Protecting Your Profits: A 3 Step Plan

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Experts in this webinar

Alex Dunn
Alex Dunn
Rob McKinney
Rob McKinney

Ever get to the end of the project and find you just broke even, or worse, lost money? Wondering when things went wrong?

Check out this discussion with eSUB on key strategies to protect profits before, during, and after a construction project.

Find out:

  • The number one reason projects don’t make a profit
  • Best practices for documenting before, during, & after a project
  • How to protect payment rights to get paid what was agreed

Transcription

Rob McKinney:
Good morning to everyone. That’s joined us today. Thank you so much for the time to listen to us. Talk about different thoughts that we think might help you out, but those of you that I haven’t met, or you maybe heard me speak, or maybe my voice sounds a little bit familiar. I have been around our amazing industry for nearly 20 years. The last few you might’ve heard of a little thing called the context crew, which is a podcast that I participate on part of Jamie knowledge or the content roadshow we’ve gone around the country. I’ve seen a lot of States. Let’s just say a lot. A lot of countries been around there. So the idea is I was originally in the construction industry as the safety director, then I got really interested in technology made that transition, Alex, probably around 2014 and I started building what I called mobile device programs.

Rob McKinney:
And that meant we used a lot of paper back in the day. Uh, if you’re in the construction industry and you’re listening to me, you know what I’m talking about because we still use a lot of paper, let’s be honest, but we’ve, uh, we’ve gotten rid of a lot of paper. We’ve converted paper into digital paper, which is a whole nother sidebar that we can talk about. But, uh, it’s an interesting journey. So I’ve worked a lot of construction companies trying to help digitize your workflows. And I specifically came over to the Aesop team cause they work with trade contractors. We specifically, and only 100% work with trade contractors. And it’s an interesting concept to talk about because if you look at a lot of software, let’s be honest. A lot of it was written to mimic the contracts and it’s a push-down model, but that’s not the philosophy we have at ISA.

Rob McKinney:
We are 100% here for the trades and that means we’re trying to streamline workflows from the office of the field, from the field of the office at the core, we’re really trying to protect profits by doing a lot of different things. But as these four things that you see up here and it’s trying to get better documentation out of the office so that the field knows what they’re supposed to be building. And more importantly, when the field has an issue, they raised their hand and the idea is generating data, data that the company can use to manage their projects, just a singular project, multiple projects. And at the end, we have some amazing dashboards that we could talk about that show you kind of a project health. And we do that through the platform. So later on, if you’re very interested in what we have to show, you would love to, uh, connect with you at a later date. And we’ll talk about that.

Alex Dunn:
Yeah, definitely. And we’ll have our contact information available at the end of the show and on the page that this webinar will be hosted on. It’s obviously being recorded and will be available sometime tomorrow afternoon, which is great. And Rob, just tell me a little bit more like who gets the most value from using the of platform. I know the trades are using it, you know, from your perspective, but like, is it the field workers? Is it the office workers? Is it the managers or like kind of like site managers? Tell me a little bit more about who’s getting the value.

Rob McKinney:
You know, it’s really across the board. It really depends on the role that you’re looking at. If we start out in the field and we think about the superintendents, the foreman running all the crews on these job sites. Well, when we start talking about making a transition and using something like this, an amazing smart device, a smartphone, whether they love Apple, like me, your Android, either way, if you think about what it was like four or five years ago to have to fill out piece of paper after piece of paper, after piece of paper, and I mean your timecards, your daily reports, all the different pieces of paper that you’re filling out. Now you can use this mobile device. It saves time in the field. It makes the guy’s life a lot easier. Even if you really want to nerd out and talk about speech detector recognition of how you can actually talk a note into your phone and it transcribes it and it sends it in, you know, so the workers in the field are saving time up front, trying to just document a job better or access the documents.

Rob McKinney:
But if you look back the office side, it’s kind of the flip side now instead of spending hours and hours. And I mean, hours of looking for that one photo that you needed, where’s that daily report from the job site, the day that it rained or the S the latest, you know, you know, we’re all down in the Southeast. Let’s talk about the weather for a minute. Right? Does weather impact construction at all? Yeah, really? Where’s that daily reports, wait a minute. Where are the hours when it’s all concise? And one web based platform that every project has the information you can see the project managers are definitely saving time on the back end of looking for things, but management too is saving time because they have dashboards where they can look at the whole company. They could look at a whole division, or they could drill down into one project. So really when we’re trying to generate data, everyone has a little piece of the pie. It’s just a very different lever, depending on what role that you’re talking about.

Alex Dunn:
Yeah, absolutely. Well, that’s really great how y’all are able to help across the entire spectrum of any company and between the companies in that respect. Um, it’s interesting. Cause you’re you’re Levelset. We, we really know how important that documentation can be throughout the entire process. Um, and what we do, um, for those tuned in who, who aren’t, you know, levels to our customers or users, um, we help contractors get paid. Um, getting paid is complicated, it’s stressful. Um, and, and the long and short of it is a lot of people just don’t get paid for the work that they do, or they have to wait a really long time, which is absolutely crazy. Um, and that’s why we’re on a mission to do is kind of kill so payment and get rid of bullying and get everyone on the same page, around communicating openly about payments.

Alex Dunn:
So that’s like a key, you know, factor we’re going to hit on a lot today is like, how do we better communicate? And being able to communicate involves, you know, uh, evidence or documentation of what has been going on, you have to communicate that around. Um, so I Levelset. We have software with lien rights management baked in, we have, uh, data around contractors and their payment history. We have ability for you to go and chat with lawyers who can help you with payment problems. And we have a gigantic library of resources, all around payment and awesome team that can help you, um, find something even if we don’t have it ready for you. Uh, so that’s a little bit of background on, level-set a little bit of background on eSUB and I’m going to pass it back over to Rob, to talk a little bit about the state of construction today. Um, when I, when we do these with eSUB, we always hit on the main three of finding skilled labor project management and completion, which is all that like efficiency, productivity, and then obviously getting paid. Those are the big three things that you’re always paying attention to in construction. And now we have these two other factors that I’m gonna let Rob talk a little bit about that have really come into play this year, specifically,

Rob McKinney:
No 2020 say what you want. It is a fascinating year to look at while we’re living through it. And I’m sure the history books will have a lot to say about it. So let’s talk about a few things. I’m sure you’re sick as I am hearing about COVID, but in our industry, you know, let me go ahead and, you know, let’s put some PP on or even talk about COVID together, right? Of what are the effects of COVID right now, we’ll still, let’s be thinking you went through one, possibly two cycles of work with the COVID factor by that. I mean, did you budget any of the jobs that you were working on from March until now to have all these extra hours to get onsite for temporal scans and extra PPE and only four people on a buck hoist? I mean, do I need to keep going, are you currently putting that COVID factor on the work that you’re bidding now to get out through the rest of the year for 2021?

