Build your job files for protection and profitability

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Every project manager seems to keep records differently, but having a defined and organized process for building your job files can save you a ton of time, money, and stress. This week we’re discussing why job files are important, how to build a good one and how they can help you resolve disputes that could otherwise cost you.

Topics we cover include:

  • Why you should stay organized and build job files
  • How job files may differ for different industries and types of companies
  • How to store your job files
  • Why documentation is crucial¬†
  • How a good job file can change a lawsuit into a change order

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FIND US ONLINE
Rob Williams, Profit Strategist | IronGateESS.com
Wade Carpenter, CPA, CGMA | CarpenterCPAs.com
Stephen Brown, Bonding Expert | McWins.com

TRANSCRIPT

18. Build your job files for protection and profitability

Rob Williams: [00:00:05] Welcome to the Contractor Success Forum. Today, we’re discussing putting a job file together and what is in that darn thing. So the Contractor Success Forum discusses financial strategies for running a more profitable, successful construction business.

Check out our show notes and go to ContractorSuccessForum.com and subscribe to get notifications to make sure you don’t miss anything. So our three long-term construction industry professionals are Stephen Brown, a construction bond agent with McDaniel-Whitley bonding and insurance agency with over 30 years of experience underwriting and placing bonds for you as contractors. And Wade Carpenter with Carpenter and Company, CPAs, helping contractors nationwide to become permanently profitable for over 30 years. And I am Rob Williams, your Profit Strategist with IronGate Entrepreneurial Support Systems, driving profit in your businesses with decades of vertical integration as a contractor, manufacturer, aviator and financial strategist in the construction industry. Now, Wade and Stephen, I bet you guys have got some quotes for us today about being organized and job folders.

Wade Carpenter: [00:01:29] Well, let’s let Stephen throw his out there first.

Stephen Brown: [00:01:33] For every minute spent organizing, Wade, an hour is earned. That’s Benjamin Franklin. Man, that’s good stuff right there.

Rob Williams: [00:01:42] For every minute spent organizing, an hour is earned. That’s pretty wise there, Stephen Brown.

Stephen Brown: [00:01:49] I’ll take credit for it. But it was Benjamin Franklin.

Rob Williams: [00:01:53] Yeah, that’s good. yeah. And this- job folders, you got it! Do we want to talk about that now? Or do we want to go to

Stephen Brown: [00:01:59] I kinda want to hear Wade’s quote.

Rob Williams: [00:02:01] Okay, let’s go. Wade?

Wade Carpenter: [00:02:03] Well, President Calvin Coolidge said the only difference between a mob and a trained army is organization.

Rob Williams: [00:02:12] The only difference between a mob and a trained army is organization. Very good. I have to let that sink in.

Wade Carpenter: [00:02:19] I mean, I see contractors that I work with all the time that, everybody does it a different way. One project manager keeps stuff in his email and other ones keep paper. And if somebody leaves, it’s always a huge mess trying to pick up and figure out what’s going on.

Rob Williams: [00:02:35] Yeah. I mean, that is what a contracting company is. It’s just an organized bunch of subs organized in a central hub called a contractor.

Stephen Brown: [00:02:46] Right. And I think what is a job file supposed to communicate, and why do you save those papers anyway? And from a legal standpoint, you say, well, I’ve got to go defend myself in a lawsuit. First thing the attorney asks for is, want a copy of the contract. I want a copy of all the change orders. I want a copy of all the communication. You know, either have it or you don’t. If you don’t, it’s just not good.

Rob Williams: [00:03:14] And, you were talking about earlier, two reasons– I’m over to Wade– two reasons why you keep these.

Wade Carpenter: [00:03:21] Organizational efficiency; like, there’s studies by  Price Waterhouse Coopers that said a lost piece of paper costs you $122 worth of efficiency in time. So we have the operational efficiency aspect.

And then the second part is protecting yourself. The CYA. Just exactly what Stephen was saying. Protect yourself from penalty causes, back charges, lawsuits. Those things that, if you have it documented, then you can protect yourself.

