2. Piecing It All Together ! Fundamentals to Consistently Make Money with Your Business Presented by: Tyler Construction Engineers, P.C.

3. Tyler Construction Engineers, P.C. work exclusively within the engineering construction industry to provide the most comprehensive business resource for small business owners.

4.  Marie Williams, MBA – human resources specialist & leadership development  Sandra Webb – accounting & payroll systems  Jay B Mercer – accounting & small business tax strategies  Curtis Webb - strategic marketing & competitive advantage strategies  Marshall Tabb – accounting, cash & debt management, leadership development  Ericka Hayes, CPA – business planning & Information technology strategies  Teresa C Daniel, PHR - – human resources specialist & leadership development  Victor Tyler, P.E. – construction business practices, bidding & pricing strategies Our Consultant Team

5.   Your Name   Hometown   School   Your interests   What do you see yourself doing in the future? Introductions

6. Successful business owners/ managers share 3 Characteristics: They Know What They Want. They have a Written Plan to Get What They Want. They Always Make Progress Toward What They Want.

7. Measurable Predictable Repeatable Successful business owners create processes that are…

8. Business Fundamentals: Business Strategy Marketing Strategy Financial Strength Human Capital Information Technology Leadership

9. Fundamentals of Company Operations & Culture Panel Presenters: Marshall Tabb & Ericka Hayes Fundamentals of Marketing Panel Presenter: Curtis Webb Fundamentals of Making & Maximizing Your Profit Panel Presenter: Victor C. Tyler, P.E Fundamentals of Tracking & Measuring Your Performance Panel Presenter: Jay B. Mercer Let’s Talk …

10. What’s wrong with this picture?

11. Presented By Marshall Tabb & Ericka Hayes, CPA Company Operations & Culture

12. Fundamentals of Service Delivery  Company Policies Procedures  Customer Service  Work / Life Balance  Discipline  Attitudes  Risk  Business Strategy  Financial & Budget  Business Processes  Information Technology  Marketing  Sales  Training Your Company Culture

13. THE LATE GREAT HENRY FORD SAID: “COMING TOGETHER IS A BEGINNING” “STAYING TOGETHER IS PROGRESS” “WORKING TOGETHER IS SUCCESS”

14. SUCCESS? ACCORDING TO WEBSTER’S: THE ACHEIVEMENT OF SOMETHING DESIRED, PLANNED OR ATTEMPTED.

15. Policies & Procedures Begin with the End in Mind

16. THE POLICY MANUAL  Direct employees to conform to overall management philosophy.  Highest authority for conduct in the company.  Takes precedence over all other publications.  Should not hold the company “Hostage” by being too restrictive.

17. Standard Operating Procedures Details the “How To” of a job or task. Start with a Purpose, a General Narrative and show its Applicability. Use position titles/functions vs. individual names. Must be kept current.

18. COMMON POLICIES & PROCEDURES Accounting Operations Personnel Marketing Bidding/Estimating Safety Record Retention Risk Management

19. Lack of Policies & Procedures Cause: Inconsistency Poor Internal Control Poor Communications Confusion Low Morale Employee Turnover Anger / Frustration Lost Profit (Rework)

20. Policies & Procedures Create Processes That Are: Predictable Measurable Repeatable

21. Lack of Policies & Procedures Cause: Inconsistency Poor Internal Control Confusion

22. QUESTIONS?

23. Presented By Curtis Webb FUNDAMENTALS OF MARKETING

24. What Is Marketing? An activity or process that creates interest The Goal is to… Attract Attract Persuade Persuade Retain Retain The Goal is to… Attract Attract Persuade Persuade Retain Retain

25. Foundation Statement You can’t give value to someone until they understand or appreciate what you are doing, or what you’ve done!

26. Where Do I Begin? Begin the marketing process by doing a self-assessment – There are three critical questions to ask…

27. Self-Assessment What is it that I’m trying to do? Know what advantages you bringKnow what advantages you bring How am I trying to do it? Define the objectiveDefine the objective Who am I trying to do it with? Know who to targetKnow who to target

28. Its All About Benefits …let your prospects know all the benefits your solution gives!

29. Explain Your Solution Let your prospects know you have a better solution to their problem!

30. Showcase Your Solution …tell your prospects why your solution is better!

31. Remember… ▪ ▪ Say or do something that gets your prospect’s attention ▪ Let the prospect know you have a better solution to their problem ▪ Tell them why your solution is better ▪ Let the prospect know all the benefits your solution brings ▪ Prove to your prospect that what you say is true ▪ Get your prospect involved in asking questions ▪ ▪ Say or do something that gets your prospect’s attention ▪ Let the prospect know you have a better solution to their problem ▪ Tell them why your solution is better ▪ Let the prospect know all the benefits your solution brings ▪ Prove to your prospect that what you say is true ▪ Get your prospect involved in asking questions

32. Presented By Victor Tyler, P.E. FUNDAMENTALS OF MAKING & MAXIMIZING YOUR PROFIT

33. Spending Habits Source: PewResearch Center

34. Making & Maximizing Your Profit Know Your Costs. Understand Your Costs. Cost first, then price. Make the estimate comparable to the P&L Statement Document data. Be detailed Be factual Base the estimate on historical data Compare final actual with the estimate. Synthesize all facts into the bidding plan. Be timely & respectful of the estimating system.