Rob McKinney:
You know, how is that impacting honestly, all the estimates that you’re putting in place, and then also, how is it affecting your profits right now? Because I’m sure people are asking for extra money. So all the trades are saying, Hey, it took us extra time and you’re asking all the generals and the generals, I haven’t looked all down and just saying, Hey, it took us extra time. Everybody’s trying to get a little bit more cheese, but how are you able going to get that? That’s definitely something to think about is really the pricing. Alex, I think is the big thing to think about is when you’re putting numbers together, how have they changed? And I’m just advocating and I’m pushing the, you know, the purple elephant, if you haven’t changed your numbers because of COVID really, really, I think you need to think about it,

Alex Dunn:
Changing those numbers. Obviously, you know, as a business owner, you want to be able to give your customers the same, same pricing as you’ve always given them, or you want to be able to be competitive. Um, and, and I think what we’ll get into a little bit later is, is using the historical data or the understanding we have from the past few months to be able to justify those things and communicate those things to the people you work with. So, um, one other thing you had mentioned when we were talking about this webinar before we’d set it up, was, um, you know, how, how those bottom three bullets finding skilled labor or, um, you know, that productivity and payment, like how has that changed because of COVID and like, how can you go and find, you know, great trades today when, or how has that changed because of coronavirus?

Rob McKinney:
It it’s changed so much the last think about this labor issue. And we we’ve talked about it. We don’t have to stump about it. We all can list. Let’s say we’re in the circle of trust right now. We can all agree. We have a labor issue in this industry. You’ve got one generation aging out that it’s aging out faster than it’s being replenished by other generations. And one thing I thought of over the summer that I’ve kind of thrown out there, we’ll see what people think today is if we still have, unless we agree there is a labor issue in this industry. It doesn’t matter. Open up union, both sides. We have a problem let’s think outside the box. And one thing that came to my mind was, you know, there’s a few other industries that are clearly suffering tremendously worse than the construction industry.

Rob McKinney:
And if I just think of a couple of the top three or four, well, let’s think about all of the airplanes and cruise ships sitting. And last time I checked Alex, those, uh, you need mechanics and plumbing and HPAC technicians on planes. Exactly right. And big cruise ships. If they’re sitting idle, looking for something to do, you know, construction might be something you want to take a look at. And more importantly, what I’m advocating any of the construction companies that are listening to this, or anybody from associations, there’s two industries I would be trying to recruit from. And you can even take it a step further and think, well, hotels, condominiums, apartments. I mean, there are trained MEP workers and other industries to think about bringing over, but outside that let’s say, okay, what if you’re a concrete? What if your steel? There’s a lot of other industries that are very hamstrung. If those are people that are looking for a new opportunity, a change of pace, somewhere new to go, we need to reach out into the labor pool and say, Hey, you know what you do X, and it’s not exactly what I’m looking for, but I think I could work with that. Right? Why not look outside the industry and encourage other professionals looking for that opportunity to bring them into our industry right now? Yeah,

Alex Dunn:
Absolutely. So things have changed, so change things, as they say, and, and there’s definitely a lot of creative ways, you know, we can go and fill and, and, and work on these challenges. Um, even though it’s just a little different than it was. Um, so that was a good primary. I think we set the table here. Let’s jump into the meat of the presentation here, and let’s talk about how we can protect our profits on all of our projects, uh, before it starts, while it’s going on and afterwards. Um, and I’m gonna let you take it away again, Rob, uh, you’re, you’re killing it right now. Talk a little bit about the pre-construction phase, what needs to be happening to protect your profits before you even start the work?

Rob McKinney:
Well, we hinted at it a little bit. It’s really dialing in that historical data and you know, I know I’m saying it, but I’m going to appreciate again, what is this COVID factor? Where did you have losses? If you look across the industry, we have seen some amazing numbers. Our friends at Nika through the electric foundation, also our friends over at SMACNA through the new horizon foundation came up with some numbers. Uh, I won’t share them all with you. If you’re part of those associations, you have numbers. If not, you can probably find them on the web, but at the end of the day, they were already projecting a 7% impact to their members. So 7% to the negative of how the COVID mitigation factors again on site, if you’re not taking those numbers and patent them in for what’s going forward and Alex, dear point, you’re not taking the number of burying it and trying to hide it.

Rob McKinney:
You need to be very open and say, all right, well, depending on what you’re building, right? If it’s a private building versus a public building, a stadium, every type of product that we work on has some kind of factor. And those GCs know, but you got to kind of have at least broke out in your burden and think through how are you going to work on those numbers and have them in there. Otherwise you just send yourself up for failure. If we’re saying that we’ve heard that there’s a 7% and it can be 10% change that I project. If you’re having projects that are underperforming by 15 or 20, and you’re looking at it, you really got to talk about that in the beginning is identify what are these changes and more important? How are you going to address them monetary.

Alex Dunn:
Yeah, exactly. And that brings us to this next point, which is like, you have to be looking at the data. How have things gone over the last six months? What are those costs, looking at those things and trying to figure out how to communicate them, um, whether it’s in your bidding or in your cost analysis or whatever it is, as you set up these projects and have conversations with the hiring party, um, using this historical data, um, why do contractors not use historical data? Like if they’re not using it, like, why is that?

