Checklists and processes are powerful tools that can help your business run more smoothly and prevent costly mistakes. This week we’re talking about how to get started with checklists, what to track, and how get buy-in and keep your team accountable.
Topics we cover in this episode include:
- Checklists vs. procedures
- Software that can help you implement checklists and procedures
- Starting off a job right with a checklist
- The benefits of standardized processes and checklists
- What to track with checklists
- Checklist champions and getting buy-in
Find all episodes and related links at ContractorSuccessForum.com.
Join the conversation on our LinkedIn page: https://www.linkedin.com/company/contractor-success-forum
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Rob Williams, Profit Strategist | IronGateESS.com
Wade Carpenter, CPA, CGMA | CarpenterCPAs.com
Stephen Brown, Bonding Expert | McWins.com
[00:00:00] Rob Williams: Welcome to the Contractor Success Forum. Today, we’re discussing the power of checklists on the Contractor Success Forum, because we are here to discuss how to make your business a more profitable, successful construction business. And who is here to tell us how to do that?
We have the three masters of ceremony of the Contractor Success Forum. We have Wade Carpenter, Carpenter and company CPAs, and Stephen Brown, McDaniel Whitley bonding and insurance agency. And Rob Williams with IronGate Entrepreneurial Support Systems. So, gosh, who wants to start the checklist of discussing the power of the checklists?
[00:00:53] Stephen Brown: Well, we’ve got a checklist.
[00:00:55] Rob Williams: We do have a checklist today. That’s–
[00:00:57] Stephen Brown: Wade sent us a checklist. Wade, tell us about checklists.
[00:01:02] Wade Carpenter: Well. Number one I was gonna say this is probably one of the sexiest topics we’ve probably–
[00:01:07] Stephen Brown: Oh yeah.
[00:01:07] Wade Carpenter: –all year.
[00:01:07] Stephen Brown: Yeah.
[00:01:09] Wade Carpenter: No, I know this–
[00:01:10] Stephen Brown: No, no tax deductibility of vehicles–
[00:01:13] Wade Carpenter: Well,
[00:01:14] Stephen Brown: –was sexy.
[00:01:15] Wade Carpenter: Anyway, I know this may not sound like–
[00:01:18] Rob Williams: Contractor Forum.
[00:01:20] Stephen Brown: Let’s change the name, Rob.
[00:01:22] Rob Williams: Yeah, we probably should.
[00:01:24] Wade Carpenter: But you know, again, I realize it may not sound sexy, but there’s a huge power in checklists and systematizing your business and I wanted to speak about that today. Talk about a book as well as try to apply it.
And before we kind of jump into that, I know Rob was into aviation. He was a pilot and checklists are huge in aviation. Rob, do you wanna comment on that?
[00:01:48] Rob Williams: Well, you always have to have that checklist. And I was a, I guess I’d call a chicken pilot. I was always nervous, which I guess is what kept me alive as a pilot. I was always fearful of what could happen. And that checklist, it kept us safe, but it also gave us consistency and got things through it.
It could speed things up when you get stuck. Sometimes it does possibly slow you down because you gotta do the checklist, but it gives you that consistency and that flow. It lets you have a successful flight because you don’t forget things. And to me, it takes the stress out of some of the things, too, and it makes it similar and consistent each time.
[00:02:29] Stephen Brown: Do you have a checklist for landing too? I just always assumed it was–
[00:02:33] Rob Williams: Yes, we have a checklist for landing. And just because you read the checklist, doesn’t mean you do all the items on there, which I did not do one time, which was not good for the bottom of my airplane that day. So, but other than that.
[00:02:46] Stephen Brown: That would landing gear, I bet.
[00:02:48] Rob Williams: Always read that with gear. I even said, gear and touch the gear. I just didn’t put it down.
[00:02:56] Stephen Brown: Okay. Alright, so let’s just change the title of this podcast. If you wanna fly, have a checklist.
[00:03:02] Rob Williams: That’s right.
