Capitalism at Its Best

Change the Game™ Podcast

The Coaches' Table: Pricing & Shortages in Construction & Remodeling

Posted by Brian Underhill on May 25, 2022 3:09:22 PM
Thanks for tuning in to our first episode of our segment, the Coaches' Table where we bring our Great Game of Business Certified Coaches together for discussions on industry-related hot topics. This episode features coaches, John Williams, Dave Scholten, and Kevin Walter, as they discuss specific challenges their clients in the construction and remodeling industry are facing today. And their recommendations for tackling those issues and preparing for the future with the principles of Great Game.

The coaches table Construction & Remodeling (400 × 400 px) (790 × 415 px)

 

Episode with guests: Kevin Walter, Dave Scholten, and John Williams

The Great Game of Business Certified Coaches™

(This episode was recorded in April of 2022.)

 

 

Continue scrolling to read the full episode transcription.

 


Brian Underhill 00:35

Thank you all to the first edition of the Coaches' Table. The Coaches' Table is brought to you by industry topics that we want to make sure we get to understand even better. So with that we brought in three of our certified coaches to talk about our industry topics of construction and remodeling. I'm going to go through an interview each coach and have them talk about what those hot topics are, and how Great Game can help those industries with those topics. So to lead us off with our introductions, first and foremost, Dave Scholten.

 

Dave Scholten 01:11

Appreciate you coming and including us and getting us in these conversations. Been of course a Great Game of Business three and a half years, currently enjoying for companies in remodeling construction. I've got Verity Homes in North Dakota. I've got Rivendale Homes in Austin, Texas, Bell River Homes in Australia and Interscapes commercial cabinetry in Minneapolis, Minnesota.

 

Brian Underhill 01:37

Thank you, David. Thanks for joining us at the Coaches' Table. And next up Kevin Walter.

 

Kevin Walter 01:43

Greetings, all thanks for attending today. Been a coach  10 years now, started my own company with that I own my brothers. They work so well there that I became a certified coach. Now this is pretty much what I do full time. Currently working with several design/build companies in the construction area. They've worked with over 20 construction companies total, from commercial to the design-build to home builders, you name it, I've covered it. That's a little bit about me.

 

Brian Underhill 02:20

Great. Thank you so much, Kevin, last but not least, certified coach John Williams. Glad to have you.

 

John Willams 02:26

Thanks, Brian, thanks for including me and glad to be a part of this. This conversation on these topics. I've been involved with the Great Game of Business since 2006. And the practitioner for 14 of those years. Certified coach now. Spent 14 years in building construction products industry. So very familiar with the supply chain side of what we're going to talk about today, clients that I have had Evolve a home builder in Canada, Alexander Nicholson, a home builder in Virginia and Ozark remodeling. So a couple of home builders there and one who does remodeling with a focus on bathrooms and kitchens.

 

Brian Underhill 03:16

So great. John, Dave, Kevin, welcome to the Coaches' Table. And thank you, what we wanted to do is really dig into pain points. So John, talk about what pain points are your current clients seeing right now?

 

John Willams 03:35

Well, I think before COVID hit, you know, the labor was was already there, that was a pain point they were experiencing, experiencing in this industry, especially from you know, a labor standpoint when it when it when we're talking about whether it's carpenters, or electricians or roofers or concrete workers or any of that they were experiencing some of that already. And now for the past, I would say year and a half, two years inflation seems to be the issue. But I think a lot of businesses can handle inflation, as long as it's not volatile. And I think that's what a lot of pain points are now is that the commodities in this industry, such as lumber, is extremely volatile. So it's easier to handle if you know it's going to continue to go up or continue to go down. But when it goes up one day and down the next day, it's very hard to plan your business and run your business and  hopefully we can address some of those pain points today to help you navigate what you can control and mitigate what you can't control.

 

Brian Underhill 04:56

Right. Thank you for that John. Kevin.

 

Kevin Walter 04:59

Pain points I've been seeing are lead times not only on materials, but on getting a home, constructing them because of what John just said, with the labor and materials shortages. Right. So, you know, getting through the lead times and being able to promise a customer that finished date, that's a risky business nowadays. And a lot of it's due to those materials, saying they're gonna be there one day, and they're not for another week, and you've got tradesmen standing around, it just could lead to some serious slippage, and profit.