Rob McKinney:
Well, I love our industry, but let’s be very honest in a lot of ways we don’t like change. And we, don’t also like to admit where things went wrong. You know, it’s no one wants to have the stinker job. No one wants to have a job that lost money and no one wants to talk about it. It’s painful, but you got to use the data to make you get there. So back in the day we managed a lot of our projects. You know, I’ve spoken with people that have been in this amazing industry, 30, 40 years, you know, we’ve got to keep in mind. We went from managing by paper to managing by spreadsheets. And we still use a lot of spreadsheets. Let’s be honest here. And then we’ve moved into data, but you know, if we’re really poke the bear and start thinking, okay, so we’re talking to our, our, the trade contractors that are listening today, you have data, but are you looking at that historical and data and using it?

Rob McKinney:
And one of the points that I brought up to you was to think about looking at RFS, who do you write the most RFS to? Is it a particular GC, a particular owner? Is it maybe a particular type of product because you may be lucky and you do something like you build data centers all over the U S and let’s be honest, data centers change too much. Maybe you build box retail, maybe build fast food. Now, if you’re doing single family homes, if you’re doing multi-family, if you’re doing condos, those are all one-off recipes, right. But how are you looking at your RFI? Are you really digging into your cost codes and thinking, Hey, what do we really make good money at? What do we not make good money at? Based again, on the numbers? One of my good friends, James minim always talks about, you know, what are the facts, not your feelings. And unfortunately, this industry, you hear so much of all that it’s got a good gut feeling or historic show the numbers wherever you’ve been tracking the numbers. You know, that’s the hard part. Absolutely. And

Alex Dunn:
It’s, it’s hard to do it. I think it’s one of the reasons people don’t do it. It’s like, you know, it takes time. We want to get out there. We want to do the work and want to get paid. And we don’t want to deal with all the rigamarole or the red tape that exists in construction. Um, but it helps. And hopefully, you know, listening to this webinar folks will understand, like, there, there are some small things you can do, like whether it’s just looking at those RFS and kind of just looking for those standout moments, stand out things that were like, wow, that was a really profitable job. Or, yeah, that was, uh, maybe not as good as we thought it was. Why did that happen? Um, so we’ll dive a little bit more in here, um, to this idea of like paperwork sucks.

Alex Dunn:
Um, it’s like the necessary evil, um, people have, you know, having this paper trail is really helpful though, you know, documentation through the process is not only good for looking at that historical data, but it’s good for communicating, um, you know, in the early stages. So before anyone, you know, shows up on the job site, there’s like payment talks already happening. They’re in the contracts, they’re in the bids, they’re in the payment terms that you’re using and, and on the invoices, um, that you’re sending or whatever it is, um, early on. And depending on your role, whether you’re that owner or a trade or a sub or a sub sub or a supplier or whatever, it’s important to know exactly what documents you’re going to need through the entire process and kind of like setting that all up so that you can be organized. So when those daily reports come in, they go into your folder that you’re going to use later in your pay applications.

Alex Dunn:
Um, and there’s also a lot of free tools out there. You know, we think about the supplier roles, or even some of the subs. When you go to work with a new contractor, you know, going to check their credit history or going to check their payment. History is something we have on Levelset.com/contractors. You can go and see what someone’s payment history is. And, you know, I pulled just this random dr. Horton example, huge, you know, top 400 GC in the country, um, deals a ton of work, and you can see their liens filed on them. Um, as early as 12 days ago, uh, there are payment issues and positive reviews and negative reviews, and you can go and learn about these people, um, and, and understand what are, what are the things I need to do to get paid by dr.

Alex Dunn:
Horton, that these people that had payment problems didn’t do, um, cause you want to set up for that job. You want to know what is needed. And of course you want to send a preliminary notice, uh, something we’ll talk about a little bit later. It’s not always right at the beginning of the job or before you start, but right after you start, right, when you hit that job site, you want to let people know you’re there. And we always use this one terminology at little Sarah called see, and be seen, which just means, let people know you’re on the job. Nobody wants to have a payment problem. Nobody wants to have miscommunication or liens filed or anything like that. Um, but if you know, who needs to pay you and they know you’re there and what you’re doing, you’re opening those lines of communications. You’re seen, you’re being seen. You’re showing people you’re there. And, and that’s always a really good like foot to start off on.

Rob McKinney:
Oh, it’s huge. Uh, you got to kind of keep in mind construction, like any industry. I like to define it as it is a game there’s rules to the game. If you do not follow him, play by setting rules, bad things tend to happen, like acknowledging to the owner that you’re working for, the general contractor that, Hey, we’re here. Because one thing to keep in mind, you know, there’s the companies that are still contractually bound to each other. But unfortunately like most industries, people change, right? Project manager starts project manager goes from the GC side from the trade side, things that are spoken into and agreed verbally, but are documented. Definitely.
Alex Dunn:
Yeah. And, and really also another thing is a lot of construction businesses are working state to state and regulations and rules change. As soon as you cross the border, you could be two miles away from where you typically do work. And if you’re across the border, um, you know, in Kansas city or wherever where it’s just like, you know, you don’t even know what state you’re in at the time. Um, you could have totally different rules for how you protect yourself and payment, how you proactively go out there and have good conversations. Like one document that I have written on on this side here is the notice of commencement is required in a number of States like Florida, notably has a pretty stringent notice of commencement rules. And when that document is filed by the general contractor or the owner of the property, who’s doing the work, all of these deadlines go into effect.

Alex Dunn:
And if you don’t know about these things, you’re, you’re, you’re kind of like in a, in a tight spot already, you’re going to start losing that opportunity. You’re going to lose those communication lines around when things need to be done. Um, and when those preliminary notices are in Florida, I think there are 20 day notices, 10 day notices, pre liens. They call them all sorts of different things. So who knows, but all this stuff is important. And it all leads to this idea of communication. Um, even on a simple job, like there’s an image here, it’s, uh, it’s a general contractor to subs and some sub tier parties below that. And you can just see the amount of arrows flying around to exchange payment and to communicate on a job is extremely crazy. Even on a small project, each party’s responsible for it’s on a paper.

