Isaac Ludlow Series Part 11: The comprehensive guide to effective back-costing

Hey team,

Do you ever find that you’re working really hard in your business, but after you’ve paid all your bills there’s not as much as you would like left over? Do you ever wonder how much you are actually making in profit each week, each month, or per job?

If you have back-costing in place already, then congratulations!  I’m sure you’ve found the benefits already.

However, if you’re not back-costing at the moment and you’re not sure how much you’re making on each job – or if you are making any profit at all, then today’s article is perfect for you, you’ll see some examples of back costing per month, per job and per hour as well as some simple tips for how to get back-costing underway, so you’ll know exactly how much profit (or loss) you are making.

To put it really simply, back-costing is working out how much profit you made in your business and breaking it down into parts – like profit per hour, week, month, job, team member, or subbie.


Here are a few simple examples of how back-costing works:

Back-costing for an individual month: Let’s say, for example, that you have expected to earn $50,000 in one month, and after you pay your team, materials suppliers, and subbies, you have $15,000 of gross profit left over to pay the overheads of running the business and $5,000 of net profit left over after that.

In the process of back costing, you might find that you earned $50,000, but once you’ve paid your team, materials suppliers, and subbies, you only have $8,000 to pay the overheads and instead of having profit leftover, you’ve made a loss of $4,000 this month.  It’s very handy to know these kinds of figures so that you can work out what’s really going on and make changes to ensure that the future is more profitable. (These figures will be available in your profit and loss statements in your accounting software)

Back-costing the hourly rate for you and your team: For charge up work, one of the most important things to back-cost is the hourly rate – for you and your team. Let’s do an example, let’s say you wanted to work out how much profit you are making from the work of your team members:

If your charge out rate is $60 per hour and you are paying them $25 an hour, at first glance, it might look like you are making $35 dollars per hour.

In this example, as well as the $25 you’re paying them, you may have extra costs such as: Income tax 20% ($5.00), Holiday pay 8% ($2.00), Sick leave 2% ($0.50), ACC 6% ($1.50), Kiwisaver 4% ($1.00)

Total extra costs: $10.00

The hourly rate initially looks like you’re making $35 per hour, but when you take out the taxes and extra costs it drops down to $25

You may also have other associated costs like paying them for non-chargeable time, training time and expenses, phone, vehicle, tool allowance, apprenticeship costs as well as team social events or gifts that average out over the year.

It may be that you’re only making half what you thought you were making

If you want to have a profitable business, you’ll need to know these figures.  It will give you the information you need so that you can work out what’s going on and make sure that every hour charged is profitable and your team is providing the value you need from them.

Back-costing for fixed price jobs: The simplest way forward is to make a list of what you quoted for, and then compare that to the actual costs on the job. Here’s a real quick example of back costing a small fixed price job.

Say you’ve quoted for a job like building some steps on a deck. You may have quoted $1,500 to the customer –  $1,000 for labour and $500 for materials. When you did the quote, you allowed for your expenses; including the wages of $700 for your team to do the job and $350 to your supplier for the materials, which should leave you with a profit of $450.

However, when your team dug the pile holes, the ground was really hard, so it took longer than expected.  When the guys picked up the decking timber, they didn’t pick up enough and had to make another trip to the supplier to pick up a few extra metres.  So in the end, the job took longer than expected. The back costing might look something like this:

Materials Quoted at $500, expected cost was $350, actual cost was $350, leaving $150 profit.

Labour Quoted at $1,000, expected cost was $700, actual cost was $900, leaving $100 profit.

In this example, the total profit that was expected was $450, but the actual profit for the job was only $250. It’s essential to know these numbers so you can either charge for variation or make sure that you charge more in the future

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Tips for getting started on back costing:

When you’re quoting, you have probably budgeted the number of hours for labour, material quantities, quoting time, project management time, time to pick up materials, profit margins, and allowances for errors or delays. To keep it real simple, using a piece of paper or spreadsheet makes this fairly easy.

When you have the information, you may wish to work out what kinds of jobs are more profitable and whether you need to quote higher so that you’re making a good margin on your jobs, or you might have a wake up call realising that certain work is making you very little profit or even a loss. You may decide to stop doing some jobs and activities because there’s no money in it.

I hope you have an exciting and profitable day.

Isaac Ludlow

Business Coach
ActionCOACH 
The World’s #1 Business Coaching Firm
Hamilton, New Zealand
Mobile: +64 27 548 3302

If having a successful team is important to you then please get in touch with Isaac at isaacludlow@actioncoach.com or 027 548 3302 who can work with you to achieve your goals.

