IMPROVING TRADE CONTRACTOR RELATIONSHIPS… From Good to GREAT!!!

1. IMPROVING TRADE CONTRACTOR RELATIONSHIPS…From Good to GREAT!!! Richard Pagotto, CGR, CGB Rtp.richland@gmail.com

2. Let’s Look at your problems • Not enough hours in the day to organize everything. • Good Trades are too busy and too expensive. • I can’t keep them busy enough on just my jobs. • I can’t pay them fast enough. • They never show up on time. • They don’t work efficiently. • They lose their blueprints or forget them. • They mark up the materials too high. • They won’t submit their Proposals fast enough. • Their invoices are always incomplete. • They never send the same crew back to finish.

3. Your “Top Ten” Priorities • Family First • spouse • children • yourself • Vacation time • Highlight “Special Dates” • Financial Commitments • Financial Budgets • Business Plan • Talk to your CPA • Talk to your Attorney • Semi-Annual reviews • Put it in writing and give it to everyone

4. Top Ten Trade Contractor Priorities 10. Finding enough good Builders to work with. 9. Finding Builders who speak their “language”. 8. Scheduling issues. 7. Jobsites are ready when they arrive to work. 6. Communications. 5. Builders who pay on time, all the time. 4. Skilled Labor. 3. Invoicing on a regular basis. 2. Proposal and Estimates. And our most important Trade Contractor priority is… 1. Finding enough GOOD Builders to work with.

5. Much Better Trade Scheduling • TO: Sweatajoint Plumbing Contracting • FROM: Richard Pagotto, Purchasing • RE: Update Scheduling for Morrisville Site • Prepared on January 22, 2011 • Revised March 15, 2011 • Revised May 22, 2011 • START UNIT # STAGE PRICE BALANCE • 03-04-07 4 five 2200.00 9800.00 • 03-09-07 3 four 1100.00 7800.00 • 03-22-07 4 six 2200.00 7600.00 • 03-20-07 3 five 2200.00 5600.00 • 04-04-07 6 two 3000.00 9000.00 • 04-09-07 8 two 3000.00 8400.00 • 04-18-07 4 seven 4000.00 3600.00 • 04-22-07 3 six 2200.00 3400.00 • 05-10-07 6 three 3200.00 5800.00 • 05-12-07 4 final 3600.00 0.00

6. The Zero Defect Plan • YOU must set the example • Make this a goal with an incentive • Everyone must be a part of the plan • Communications are key factors • Clearly state the objectives to all • Clearly state the responsibilities too • Clearly state the consequences • Establish weekly walk-through meetings • Pre-drywall is the most important • Written inspection reports must be filed • Pre-pre-settlement walk is mandatory

7. You must set the example…SMILE!! You MUST say good morning every day Know their special dates (birthday, etc.) Know about their families Pay them well (above standards) Give increases before they ask Empower them daily Give them flexible hours Vacation time must be planned before hand Have a suggestion box on your door INFORM them and LISTEN to them! Monitor and reward them The Happy Contractor 

8. Trades vs. Employees ??? • What is the goal of your Company? • What is the size of your Company? • Can you easily find GREAT Trades? • What type of headaches do you prefer? • Are you caring and compassionate? • Do you employee Superintendents? • Are you a “hands-on” leader? • If so…do you enjoy hand-holding 24/7? • Let’s talk about the financial advantages. • …and disadvantages.

