Its not every day we get to build a bridge, but with the large sites we get into, it isn’t uncommon to have something like this as part of our infrastructure package. This one was very cool and not without its challenges, but thanks to our team with Kristen Miller at the lead it all went very smoothly. The bridge itself is a 100 year old truss bridge which we purchased from the Stare of Indiana. We had it cleaned up and structurally retrofitted then shipped in two main parts to our site. We constructed it to the side of the driveway and when it was complete had a couple of cranes come over and help us lift it into place.
In Douglas Adam’s book, The Hitchhikers Guide to the Galaxy, it took the supercomputer, Deep Thought 7.5 million years to come up with the Ultimate Answer to Life, The Universe, and Everything. Hopefully, when we start an organization, it doesn’t take us that long, especially when the answer is as simple as 42.
From the start, I knew my company’s Purpose, but I could never articulate it well enough, at least not in a simple coherent sentence. Why that is important is as simple as the number 42, that is, the people around us need a cause that they can believe in. What’s beautiful about a cause rather than a mission statement or a values proposition, is that it can be simple- in fact, the simpler the better.
The striking thing is, how important it really is for your people (I mean your employees of course, but I tend not to use that word). It wasn’t till last year after 24 years in business that it really came to light how crucial it is to have a clear and defined purpose. Up till then, we had terms like Mindful Building which we had trademarked in the early years, we had a set of values that everyone embraced, and we actively work on these values with monthly recognition for people who embody them. We also have a mission statement, though it is wordy and unwieldy, and I still can’t recite it word for word. It wasn’t until I was challenged in a vision meeting with a group of our people that it dawned on me what our purpose was.
Simon Sinek’s amazing book, Start with Why, is likely to be the ultimate guidebook on how you come up with your purpose. In it, he talks about how your customers are more interested in Why you do what you do than what it is you do. But your people will get behind why you do it too, and if they believe what you believe, you’ll build a company with a unified purpose and your values and vision will be aligned. It also happens to be one of the most critical parts of attracting great talent.
Fortunately, it did not take 7.5 million years for me to come up with the answer to our WHY, but it did take almost a quarter century to codify it. If you already know your “WHY” and have a purpose articulated that is clear and shared by everyone in your organization, then all you must do is continue to keep it at the core of every decision you make. And continue to instill it in your culture. If you don’t have it yet, I encourage you to take up that work and figure it out. Watch the difference in your teams when you do.
Our why- it’s simple: We believe in Helping People Build a Better Future
A sobering article here. Let’s de-stigmatize mental illness and have some empathy. May is mental health month, but is it soon enough? Why not implement tools today and do everthing in your power to help your workers and each other through these tough times.
Also, it’s not just construction – Obviously
Would you start a marathon without warming up first? How about going to the gym and lifting your max weights on the first set?
Construction workers and those in many industries are doing the equivalent of a marathon every day. Lifting weights, up and down ladders, working in and out of plane positions and doing repetitive movements. These can all take a toll on our bodies if we don’t properly prepare ourselves for the days activities
Make it a habit – warm up and stretch every morning before you start work – Just like we do.
10 Daily Stretches for Construction Workers >
Let’s talk about the diet of construction workers. From safety meeting donuts to sugary and highly caffeinated drinks to fast food there is an epidemic of poor nutrition in the construction industry. It’s time to wake up and realize that we are an industry fraught with diabetes, heart disease, hypertension and a myriad other diseases. We can change that.
As leaders and managers we can stat by bringing awareness. Here’s one idea – start by bringing apples to your next meeting!
The news is reporting in that the price of a lumber package for a single-family home has increased by an average of $36,000 per home. This increase reflects one that the market has never seen before and hopefully will never see again. But the truth is that this issue of lumber prices is a narrow look at the current affairs in construction. But it does bring with it a few questions
When will prices subside?
We don’t know when prices will subside, in fact even the experts and veteran traders cannot give us a straight answer. There is no proven model to project how the current market will behave or how post COVID-19 will shift the supply/demand ratio. The facts, however, are that the pandemic turned the housing market on its head, disrupted labor, and surged the demand for lumber. These are going to be lasting problems with no clear supply side fix for near term solutions.