Update: Add permissions to your folders to boost your organisation levels

To get the most out of your RaveBuild experience, we recommend you take advantage of the permission settings that are found throughout the system. Permission settings are the best way for RAVE users to ensure that all stakeholders in their projects can access the files and information that they need, and nothing that they don’t.

In a recent update, our team has added some simple but effective permission settings to use when creating new file folders. While adding or editing a new file folder, branch users can now set view and/or access permissions, determining who can view and access the folder.

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Once a file folder is added with permissions, it can be saved as a template to be used when creating future folders. This saved folder template can then be loaded to any project. Allowing you to remain consistent and accurate every time you set-up or edit your projects.

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These saved templates are listed under the “Templates” page. Ready for you to view, amongst all your other saved templates from throughout RAVE.

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These folder templates can be set as default templates, which when set, will be auto-loaded whenever a new build is added. This, once again, saves you time and effort when logging your builds within RAVE.

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For a complete view of all the technical updates and tweaks that have been made to RAVE recently, check out the Technical Updates section of our blog.

As always, if you need any support with RaveBuild, we encourage you to reach out to us at support@ravebuild.co.nz or call us at (NZ) 07-210-2228 or (AUS)1800-179-163

RELEASE – 11th April 2019

Set permissions when adding/editing folder

  • While adding or editing a new file folder, branch users can now set view and/or access permissions. Determining who can view and access the folder.

Folder templates saved

  • Once a file folder is added; with permissions, it can be saved as a template.
  • This saved folder template can be loaded to any project.
  • All these saved templates are listed under the “Templates” page.

Setting template as default template

  • These folder templates can be set as default templates, which when set, will be auto-loaded whenever a new build is added.

Messages (bug fix)

  • “Messages” Bug Fix

Login  (bug fix)

  • “Login” Bug Fix

 

Isaac Ludlow Series Part 10: Increase engagement and productivity during team meetings – and beyond!

isaacbannerDo you find that your team is open, engaged, and proactive in team meetings?

Are your team members open with you about issues that they would like to see fixed? Or do they just grumble behind your back amongst themselves?

What difference would it make for your team’s productivity and enjoyment levels at work if all the team members got along better? Often it’s the simple things that make the most difference, and today I want to share a tool that is very simple, doesn’t take long, and makes a big difference for the engagement of your team.

When people arrive at meetings they can have lots of things on their mind, for example how their day has gone so far, how things are at home, things they are proud of, happy with, frustrated about… The list can go on and on.

icandoitIf your team turn up to the meetings thinking about these things, then how will that affect their concentration? How valuable do you think it would be to you, to have all of your team present and ready to contribute your team meetings? 

The tool that I’ll share today has been proven to make a huge difference in morale, productivity and enjoyment at work! It takes some vulnerability, someone to show the way, and the forming of a new habit, but it’s worth every second.

The process is simple and it’s called a WIFLE.

Here’s how it works:

WIFLE stands for ‘What I Feel Like Expressing’. The WIFLE is a powerful tool to help you build a championship team, and using it enables each team member to express what is currently going on in their lives, both at a business and personal level. Too often it is assumed that people leave their emotions at the door when they come to work, but the reality is that this unexpressed or ‘bottled up’ emotion can often impact negatively on team performance.

The rules for a WIFLE are as follows:

Sit around the room, and starting with the person next to you, ask them this simple question: “What do you feel like expressing?”. This person then has the right to say whatever he or she feels like (usually for about 1 to 3 minutes), without interruption, this is most important. If anyone does not feel safe to express whatever he or she feels, you are all wasting your time.

Once the team member has had a say, this person then asks the next person what they feel like expressing. When everyone has had their say, you may then ask if anyone has any ‘Burnings’. This is where anyone that feels they have been wrongly treated replies to the other person’s feelings or impression, either by apologising or explaining what they think actually happened. If these sessions are conducted correctly, you will find your team bonds together effectively and relates to each other as humans – instead of just someone you work with.

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You need to hold WIFLE sessions regularly in your business. It should be held at a minimum frequency of weekly but you may wish to hold them as regularly as daily – it depends on what’s realistic for your business. It can also work well having one at the start of the week (first thing Monday, including goal setting) and one at the end of the week (to review the week on Friday afternoon).

It is important that everyone realises that any complaints are not directed personally, rather they focus on behaviour. This is essential in enabling everyone to feel safe in voicing any criticism of you or the system, meaning changes can be made and progress is always happening.

