There’s nothing like being prepared for the crucial moment of a clients’ initial phone call. Below is David Gerstel’s “Phone Interview Checklist,†that he provides in his book Running a Successful Construction Company. In your experience, would this list be sufficient to qualify a customer and prepare you for a face-to-face meeting?<!—-><!—-> <!—->
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Phone Interview Checklist <!—-><!—->
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o Clients’ mailing address, phone and fax numbers, E-mail address<!—-> <!—->
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o Project address <!—-><!—->
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o How client learned about your company<!—-><!—->
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o Description of project<!—-><!—->
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o Reasons for wanting to build project<!—-><!—->
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o Designer <!—-><!—->
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o Stage of design <!—-><!—->
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o Progress in applying for permit<!—-><!—->
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o What client is looking for in a builder<!—-><!—->
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o Preferred process for choosing a builder<!—-><!—->
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o Openness to process other than competitive bidding<!—-> <!—->
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o Preferred schedule<!—-><!—->
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o Flexibility in schedule<!—-><!—->
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o Budget <!—-><!—->
–T
Replies
That is a great list. A couple of things that to supplement
Under Designer:
Do you have a complete set of plans and specifications?
Is there and Architect or Interior Decorator involved with this project?
If so what role will they play during construction?
Under Bidding:
Are you seeking multiple bids? if so-thank you very much for calling but I will have to decline
Explain my business model and how I charge to prepare project costs and design documents (i.e. no free estimates). Is this acceptable to you? If not-thank you for calling but I will have to decline.
Thanks for posting the list. Great Stuff.
Bruce
Hiker
Under Bidding:
Are you seeking multiple bids? if so-thank you very much for calling but I will have to decline
Wow, that stings a little!
What I read here is:
"Don't even think about getting another opinion, my way is the only way" and " Write me a blank check and don't ask any questions"
I'm shore you have your reasons, and apparently it works for you.
As a potential customer, if I got that response on the initial contact you just diss qualified your self.
Hey, maybe your system does work?
Bill
Bill,
I do nearly 100% of my business by referral. When I get a call from someone who has been referred to me I am 75% sure I will be doing that work because I was already presold by the referring person.
When I get a call from someone who is getting three bids, because that is what the magazines say to do, I drop myself out of the equation. Why because I know I will not be the cheapest bid and this consumer almost always will tend to the lowest price thinking that the bids are apples to apples (when they never are because a complete set of plans and specs are never complete). Why would I spend 30, 40 or sixty hours preparing a proposal for a close to 0% chance of getting a project?
As a consumer you may or may not have ever spent that level of effort to develop a price for a project. After doing it multiple times you realize that it is a waste of time. That is a fact.
You comment about getting other opinions and and asking questions. When I work with someone, I spend an inordinate amount of time truly understanding what they want. I am totally open to whatever ideas they may have. However, I do not do that for free (unless you are a repeat client who I know we will be doing the work for you). Several times after sharing lots of ideas I have seen them implemented by other folks with no benefit to me-so why do it?
Your comment about a blank check is again part of that bidding attitude. Of course I do not get blank checks from my clients. When I work with someone, we work closely to develop a scope of the project to ensure we come in at a budget level that is appropriate for them.
Maybe I may have disqualified myself from working with you-maybe I lost out on an opportunity, but in my experience I usually just saved myself a weeks work only to never hear from you again because you decided to go with the low bid or not to do the project at all.
Bruce
Hey Bruce,
I have never ran a business so I am definitely on the other side of the fence. You have obviously found a system that works for you ( that's a good thing ).
Might I suggest that you take a few minutes to explain your position to the magazine educated consumer on that initial phone call.
Why because I know I will not be the cheapest bid and this consumer almost always will tend to the lowest price thinking that the bids are apples to apples (when they never are because a complete set of plans and specs are never complete).
The whole Honest contractor thing comes to play here, ( and it sounds like you are one ), if they are still interested they most likely won't mind paying for an estimate??
I have met a lot of hacks and crooks out there, an up front guy like your self would be refreshing.
43Billh, I've recently had this conversation (or rather a closely related one) with several of the contractors on this board. They have their attitudes and business model and they choose to stick with it, you won't convince them otherwise.
