it as a monetary relationship transaction.
Bryan Kaplan: 55:05
Yeah, it's kind of like if you don't want to be treated as a commodity, we all you know, none of us as builders want to be treated as a commodity, well, we can't treat the relationship the same way. And that's, that's really what it comes down to. So taking that different approach, you know, for both sides is really you know, how we get around that.
Grace Mase: 55:22
Bryan, I can speak with you all day long. You have so much insight and so much great advice. So, for those who are listening, and are probably just dying to get in touch with you, what's the best way for them to get in touch with you?
Bryan Kaplan: 55:35
So the easiest way is just to find me online, it's constructionconsulting.co not .com. On my website, there I have links to I run masterclasses in a few different disciplines. So there's links on that page that'll take you to different course pages so you can see what I'm currently registering people for, or what's coming up kind of thing. You can also book a time to chat with me if you're not really sure where you want to start. Or if you just want to kind of get a sense of what it looks like to work with a consultant or coach, if you've never worked with one before. There's buttons on my page as well that allow you to kind of book time with me. And then I'm also pretty active on Instagram, which is the same handle @constructionconsulting.co and then on LinkedIn, you can just search for me, Bryan Kaplan and you'll you'll find my profile there.
Grace Mase: 56:24
Well, thank you, Bryan, for taking so much of your time and helping us to learn together. And I hope all of you guys enjoyed listening to Bryan as much as I did. And thank you for listening to the Revivify podcast. We'll see you next time.