[00:03:04] Stephen Brown: And our contractors wanna fly, Wade.
[00:03:06] Wade Carpenter: Well, absolutely. So let me ask Rob a question. What ultimately could happen if you don’t follow that checklist?
[00:03:14] Rob Williams: Well, you, everything can end. You can end everything. You can die. Exactly. Exactly.
[00:03:20] Wade Carpenter: Which is one of the things I wanted to bring, that– I mean, that’s not a very nice thing to say, but, ultimately that’s what we’re trying to do. Now, there was this book that came out in 2011. And I don’t, I can’t remember. I’ve probably been 10 years since I read it, but it’s called The Checklist Manifesto. How to get things right is the subtitle. And the author is Atul Gawande.
He’s actually a medical doctor and he talks about checklists in several contexts. He talks about aviation and how some of the huge failures in aviation have come across. He talks about, when they started implementing checklists in hospitals and operating rooms and ICU, how they’ve, reduced the rates of infection and things like that.
So reduces the cost of malpractice, all the things that go with somebody dying because of a mistake. So ultimately that’s, you know, people can die. He also talks in that book about, he went to talk to some of these builders that built skyscrapers in New York. And obviously when you’re getting up, 80, 90 stories high or something like that, and you have a failure in construction, well, again, people can die, right? And that’s not the whole point of this.
One of the points that I wanted to bring out today is that a business can die if they do not have procedures and checklists in place. So I just wanted to kind of talk today about how the power of that is, how you can implement it a little bit and just, maybe throw some stories out there.
Why we need checklists
[00:04:58] Stephen Brown: Well, checklists aren’t necessarily rules, but then again, they are. For example, a checklist put putting a bid package together. If you forget to put your license number in some states on the envelope, if you don’t address it properly, if you leave one question out if you’re bid bonded and perfectly sealed and dated with the correct information, all these things will throw your bid out and you just won’t get the job. A lot of new customers that are bidding more work for municipalities need those checklists. There’s one example.
[00:05:33] Wade Carpenter: Well, I think we can probably spend a whole bunch of time talking about examples. I just wanna throw out a couple of stories real quick.
A friend of mine, a CFO at a general contractor at the time they were doing about 90 million a year. And she’d been in the job for a while. She hired a new billing clerk and that billing clerk was in the job for about six months.
One time, I think it was November or December or whatever that year was that billing clerk forgot to send out pay apps for that month. And when you’re talking about eight or $9 million, a month, well, she told me how big of a problem it was. They had to really scramble.
They were a very established Contractor, but they’re scrambling because they had to wait 60 days for, you know, eight or 9 million, and they were really scrambling and going to the bank and it about took down a company that had been around for about 30 years because somebody didn’t follow procedure.
Checklists vs. Procedures
[00:06:33] Stephen Brown: Okay. So what’s the difference between procedures and checklists?
[00:06:37] Wade Carpenter: Well, again, we can talk about the workflow and I don’t know, Rob, if you wanted to address that, but you know, a checklist is a tool to ensure that people are doing things the same way.
[00:06:47] Rob Williams: In the definition on my checklist software, I actually have a software for making checklists and following it. But the procedures is how you do something. And I have multiple small procedures that’s how to do it, but I have a checklist that even puts the procedures together.
So my checklist is this. And I may grab a few different procedures and put it in that one checklist. So one item on my checklist may be follow this procedure for invoicing.
[00:07:15] Stephen Brown: What’s the name of that checklist software?
[00:07:17] Rob Williams: I’m using Sweet Process. There are a lot of them out there. I think actually a lot of accountants use Sweet Process. That’s where–
[00:07:24] Wade Carpenter: There are some other ones, like Process Street and stuff like that.
[00:07:27] Rob Williams: So there are a lot of them out there and you have to find one that’s right. Mine’s one of the smaller ones made for possibly not the largest system, but it’s got a lot of detail. I think mine’s maybe one step up above some of the other ones. So they’re all different levels of checklists.