Alex Dunn:
All the parties are probably working on more than one job at a time. And the, all the onsite communication and the in-office parties are not always in sync all the time. So it’s really good to set those expectations early, never assume someone knows something that you haven’t specifically said to them, either in writing or in some sort of documented way, and then readdress those things over and over again as needed. Um, you really like can’t be too safe early in a project to know what is expected from you and what the other party expects from you.

Rob McKinney:
Very true. One of the first lessons I ever learned in safety, and I think it applies to the industry as a whole is if you didn’t document it, you didn’t have to do it.

Alex Dunn:
And, and then like the later part of that is whoever has the most documentation wins. So, uh, you know, sort a lot going on there. Um, but hopefully that kind of like gives a good, uh, overview to the, to the listeners today that in the early stages of a project, there’s a lot you can be doing from looking at past projects and understanding what happened and how do we keep those things from happening again, or making sure our, our bid is correct or our processes. Correct. And then opening those lines of communication, CNBC, understand the key elements that need to happen throughout the project and, and keep communicating them, um, because the project’s about to start. So let’s talk about the construction phase, uh, Rob, and let you take it away again.

Rob McKinney:
You know, one of the things that we’re really thinking about when we talked about that documentation is how are you going to document the project? We’ve got a phrase that we’d like talk about eSUB, the job. And by that I’m talking about w you know, we, we brought up these amazing mobile devices and just the change in the workflow of why not have a foreman and train the form of the superintendent, the people that run in the job site, train them how to do sub the job, but what does that mean? It means once they get to the site and once they’ve had their safety meeting and they’ve blind all their crews out, they’re literally walking around, taking photos of the beginning of the day. What has changed since last night? You know, I joked a little bit before about storms, but that’s a real thing, at least for us in the Southeast where these hurricanes and tropical storms come through, I don’t know what part of the country may be living in, but when he got 60, 70 mile per hour winds coming up into the North Georgia mountains and knocking trees down that mess.

Alex Dunn:
Yeah. I don’t even think it matters, uh, where you live these days. There’s something, some sort of natural disaster is going to come and get ya. Um, and I also just want to say, like, I love that idea of like ease of the job. It’s like Google it, but it’s like he said, he’s done the job. Very good. Um, do you want me to play this video here, Rob? Uh, we have a little like demo of the Aesop software and, and you know, you’re talking about taking photos of the job you want to play. Cool. So walk through this one here. Okay.

Rob McKinney:
That’s opening up the home screen from our mobile app and we call a photo of field notes. So you can take one to six in any field note that you’re trying to look for, and you can take them natively from the, or you can pull them from the camera roll. But the difference for us is what a photo really does inside of our system, because there’s lots of ways to take a photo. Let’s be honest. You can use any smartphone out, take a photo and text it to a teammate or email it, but then what do you do with it? How do you find it? So when we’re taking a field note in our system, it is documenting the job. It’s part of what we say is eSUB, the job, and it’s an issue that’s popped up so we can type in our text.

Rob McKinney:
We could speak in our text and also use key words. One of the things that we do on our CS side, our customer support team is we work with each of our customers and kind of identify what are the key words that you’re most worried about what specifically, and I’m talking to the project managers. If you see this word or hear this word, what raises up the attention level for you? Is it delay, notice, change, incident accident, fill in the blank, right? What are those terms that need to be put onto a photo? Because now once you’ve taken a photo inside of our platform, the photo is always associated with the project that they’re taking it on. It’s timestamp, it’s date stamped and knows the actual physical location of the photo. So it’s really a legal document that can be binding if you need to get to that point.

Rob McKinney:
Hopefully we won’t talk about litigation today, but it happens, right? So you’ve taken a photo from the field. And the idea is it’s going in the system in the system, works with the project managers to alert them to either take an action or an insight. And by action, you know, someone asked earlier, what does an RFI stand for? What’s request for information that is basically a formal question from the trade contractor to a general contractor, but you need some backup, you need some basis, right? So if we take a photo of a door opening or a window opening or an electrical, something’s not where it’s going to work out the form, it takes that photo adds all the notes and the details puts it in our system. Then the project manager realizes, Oh, we’ve got an issue. So I need either, maybe I’m starting to RFI, or maybe it’s also just letting them notify something. Maybe they’re just behind it gives them an insight. So we’re trying to use the photos to prompt actions that again are prompting better workflows. And at the end, it’s always still trying to protect us profits. So we want to figure out what’s going on at all times through the job, through every part of the phase.

Alex Dunn:
Yeah, absolutely. That’s I really like the, uh, ability to annotate the photos as well, because you know, like a, picture’s worth a thousand words, but like it’s worth even more if you know where to look and why, um, you know, why it was taken in the first place, like pointing out that duct, where is it? It’s a delay. Maybe it’s, it’s going to result in a change order if you, if you have to move it and having that documented the day that it was installed or the day after it was installed, um, or, or the day, the week before a giant hurricane comes and wipes it all out anyway. Um, who knows like having that is just a pretty invaluable,

Rob McKinney:
Well, I’ll tell you, you know, you think the old phrase was a picture is worth a thousand words. You know, it was kind of when cameras were being first invented and how to, you know, convey so much information visually through a photo. Now let’s say a picture is probably worth a thousand dollars. Maybe more.

Alex Dunn:
Yeah, definitely more if it’s that duct that’s for sure. That thing looks pretty, uh, pretty heavy duty.

Alex Dunn:
Well, we’ll talk a little bit about like how, you know, that’s really good for on the job, like how you can protect your, your payments. There’s creating those documents. And let’s talk a little bit about like the back office side for a second here, you know, work is getting done and, and ideally payment comes like sometimes I guess, um, knowing that payment process upfront from your hiring party is really good. We see it sometimes with pay apps getting denied because there isn’t enough documentation or they weren’t sent on time. But if you know exactly what documentation is needed, you know, exactly like, um, you know, what, what time it needs to be in the GCs hands to make the payment, all of that stuff is really important. Um, Rob, tell me a little bit, like about your experience here. Like how did GCs look at pay apps when they’re deciding who gets paid?