 

Brian Underhill 05:37

Thank you for that Kevin, and Dave.

 

Dave Scholten 05:42

Great Game and SRC the last year and a half that people would product that people with people, companies with people and companies with product will thrive. And this industry, not only has to have its own employees, and its product, but it also has to have trades, that have employees, trades that have product. And so this spans out further than your own factory or your own retail shop, because your success is dependent on other businesses, and how they can execute as well. So they're managing that relationship with the communication, the scheduling their staffing, if you're going to grow at 20% a year, can your trades grow at that same rate and keep up with you to service your needs? So we're seeing a lot with trades, and then also just crazy weather. And last week up in Bismarck, North Dakota, they got 30 inches of snow on Tuesday. Come on. It's April.

 

Brian Underhill 06:42

Yeah, so true. Yeah. So thank you all for identifying some of those pain points that our clients are feeling right now. But how do we take those pain points? How do we take the principles from the Great Game of Business and mitigate those pain points? Kevin, what are your thoughts on that?

 

Kevin Walter 07:01

To me, it starts off with having the right strategy. What are you going to do to be better than your competition at the pain points? What can you control, and scoreboard to and track measure and report because what gets tracked, measured and reported gets improved. You know, it especially is tough and construction with the WIP accounting work in progress work in process accounting, and the leg from when you know what your actual costs are at the completion of a job. So what's happening six months earlier, or nine months earlier, when you started, then you know, conditions change over that time. So controlling what you can control is a big thing. And scoreboarding those lead activities and behaviors. That's really critical. So you can from the start of the construction, whatever you're constructing, from the start, you can measure and track those things before you get to the end. And all of a sudden, oh boy, we had a lot of slippage on that job.

 

Brian Underhill 08:08

Yeah, appreciate that. Kevin, Dave.

 

Dave Scholten 08:13

One, I would look at your trades. Companies, you're working with as your partners, whether they are a financial partner or not, you're going to be a victim of their performance. If you crossed out the actual cost of a delay, I went home builder and one day delay was $3,000. And if they're late 70 days, over 15 homes in a year? How can that $210,000 be spent differently to be on time. And so internally with Great Game and the companies that execute or implement Great Game of Business we have stake in the outcome, we have MiniGames. I think some of those things we're starting to look at, can we execute those things with some of our trade partners and some of the companies we do business with? Another thing that we work a lot with is scheduling. I think it's difficult for people out in the field, supervising trades in supervising employees to also have a handle on what the schedule is going to look like. And so you know, whether it's technology or an office person helping with the scheduling sometimes that helps you manage the communication on the job, and the scheduling with the trades. And then the third thing is just, you know, to John's point earlier, you know, I like Kevin's what you measure, publish, communicate, improves. But to John's point, this pricing volatility is so difficult right now. And so it's tough to know what you're going to price things that.

 

Brian Underhill 09:47

Great. Thank you do and John.

 

John Willams 09:50

Well, I think from a pricing margin standpoint, I think it's good for companies to go back and look at their High-Involvement Planning and what is their true strategy with their sales and growth strategy on the business, because volatility also presents opportunities. And when you look at pricing and margin, you know, you may, you may not look at it from a profitability aspect as much, you know, in the short term, but look at it as a long term if it fits within your strategy to take advantage, because this may be the only opportunity you have in this kind of market to capitalize on some of those strategies and tactics. So take a look at that. Don't look at the short term, look at the long term when it comes to pricing and margin, because the market is essentially going to set the price. And get data. Don't just depend on your emotions when it comes to pricing. Get the data, know your market, look at your strategy. And that those are three things that you should be doing and your High-Involvement Planning. So I would say focused on that, when it comes to project management. And I like what Dave said, get your partners involved. This is one industry that is so reliant on subcontractors to do other things, especially when they're busy, because when you have a labor shortage where you do you depend more on subcontractors. So you almost have to look at them as a part of your business, you know, and employees. And, and if you take it down to that lowest level, when you're looking at drivers, instead of the the P&L stay focused on those drivers because that will keep you narrowly focused because that is one of just going to produce the outcome. But include the subcontractors include the superintendents include the laborers, and the carpenters and electricians around the things that you can control. Like Kevin said, schedule attainment. scheduling your subcontractors efficiently can save on that money. Dave was talking about losing $3,000 a day, you make one mistake scheduling a subcontractor that sets everything back. So those are some key things to use those Great Game of Business principles, drivers, scoreboards, High-Involvement.