In the contracting industry, our project management software is sort of a checklist type thing. We just don’t think about it that way sometimes. So.
[00:07:53] Wade Carpenter: Well, I was wanting to throw out one more story if I could, that actually came from the book, but I had heard it before. People may not believe back in the eighties, I was huge rock fan. Van Halen was my group. And um, Rob, which, but, I was a huge fan of Van Halen.
And there was a story that, van Halen was one of the first bands that they would do all these huge tours and they would roll up with 18 tractor trailer loads worth of equipment and stuff like that. So they actually wanted to make sure things were done right.
And they had these huge contracts, but David Lee Roth put in the middle of this contract was the fact that, in David Lee Roth’s dressing room, they had to have a bowl of M&Ms with all the brown M&Ms removed.
[00:08:42] Stephen Brown: Yeah. I remember hearing about that.
[00:08:44] Wade Carpenter: Yeah, but he didn’t do that to be a diva and say, I gotta have the best of everything. He did it to see if they were following instructions. And if he went into his dressing room and he saw brown M&Ms he had the entire crew go back and check everything, because they had these huge stages, and if they collapsed from the weight or, if they’re not paying–
[00:09:06] Stephen Brown: Especially him swinging from the top of the arena. You know.
[00:09:11] Wade Carpenter: These jump kicks that were amazing. And break a hip now, but–
[00:09:15] Rob Williams: We should probably all demonstrate our David Lee Roth jump kick.
[00:09:19] Stephen Brown: Well, maybe on another podcast, Rob.
[00:09:22] Wade Carpenter: Yeah, but anyway it was a great story, but he was that dedicated to making sure the show went off right. And he actually put a clause in his contracts that, if you don’t follow instructions, we have the right to cancel the concert, but you have to pay the band the full payment.
But, there was so many consequences to a failure that he recognized that, and it was a simple piece of the checklist to say, you don’t do your job, well, I’m gonna have my crew go back and check everything, make sure everything is right, so that it comes off right.
[00:09:57] Rob Williams: I’d heard the M&M story, but I didn’t realize that was a quality control measure to see if they were following and reading the contract, that actually changes that whole story for me. I thought it was just a diva thing. Some manager trying to get somebody on a power trip.
[00:10:12] Stephen Brown: All things being the same. Most people don’t like a brown M&M. They like the more colorful ones.
[00:10:16] Wade Carpenter: I want the green ones only, but anyway.
[00:10:20] Stephen Brown: Remember that next time you do a speaking engagement.
[00:10:23] Rob Williams: Yeah.
[00:10:23] Stephen Brown: But no, that’s a great story. So checklists accomplish standardized methods that work.
[00:10:31] Wade Carpenter: He does actually, in the checklist manifesto, that story is actually in the book as well. He talks about that, but that was his way of ensuring things. It may be a minor thing, but, I think we maybe spend some time talking about ways we can use that in a construction standpoint. As well as, getting back to some of the points you guys made about getting people to buy into it, getting people to follow them.
[00:10:56] Rob Williams: I think, I think there are two areas here. The office that we’ve mentioned, about accounting procedures, those kind of things, but it’s also in the field. And the field to me has at least as much of an impact.
Starting off a job right with a checklist
[00:11:09] Stephen Brown: Getting the job started off right. Just like setting up a stage for a Van Halen concert. That needs checklists. Also setting everything up with the owner and the new contract of getting paid properly, that involves a checklist. And then the follow up on the billings that involves a checklist. Maintenance of vehicles and equipment, that requires a checklist. Like I said, bid preparation requires a checklist. And then punching out a job. They call it a punch list.
[00:11:38] Rob Williams: And that punch list was, yeah. Although sometimes that’s a random list. If you can standardize that. I know we never would’ve been able to grow. This is probably good for maybe some of the smaller contractors to get out of that contractor where everything is you.