Rob McKinney:
There are so many things to throw out there, right? You know, I can tell you from my history, I remember seeing how these were measured back in the day, they were three ring binders for H project where you kept all the documentation. And by that, I mean, when do we have notice of commencement? Do we have notice to proceed? Did we get their lien waiver? Do you know, 15, 20 years ago, this was measured in three ring notebooks, printed out, sitting on a desk, maybe correlated back to an Excel spreadsheet to hear what you guys are doing today. In real time with a modern platform that’s web based that documents everything it’s literally laying out, you know, that, that standard operating procedure of how to work through a project, but also notifications connecting the internal team are realizing, cause let’s be honest, if you’ve got a company in there’s maybe 10 projects at any given time going on each PM is focused on that one job.

Rob McKinney:
And maybe there’s a senior PM overseeing two or three, but that project executive, the CEO, the COO, they’re looking out for the whole company, how can they quickly figure out and raise their hand and look and see why one job may be going red or maybe payments are delayed? Like what is happening? That’s very powerful to understand what’s going on because at the end of the day, you know, releasing payments, we’re all chasing money. The money’s coming from the owner who gets it from the bank. Who’s distributed to the general contractors. Everybody’s trying to hold on to that little bit of cheese, as long as they possibly can before they’re releasing it, uh, you know, financing jobs. It gets interesting when you look at where the money really gets bottle-necked.

Alex Dunn:
Yeah, definitely. And we, you know, we always say like, it’s, it’s not necessarily anyone’s specific fault all the time when there’s a payment issue, it really can happen for so many different reasons from so many different parties. Um, and all you can do when you’re a sub to your party, whether you’re, you know, sub or a supplier or whatever is, is follow like a couple of simple rules here, which is, you know, that CNBC, we always talk about the preliminary notice, which I was mentioning earlier goes by a number of different names. And in most States is a required document actually to protect your payment rights, just by sending this document, it has nothing to do with like filing a lien itself. It’s just letting people know, Hey, we’re here, we’re doing this work. This is how much it’s for. And they know automatically, okay, these people are serious.

Alex Dunn:
They run a tight ship. They understand how the business works and they’re letting me know we’re there. And I’m going to basically put anything that comes from them at the top of the pile to look at first, because they’re the ones that could potentially cause a problem down down the road. If we don’t play by the rules, if we don’t try and leverage them or bully them, like they know what’s going on, they know their rights. So sending that preliminary notice, there’s like a really key thing that you need to do before any payments get exchanged, ideally. And in some States like Texas, you’re, you know, you’re sending a notice every single month before the 15th of every month. It’s a, it’s a big to do. Um, it can get a little messy. So keeping really organized daily reports, keeping really organized payment reports. When did you send the invoice?

Alex Dunn:
When did you communicate? Um, when, you know, did they send a waiver? Did you get that waiver signed a lien waivers or, you know, also known as lien releases depending on where you are. Um, they’re really important. Like those G that’s part of the GCs ability to be able to cut those checks and get them out is that you have to sign those documents. You don’t want to sign an unconditional waiver if you don’t have the money, but you do want to make sure that you’re following those processes that ideally before the job started you, you went out of way to understand when you open those lines of communications. Hey, when do you guys send waivers? Hey, when do you need pay apps? Um, what needs to be in the pay app? And, um, and one thing we’ve actually been doing it Levelset is going to some of the bigger GCs in the country.

Alex Dunn:
Um, Shawmut, I think even dr. Horton, who we add up on the screen earlier and we call them and we figure out what are their ideal processes. And we write a whole guide, the subcontractor’s guide to getting paid by XYZ contractor, whoever it is. Um, and it gives you all those, those steps. And sometimes it’s, like I said, there’s a little bit of red tape and the more, you know, going into it, the more you can stay a little bit organized. You can send those invoice reminders when they’re not doing what they said they were going to do. And just continuing to communicate and having those conversations, um, if things aren’t going the way they should be, whether it’s a change order or whatever, you know, having those constant communications. So key,

Rob McKinney:
That’s a fascinating concept. And what a great value for your customers of actually going in detailing. Basically here’s the steps to get the money. And they do vary by company. They vary. I let’s be honest, even in some companies, they vary by region. And who on your team knows the keys to the kingdom to get the money? If that’s the person leaves, they didn’t know that’s the value of the system of what you’ve put together. This is how to get paid.

Alex Dunn:
Absolutely. For sure. Um, so yeah, like say, say Rob we’re, we’re 75% through a project and we sent him to pay after the first 50% of submitted like a month ago. And we’re still waiting for payment. Like, what would you tell, um, the listeners day? Like what should they do? Assuming they have these lines of communication, they have this documentation, like w w how do they go and communicate on this stuff?

Rob McKinney:
You know, back in the day you had to call and call and call again, and then maybe you started emailing and emailing. You know, one of the inherent systems that we’ve built inside of the Aesop platform that we call it, the correspondence toolbox, and our founders had a long history, uh, over a decade of consulting with trade contractors, you know, back in the day when they were consulting, it was going in and organizing banker boxes and three ring binders, and loose documents to get them organized, to go present for payment or litigation or worse. And that was a lot of what gave them the idea to even create the Aesop platform. And part of what we still have inside of our platform is multiple different form letters that they successful used in their prior career that each of our customers can take and update for themselves.