It does, however, raise an interesting problem. The project owners most likely to seek out a quality builder rather than just the cheapest one, are the owners who read magazines like FHB, TOH, Architectural Digest, and some of the other better magazines. They will also have read a book or two on homebuilding, often those written to appeal to owners rather than contractors. EVERY ONE of those sources will have told them to seek competitive bids. And yet, it seems that many of the contractors at least here on this board, simply will not do competitive bids. The result may be that the best owners cannot be connected with the best contractors.
It also presents a tremendous business opportunity for someone who can figure out how to bridge this gap.
"If the trout are lost, smash the state."
James,
I have to admit, in almost all the reading I've done directing homeowners on how to select a contractor, they do indeed say get competitive bids, but almost all of them also have derogatory comments on going with the cheapest bidder.
Phil
Phil,
I was thinking of an article I read in TOH a year or two ago, and it did exactly what you say: recommended getting multiple bids, and then came darn close to saying you should toss out the lowest bid. Now, if you've got three bids that are relatively close to each other, the owner can be relatively confident that each of them is a competent bid. As a contractor I am sure you hope that the owner will select on something other than price such as experience, references, or even that undefinable feeling of competence that you get from some people.
But I certainly understand that you cannot build a business on "hope."
James
"If the trout are lost, smash the state."
James,
That was a great post, and I think you're right on the money.
How to bridge the gap? I think it's as "simple" as educating the client. In any sales work, you need to know how to show the potential buyer why your product is better.
james... good points..
<<<The project owners most likely to seek out a quality builder rather than just the cheapest one, are the owners who read magazines like FHB, TOH, Architectural Digest, and some of the other better magazines. They will also have read a book or two on homebuilding, often those written to appeal to owners rather than contractors. EVERY ONE of those sources will have told them to seek competitive bids. And yet, it seems that many of the contractors at least here on this board, simply will not do competitive bids. The result may be that the best owners cannot be connected with the best contractors.>>>>
what is the most reliable indicator of the ability to get the good work a homeowner desires.. or the peace-of-mind
it is probably a referral from a trusted friend who has had the contractor do work for them..
so.. since most who have been in business , or had work done, know this.. how does that fit in with the "get three competitive bids" advice
obviously ... the advice may not be as valuable an indicator as perceived... or the judgement of the person giving the advice may not be that good
but still.. it does indicate that the contractor is going to get the job based on his reputation.. which includes a bunch of things: price, quality, cleanliness, trust
( trustworthy, loyal, helpful,friendly, courteous,kind,cheerful, brave, clean & reverent)
so , for the most part, both parties know that the competitive bid deal is not going to make any difference... now.... some owners will solicit input from a wider list of friends and come up with 3 good candidates... but that is usually indicative of control freaks and counterindicative to meMike Smith Rhode Island : Design / Build / Repair / Restore
Another thing that dawned on me when thinking about this process; I'm willing to bet that alot of home owners, if not most, who are refered to a reputable contractor and have a pretty good sense that this is their man/woman, are still pretty likely to get other bids just to reassure their decision, which equates to deliberately wasting the other bidders time. Another thing to watch out for.
I know for a fact this has happened to me on both sides of the coin.
Phil
Of course, it seems like I remember David also saying somewhere in his book that he’s never participated in a competitive bid since the 70’s. In any event, I would be willing to do business on a competitive bid basis, under certain conditions. <!----><!----><!---->
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First, I would charge for the estimate. This eliminates the possibility of me working for free. While this would probably eliminate over half of the competitive biding customers,’ it would probably also eliminate most customers who will simply go with the lowest bidder. In fact, I think it a good idea to ask: “Are you planning on going with the lowest bidder?â€<!----><!---->
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I’m willing to give free ballpark estimates over the phone for things like drywall and roofing. For an actual estimate on something like this, I would charge $35 to come out and look at it. This is what my nearest home center charges. They also offer to refund the money if their bid is accepted. They, of course, charge for that $35 refund in their bid, a tactic I also intend to employ.<!----><!---->
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For something more elaborate, something that might take me around 10 hours to estimate for example, I would charge more. I recall someone here at breaktime recommending $150 for a proposal fee. I don’t know how the poster ever arrived at that number, and I don’t know if I would necessarily charge that much, as no contractor in my area beside my nearest home center charges for estimates. Even they stop at $35, as around here Lowe’s doesn’t do anything structural. Lumber yards actually in my town will even estimate materials for free.<!----><!---->
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What I do charge however, would also be “refundable,†if my bid is accepted. In return for the proposal price, I would of course offer not only a number, but an itemized list of materials and man hours that the homeowner would be able to keep.<!----><!---->-T
Hello James,
Great post, I agree completely.