What happened to cause this?
This problem supersedes the pandemic however, it was exacerbated by it. Where we first noticed a shift in the lumber market was in 2018. Following raised tariffs by the White House administration in 2017 on Canadian Lumber, the whole supply chain became volatile. Lumber prices surged from around $300 per 1000 board foot. to over $600 per 1000/BF, before crashing back down to a stable price of around the $250 level in an alarmingly short time. This resulted in mills shuttering and closing, decreasing the production capacity by 3 billion board feet, and decreasing the labor pool.
Tariffs are not the only hit to Canada’s lumber market. Climate change continues to be a problem for the largest exports of lumber to the U.S. Without extreme freezing temperatures that have kept the ecology of Canada’s forests in balance, the mountain pine beetle and spruce beetle infestations in British Columbia reach an all-time high in 2018 and continued to climb thereafter. By 2020 the infestation was responsible for killing off 15 years of log supply and infecting 5.4 million acres of forest, which is enough lumber to make 9 million homes. The only solution to the outbreak is to strategically cull the infested trees and burn them. Ecologists working on the outbreak have found the method to be highly effective and plan to have the outbreak contained within 5 to 6 years.
But it does not stop there. As we continue into 2021, the lasting effects of the COVID-19 pandemic are being felt. More mills closed in the early onset of the pandemic. Shelter in place orders made getting labor volatile. But as we recover, John Fisher an LMC Expert, in his report on the current lumber crisis, noted that mills are producing as quickly as they can and squeezing the profits out of every toothpick along the way. What is left of the infrastructure is producing with the utmost efficiency, but it’s just not enough to satisfy the demand, nor can it be transported efficiently.
Before the pandemic, the load to trucker ration was at 20:1. It currently sits at 100:1 as the shortage of skilled truckers continued to be a problem with no fault to the mills who are offering increasingly great deals for new hires.
How will this affect building?
The up to 400% increase we are seeing in lumber is alarming to say the least, but it doesn’t end there. ½” plywood at over $80 a sheet is unthinkable but we wouldn’t be surprised to see it go over $100 before long. Lumber is a commodity used in many manufacture products from pallets to windows doors and cabinets. That along with shipping delays and labor shortages can add more cost to a project as well as additional time to the overall construction schedule.
Is it a good time to build?
To put this all into context, the increase in costs can add a couple of hundred dollars to the average mortgage. And yes, that can be a game changer for many would be homebuyers, but when you counter that with historically low interest rates, a project can still pencil out very well. Additionally, when we factor in the low housing stock and the decreased number of options available, building a new home or renovating one is still an attractive option.
What measure can we take to mitigate the rising costs?
Select a construction company with a proven track record for managing a project efficiently. This will make a huge difference as procrastinating on placing critical path lead items can add thousands in cost escalations as well as unnecessary delays. This takes work on the customers part too- it is important to be expeditious in decision making especially as some quotes are only being held to 5 days. A contractor that has great relationships with suppliers and trade partners can also make a difference. At Earthtone we take great pride in the wonderful relationships we have developed with our suppliers – they know us to be quick payers and an organized company that is pleasure to work with. This gives us a bit of an edge over other builders and perhaps a bit of preferential treatment and these relationships are a direct advantage to our customers too. That along with our proven track record for process and project management will help keep delays and cost increases under control. But we don’t stop there, there are other things we are doing such as locking in pricing where feasible, staying ahead of price increase communications, thinking outside the box with transportation issues, managing resources effectively and minimizing waste as well as exploring alternatives when costs or delays do get out of control.
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In any housing economy where there is a shortage of high caliber builders we often see quality spiral downwards. As more folks look to the building industry as an opportunity to make a quick buck, the more problems and call backs we see. While there are thousands of highly qualified building companies around the Bay Area, there is definitely still a shortage. And given the recent years of catastrophic fires that devastated thousands of homes, is it any wonder that many that swung a hammer in the past have seen an opportunity to jump in on the housing construction industry?
