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DESCRIPTION

More than a few residential builders and remodelers have walked away from closings with less profit then they deserve. You may get the job, but find out later you needed to make a lot more money on it. Performed correctly, estimating is a small builder's or remodeler's key to profit. Here you'll find how to estimate based on fiscal goals while protecting your company's bottom line.

This unique approach to estimating gives readers user-friendly tips and methods for improving the process and providing hundreds of ideas and simple suggestions. Explains how to defend each line of an estimate so that your system of planned profit is consistent and bankable.

TABLE OF CONTENTS

LIST OF ILLUSTRATIONS, viii

ACKNOWLEDGMENTS, xi

ABOUT THE AUTHOR, xiii

FOREWORD, xv

PREFACE, xvii

1. Understanding the Critical Number in an Estimate-Profit, 1

2. Establish the Company Profit Number Based on Your Income Needs, 9

3. Competencies for Building and Remodeling Success-Estimating, 19

4. Spreadsheet Estimating, 29

5. Seven Ways to Get the Numbers, 49

6. Using Retail Pricing at Every Line, 61

7. Minimizing the Workload, 67

8. Materials Costs and Tracking, 75

9. Estimating and Tracking Production, 85

10. Financial Analysis: Estimating the Cash Flow, 93

11. Defending the Profit Line in Your Building Estimate, 99

12. Defending the Profit Line in Your Remodeling Estimate, 115

NOTES, 133

SELECTED BIBLIOGRAPHY, 135

INDEX, 136

Preface

"Who pays more for his shoes: a rich man or a poor man?" my mother asked me early in grade school. I fell for the simple answer that the rich man paid more, but she enlightened me. The rich man pays less because his shoes last far longer, and therefore, his annual cost is less than the poor man's. Indeed the poor man pays more over time. So the lesson was taught-but maybe only crystallized later-that life-cycle cost is far more important than first cost. Others followed this lesson by teaching me through examples of hard work, watching for dangerous risks, and always keeping a few safe paths out of nearly any situation. A long string of values and strategies were imparted to me, such as each of us might glean from caring parents.

This book is about such a lesson. A lesson in looking at your goals and creating a company that helps you fulfill them. It is about creating profits that cannot be endangered by carelessness or short vision so that each year is profitable. It teaches you to defend each estimate line item so that your planned profits are consistent and bankable. This book is directed to the creation of a defensive state of mind, so that it may become a system for generating and protecting profits.

You should be looking inward at your estimates and trying to find latent risks. Once you discover them, you need to defend against the risks to profit with clauses, terms, conditions, and disclaimers. We will review some of these risk-mitigating strategies in this text. You should not look for magic estimating formulas because they are not here.

As a society, we often read media coverage abhorring the profits of business. Excess profits are deemed a bad thing for society: the oil companies make too much money or corporate leadership makes too much salary. I suggest that this negative spin is wrong and that solid profits are a healthy way to keep a business and industry vibrant. Whether the stock holders benefit through dividends or a small owner-operator has a good year and banks some savings, the pursuit and achievement of profit is the reason to be in business. In defending the quest for profits through estimating, we secure our companies to face another day. A fellow builder shared with me the words of his immigrant grandfather, who entered the building business in America 90 years ago. He passed along the wisdom to know every dirty trick in the book. Not that you should use them, but to be sure they are not used against you in the building business. This company is now in its fourth generation.

My goal is for readers to rethink their quest for profits managed by "industry standards" and instead to tie their quests to their own needs in terms of financial security and personal growth. We each have a tolerance for risk in business, and you each need proportionate defenses to mitigate the risks you can't tolerate.

Our society speaks little about risk management for small businesses or individuals. Likewise, we give little effort to teaching decision making, financial management, personal skills development, process control, and a number of common sense topics. This book is a small step toward defensive thinking that may carry your business forward and just maybe protect some profits. The skills of defensive estimating readily transfer to other applications in life and other businesses. Given the potential volatility of our industry, some defensive thinking may be overdue.

BACK COVER

DEFENSIVE ESTIMATING
Protecting Your Profits

More than a few residential builders and remodelers walk away from closings with less money than they deserve. Stop letting it happen to you. Performed correctly, estimating is your key to keeping more of your hard-earned profit. Master remodeler, custom builder, and business expert Bill Asdel shares his unique focus on successful estimating for home builders and remodelers. With Bill's guidance, you can

• examine how you do business and modify it to meet your financial goals
• create profits unendangered by carelessness or short vision
• defend each estimate line item so that your system of planned profits is consistent and bankable

"A must-read for anyone involved with managing a construction business. Bill Asdal promotes not only the understanding of costs, but the foresight to predict construction expenses while considering the full realm of cost as a function of profit.
Dennis A. Dixon
Dixon Ventures, Inc., Flagstaff, Arizona

"Despite the title, Bill lays out a solid offensive game plan to ensure that the business owner not only scores on each job but takes home the trophy when it comes time to pack up and move on."
Bryan Patchan
Frederick County Builders Association, Maryland

William Asdal, CGR, owner of Asdal Builders, LLC, of Chester, New Jersey, is an award-winning residential remodeler and custom builder. Asdal Builders also builds and buys properties, to cultivate a rental portfolio. A former chairman of the Remodelors™ Council of the National Association of Home Builders, his many awards include Remodeler of the Year in 2000. He serves on the boards of the Partnership for the Advancement of Technologies in Housing (www.PATHnet.org) and the Energy and Environmental Building Association (www.EEBA.org). Bill is a frequent speaker at industry gatherings. He was a driving force behind the creation of Professional Remodeling magazine to address the business needs of the industry.