It also presents a tremendous business opportunity for someone who can figure out how to bridge this gap.
Now there's a statement that really applies to my area ( Wilmington De ).
If you leave a message for 6 contractors your lucky if 3 of them call you back. Then guarantied at least one of them won't show up as agreed. After the initial meeting , maybe, just maybe, you will get a piece of paper with some writing on it that resembles the scope of work and money involved.
I know what some of you are thinking ( he should call reputable contractors who charge a fair price for their proposal).
B.T.D.T. too!
More than a few times I meet with a guy, discuss the options, PAY FOR THE VISIT, and get back something in writing that isn't even close to what we actually talked about. Then if you call him on it, your just being picky and he's finished with you.
I'm involved, I read, I have a reasonable knowledge of tools and construction. I'm NOT a business man or a tradesman!
If i want to learn something i'll read till my eyes give up in order to have an intelligent discussion with some one I want to hire.
BIG NOTE HERE I realize this does not make me an expert and or know it all.
It has been my experience that being armed with a little knowledge scares contractors away.
For example,
What do you use for expansion joints?
or
I want my roof sheathed with 1/2" 4 ply
Or
do use use stainless hardware with pressure treated lumber
or
Please use full port ball valves.
Maybe I have it wrong but isn't that what an "educated"
home owner should be doing?
I can tell you for a fact ( at least around here) that if you hire the first guy who comes along and tells you his work is "better than the rest" and then stick your head in the sand your gonna get boned!
I have managed to hire some good contractors over the years, the kind of guy's you don't mind hiring a secon time. But they are not easy to find.
43Billh, you are the kind of guy I prefer to deal with.
blue"...
keep looking for customers who want to hire YOU.. all the rest are looking for commodities.. are you a commodity ?... if you get sucked into "free estimates" and "soliciting bids"... then you are a commodity... if your operation is set up to compete as a commodity, then have at it..... but be prepared to keep your margins low and your overhead high...."
From the best of TauntonU.
Thanks Blue,
I know the good ones are out there, I just never figured they were so few and far between
Second, I think it’s important for any business to have different product lines if they’re to be competitive. Sears has Craftsman, and they have Companion. There are DeWalt tools, and then there are Black & Decker tools made by the same company. Even Snap-On has different product lines. One large production homebuilder in my area sells a standard home as well as a more expensive, signature home. Modular home factories do the same thing.<!----><!----><!---->
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Larry Haun, in his book Homebuilding Basics Carpentry, claims that ‘while some carpenters think using glue and lots of nails is a sign of good craftsmanship, one 10d nail is all you really need to fasten a header together.’ I would therefore sell three lines of homes: One built to bear minimum standards with a minimum warranty, another built at quality standards with a good warranty, and finally another built at the highest quality standards with one of the best warranties. Each line would have a name, but the latter is the one I would stamp my signature on. A similar process can be used for remodeling.<!----><!---->
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In a competitive bid situation, bear minimum standards could be used.<!----><!---->-T
When I get a call from someone who is getting three bids, because that is what the magazines say to do, I drop myself out of the equation. Why because I know I will not be the cheapest bid and this consumer almost always will tend to the lowest price thinking that the bids are apples to apples (when they never are because a complete set of plans and specs are never complete). Why would I spend 30, 40 or sixty hours preparing a proposal for a close to 0% chance of getting a project?
Bruce,
I think you're oversimplifying things when you say that the homeowner will almost always opt for the lowest bid.
In my opinion, homeowners have a lot of fear when selecting a contractor because sometimes homeowners can get screwed -- the contractor might turn out to be a hack, or might charge double the "market average" or might even just take a deposit check and disappear.