The only way for you to get out of that– well, I guess there would be another way. The only successful way for you to get out of being that thing, where you’re doing everything is to systematize it, which I think one of the main things is to make that checklist. So when you walk through there, it’s done your way.
I remember when I was young, we didn’t have as many checklists. We developed them over the years and the decades, but each superintendent, each guy that I had would do the job differently, especially we didn’t have YouTube to go see how everything was done. So everybody came up with their own method and you’d get that in one house in one neighborhood would be different than another one.
They wouldn’t use the thing. They wouldn’t even look the same sometimes. It’s like, did you not get the blueprint out of the truck? But we standardized that and in able to grow, we had to be consistent. So if we sent the right number of materials out there, they better have put the house to get built it that way and to be able to grow and multiply and scale up, you’ve got to standardize it. And I think using a checklist is one of the most common ways to do that.
The benefits of standardized processes and checklists
[00:13:01] Wade Carpenter: I guess you’re kind of jumping ahead of where I was gonna go with it, but exactly the same thing you got, any of you ever had a new project manager or estimator and one uses Excel, one uses some kind of program that they found off the internet that was free, and another uses some kind of really sophisticated software, or a project manager does it their own way and they don’t have a really good trail. And they leave. Somebody tried to take over that project. I’ve seen where they take weeks to get their feet back wet and and where they are. And–
[00:13:35] Rob Williams: Oh, yeah. I can’t believe at one time, maybe this is normal to some people. Our superintendents in the field would do the lumber takeoff each time we built a house, you know, to do that. So basically you had to have a carpenter be a superintendent. It just blows my mind that there was a point in time that we didn’t have the lumber takeoffs in the office to order that lumber. The guys in the field would do the takeoff in the field, call the lumber yard, order the lumber that we wanted, and that just blows my mind that it ever worked like that. We were probably even building a couple hundred houses a year when we were still doing that, before we got that standardized. And I think bringing those things back to the office was probably a big thing for our scaling up and quality control so our numbers wouldn’t be so drastic from neighborhood to neighborhood and being able to grow.
[00:14:24] Stephen Brown: Yeah, our motto is you don’t know what you don’t know and checklists help remind you of the things that you know, but you may have forgotten about. Just like they say, the key to a successful restaurant is serving the same quality food, the same taste of food that people like over and over and over again.
What happens if all that process is in the head of the owner, the chef, then the restaurant ends, but Wade, I’m sold on checklists. I’m sold. I’m really glad you brought this up. How do you get started?
[00:14:59] Wade Carpenter: Well, just a couple of points on some of the things you made. And I think we probably should talk about how to get started really quickly, but, you brought about like bid checklist. What’s the consequence if–
[00:15:09] Stephen Brown: They throw your bid out.
[00:15:11] Wade Carpenter: Well, you could throw your bid out, but I’ve also, and I know all three of us have seen this, you miss a huge line item.
[00:15:18] Rob Williams: Yeah, it could be even worse if you get the job.
[00:15:21] Wade Carpenter: Yeah. That’s where I’m, yeah. You get the job–
[00:15:24] Stephen Brown: They call it bid spread in my business.
[00:15:26] Rob Williams: Yeah.
[00:15:27] Wade Carpenter: Yep. And then–
[00:15:28] Stephen Brown: The difference between your bid and the second low bidder, that’s the spread.
[00:15:32] Wade Carpenter: But again you do something like that, you get this job and then it’s gonna take out all your profit. That’s where we’re going. It’s like these things can kill your business.
[00:15:41] Stephen Brown: Yeah, estimating checklists beside a bid before the bid list.
[00:15:47] Wade Carpenter: Change orders, things like getting project managers to get their stuff in on time that has effects on cash flow.
Where to start with checklists
[00:15:54] Wade Carpenter: I got a whole list of things that we could have talked about, but I guess we probably should talk about, what do we accomplish? How do we get started on doing these? Let me address that first. How do we get started? We could sit there and talk about everything in your business.