35. Strategy Start

36. Strategy to winning more profitable work. Position (Market) Project People Product / Service Price Production Profit

37. “To achieve consistent profits you must: know your costs understand your costs, and control your costs. You cannot begin to accurately price your products or services without knowing your cost.”

38. Price Structure Contract Price Total Cost Direct Cost LaborLabor Mat l. Jobsite OH Work Item Cost Gen & Admin. ProfitProfit SubsSubs EquipEquip

39. Understanding Risk & Pricing Old Way Costing Labor$50,000 Material$70,000 Equipment$7,000 Subcontractor$76,000 Other$3,000 Total$206,000 Overhead & Profit 25% $51,500 Total Bid $257,500 New & Improved Costing Labor$50,000 Material$70,000 Equipment$7,000 Subcontractor$76,000 Other$3,000 Total$206,000 Multi-Overhead Allocation Labor Burden 21.0% $10,500 Project Site Overhead 5.0% $10,825 Subtotal$227,325 Home Office Overhead 10.0% $22,7336 Profit 5.0% $12,503 New Total Bid $262,560

40. How Time In Construction is Spent Opportunities for improvement  Planning makes actual installation more efficient  Other activities such as site movement, material logistics, general non- productive time and rework is minimized 64%Installation 36% other activities

41. The Average Construction Day DESCRIPTION %HOURS/DAY Study Plans3%0.24 Material Procurement3%0.24 Receiving & Storage3%0.24 Mobilization5%0.40 Site Movement5%0.40 Layout & Marking8%0.64 Actual Installation64%5.12 Cleanup3%0.24 Breaks – Non-Productive6%0.48 TOTAL DAY 100%8.00

42. Look at 176 Man-hour Month Where can we improve? DESCRIPTION % HOURS/ MONTH Study Plans3%5.28 Material Procurement3%5.28 Receiving & Storage3%5.28 Mobilization5%8.80 Site Movement5%8.80 Layout & Marking8%14.08 Actual Installation64%112.64 Cleanup3%5.28 Breaks – Non- Productive 6%10.56 TOTAL MONTH 100%176.00 For one employee approximately 63 hours per month is spent on activities other than actual installation …. approximately 760 hours per year for that one employee.

43. $45,619 per year If you have 4 full-time field employees paid at $15 per hour … That’s why I talk about productivity in the estimating processes for both field employees and equipment. Seminar Tip Use accurate rates and reduce idle time.

44. Cost Summary The Estimator’s View Direct Costs Direct Labor Equipment Materials Subcontractors Other Direct Costs Labor Burden Rate (%) Indirect Expense Rate (%) Gross Profit $$$ General & Administrative Rate (%) (Company Overhead) Profit Rate (%) Bond Rate (%) Total Cost : $$$ Company Income Statement The Accountant’s View Revenue $$$ Cost of Sales Direct Labor Equipment Materials Subcontractors Other Direct Costs Indirect Costs Labor Burden Other Indirect Gross Profit $$$ General & Administrative Expenses Income Before Taxes $$$

45. Margin vs. Markup Job Profit and Loss Statement Sales ……………. $ 700,000 Less COGS …... 507,000 Gross Profit ……. 193,000 Less OH ………..… 175,000 Net Profit..…….. 18,000 As a % of Sales 100 % 72 % 28 % 25 % 2.6 % Markup As a % of Direct Cost 138 % 100 % 38 % 34.5 % 3.6 %

46. Basic Cost Summary % of Revenue Revenue $ 700,000 100.00 Labor 120,000 17.14 Material 300,000 42.86 Equipment 75,000 10.71 Subs 12,000 1.71 Overhead and Profit 193,000 27.58 Expanded Cost Summary % of Direct Costs Revenue$ 700,000136.72 % Direct Costs Labor 120,00023.44 Material 300,00058.59 Equipment 75,00014.64 Subs 12,0002.34 Other Cost5,0000.98 Total Direct$ 512,000100.00 Job Site OH Labor Burden$ 40,0007.81 Supervision 75,00014.65 Total Job Site$ 115,00022.46 Total Cost Input$ 627,000122.46 Gross Profit73,00014.26 Overhead55,00010.74 Profit $ 18,000 3.52

47. Why is it so important to know what costs belong to each job? Accurately measure profitability To determine what amount to bill To support change orders or claims Financial performance (banker, surety, etc.)

48. 1.Only bid what you do best - specialize and focus on certain types of projects, in specific locations, for certain types of customers 2.Define the ideal project size - increase your effectiveness and become more competitive 3.Seek negotiated jobs - and never bid or propose on projects against more than three quality competitors. Do not become a "'too busy, low profit" contractor 4.Develop accurate job costs - The only variables between the bid and the completed project should be overhead and profit markup. Bid Strategy

49. Consistent Profits

50. QUESTIONS?

51. Thank You!

52. cost consultants | estimators | management consultants 810 Dominican Drive, Nashville, TN 37228 tel. 615.469.5398 fax 615.469.7054 www.tyler-engineers.com