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Wednesday, August 17, 2011Apprentices are like a fine bottle of wine!
Apprentices are the lifeblood of our industry. Young men (mostly) usually come out of High School, looking for a career in Carpentry or Building. They gain employment with a builder to learn the ropes, and put in to practice the training & skills they learn in the classroom. They also get the chance to earn money while they are studying towards their chosen career. In return their employers get keen, partially-skilled workers that are relatively cheap labour, and the opportunity to mould them in to the builders they need for their businesses future. Several of our best foremen today started out as our own apprentices.
Many builders complain about the quality of the apprentices available. Certainly, I have also seen many apprentices that have been abused by their employers – paid a pittance, and not trained at all – just used as half-price labour. The system is by no means perfect.
Gone are the days of leaving school at 16 after the School Certificate, which I believe is being abolished anyway. The majority of the apprentices that we see are fresh out of school, or back from a “gap-year” after school. At 17, 18, or 19 years old, some of these kids are somewhat immature, inexperienced, and as we have become accustomed to in the “Gen Y” mould – not exactly sure of what they want to do with their lives. Obviously this is a generalisation, but you get the idea.
What I have found extremely refreshing over the last few years have been the influx, in our firm anyway, of Mature-Age Apprentices - guys that are 25 or so, or older, that have worked in other industries or fields (one of ours was even a Commando in the Army for 7 years!). Typically they are a lot more mature, have travelled the world, and are more focused, as they now seek to settle down and properly pursue their chosen direction and career. Some employers may see starting at the bottom at their age as a disadvantage, but I believe their life experience in other areas helps them make better decisions, work better under pressure, and motivate them to drive harder towards their chosen goals.
"And so I say – Apprentices are like a fine bottle of wine – the older they are the better!" |
Tuesday, August 16, 2011
Plumbers are Plumbing BUSINESSES too!
Last financial year, we gave one of our plumbers more than $500,000 worth of business. The same for one of our electricians. And our concretor, and our window fabricator…….
With the cost of building rising and rising these days, and the complexity of the houses growing and growing, it is not uncommon for a “Tradie or small Builder” with even 4 or 6 employees to be turning-over more than a million dollars a year! That’s an average of $20,000 a week, every week of the year.
Obviously the same can be said for most small builders.
Who trains these guys to run million-dollar businesses? Certainly at TAFE, apprentices that finish their education at the age of 21 or 22 have not been trained enough to manage that kind of business or cashflow. These days we have BAS, GST, PAYG, Various Taxes, Wages, Super, Workers Comp, Licences, Payroll, RDO’s etc. Builders at least get to go and do the Cert IV Builders course at TAFE, but I hardly think that prepares anyone for spending $4-5,000 a day. Especially when they have 5-10% retention withheld from their claims, and they only get paid once a month. Combine this with the good tradesmen’s businesses growing at dramatic rates due to referrals and their business is at risk if they aren’t properly prepared.
Most of the guys that I hear that go out of business are not necessarily bad tradesmen or builders – quite the opposite. It’s the fact that they are very good at what they do that they decide to go in to business for themselves in the first place. I think rather that while (In my experience, although) they may be good plumbers for example, they are unprepared for, and not adequately trained to operate a PLUMBING BUSINESS!
I’m not sure what the answer is. Certainly getting a certain level of Home Warranty Insurance is making builders demonstrate that they can run a good business, but tradies don’t have this same requirement. Maybe all licencees should have to do a small business management course before they get their licence? |
Wednesday, August 10, 2011
Fixed Price (Lump Sum) Contracts vs. Construction Management (Cost-Plus)
People are always asking me which is the best form of contract to enter into when building.
One of my clients, a retired accountant, once told me – “If you give me a fixed price for this job, one of us is gonna get screwed in the end!”. I tend to agree. It all comes down to risk, and who takes it on.
If someone is risk averse, or on a tight budget, I would recommend them to proceed on a fixed-price basis, and as much as possible detail and document the project. Have as few PCs as possible, and if you have PCs that they be based on a quote of some sort, thus a reasonable amount. The most important thing then, once the contract is signed, is to be disciplined in staying within your budget, and not making any changes along the way. One should always have a contingency sum in your overall budget for deisgn, structural or regulatory issues that arise during the project.
Contrary to popular belief, I don’t think Cost-plus should be a decision based on saving cost, but rather control. If a client wishes to have ultimate control over what gets done, by whom, and for how much then cost-plus is the way to go. Obviously, the majority of the risk in the project then sits with the client. The most critical factor in the successful outcome and delivery of a cost-plus project is obviously the budget. The problem arises in the uncertainty of what exactly we are budgeting for? If we knew the details, chances are that the project would have been done on a lump-sum basis! So the key is to make the budget figures REALISTIC, and update the budget on a regular basis. |
Tuesday, July 16, 2011
Rule #1 - Builders don’t build.
This is my first attempt at blogging, and although I find it intriguing, and I hope you do too, let me be the first to say that English was not one of my better subjects as I wandered the halls of Sydney High School more than 20 years ago!
I have boasted (mostly to the guys in the office) that I could write a book based on the experiences I have had building houses for people over the years, and the lessons learned. That is obviously a pretty unlikely event, but then it occurred to me that I could publish it a different way – Hence this Blog!
On my first day of the Building course @ UNSW, one of the lecturers told us two things that have stuck with me ever since:
1. After 4 years studying, you are most likely to be unemployed. [Such was the state of the building industry in the early ‘90s - then we won the bid for the 2000 Olympics, and the industry has never looked back since], and
2. Builder’s don’t build.
I was ready to get up and admit defeat right there and then. Obviously this was not the course for me! But I stayed, and I’m glad I did, because they were right – Builders DON’T build – They manage!
One definition of “Management” is to plan, organise, direct and control. In very simple terms, Builders need to Plan what needs to get done (study the plans, set goals and how to achieve them); Organise a team to do it (get the right team together that will actually DO the work); Direct people what to do, and when; & finally to Control, or monitor whether they are actually hitting the goals of time, cost, quality, & service.
I actually can’t stress how important this philosophy is. Builders are not excavators, or bricklayers, nor concretors, window fabricators, roofers or painters. They are not even carpenters, though most of the best builders are trained as carpenters. All these people help BUILD the house, but the Builder is the conductor that puts all these musicians together in to an orchestra, and makes sure they are all playing the same set of music, in the right key, and finish on time. |
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