While many are well meaning, in the Bay Area we are not short of the fly-by-nights and “quick buck” guys that see a way to make money quickly. Unfortunately this is often at the expense of an unsuspecting homeowner. Even the “best” of them often find themselves in over their heads and frustrate clients with delays, added costs, and mistakes. When a client finds themselves in this position during construction, it can often feel overwhelming and extremely frustrating.
Rarely is a construction project absent of the odd misstep or schedule delay. After all there are thousands of parts and hundreds of people involved building a home that is often custom (i.e. never been built before). But repeated issues, repeated delays, poor communication, and surprise added costs over and over should not be the norm. In this case, the homeowner has every right to stop and re-evaluate the relationship.
If a homeowner does find themselves at this point, we recommend to take a pause and have a serious conversation with the contractor. Create a reset of expectations and re-establish clear and written commitments.
If the project is at the point where it’s obvious that quality is at stake, the budget is going haywire, or the timeline is way off, it may be time to consider switching contractors. While it may be tempting to try and stick it out and see the project through with a “better the devil you know” attitude, the client may be better off mentally and financially to pull the plug and fire the contractor.
But how hard is it to switch builder’s mid-stream?
Surprisingly not too difficult if the strategy is approached in concert with a reputable firm.We at Earthtone have taken over a number of projects under such circumstances (like this one) (and this one) , and we have a five step plan that works to get most projects back on track:
- Make sure your contract has a termination clause. Most contracts do, but even without one you should have legal basis to terminate based on breach of contract if the contractor isn’t fulfilling obligations. Check with an attorney here. Do not make any further payments to the contractor until all issues are resolved and potential liens are cleared. A homeowner may not find out for many weeks or even months if there are outstanding financial ramifications.
- Select a contractor with experience in taking over projects. Then have the new contractor conduct a thorough audit of the project status, the financial status, and the inspections and permits history.
- Next the contractor will need to evaluate everything that has been done, checking for adherence to plans and details, local code; and of course structural specifications, waterproofing and drainage details, etc. Required corrections should be thoroughly documented and where possible an estimate to remediate issues should be prepared. In some cases, an estimate may not be possible if things are hidden.
- The contractor will also help audit the subcontractors and suppliers to see who has been paid and what’s outstanding. He will also make an analysis of those vendors and check their suitability to complete the project. Ideally the more that can be retained the better, but if a sub is part of the problem they’ll need to be culled.
- Once a thorough audit has been conducted, the new contractor can provide a thorough estimate to complete the project. Should all be in agreement, a new contract can be written and the new contractor will get you back on track.
Obviously there are many nuances to this, such as getting the permit records changed and working with your lender to get the financing re-set, and we can help with all that. But even if you’re not there yet and you just want an opinion or second set of eyes, we are happy to help. Feel free to call for a phone consultation.
In today’s ever changing building & energy codes, availability of cutting edge materials and escalating labor costs, how do you control the cost of construction? How do you ensure that the design path is in-line with your budget and comfort zone?
To ensure a project’s feasibility, an experienced and reputable General Contractor (GC) can play a valuable role during the design development stage. At times builders are engaged with the design team and owners early on and well before the plans are fully developed to help guide the costs. By engaging a General Contractor in design development stage to analyze preliminary drawings, the design intent and the site conditions, owners can ensure that the path of the design is in line with the client’s comfort zone in costs. The old-school methodology whereby the client and design team develop full architectural, structural, and MEP plans, then get multiple bids misses out on valuable tools and input that could give owners a considerable advantage and avoid costly disappointments.
There are other added benefits to engaging a reputable General Contractor early on. During the preliminary design’s budgeting process, the client, design team and GC will get to know each other and develop a working relationship. The triangle of Owner/Designer/Builder is an important dynamic in the success of a project. During the pre-construction process, these parties have the opportunity to work together and get a taste of the chemistry in place. This gives everyone the opportunity to ensure great synergy in working together. If the chemistry is not palatable, it is much easier to end the relationship in pre-construction stage and to engage others instead of discovering the lack of synergy during construction process.