Rob Williams: [00:03:50] Yeah. Yeah, it’s really true. That brings up a good point. I know I was younger than most of the people that worked for me. Some of them had decades more of experience than I did. And we got into some of these commercial jobs and the things, and they knew how to build these jobs, but they weren’t much on knowing what the contract, they didn’t really care what the contracts said and they didn’t have this.

So I definitely went through a big roller coaster ride myself of being dependent on these guys, but they didn’t understand the legal implications of having this and  the reasons it was important. They, in their trades, had just not really worried about it very much. They just, it was what it was.

And if somebody didn’t pay him, they didn’t pay him. They moved on to the next job. And as you grow and did that, you couldn’t be like that anymore. We had some extreme situations with some big jobs that we really needed to know what that paperwork said. And in the superintendents better know what that says to o, that we had out there.

So we were forced to get better job files. We didn’t call them that exactly, because we were based back at our, at the factory. Because we were usually manufacturing the building components. So that’s where our hub was, not really in the superintendent’s hands like it was as a home builder. We did, we had a box of files. We had the whole metal box that, back in those days that we didn’t have internet or anything, and we just you’d ride around and you’d have all your job folders in this one big metal box and you’d have pretty much everything. And so it all was in the hands of the, the superintendent.

Stephen Brown: [00:05:36] I I’ve got these vines growing up out of the bushes on my front yard like crazy. And I had a lecture from one of my buddies who was leaving the house and he was like, you know, Brown, you gotta pull these vines out every week. You got to just tend to them every week or they’ll take over.

And of course I, I, Tom Sawyered him into going, well now, how do you pull those? You’re doing a great job. You use your left hand? But know, point is those weeds have to be pulled and your contract is the weed that has to be read You gotta know what you’re signing. Is it a standard contract? If you look at them enough, they’re not scary. Now, if I really want to terrify you, I’ll say, well, it’s really fun to read contracts and insurance policies, their great and, and general indemnity agreements for bonding companies. Paperwork is all I deal in. All I’m selling is a promise as an insurance agent. Paperwork is everything.

So we have, what’s called transactional filing where everybody in the office can get ahold of a file and  glean what they need from it.

If you’re in a billing department for a construction company, you’ve got to pull out the, the terms of when you can bill on that contract. And then a lot of contractors say, well, all the paperwork and everything slows down with the project managers, the job superintendents. They’ve got to understand that that’s a big part of their job as much as building the project. But nevertheless, it’s an ongoing battle.

Rob Williams: [00:06:59] Yeah, it really is. We did a lot of lean manufacturing training in there and we had the factory, but we also had the field. And so we were always trying to figure out how we get more lean and more efficient. And what we found, we had the University of Alabama and Southern Miss both, we had a lot of the PhD guys up there studying our processes.

And what we found is instead of them looking at the guys working on the jobs and working in the factory, we probably spent 75% of our time looking at our communication rather than the actual movement and motion of the workers, because it was about getting that communication and having all the information so we could get the things going. There was always something missing when we started in early days and the communication going back and forth and back and forth.

Actively, what we did is we got out of our computers, even though this was a long time ago, we were trying to put everything in the computer and they got us out of the computer and up on the whiteboard with all these sticky notes, you know, this is the one and every line was one person communicating to the other one and getting that, coming back to getting that information in the file, so we could create the documents, create the drawings, create all of these things. And it was a spaghetti diagram and we did it. The ink would just go over the top of the ink.

So we spent years trying to get that into a straight line and asking the right questions at the right times. And what information do you have to get? What is in these contracts that you bid on? And then what is not in the specs? There’s a lot of information that we had to gather that that’s not in the spec. 

That’s, that’s how we did it. So we just constantly, every month, every, it was every week for awhile, we would get that. So I think in the beginning, it, it took us at least a month, sometimes two to three months to get all the drawings and everything down. And we got our process down to less than three days. But it was not easy. We had adjustments, we were working with regular clients most of the time. We had some new ones that we’d bid on jobs, but, but we serviced a specific group of contractors for 90% of our work.