Rob McKinney:
So to your point, if you realize that you’re behind on payment or you’re behind on answers to RFID, if you’re behind on anything, or if there’s a change, we’ve got these amazing form letters that we can utilize in our system that lets the subcontractor again, raise their hand and say, Hey, I have an issue. Whatever that issue is, it’s a legal, formal letter that we’ve used repeatedly. And our customers really see a lot of success because once it’s gone from, there’s an email saying, Hey, you guys owe me an answer an RFI number two, or Hey, by the way, you’re two payments behind in an email. Hey, you get a little bit of a little bit of attention when a formal letter comes in. I don’t understand why w when announced a form, a letter it’s like, Ooh, now we’re in trouble now. Okay. It’s serious. Now it’s a letter. Like they asked you,

Alex Dunn:
They got some certified mail. They’re going to open it. And then they’re going to take a look. And I love that Robinson. It makes a lot of sense. In one framework, we use a lot of Levelset. And it’s funny because we came up with this framework before we’ve rebranded to Levelset, but we call it the set method. And we’ve talked about the S and the E first, which is CNBC is the S and E is exchanging documentation. Um, you know, easily exchanging documents is really key, but the T and that’s what you’re talking about is talk it out. Uh, the idea there is nobody wants to have these problems. Nobody wants to, you know, end up in a tight spot where litigation, God forbid comes in or liens need to be filed. So how do you, you know, come to the table, whether it’s calling, calling, calling email, email, email, or sending even a registered mail piece or a demand letter, or an invoice reminder, just letting them know, Hey, we are paying attention to this. We did do the work. You did tell us you’ve received the pay app and it was approved, but we don’t have the check. Like w we don’t want to have to take further steps here, but we are coming to the table to talk about it. And I think that that’s really cool. I love that the correspondence tool locks, I want to learn more about that. I didn’t know about that.

Rob McKinney:
We’ll have to maybe do some deeper dives in different, uh, platforms and almost come up with a playbook of, okay, if you’re having this issue, this can do this. This can do that. This is how we work in concert.

Alex Dunn:
Exactly. Very good. So here we are. We’re at the end of the project. Um, so far we’ve, we’ve been proactive in our understanding of, of what needs to be communicated. We’ve looked at historical data to make sure that we’re asking or invoicing the correct way we’ve communicated with exchanging documents throughout the project, and have documented as much as we can. What do we want to do at close out Rob, to make sure that our profits are protected?

Rob McKinney:
Well, one of the biggest ones, and again, this is, this is a purple elephant. This is a painful one is you really got to look at your productivity and do you have a system now that tracks productivity? And let me be really clear. I’m not talking about that. You’re tracking that an employee worked eight hours in a day on a project. You’re saying, are you tracking during the eight hours that they worked? What did they actually accomplish in relationship to a phase? That’s what true productivity is. And do you have a platform that can do that? It’s something, if you’re curious, I’d love to show you how up can do it, but you really got to think about your productivity of figuring that out. We’ve got multiple different reports that we can show you how that works out of tracking it by your unit hours or by the labor.

Rob McKinney:
We can also different ways that we can surface data for the cost to complete, because Alex is, they’re getting close to the end of the job. And you’re kind of watching that, that diminishing window of cost to complete I, how much time do I have left and where are we at? What’s still to get there. Have you budgeted the hours? Right? Because people make errors. What if a phase code was? And you think you’re ahead, but you’re really not. There’s a lot of things to really think about there. And it really, the productivity get to analyze your data. But in order to analyze data, you got to generate it. You got to have a spot to look at it. That’s connected in uniform for all of your team. Really kind of think thing.

Alex Dunn:
Yeah. So it sounds like you’re talking a little bit about, like, how do we, how do we centralize this all in one place so that you can kind of look at it and then understand it, you know, data points on their own or bits of information, zeros and ones aren’t much, it’s all about kind of bringing them together, running the program and seeing how, like, how did this actually shake out?

Rob McKinney:
Absolutely. The goal for a lot of subcontractors for our trade partners is trying to get things in one spot. And like I was mentioning before, that’s been a challenge because a lot of software had been written in that top-down mentality. But depending on the state, you live in the statute of limitations, you know, I built for a long time and state of Georgia, and it was seven years. Where do you keep all of those as-built drawings or for a lot of trade contractors that have service divisions? Let’s talk about our MVP friends. If you’re lucky enough to build a project and maybe get your service team on it later, how does one division tell the other division where everything is? You need that central place to keep all of your documents. And I’m talking to your 2d plans. And even as we’re elevating into the 3d workflows, where’s your information?

Rob McKinney:
How do you change and transfer it to different team members, but then also start diving in right? You’re commissioning manuals. Where’s all the information that you as a trade contractor provided to the general who provided the owner. Where’s your copy? How easy is it to figure out what if you’ve done something new, right. I can tell you a horror story of a project that we implemented a pool. It was the first time we ever built a pool, Alex, on top of a four story parking deck. So it’s a concrete structure. They put a big thing, holding water at the top

Alex Dunn:
Is heavier than people think, you know, super

Rob McKinney:
Heavy. And by the way, when it freezes, it expands, which is not good. And I remember clearly sitting there with the, with the bull, you know, we had the bull company, we had the precast company for the concrete, and I was there with the property manager managing this project. And we had this on video. So we were recording the video. We were writing things down and we’re clearly telling the property manager, Hey look, so this pool is four stories in the air in a giant concrete structure. We’re telling you if it gets below 32 degrees, you got to drain it or run the circulation pumps 24, you know, 24 hours kill what’s above the temperature, right? You got to keep it moving or it’s going to freeze. Okay? No problem. Alice. Guess what happened the very first time it went below 32 degrees,

Alex Dunn:
The pool cracked

Rob McKinney:
And froze like a giant ice cube. And yes, then it started cracking and bad things happen. And so owner is looking at the time, I’m at the general contractor, he’s looking at us like, what’s going on? What am I pull crack? And we knew, because this was one of those occurrences. I was actually there helping manage this from the get-go. So I wasn’t looking to the pool person to, you know, say anything bad or disparaging about the pool person. Cause when you’re standing on top of a big guy skew, it’s kinda obvious what happened. Yeah, exactly. From a legal standpoint, though, I have to start, okay, where’s the manual. How did you train ’em? And we had to have all this I’m period. This is 15 years ago. It was not easy to pull together a lot of things to make it very, very upset owner, at least mad the other direction. And you know, back off the contractors to say, we built it to spec, we delivered it. We told you exactly how to maintain and run it. They forgot to drain it or to keep the pump running hard. Hard.