9. Top Ten Menial Tasks To Eliminate • Estimating • Proposals • Invoicing • Scheduling • Advertising • Takeoffs • Contracts • Specifications • Change orders • Office Hours

10. Increase the Need for On-site Supervision • One Super on multiple job sites • Use Trades to supervise other Trades • Better Trades require less supervision • Keep supervision to one hour per day • Hire the experienced Superintendent? • Can the Owner be the Superintendent? • Can you consider off-site supervision? • Consider video supervision • Save the cost of the trailer / compound • Can you sub-contract the Supervision? • Create incentives for the Trades

11. Pre-Qualification Form (Sample) Your Name & Co., Inc. 123 Your Back Road, Front Town, NJ 09988 Phone: (555) 123-0000 Fax: (555) 123-0001 TRADE CONTRACTOR’S PREQUALIFICATION FORM TRADE:_________________________________________________________________________________________________ NAME OF COMPANY:____________________________________________________________________________________ PRINCIPALS:____________________________________________________________________________________________ ADDRESS:______________________________________________________________________________________________ PHONE NUMBER:________________________________________________________________________________________ E.I. OR SOCIAL SECURITY # OF PRINCIPAL:________________________________________________________________ YEARS IN BUSINESS:____________________________________________________________________________________ $ VOLUME: 2006______________2007_______________2008 (projected) ________________ PRESENT # OF EMPLOYEES:______________________________________________________________________________ LIABILITY INSURANCE LIMITS:___________________________________________________________________________ DO YOU SUBCONTRACT ANY PORTIONS OF YOUR WORK?__________________________________________________ WHEN ON THE JOB, IS YOUR FOREMAN PRESENT?_________________________________________________________ ARE YOU PRESENTLY WORKING ON SIMILAR PROJECTS?__________________________________________________ PLEASE LIST AT LEAST 3 JOBS YOU ARE PRESENTLY WORKING ON OR HAVE COMPLETED: BUILDER COMMUNITY SIZE OF JOB LOCATION PHONE # CONTACT_ ________________________________________________________________________________________________________ ________________________________________________________________________________________________________ ________________________________________________________________________________________________________ ________________________________________________________________________________________________________ PLEASE LIST VARIOUS MATERIAL SUPPLIERS YOU USE AT THE PRESENT TIME: SUPPLIER ADDRESS PHONE # CONTACT______ ________________________________________________________________________________________________________ ________________________________________________________________________________________________________ ________________________________________________________________________________________________________ SIGNATURE:______________________________________________ TITLE:__________________________DATE:____________________

12. Top Ten Where to Find Good Trade Contractors • Building Inspectors • Township Offices • Banks • Vocational Technical Schools • Vendors and Suppliers • Architects and Engineers • Drive Through Other Job Sites • The Local HBA Offices • Other Good Trades • Trade Shows

13. How do we get better quality, more often, at a lower cost? • Pay promptly • Quality in…quality out • Compare at least three other Bids • Reconsider the highest and lowest bids carefully • Provide clear specifications during the bidding process • Provide ALL Trades with the latest set of drawings • Eliminate all questions and concerns up front • Always schedule a pre-con meeting with the Trades • Search for volume discounts • Faster payment schedules • Give the Trades opportunities to make more money • Ask for all rebates from suppliers and vendors • Consider profit sharing with the Trades

14. They will want to work for you first if … • you pay them promptly • you schedule them well in advance • your jobsites are clean and ready for them • all materials are on site and complete • you pay them promptly • they have full and complete drawings • they have clear and concise specifications • you issue timely work orders in advance • you pay them promptly • you allow them time to get their work done • you give them an empty house to work in • you compliment them for a job well done • you pay them promptly!

15. Creating and Improving a Business Relationship with your Trade Contractors • STOP calling them “SUBS” • Develop a Trade Contractor Manual • If you already have one, update it now • Give it to them ASAP! In person. • It must include “Policies and Procedures” • Include a copy of your Mission Statement • Attach your Warranty Program Guidelines • Prepare a “Scope of Work” for all Trades • Prioritize the Change Order procedure • Have them sign off on a file copy • Update it as often as necessary

16. How to Improve the Quality of Your Trade Contractors • Communicate with them on a regular basis • Make sure they are members of the HBA • If not…sponsor them immediately • Give them autonomy • Make them accountable • Be a mentor to them • Sign them up for educational seminars • Help them to attend trade shows • Get to know them on a personal basis • Find out what YOU can do for them • A happy Trade is a GREAT Trade!