And it’s easy to get overwhelmed and say, we got a thousand checklists we need to write, and we get this analysis paralysis and we get nothing done. Right? So what I would suggest is first thing you do is make a list of all the functional areas of your business and some of the checklists you need to do. But after you’ve got that list, you need to prioritize it.
So I would say prioritize it number one, based on the biggest impact on saving you money, improving your cash flow, saving you time. If there’s something you could do that could free up somebody to have more time to do something or work on these things, that can get the ball rolling.
Those are the kind of things I think that help get going. Things like I would say, I call it the early yardage. If there are certain things that would help generate that time or generate that cash flow to help you move into the next phase of it. But you need to realize you can’t do it in a week.
It’s something that you’re going to be doing. It’s not gonna get done in a, week, a month, a year. Hopefully at some point you get a base level and even once you’ve got that base level of checklists, you gotta revisit it at least once a year because things like software changes and technology changes, people leave or something changes in your business, then you need to revisit these checklists.
Checklists and Accountability
[00:17:33] Rob Williams: One place to start, I’m actually going through this now is one of the tools we have in Scaling Up is the Process Accountability Checklist. So the first place you start is actually what area do you need to do it? And then who is gonna be accountable for this checklist?
Who is that? So, so who is responsible for this? So we start with that and then we start with about five. They usually say start with five to seven, don’t try to do everything and then prioritize those and pick those.
And you have somebody that’s accountable and then you might want to even try to have what is the goal at the end? Is there some kind of a KPI or something associated with that process? How long should it–
[00:18:17] Stephen Brown: KPI, what’s that?
[00:18:19] Rob Williams: Key performance indicator. So a, a number, a measurement that you can have to see what the success of your processes. So you can start with your Process Accountability Checklist first. That’s the place where I start in our process, our Scaling Up, as you’re trying to grow the company is make that list and don’t pick more than five to seven and then take them one at a time and decide who is in charge of that. Who knows this.
Who’s accountable for it, which doesn’t necessarily mean they’re the one responsible for it, but who’s going to be keeping up with this checklist and make sure it’s good.
What to track with checklists
[00:18:57] Rob Williams: And then what is the measurement? What does success mean for that process? And it’s amazing to track that. We did so much lean manufacturing in our processes with that. And it was amazing the length of this checklist when we started doing it and we could quantify it. And we had it written down. And w e had the main process was like getting our blueprints into our software and it went from three months down to four hours, over, I mean, it it took us years to get it that short.
But it was because we had that checklist and we had that responsibility because we always were missing something and it might take us two weeks to get it. So that checklist was just huge in defining that process. So hopefully that’s helpful.
[00:19:39] Wade Carpenter: I think you kinda lead me into two of the points I was gonna say, what are we accomplishing with all this? When you have a checklist, that is a thing to say, we are going to hold you accountable. So if you don’t follow that checklist, if we don’t have written procedures then, well, the person’s gonna say, I didn’t know.
Well, if you’re not following the procedures, then maybe you don’t get the bonus, or maybe we’ve got some reason to discipline. At least maybe we’ve got something to say, maybe you have to fire somebody because some of these failures can cost you tons of money.
[00:20:16] Stephen Brown: Sure.
[00:20:17] Wade Carpenter: And if you don’t have it documented, then you know, that’s a huge, what Rob was saying about holding people accountable, avoiding errors, avoiding wasted time or rework, or having to go back to the part supply house because you forgot to get something. Just having, this is the way we do it here.
[00:20:37] Stephen Brown: Just the we do it.
[00:20:38] Rob Williams: Well, well, you just made a great point when we talked about the KPIs, the key performance indicator, you wanna know how successful that is. And so as you have this process, you have a number to see how successful they are at doing this. It might be the days to get this down or something like that.
And that’s how you judge them to see whether they’re being successful at that. Now you still might have to watch out to make sure they’re not cheating in something. Or it could be a quality control.