Since you are a successful contractor with plenty of referral work, I'm sure you also have plenty of people who will give you glowing references. There's no reason you can't use that to your advantage. In my own experience, homeowners will select the contractor that seems honest and competent. It's very important that they feel like they can trust the contractor and that the job will be done well. I haven't met many homeowners that weren't willing to pay a bit extra for trust and competency.
Ragnar,
I no longer remember the number of times I entered a bid situation. Each an every one went to lowest bidder. So based on my sample population I have a 0% chance at getting the project-so why spend the energy on the bid seeker?
When I get a referral, I spend my time with them. I know the project is in the bag if I want and I can get them in my schedule. I cannot expound enough on how important it has been to my business to get my referral base developed. Once you have a solid referral base, you do not need to market, most of your leads are presold, and in our industry, as you mentioned, people are just looking for an honest contractor-almost regardless of price. That's why I don't bid.
It may be oversimplification, but why spend effort on low probability clients when you can spend effort on higher probability opportunities.
Bruce
Bruce,
I agree with you completely that word of mouth is the best marketing tool there is. I'm a contractor, too, and I never have to advertise. What a blessing it is to get referrals -- the people automatically trust you since you've done good work and proven yourself already to someone they know.
So I won't argue with you at all about directing your resources towards referrals and not wasting your time with potential tire kickers.
I think you and I might have a different working definition of "bid" however. You seem to speak as if a "bid" only occurs when a number of contractors are competing for a project. To me, "bid" simply means the price that I quote my client.
Unfortunately, I find that to be less and less the case. I've been coming across more and more clients that first indicate they want honesty and quality in their contractor and not necessarily the cheapest. I then recommend the contractors that I've worked with in the past that I know will put out a good end product with honest work. But I find that more and more clients in the end take the cheapest guy that makes everybodies life harder including mine.
Edited 2/23/2007 3:54 pm ET by JoeArchitect
Joe,
I have got to ask you about what is so arrogant about that remark. Your own referred contractors have been treated the same way by your clients. The fact is if someone is getting multiple bids, is most cases, the cheapest guy will get the job. If you know your not the cheapest guy bowing out the process before getting involved is not arrogant. It is saving you time and allowing the owner to find someone who wants to play the bid game.
Obviously a phone dialogue is more substantial than the text I am typing here, but the gist for the contractors reading this is the relevant part.
Bruce
I understand your pre-screen method. I don't disagree with you outright, but you may be passing up some customers who are not just tire-kickers. (If you have all the work you want at this point, just ignore this post.)
As an example, I do not mind paying more for quality. In fact, I prefer it. The problem I am finding, as other customers might, is that I don't recognize how much more I would pay you, for example, for a higher quality job than the next best contractor. Also, I may not have the benefit of having friends who have used you who can testify to the value you bring the job. As a less informed party in the process, I just want to make sure I'm not overpaying for good work-- hence the benefit in getting an alternative bid.
There is a an optimal price/quality point for each buyer. You can think of it as a trade-off curve. For each increment of quality I am willing to give up an increment of money. It depends on how much however. If you are twice as expensive and only 10 percent better, it is not a good deal. If you are twice as good and 10 percent more expensive, it’s an excellent deal. (Of course it is terribly difficult to measure the quality differences so precisely.) There are some customers who want to pay the lowest price and are not concerned about quality, wheras, there are others who will pay virtually anything to buy the "best".
All I'm saying is that if your prices are not significantly different, and the quality is justified (and perceived by the buyer) you should not lose the bid in a competitive situation. It may be that your experience has shown that outside of the referral network, demonstrating the quality difference is not possible at a reasonable cost. Just my two cents.
jmac,
thanks for your input. The issue of quality is the hardest thing to measure in construction. I think at best you can have descriptors of great, good, adequate, or bad, or POS. In every purchase I have every made for whatever the product, the higher the quality, the higher the price. As a businessman, I do not aspire to give high quality at the other guys price. I aspire give high quality at a price appropriate for high quality work. Hence if I am bidding against the other guy I will be priced higher, therefore I will lose the bid, therefore I do not bid. I am not trying to imply I am some gift from heaven in carpentry (I'm not), but we do good work. Why would I sell my good work for the same price and the hack selling bad work-no point from my perspective as a businessman.