 

Brian Underhill 12:29

Thank you, John. Dave, we talked about pain points for construction remodeling, we talked about what can the Great Game principals do to mitigate some of those. What would be your closing thoughts for our community and our clients and others in these industries that you would want to leave them with?

 

Dave Scholten 12:55

I think our biggest opportunity is to change the timeframe to gain leverage. Kevin and John were both talking about High-Involvement Planning and strategy conversations. This, this opportunity we're having isn't for the next two weeks. Okay, so it's going to happen to some of us and some of us are going to be able to plan away not to participate. And so I think having a strategy, and having a trade partner where it's good for them, and good for you. And it's not as paying whatever they have to get paid and be profitable. So they can grow their business, given great terms, so that you can be the customer choice for them. And if you become the customer of choice, they're going to want to do business with you. But I think the you know, opening the lines of communication and having the one to three year conversations rather than a two month conversations, bring you some opportunities.

 

Brian Underhill 13:53

Thank you, Dave, and John.

 

John Willams 13:56

And this fits exactly what I was talking about is if you're going to learn anything from the past two or three years, be proactive and not reactive. If you had a good plan in place, and you're in it for the long term, you know, this is just a wave that you're riding. So how do you want to look, if there was no inflation? If there was no labor issues, that there was no material issues? How do you want to come out of this? What customers do you want to have? What relationships do you want with your suppliers? So because you can't go out of this, and then just take a deep breath and say it's all over because something else is going to happen. So that's where High-Involvement Planning comes in. Is that you have a plan, and contingencies were never more important. If you had a contingency plan before 2020. You probably sailed right through this thing. If you don't, you're scrambling. You're scrambling.

 

Brian Underhill 14:57

thank you, John. And Kevin

 

Kevin Walter 14:59

I couldn't agree with John and Dave more, especially becoming a customer of choice to your subs. And Dave described $3,000 A day in losses or what have you paid yourself as 1000 of that, you'd still be ahead of the ballgame. So, you know, maybe paying a little more not looking for the cheapest bid. Those relationships are more important now than ever before. With the current labor shortages and material shortages. You know, if you become A-list customer for your suppliers and A-list customer for your subs, you're gonna rule the marketplace. Another thing with applying the Great Game of Business principles is adapt, adapt, adapt, right? It's not manufacturing, like we hear all the time. It's construction, and we've got to adapt that to what's going to work. Sure the P&L is really important. But as John said, those drivers are more critical now than ever before. What can we do today and this week, to set us up for success on the P&L?

 

Brian Underhill 16:05

Perfect. Gentlemen, thank you so much for joining the Coaches' Table, where we do discuss hot topics in the industries that affect us. And this one certainly revolved around construction and remodeling. Future Coaches' Tables will include manufacturing, distribution, landscaping, and others. So gentlemen, thank you so much for joining us and the Community. Please look forward to other Coaches' Tables, where we're going to answer and resolve hot topics in your industry. Thank you very much.

 

Kevin Walter 16:37

Thanks, Brian. Thank you. Thanks.

 

16:41

Thanks for listening to this episode of the Coaches' Table. This episode is just one of the many resources and discussions were hosting in the Great Game of Business Community platform. Learn more about the Great Game of Business Community at greatgame.com/explore-ggob.

 

Announcer 17:00

The Change the Game Podcast is produced by the Great Game of Business. To learn more, visit greatgame.com

About The Podcast

Podcast Banner

Hosted by Rich Armstrong and Steve Baker the Change the Game podcast highlights true life stories of organizations influencing positive change by doing business differently. They’re teaching people how business works and closing the gap between the haves and have-nots. It’s capitalism at its best. Inside each episode, you’ll discover stories of entrepreneurs who are Changing the Game.

Change the Game Podcast Trailer

GGOB_PodcastPageDesign_Ver2

Subscribe to Get notified about new episodes!