You may also try other variations of this, such as the high-low technique. This is where each team member expresses their high’s and low’s for the week during the WIFLE. Remember, open and honest communication is one of the first steps in building a championship team.

 

Isaac Ludlow

Business Coach
ActionCOACH 
The World’s #1 Business Coaching Firm
Hamilton, New Zealand
Mobile: +64 27 548 3302

If having a successful team is important to you then please get in touch with Isaac at isaacludlow@actioncoach.com or 027 548 3302 who can work with you to achieve your goals.

Update: Easier reporting to help you hit your delivery dates every time!

Amongst recent updates made by the RaveBuild team is a smooth upgrade of the Key Tasks section of the Site/Build Overview. These additions make the Key Tasks page an even more essential check-in for any project manager, allowing for better management of multiple builds – meaning you’re always on track to hit your delivery dates.  

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Let’s take a closer look at what’s new:

Filter your projects by Active and Maintenance Builds

Get a clearer view of each of your projects and key tasks, and trim your search to exactly what you want to see, with the ability to distinguish between Active and Maintenance Builds.

Start and end dates displayed for Key Tasks

Hitting delivery dates has never been easier, as you now view both the start and end dates for your Key Tasks.

Export only the information you want, by selecting specific columns of data

Create custom reports containing only the information you want to see, by selecting specific columns via checkbox, and exporting. This simple addition removes the frustration of having to sift through reports that contain excessive, irrelevant or unnecessary information. Save valuable time and energy by making the most of this efficiency boost.


For a complete view of all the technical updates and tweaks that have been made to RAVE recently, check out the Technical Updates section of our blog.

As always, if you need any support with RaveBuild, we encourage you to reach out to us at support@ravebuild.co.nz or call us at (NZ) 07-210-2228 or (AUS)1800-179-163

Update: RaveBuild messaging just got a whole lot better

Our team has been working hard to make RaveBuild project messaging easy – keeping all of those connected to your projects informed and up to date with any changes. Thanks to some new updates, it is now easier than ever to do just that and more.

So, in the spirit of clear communication and making things easy, here is a breakdown of the RAVE messaging update:

  • We’ve added the tag categories “maintenance” & “build updated”

Message tags allow for enhanced organisation of your project communications – making it easier to sort and find key updates.  

  • Customisation of the “Other” tag category

When you select “Other”, you’ll be prompted to enter your own tag category title – allowing more specificity to your messaging – the possibilities are endless!

  • Formatting of the message body

Format the Font, Size, Bold, Italics, Underline, Bullet points and more to better layout and highlight key points, and say exactly what you mean with any message you send.

  • Create message templates

Lock down your processes and SAVE time by saving your common messages as message templates.

Simply create your desired message in the message body, click the “Templates” button (top right of the message window), then select “Save as Template” with your chosen name.

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Your template is now saved, and ready to load in future.  You can load your template copy by clicking the “Templates” button, selecting “Load Template” and choosing your desired template.

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  • Forward or create a template from received messages

Need to forward a message on? This is super easy to do by clicking the “Action” button, then “Forward”.
Forward MessageYou’re then able to select recipients, add any additional messaging you’d like, and then complete the forwarding.

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With your received messages, you also have the ability to save any as a template to use in your future communications. This is easy to do also, just click “Action” and “Save as Template”.

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Now, just give the template a name. Your template is now saved, and ready to load in future. This is done by again, clicking the “Templates” button, and then “Load Template”. Choose your desired template, and it will be automatically filled into your message body.

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Updates continued…

  • Add other client contacts

You can now include your clients other contacts (from their Client Profile) in a message (to receive an email message only) to keep all key client contacts informed on an update or change.  Useful if your client’s son/daughter, father/mother, or mortgage broker etc. are a key contact on a build.


For a complete view of all the technical updates and tweaks that have been made to RAVE recently, check out the Technical Updates section of our blog.

As always, if you need any support with RaveBuild, we encourage you to reach out to us at support@ravebuild.co.nz or call us at (NZ) 07-210-2228 or (AUS)1800-179-163

 

Isaac Ludlow Series Part 9: Recruitment tips to ensure a successful hire

Are you looking to grow your team? Finding it hard to recruit the right people? Are your recruitment ads getting the right people to attend interviews?

With the construction industry at the moment, you need to advertise differently than when there was plenty of staff available.

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Traditionally you might have marketed with a list of what you were looking for in the right team member. During a skilled labour shortage, your ads need to change, so that you are promoting the benefits of working with your business. Think of it as selling the role to prospects.