You made an interesting statement that you did not want to overpay for quality. I know many people who say they wished they would have paid more for a better whatever. I have never heard anyone say I paid too much for this great remodel or house building experience.
Thanks Bruce
I agree that a completive bidding is customer is the last customer to consider. However, I don’t think it’s reasonable to rule them out all together. Even David Gerstel, who promotes doing business on a cost planning basis, writes in his book:<!----><!----><!---->
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“For almost all builders, including those who prefer to acquire jobs via design/build or cost planning, competitive bidding is a necessity at times. It’s a way to keep a crew busy rather than lay off and lose key employees during a slow economy or to simply fill a hole in a schedule during better times.â€<!----><!---->
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David goes on to say: <!----><!---->
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“Even for builders for builders who have the option of avoiding competitive bidding altogether, it may be wise to not move away from it entirely.â€<!----><!---->
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Why? He quotes an experienced builder, Deva Rajan, with the answer:<!----><!---->
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“You can lose your edge. You lose touch with marketplace realities and grow lazy at controlling costs. You loosen the reigns on your subcontractors and allow their prices to creep up, slacken your requirements for productivity by your crews, and let your overhead inflate. Then, if you must suddenly enter the competitive market place, you can’t compete. You have grown lazy and sluggish, and cannot run with the wolves.â€<!----><!---->
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David gives “a way of breaking into a new market†as a final reason.–Running a Successful Construction Company, p. 124, pars. 2-4.<!----><!---->
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The last reason given would also apply to those who are just starting out in business. For them, any market is a new market.<!----><!---->-T
Apples and oranges.
An owner may think you arrongant for not wanting to bid on a job where there will be multiple bidders. Remember, some owners think their job is the job of all jobs. I feel there is nothing wrong with you declining, but my comment was that owners will think you to be arrongant.
Regarding owner going with the cheapest contractor over contractors that I referred, is not arrogance. Sometimes it's thinking that everyone does the same quality work for different prices, or it's just what they can afford and hope for the best.
I have found out people understand the difference between a mercedes and a yugo but ofton the low bidder can be a smooth talker and they cant see whats going on, 99 percent of the time they want the low bid, if maybe they do go with the higher they feel cheated from the get go, Its like my kid and the woodstove, till he got burned he did not believe me not to touch it, one thing that goes my way is some people see the effort i would put in and the low bidder shows his cards to smart people, But i could go broke weeding through many of them.
If I were the inquiring client, my thoughts exactly, what arrogance. But..I think that if that system works well for you as a business stick with it. That system seperates those just calling everyone in the yellow pages from those that have heard of your work and seen your work and want your work.
I like a lot of the ideas David Gerstel has in his book, although I find it hard to believe he takes all those details down over the phone for every tire kicker.
One of the best screening tools I've seen work in the real world is a lengthy questionaire.
Caller: "I'd like to remodel my kitchen. Can you come over and tell me what you think?"
Mr. Questionaire: "That sounds like a great project. There is a questionaire for you to fill out before we meet that will help to save us both time when meeting face to face. Would you like to swing by and pick up a copy or can I FAX or email it to you?"
The beauty of the thorough questionaire is that tire kickers won't usually take the time to fill it out, but those actually motivated to build will.
Check out http://www.geappliances.com/design_center/design_questionnaire.htm
Beer was created so carpenters wouldn't rule the world.
Under "Budget" it might be useful to know how the funds are made available. Is this coming out of savings, or will it be financed through a bank? They may say they have a $20,000 budget for a bathroom, but don't have the money, and haven't started the process of getting funding. This is usually a good wake-up call for the homeowner.
Of course, there are those who want estimates, then figure the project is out of their league. Thinking a new bathrooom can be done for $3,000, stuff like that. I have no problem giving ballparks over the phone, with a broad range, of course. Then if they're serious we can meet and go further.
I had a lady call wanting an estimate to paint a family room. Dark paneling, ceiling, etc. I gave her a ballpark over the phone of about $800, to scuff sand, TSP wash, prep, prime, paint. She was flabbergasted, and said there was an ad in the paper to paint any room for $99. That would barely buy the primer and paint I would use. I wished her luck and went on to my paying customer's job.
Pete Duffy, Handyman