| 1. Strategic Planning: | | 1. Experience has shown that trades exist because they represent business plans that can are viable, but niche jobs like diamong drilling and demolition are not trades because they are not viable in the long term. | | 2. Sell your trade, sell what you are good at, sell what you enjoy doing, sell work your can quickly plan. |
| 2. Diamond Drilling: | | 1. Diamond drilling is to construct a hole that has an undefined quality and is not treated as an asset by the client. Payment may be delayed by the client because the work done has not added value as a contructed asset. | | 2. Not enough diamond drilling work exists in any local area to enable a business to thrive doing diamond drilling work. | | 3. Diamond drilling must be classified as a spare time job. | | 4. When less than fifteen holes are to be drilled on any single day, then the diamond drilling job will not be viable. | | 7. Cash flow to drill 100 holes at 20 pounds each may be 2 weeks before the job is invoiced followed by 4 weeks before payment is made. The contractor bidding for a 2000 pound job must pay for that clients job for an average of six weeks before being paid. This is only viable where the diamond drilling job is treated as a spare time second job. |
| 3. Demolition: | | 1. Demolition is to construct an opening or excavation that has an undefined quality and it not treated as an asset by the client. Payment may be delayed by the client because the work done has not added value as a contructed asset. | | 2. Not enough demolition work exists in any local area to enable a business to thrive doing demolition work. | | 3. Demolition must be classified as a spare time job. | | 4. Every demolition job is unique and prices cannot be estimated by comparison with other demolition jobs. | | 5. Every demolition job demands a complete project plan with risk assessment and method statement before work package prices and durations can be estimated. | | 6. The cost of a window opening on the ground floor may be much cheaper than a window opening on an upper floor where temporary supports must be built from the inside with dependence on maximum floor loadings. | | 7. Cash flow for a 10,000 pound job may be 6 weeks of work before the job is invoiced followed by 4 weeks before payment is made. The contractor bidding for a 10,000 pound job must pay for that clients job for at least ten weeks before being paid. This is only viable where the demolition job is treated as a spare time second job. |
| 4. Seed Corn Business: | | 1. A new business can begin with a core trade such as plumbing, carpentry, painting, gardening, roofing, bricking, plastering or filling windows. Evidence is that such trades have existed for a long time and will exist for a long time as "seed corn" businesses. | | 2. The role of a seed corn business is to establish a foundation on which other jobs can be added without disturbing the core business. | | 3. Diamond drilling and demoolition jobs are classic high-risk high-profit spare time jobs that are added on top of a viable trade. | | 4. High-risk high-profit jobs mean that nine out of ten quotations will be lost because the price is too high, but when such a job is won, the profits compensate for the long payment cycle. |
| 5. Core Business: | | 1. A core business has no assets, no staff, no liabilities, but a good marketing campaign to keep the core business earning revenue. | | 2. When a diamond drilling or demolition job is won, then subcontractors are hired on fixed price contracts to do the work according to the project plan. Subcontractors will only do the scheduled work packages because that is the only work they will be paid for. | | 3. If the client chooses to change the agreed project plan in any way, then the whole project plan is reissued with an applicable price that refolect the work to be done. Evidence is that every change to the original plan may see an increase of ten percent to cover the cost of making the change to all contracts and work packages. |
| 6. How does it work: | | 1. The core business ticks over on a month by month basis with recurring revenue from a strady trade that does not go up and down - this provides a stable cash flow position. | | 2. The construction industry is a subset of the information industry - information is where the profits are made. | | 3. The core business needs an extensive database of all subcontractors within 50 miles - when a quotation is won, then those subcontractors wanting to earn extra money may be tempted by the work packages offered with a fixed price. | | 4. The core business needs an dataabase of suppliers or materials, equipment, supplies and hired gangs that can be subcontracted to do documented work packages. | | 5. When a client accepts a quotation it is because the client is in urgent need of extra people to get a job done and the lowest or only price won. The client is asked to provide a purchase order to confirm the contract - nothing happens until a purchase order is provided because only a purchase order is confirmation that the client will pay the invoice. The client is then obliged to wait until labour and materials can be scheduled to start the job - the quotation stated that the start date was dependent on the client purchase order. A worker may turn up to do some setting out while the real subcontractors are still being selected. |