But getting that process down and building that file. And learning how you’re going to store it. Unfortunately, at that time we didn’t have internet phones. We at least we did have phones out on jobs. And we had radios, we had those little walkie

Wade Carpenter: [00:09:37] No Nextel bills.

Rob Williams: [00:09:39] Yeah.

Wade Carpenter: [00:09:39] Okay.

Stephen Brown: [00:09:40] Well, when you’re talking about building the job file, too, on a project, what’s in there beside the contract, the change orders, and then all the communication between the different parties that you have? One thing that’s just bigger than ever now is video, photographs, drone footage, that’s a huge part of building a job file.

That of course is digital that you want to save, but picture’s worth a thousand words in a dispute, especially when you’re trying to get paid on something and maybe that interloper is telling the owner it’s not done. It’s done. You don’t want to argue it back and forth and then have a meeting where they come back at you, you want to just fire a picture.

Rob Williams: [00:10:24] Right.

Wade Carpenter: [00:10:25] Actually one of the guests we’re hoping to put on here, he saw how much pictures and video can make, you know, so that every single day he has somebody on the job, he said they have to take a minimum of six pictures.

He told me a story recently. It’s a contractor, he’s a polish contractor out of Virginia. They were building this big hotel, and they had this grand foyer where they were, like a polished concrete in front of the fireplace. And they were documenting all this stuff and they had been done with their part of it for a couple of months and they were getting ready to open. It was actually a holiday weekend  like Labor Day or something.

The owner called him and said, when are you going to get out of here and polish my concrete? I open Monday.  He said, we’d already done it and, we had a conversation with the general contractor about it and they were going to acid wash the chimney before that. And we told them that we can’t do that, cause it’s gonna mess… Sure enough. He had it all documented. And the owner was wanting to back charge him to get out there, and it would’ve cost him 30 grand on a holiday weekend. He had it all documented. He sent him all these pictures and all the discussion, and he ended up getting  a $50,000 change order.

Stephen Brown: [00:11:43] That’s a great sentence.

Wade Carpenter: [00:11:46] Otherwise there were, it probably would have cost him 30 grand out of his pocket to go back and  send a whole couple of crews up there on a holiday weekend.

Rob Williams: [00:11:56] Oh, yeah. That’s, that’s been big. I can think of some huge, huge costs that I had because it was a, he said, she said, and the superintendent, and the jobs I’m thinking of were jobs that I didn’t have an ongoing relationship with these companies. And, and these superintendents were siding with their guys they knew. And we didn’t have all those cameras and stuff back then. We did have digital cameras. I just remembered that because I found the box of them not too long ago. In my attic, we had about 20 different digital cameras we had bought for everybody to take, but man, without mobile phones and stuff, trying to get those things filed and getting in the right places, wow. It was tough.

Stephen Brown: [00:12:38] Wade, your story going from a potential lawsuit into a change order, what a fantastic story that is to illustrate building a job file. And, we were talking about this earlier, you don’t take a Wade Carpenter a box of receipts and stuff and say handle my stuff. I mean, If you do I think Wade, you should charge them $500 an hour or a thousand dollars an hour just to sort through it.

But the main thing it’s just a waste of a good professional’s time, just like an attorney.  I attended a seminar that a great local construction attorney Joe Getts gave once for the AGC. And it was just simply how to organize a project file. And what he said was it is transactional, put the oldest stuff on the bottom and the newest stuff on top, and that’s how they scan it.

They’re going to put their own file together, no matter what you send it, because I have their own way of transactionally filing because you know, we’re not talking about 20 or 30 pages. We’re talking about a couple of thousand that they’re having to sort through, and they’ve gotta be able to find it in an instant.

It’s just amazing ask your own attorney buddy how to set up a job file, they’ll tell you exactly what you need to do and what you need to not just CYA cover your butt, but also to use it to be profitable.