17. Trade Contractor Improvement/Suggestion Sheet • To: Richard Pagotto • From: Copperhead Plumbing • Date: ______ • Re: Jobsite _________ • We worked on this site on date ________ • The Superintendent was _____________ • We worked on lot/house/unit # _____________ • On a scale of 1-5 (5 being highest) we determined: • We received the Work Order prior to starting 1 2 3 4 5 • We had complete drawings and specifications 1 2 3 4 5 • The site was ready for us to work 1 2 3 4 5 • The site was clean and prepared 1 2 3 4 5 • The Superintendent was courteous 1 2 3 4 5 • All materials were on site and complete 1 2 3 4 5 • There were no other Trades in our way 1 2 3 4 5 • We had ample time to complete our work 1 2 3 4 5 • Payment was received promptly 1 2 3 4 5

18. Daily/Weekly Fax Checklist for the Trade Contractors • Date ______ • Good morning __________ • Your services are needed on this site_____________ • Your service are needed on this date ____________ • Our Superintendent will be _______________ • Please contact him to confirm at _______________ • Please see Work Order # _________________ • You will have ________ days to complete. • We have agreed to a price of ____________ • Please sign here below and FAX back today: • Approved by _______________ Date ______________

19. Top Ten for the Policy Handbook • Keep it short. Six pages at most. • Write it in at least two languages. • Review the main points at the meeting. • Payment schedules • Estimating and Proposals • Price Coverage • Rebates and Model Home discounts • Work Order System • Invoicing • Clean-Up • Insurance and Workers Comp • Work Hours (Days) • Scheduling • Article Five

20. Top Ten for the Policy Handbook continued … • Ask them to sign it before they leave. • Some will. Some won’t. That’s okay. • Explain how they will get paid promptly. • Offer Incentives and Bonus Packages. • Give them an opportunity to contribute to it. • Update the Handbook throughout the year. • Thank them for their contributions.

21. T ough as nails R are breed A nticipates problems D ynamic in personality E asy to please C onscientious O wns the business N ice person to work with T rustworthy R esponsible A lways there when needed C lean and neat appearance T horough O rganized R espectful You Must Always Consider the Trade Contractor DNA First

22. Top Ten for Great Suppliers/Vendors • They know all the good Trade Contractors. • Allow them to complete the take-off lists for materials. • Are you aware of all rebate programs they offer? • Also Model Home incentives, FREE gifts, etc. • Service after the sale is paramount. • Good source for financing if needed (60 days to pay). • Underwrite the Breakfast meeting. • Free trips as incentives for Trades. • Unfortunately you won’t be seeing as much of them anymore. • Unless it is on the golf course!

23. Insurance premiums (liability, etc.) healthcare costs salaries employee benefits vehicles fuel costs auto/truck insurance office expenses soft costs / overhead advertising supervision punch list warranty work service work call-backs plan reproduction phone service internet costs safety / accident prevention waste / recycle scheduling carrying costs / interest payments financing Trim Your Costs Checklist

24. Watch as you Grow Together 1. Plant the seed early. 2. If at first you don’t succeed, don’t give up. 3. Never burn a Good Trade Contractor bridge. 4. Use them as a great Trade Resource and vice-versa. 5. Lean on them when times are tough. 6. Stay in touch at least once per month. 7. Determine their goals and help them achieve them. 8. Consider a small business loan if necessary. 9. Be a mentor. 10. Recognize their success.

25. Top Ten We Must Change Tomorrow • Better estimating completed sooner • Better plans finalized sooner • ALL Trades on board early in the Project • All bids in before presenting your price • Better specifications and scope of work • Budgets must be entered before work starts • Tracking system in place early on • Work Orders issued for ALL purchases • Monitor, Monitor, Monitor… • And I promise to change one thing starting tomorrow __________________!!!