A lot of these ones, it’s the net promoter score, because some of these processes are quality controls. So when you get that feedback from the users of whatever that product is that you’re producing with that checklist. So, yeah, there are different types of measurements and those measurements should be what you’re grading that person on. So you, hopefully you don’t have to get to the point of, you have to fire them that you know that they’re doing, whether they’re improving or not.
So you get to talk to them and correct that situation. And hopefully we don’t have to bring up the firing situation, but you’re right. If it’s catastrophic, if they don’t buy in then that’s it. But yeah, make sure you got that process. You got the person accountable and then you have a way to measure the success of that as it’s ongoing, because these processes will just kind of end up in a binder somewhere if you’re not following up and grading them.
Checklist champions and getting buy-in
[00:22:00] Wade Carpenter: These are all great discussions, but getting buy in, a lot of times we need a champion to say, this is the way we’re gonna do it and we’re gonna hold you accountable for it. And maybe it shouldn’t be the boss, but a lot of times it should be the boss.
It’s hey, you’re gonna do this. And this is the way we’re gonna judge you. But to get buy in it’s too often to change people’s habits when they’ve been doing things the same way every year.
[00:22:25] Rob Williams: Yeah, and it’s really important on the support, because I have definitely seen these things fall apart when it’s not always the owner or the contractor. In our old company, it was actually our CPA that we hired to get on there. And he was wonderful at these.
And sometimes people would roll their eyes at him and stuff. If you let that happen, if the owner’s not sticking behind him, it’s not gonna work. It doesn’t mean you have to do it as the owner, but you darn well better be emotionally supporting that and be buy-in. I had one situation with a partnership that the owners, they wouldn’t come into the meetings and they did. It just fell apart. Because they wouldn’t even show up to listen, to do anything. They didn’t know what was going on. They said, well, we’re just gonna let them happen. And then there was one guy that decided he didn’t want this to happen.
So he just acted like an ass and– beep, bleep that out– and It just destroyed the whole thing. And it was just a waste of time and energy because it wasn’t supported from up top, even though the owners wanted it to happen, they weren’t showing and supporting that it was gonna happen. So that guy doing the work knew that he didn’t wanna do that. He didn’t want anybody telling him what to do. He just successfully destroyed the system.
[00:23:32] Wade Carpenter: Yeah. And I could see that all the time. And unfortunately, old farts, the three of us, are sometimes the most resistant to change, but I know we kinda need to wrap up here, but you know, there is a lot of power in the checklist and I think that if you recognize that and you can get buy-in, you can save a considerable amount of money, time and effort and hopefully save your business. There’s a lot of things that we see failures, and checklists can help prevent some of that.
[00:24:01] Stephen Brown: As owner of a construction company, or Chief Executive Officer, your checklist of things that you need to start with are understanding exactly what your duties are and what you wanna accomplish. Your mission statement, safety, technology only comes down from the top. That change it and made it unless you’re the head honcho.
And also, what the company’s all about and your goals. So I see this as a bigger thing, but also a practical thing. I think it’s a great topic, Wade. Thank you.
[00:24:32] Rob Williams: Yeah, just get started. That’s the main thing is where to start is to start. This is one of the topics that people talk a lot about, but just getting it down. Appoint the people, decide which processes you’re gonna do, and then observe those processes and just start, decide what you’re gonna start on and who is gonna work on it.
[00:24:52] Stephen Brown: Okay, listeners, we’re gonna shut up, it’s the end of this podcast, so you can get started on your checklist.
[00:24:58] Rob Williams: All right. And that is the word from the Contractor Success Forum today! So thanks very much. This is your checklist headquarters and I hope you had a very safe flight and uh, a very nice landing and depart from the exits on either side of your monitor. So, have a great day and come back to us.
See us at the Contractor Success Forum with Stephen Brown, Wade Carpenter and Rob Williams.
[00:25:26] Stephen Brown: Bye. Bye.
[00:25:27] Rob Williams: Thanks very much.
[00:25:28] Stephen Brown: Bye bye.
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