Having a strong work culture will be key for you when attracting the candidates you’re after.  

The best people often aren’t just looking for good wages, but a workplace culture they will love to be a part of.  Many tradespeople have worked in an environment they don’t like or are working in one they don’t like right now. Because of this, They’re not just looking for good pay, but a workplace culture where they will look forward to going to work and that suits their lifestyle.

Knowing this, ask yourself: What are the benefits in your business and how can you promote them in your recruitment ads?
Your ad might start out something like this:

PROJECT MANAGER WANTED

… People with Passion, People with Heart…

Have you been looking for a professional position, in a professional business, doing professional work in a professional way?

Have you been looking for a position in which you’ll produce stunning results for the people you come into contact with? Are you interested in growing, expanding your knowledge, and increasing your influence?

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Once you’ve got to the interview stage, remember, always hire on attitude.

In many cases skills are essential, but most skills can be taught, and attitude is key. Too often people get hired based on skill but end up getting fired because of their attitude.

Isaac Ludlow

Business Coach
ActionCOACH 
The World’s #1 Business Coaching Firm
Hamilton, New Zealand
Mobile: +64 27 548 3302

 

Are you interested in finding out more about how the ActionCOACH recruitment system works?  It has proven to get excellent results worldwide, time and time again. Contact Isaac at the details above for further information.

RELEASE – 8th March 2019

Remove contractors on mobile (bug fix)

  • “Remove contractor” Bug fix. All branch owners can now remove contractors on all browsers and mobile devices.

Validation while adding task duration (bug fix)

  • Bug fix when adding task duration as a “half day”, whole day validation alert.

 

Update: Create Clients and Site/Build templates for customised exports

Within RaveBuild’s Client and Site/Build tabs, is the ability to export your information into CSV files with customised selections. Now, RAVE users can easily save their report criteria as a template for future export.

This means that you only have to enter the combination of search fields that you wish to export once, as they can all be retrieved in future via the load template feature.

For a step-by-step breakdown of how to use this new RAVE feature, continue reading below.


Custom exports in the Clients Tab

From your RaveBuild dashboard, simply select the Clients tab, then filter your clients by “Custom”. 

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Set your custom export criteria, on the next page, choosing from the dropdown fields provided.

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Once you are happy with your search criteria, give your template a name and click “Save Template”.

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Your saved template is now available for future use – just select the right template and click “Load template”.  To continue with your export now, click “Export as csv”.

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Custom exports in the Site/Build Tab

From your RaveBuild dashboard, simply select the Site/Build tab, then “Custom Export”.

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Like previously for the Clients tab, set your custom export criteria, on the next page, choosing from the dropdown fields provided.

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Once again, when you are happy with your search criteria, give your template a name and click “Save Template”.

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Your saved template is now available for future use – just select the right template and click “Load Template”.  To continue with your export now, click “Export as csv”.

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Template names can be edited and/or templates deleted from the templates section of either the Clients or Site/Build tabs. This feature allows for organisation within the template list, for even quicker processing when completing custom exports.

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For a complete view of all the technical updates and tweaks that have been made to RAVE recently, check out the Technical Updates section of our blog.

As always, if you need any support with RaveBuild, we encourage you to reach out to us at support@ravebuild.co.nz or call us at (NZ) 07-210-2228 or (AUS)1800-179-163

RELEASE – 21st February 2019

Customised export templates in Clients and Site/Build Tabs

Users can now save their custom export selection under the Clients and Site/Build Tabs as a template.

  • New tab “Templates” is now displayed under Clients, where all the saved templates can be viewed.
  • Before exporting as CSV, custom criteria can be saved as a template.
  • Templates can be loaded from the list of saved templates.

Users can edit or delete the Saved template name from Clients –> templates, Site/Build –> Templates.

Record updates -Audit trail

  • Now in RaveBuild, some actions are recorded in more detail. For example when details are updated on a task, it is recorded as specifically what has been updated on a task in the schedule.

Following updates have been added:

  • When a template is loaded – Audit trail records the name of the template that’s been loaded.
  • When a milestone is edited – Records the name of the milestone that’s been changed.
  • When a new task is added – Records every single field that’s been modified while adding a task.
  • When a task is edited – Records start date change on task page, every detail updated on edit task page and records every update made on “Comments and photos” page.

Ability to access sales reports

  • Sales people can now access a custom sales report. They can only view their own sales in this report.

Error page issue (bug fix)

  • Navigation from “Sales overview” page to “Sales Reports” Bug Fix.