| 7. Purchase Order: | | 1. A quotation is won after a purchase order has been issued as confirmation of a contract with a fixed price. | | 2. Each time the client chooses to make a change to the project plan, then a new quotation, RAMS and set of work packages must be documented. It can be expected that any change will increase the overall cost because the schedule of equipment and labour being on site has changed - different people may have a different cost. | | 3. The client may terminate the contract at any time and the amount of the purchase order will be invoice to bbe paid in full. The fact that the client choose not to proceed with the scheduled labour and materials does not change the cost of that labour and materials as ordered. |
| 9. It will never work: | | 1. Evidence of what does not work is that 20% of all construction companies go bankrupt each year and in 2017 no publically listed construction company made a profit. | | 2. What does not work is making dynamic changes to a contract with little understanding of the cost and time implications. | | 3. The era where quotations are just a guestimate will not change, but those companies that put in a low price to win a contract will eventually go bankrupt. A new era of information has arrived where quotations are detailed project plans with realistic work packages that can be subcontracted to people for a reasonable price. | | 4. In the long term, information will win over guestimates, but cash flow is the thing that will separate the cowboys from the professionals. |
| 10. Procedures: | | 1. Running a business can be easy or can be hard, depending on what procedures are followed. | | 2. Life is easy when work is quoted with a set of priced work packages that can be confirmed with a purchase order, when the work package is completed then it is invoiced for the agreed price - simple. | | 3. Life can be hard when work is done with no price, no evidence and may never be invoiced. If the work is invoiced it may be delayed and disputed because no puchase order and budget exists for the the work. | | 4. It may look OK to do work for a mate with a verbal promise, but the lack of procedure will mean that it may never be invoiced and may never be paid. | | Procedure: | | (1) Client makes a request for quotation (RFQ) - may be verbal or in writing. | | (2) Contractor offers the client a quotation as a risk assessment and method statement as a set of work packages, each with a cost, a duration and a quality statement. | | (3) Client confirms the quotation with a purchase order in writing - nothing is permitted to happen until the purchase order has been issued as the contract. | | (4) If the client cannot afford the set of work packages, the set of work packages are changed to do less work for less money - it is not possible to do the same work for less money because the quote was as good as it could be. The client is advised to look to others if they need work doing below the cost of what is commercially viable and sustainable. | | (5) When the client chooses to make any change to the agreed set of work packages, the entire project plan must be redesigned because prices are based on an availability schedule of labour and materials. Experience shows that any revised project plan may be more expensive than the original project plan because work package dependencies have been changed. The cost of not doing a specific work package may increase the project cost because contract hired equpment may need to be delivered and collected with an increased cost. | | (6) When any work package is completed, the client sign-off the work package so it can be invoiced with the client sign-off confirmation. | | (7) A monthly tradition exists where work packages completed one calendar month are invoiced at the end of the month for payment within the following month. Any change to this monthly payment cycle must be resisted because it can put at risk UK laws for handling commercial debts. | | (8) People working on a project must follow the simple rule that they only do work according to a confirmed work package - they will not be paid for any other work done. Until a work package is signed off as complete and correct with evidence, the job has not been done and payment will not be made. |
| Document Control. | | 1. Document Title: Strategic Planning. | | 2. Description: Strategic Planning, policies and guidelines. | | 3. Keywords: Strategic Planning, policies and guidelines. | | 4. Privacy: Shared with approved people for the benefit of humanity. This is not financial or legal advice. | | 5. Edition: 1.4. | | 6. Issued: 14 May 2019. |
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