Rob Williams: [00:14:05] Yeah, it is because of  the different trade or the different people, different companies might need it in a different order. We had certain things that we needed that had to physically go out to the job sites, because they’re not computerized, but in general though, I guess we did have sort of a similar thing like that done by time.

Time is a good default thing. We had color folders, even. That was a really big thing based on what we had to see. Cause we had to see– a lot of times that was timed deadline though. We had the red folder, so everybody’s like, oh, there’s a red folder. And I would know to go look at that, like, what is red what’s what’s, what’s hot here?

So, so different color codes. And I was just talking to some people the other day about all these different systems now that you can get, and I don’t know the different brand systems, but I do know how they have changed and how I’ve gone through so many of them.

I had a guy telling me the other day– and he wasn’t that big, so he could do it. He’s like, I’m through with those. I’m going back to my Google files and I’m just storing them on here because I want everything in one place. And for his size that’s what made sense for him. He just wasn’t needing to get one of those big systems, those big systems overwhelmed him and he just never could finish getting the system going.

Stephen Brown: [00:15:23] And you’ve got to save that file with a very specific name for exactly what it is. If you’re emailing someone a bunch of files, they can’t sort through a generic file and find everything they want. You’re wasting someone else’s time. You’re wasting your own money. Either they’re an employee of yours, or you’re hiring them to help you. You know, Unless you have just a family member that wants to do it out of the goodness of their heart, just take a second. The name that file very specifically, what’s in it. be consistent, be consistent.

Rob Williams: [00:15:56] Exactly consistent. And then, then what are there, I know our standardization between residential and commercial was dramatically different because they had a whole different coding system of the way we had to do that.

But knowing these is a big thing and there are probably some great resources out are, which, when we come up with these great resources, look in the show notes. So they’re probably there right now. We don’t have them, but by the time you listen to this, there’ll be some great resources in the show notes. So we’ll put some links in there when we figure out what those links are. Right, Stephen?

Stephen Brown: [00:16:30] You got it.

Wade Carpenter: [00:16:31] Can I chime in on that a little bit? I think there’s a lot of things that are out there and we are going to be doing some that we discussed on technology and construction. The guy that I was telling you about documented this stuff, built his own system to ensure that these things get done. You can take pictures all day, but if you can’t find it, that’s exactly to Stephen’s point.

 I mean, I hate to say it. I’m old school too, but you know, it’s hard to get out of paper, but getting paperless can be a huge time saver and effort saver. And exactly what you’re saying. You have to have an organizational structure. Talk to an attorney or talk to one of us or something like that, about what should be documented into a file and have that file structure set up. And everybody has to use it. And even if it’s online, you teach your people what should be in that job file. Get it, get it paperless, use technology as much as you can, and you’ll save a lot of time doing it.

Stephen Brown: [00:17:34] Great advice.

Rob Williams: [00:17:37] Great. Well, I look forward to doing this. This is definitely a follow-up episode. We’ll get a guest in here and talk about that or see some of the show notes. The takeaway here is you need to get it done. You need to have it. You need to figure out what is the best system for you, whatever kind of trade you’re in or, or whether you’re a GC, it’s going to be different for you guys and learning what’s going to work with you and your clients or, or your subs if you are the client.

So, Look forward to following up on that and getting other episodes. And in the show notes, we’ll put links to those shows as we get those done. So I appreciate you guys getting up this morning early, before the sunrise to do our nice, great Contractor Success Forum podcast.

So I am Rob Williams with IronGate Entrepreneurial Support Systems.

Stephen Brown: [00:18:28] I’m Stephen Brown with McDaniel-Whitley bonding and insurance. Call us if you have a bonding or insurance-related problem that we can help you solve.

Wade Carpenter: [00:18:38] I’m Wade Carpenter with Carpenter and Company, CPAs and we help contractors nationwide to become permanently profitable. Check us out at CarpenterCPAs.com.

Rob Williams: [00:18:47] All right. And we are ContractorSuccessForum.Com. Follow us, check us out. Come see our next show. Thanks. Have a great day.

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