Alex Dunn:
It’s definitely hard. I was working with a concrete guy a couple of years ago. And one thing you said that I’ll never hurt, I’ll never forget. It’s so funny. He’s like, I know two things about concrete. One is it’s gray and the other is it cracks. And, and I’m always just like, it’s, it’s a so simple. Um, but it happens all the time, whether you’re doing a radiant floor install and you got, you gotta put your antifreeze in there. You’ve got to replace it every two years. There’s a lot of stuff that needs to be documented around stuff. You can’t see like a pool. You can see the water in there when you’re walking on a radiant heat floor. You know, you don’t know that there’s a mile and a half of pipes under there with water that literally one breaks your floor gone. You’re ready.

Alex Dunn:
You know, you’re better off just putting an HPAC system. If that thing breaks when you got a big warehouse with radiant heat. So anyway, just a little bit, a little divergent here. We’ll keep moving along. Assuming we’ve done all the right things. We have all this great documentation through the process. You’ve been proactive. You haven’t been reactive. And a lot of people that come to Levelset on a daily basis are calling us in a very reactive state. They are not being paid. They cannot meet payroll. They’re having a problem and we need to help them like the, our core value of help first is like very guiding principle for us and everything we do. And we want to help them with that. And it’s hard to sometimes get people to realize that being proactive will almost always be a better way to do it. But you know, easier said than done, like being proactive takes work.

Alex Dunn:
We’ve talked about it on the thing. People don’t like doing the paperwork. It’s a pain in the butt, but it’s a necessary evil. And when you have that proactive approach, like it’s gonna, it’s gonna help you. You’re not going to have these problems down the road. Um, but they still can happen. You can be as proactive as you want. And as I was saying earlier, like sometimes, you know, companies are going bankrupt left and right, these days with coronavirus, sometimes payment just doesn’t come. You could have done all these steps perfectly, but here you are at the end with your hat in your hand, and the person who was supposed to pay you is in bankruptcy filing court. So what can you do? Here’s a quick couple of things you can do to protect your profits. If you’ve been proactive, if you’ve filed these notices, um, and you’ve retained your lien rights, you have a few things you can do.

Alex Dunn:
Um, one is stay calm and call your customer. Always reach out first and let them know, Hey, this is a problem. Like if I can’t get paid, I need to take next steps to protect my business and protect my profits. So, first thing is we have a document called the notice of intent to lien, which is not a lien it’s actually required in a couple of States like Colorado. I believe it has a requirement for an NOI or a notice of intent to lien. And that lets people know you’re serious. Like, Hey, I’m going to file this lien. Um, I have my lien rights. I mean, you can actually file one. If you don’t have lien rights, it’s completely fine to do that. But it, you know, someone might call your bluff as well. So watch out. Uh, but at the end of the day, this, this notice of intent to lien is like a secret weapon that you have to go out and get paid and to, to let people know you’re serious.

Alex Dunn:
Um, you were talking about something in the, you know, your communication toolbox, which is like this ability to send a registered letter from an attorney or a demand letter or, or an invoice reminder. There’s a lot of things you can do before you get to that nuclear lien option. Um, that just lets people know like, Hey, this is, this is serious. Like you didn’t have any problem with me bringing my guys out there and doing the work. And like, you shouldn’t have a problem paying for good work cause we did great work. Um, and then at the end of the day, there’s always the mechanics lien. Um, we try, we always want to avoid those. Like I said, nobody likes mechanics liens, but they exist for a reason. You do have to get paid for your work. You do run a business and it’s important that you are able to do that. Ideally you don’t have to because you’ve communicated, you’ve set good expectations and you’ve continued to document everything correctly and payment came. Um, but there’s always this, um, this idea of sending a mechanics lien, it is your right to get paid.

Rob McKinney:
You got a document. Uh, one of the things our founder, when Rogers talks about is you don’t necessarily get paid for the work you do get paid for the work that you document. Did you get a document and often documented well so that when you are pushed into a corner you’re able to show? Nope. Nope, Nope, Nope. You hired me to do one, two, three. I did one, two, three. You accepted one, two, three, but now you’re holding back.

Alex Dunn:
Yeah, exactly. Right. Cool. So I think that’s basically bringing us close to the end here. Um, I want to quickly just recap everything that anyone listening here, any business here can do, um, to protect their profit in construction, I’m going to let Rob kick it away. Um, you know, not everyone needs to go out and buy a bunch of Aesop software and Levelset software. Like there are things you all can start doing today, whether or not you have the budget to automate them with some sort of technology or not. But Rob, from your perspective, what are some, you know, what are three or four things people can do today that will help them protect their profits?

Rob McKinney:
The first one we talked about is take, take photos. And the amazing thing about these new mobile devices is you can take more photos than you’re having to share them with your team in multiple ways. Just make sure you have a good game plan of this is why you take a photo. This is where you send the photo. This is how use the photo, the photos. Again, they used to be worth a thousand words. Now I really think there were thousands of dollars and that goes right into the next part of the COVID factor of how are you capturing any losses that you may be occurring because of the main litigation. If it’s taking you longer to get onto a site or off of a site, if it takes you longer to gain access to a floors, I mean, I’ve heard crazy numbers from safety professionals of their limiting, the buck hoist to four or five people per load.

Rob McKinney:
You have 300 people on a job, do the math on how long it takes to load in load out a job, or what if there’s different mitigation factors of where can you take your break? I mean, there’s database. I would argue a few minutes a day that you’re losing that you got to capture and that all falls into even a daily report. If you’re currently still doing a daily report by paper, please, please find something. Even if you just use a form builder and you use digital paper, at least have something that you can share back with your team. But the core, again, I’ve documented that daily report I used to try and stress to people and make them understand that, Hey, look it, daily board is really it’s the scorecard for a job and it can be either offensive or defensive weapon depending on where you’re at.

Rob McKinney:
But if you don’t have the record of the day of what you did or more importantly in our world, when we’re speaking to our trade partners right now, the trade contractors, anytime you’re held up from working anytime on a job at the beginning of the day or anytime, how are you documenting that to use it later as a leverage piece because you gotta have it. And then really for us is data. Anyone talking right now in the construction space, you look at all this amazing software that’s out there. It’s all about generating data, but the kicker I want to stress is it needs to be your data. Where are you creating? And I use this term hallux the data goldmine, where is that gold that you’re going to need when you need it, but it has to be your platform that your company, your team, your projects, you all understand to use, and you all put the same gold in the same place and you use it when you need it. But again, you know, trying to find papers, trying to find disconnected spreadsheets. That’s the, I think, I think we’re past that. And that’s what amazing platforms out there like ours help you do.