At Earthtone Construction, our approach is to thoroughly evaluate the project and present a thorough budget that becomes an invaluable tool to our clients. If there are multiple bidders in this process, our approach is to almost ignore that fact and provide the tool in spite of the potential to lose the project to a “low bidder”. And, in over 22 years in business we have indeed lost a fair share of projects to a low bidder. But time and again we have heard from owners how the “low bidder” wasn’t actually low at all- they had either missed important components, not understood the design intent or bid it so cheap that quality and timeliness suffered.
If you or someone you know is interested in an honest evaluation of your project’s needs call us and we’ll give you the benefit of our experience. After all, wouldn’t you rather know up front what you are in for before engaging in your project? ~ Kashy Ghazzagh
In today’s market, many apartment complex owners must compete for tenants by offering the amenities and luxuries that their market place dictates and those that the clients expect to see. The investments made for renovations and creature comforts can vary drastically based what part of the country the real estate is located & what the competition offers among many other factors. In certain markets, a landlord could spend as little as $5,000 for basic renovations and enjoy a solid ROI in increased rent. In other markets and in what may be a similar property, the owner may need to spend a higher dollar amount for the unit to attract potential renters. This higher dollar amount is typically driven by market conditions, job market, price of labor and materials, as well as what the renters’ expectations maybe in that specific market. For example, adding electric charging stations in the parking area in Michigan may not produce nearly as much ROI as it would in other areas such as Northern California.
Typically a property manager or owner looks very closely at the ROI in the renovations. There are many things to consider when it’s time to renovation of an apartment unit. Typically, a 10%-25% return on investment is the benchmark in the industry. What does that exactly mean? It means that he or she expects to see at least a 10% return on annual basis on the investment made in that unit. For example, if a rental apartment is currently producing $2,500 per month and a renovation project is expected to cost $15,000, how much should you be able to increase your rental fees to get to the 10% annual goal? The magic number is $125 per month. If rent is increased to $2625 (at a minimum), this specific unit will produce $1,500 more in rent per year than before and in 10 years, it pays for itself. Of course this does not take into consideration the interest on borrowed money, or the fact that there are tax deduction benefits for depreciating assets.
Another big consideration is the enhanced value of the property by keeping the units updated. If the owner of the property considers selling the property, he or she can expect a higher selling price of the complex than another complex that is dire need of extensive work. This also creates no disruption to income stream when the new owner takes over the property.
Of course many other factors play a role here such as: What is the life expectancy of the renovations? Clearly you want this to be at least 10 years to break even. What this brings to light is the importance of great planning and utilizing finishes and components that provide a 10 year visibility for longevity and trends in remodeling.
Typically the most effective ways to attract new clients are when they are considering renting a new apartment unit are:
New Flooring, New Paint, New Cabinets, New Countertops, New lighting and Plumbing Fixtures and new Appliances.
There are also other items that can contribute to the overall complex’s appeal such as: enhanced community building, an exercise gym, BBQs for outdoor gatherings and more. These investments are a little harder to quantify, but they certainly contribute to the curb appeal of the property and they tend to attract longer term tenants and a larger pool of potential clients.
At Earthtone Construction we understand the importance of ROI as well as developing a budget and schedule that will maximize your dollars invested in the project. Over the years, we have assembled the right team of passionate people who have vested interest in the success of your project. We have created relationships with key vendors and suppliers to bring the best value to the table for any renovation project in the multifamily segment. By having a clear understanding of the financial implications as well as what each location’s specific needs are, we thrive on delivering on time and within budget projects that create value for our clients. After all, if our clients don’t succeed, our efforts will be short lived.
This chart assumes a current $2,000 a month rental income which as of year 2 will be increased by 2% to adjust to inflation. The orange indicates the increased income assuming a 10% increase in rental income for ROI. ~ Kashy Ghazzagh