Alex Dunn:
Yeah, definitely. I mean, you can do it on your own, but you’re, you’re asking for trouble. You’re asking for disorganization. Um, and you’re asking for a little bit more wasted time trying to consolidate that stuff. Um, as it happens, you know, anyone can take photos on their phone and put them in Google photos and send emails with updates over and over. But then when you need to consolidate all that stuff, like, did you really, is it really worth it? Um, you know, maybe it is, um, because those pictures are so valuable, but when you have technology available that can help you just suck it all into one awesome place and use it to your benefit in that proactive way. You’re going to be a lot happier, I think. Um, and then I’ll just touch on quickly. Also, if there are any questions out there, we’re open up to questions here in a second.

Alex Dunn:
So throw them into the chat. I will keep an eye on it and um, we’ll get to those in just a second. And then I’ll just hit on my, my set method. One more time that we use a Levelset. These are things you can do with, or without levels that you do not need our software to do these things. CNBC is sending those preliminary notices, opening those lines of communications before you start the project, just let people know you’re there. Uh, sometimes it’s required for you to let them know you’re there. So definitely make sure you do it. If you’re in California or Arizona or Florida, Texas, or like there, you know, ton of places where this documents required. So make sure you know, your requirements when you’re letting people know, um, where you are on the project and what you’re doing the next is making paperwork easy.

Alex Dunn:
Um, create a process for yourself, know what your own process is in the state. So you’re working in and follow it. Um, you don’t want to end up in that reactive situation where you weren’t following it because he’d been working for these guys are whole life. Um, you know, you’ve been doing projects with them for 20 years. If they go bankrupt and you don’t have your lien rights, you’re not going to be in line to get that payment later on and that’s a hard pill to swallow. Um, so, so make sure you’re, you’re just keeping that paperwork process up. It’s just part of doing business, just like it is getting your personal protective equipment on. When you go to the job site, making sure you’re got your business protection plan with, uh, all your paperwork. And then the final part is always talking about like try and avoid those nuclear situations, where they needs to be filed, try and try and have those hard conversations in a productive way where you’re not banging your fist on the table and yelling about the money you don’t have.

Alex Dunn:
Nobody wants these bad situations to happen. If you’ve documented things, if you’ve had those conversations, you’re most likely going to have a much easier out than lean filing bond claims or any type of litigation or alternative dispute resolution that needs to happen in construction. So those are the quick takeaways from today, and let’s see if we have any questions. We’ve got our contact information here. If anyone wants to reach out to myself or to Rob afterwards, um, we would be more than happy to help. Um, Oh, here we go. Someone asked, asked, uh, if we could define an RFI, Rob, you want to just give a quick RFI overview for, uh, Kathy.

Alex Dunn:
Absolutely. That’s a request for information. Think of it as a formal question in construction. If something that your company is trying to install doesn’t work or fit in the wrong location, you’re asking a formal question to clarify that way. Either you get clarification of the design documents, the plans and specifications, or they may have to do a change, and then that will escalate into potential change order, change order, those types of work funds.

Alex Dunn:
Awesome. Thank you for that. Very good. Um, I saw you answered in the chat here too, but, uh, it’s good for everyone else listening. And, um, someone was asking about the pricing for ESOP. We usually don’t talk pricing on these webinars, but I definitely tell you to reach out to, uh, Rob after this, just shoot him an email. I’m sure he could talk through this stuff. Um,

Rob McKinney:
And you know, absolutely. I’m
Sure it also varies quite a bit. Uh

Rob McKinney:
It’s you know, it’s really easy though. Let me one thing I can throw out there, but it’s per user licensing and it’s an annual basis. We have what we call a core. That’s kind of the main part of the system. And then there’s a few things that are add on. So it’s per user pricing. The more employees you have that that’s what would change the number or the more, uh, more modules it’s only two or three. It’s not very complicated, but there’s a main part. And then a couple ad-ons that do different things and also would depend, um, uh, who was at that asset. Kimberly. It depends also, uh, because we handle money. Very interestingly, if you have an accounting platform such as Sage or Vista, we have integrations that can push and pull data. It gets it’s, uh, I don’t want to say it’s a custom order for every person, but it’s a interesting thing to look through and what, what more you’re looking to get out of our system. So if you shoot me a email, I’d love to be able to give you better, more specific information to your company, uh, offline.

Alex Dunn:
Awesome. There we go. We’re driving some revenue here for you to rehab on this webinar. Um, I don’t see any other questions coming in. Let me check the Q and a as well. Um, see if there’s anything in there looks like we’re clear. Uh, well, I guess we’ll wrap it up. Um, reach out to us if any other questions come up, um, or throw them into our community. Uh, you can always go there and get an answer from a lawyer or someone on the Levelset team around payment issues you have. And, uh, Rob, thank you so much for coming and chatting with us today. Talking to us about protecting profits, love, getting the alternate side from the, we, we focus so much in the back office and the people managing payments. It’s really great to have your perspective on the, in the field and how we can do better job there too. So thank you again for being here.

Rob McKinney:
Absolutely. Alex, thank you for the opportunity to talk, spread some good knowledge of different people and yeah, definitely show you the field side because what we try to do collecting data on the field side, I got to think would be a lot of what will be used on the backside of trying to collect on those payments of, you know, again, showing that you put work in place, it was installed, it was accepted. Everything’s good. So why are we got an issue? Can be a very good meeting of the two softwares to help contractors moving forward.

Alex Dunn:
Absolutely. Well, thanks again for everybody who showed up and, uh, spent their lunch hour with us, we really enjoyed having you and, uh, we will see you next time on, uh, our next ISA of level-set joint venture. Uh, have a great weekend, everybody and a strong finish to the week,