Smart Business How to Figure Your Correct Selling Price Sample problem, as follows: You have taken on a job for which your total cost is $1,000. You wish to make 10 percent profit on the job. How much do you have to charge the customer in order to make your profit goal? Probably nine out of 10 roofing contractors are inclined to figure it at $1,100, Wrong. They derive that amount by figuring profit as a percentage of cost, and then adding it to come up with selling price. However, profit must be calculated as a percentage not of cost, but of the final selling price. So 10 percent profit on a job that costs out at $1,000 would require you to sell the job for $1,111.11. The math works out as follows: Job cost = 90 percent of final selling price. 90 percent of X is equal to $1,000. To find X, the selling price, you need to divide, not multiply, $1,000 by 90 percent. $1,000/.90 = $1,111.11. (If you don’t feel like going through the math for every job you sell, you could use a markup multiplication table like the one that appears in the adjacent box.) Unfortunately, in the real world the vast majority of roofing contractors bid their jobs using incorrect markups, although they think they know what they’re doing. For this sample job they’d bid $1,100, thinking they are making 10 percent profit. In reality, they are factoring in a net profit margin of only 9 percent and coming up short by more than $11 for every $1,000 in job cost. This is one big reason why so many contractors can’t seem to make ends meet. As noted in previous articles, first they fail to sufficiently account for overhead, especially allowing a salary draw for themselves and a spouse who might be working in the business. Then the mistake gets compounded when they fail to convert overhead to a dollar-per-labor hour charge to apply to their job price. Finally, they miscalculate their intended profit margin. Then when the job’s over, they scratch their heads wondering how come they failed to make the money that seemed to be there when they put together the bid. Markup Table
Contracting’s Biggest Problem What all this adds up to is perhaps the biggest headache in the roofing world, as well as most other construction trades. That is, most of the jobs quoted by contractors are woefully underpriced. Economics professors would argue that the marketplace dictates the price, not the work providers. I would retort that the marketplace would accept higher prices if they were established as the going rate by contractors whose bids were based on a better understanding of job costs and basic business math. Instead, the market is driven by low bidders operating under false assumptions. It’s a great deal for buyers, but a gigantic pain in the anatomy for contractors trying to earn a decent living doing high-quality work without cutting corners. The end result is depressed compensation both for owners and employees, and a continuing degradation of the trades. Everyone complains about not being able to find good help. Yet, PAS Inc., a company in Ann Arbor, MI, that tracks nonunion trade wages, pegged last year’s hourly wages for nonunion roofers at an average $14.93. This translates to annual incomes of around $30,000, for work that is dirty, grueling and unglamorous. It’s simply hard to convince talented, hard working people to enter the trades when they can make just as much money tending bar, waiting tables or delivering packages for UPS or one of the other overnight firms that also offer terrific benefits. I know, you can’t afford to pay any more. Not at the prevailing prices for which contractors sell their labor, you can’t. What can you do about it? You have two clear-cut-choices. If you’re satisfied with your lot in life, including the compensation it brings you and your employees, then continue doing business as usual. But if you believe you work too hard for too little, then it’s time to change things. Article obtained from Roofing Contractor, September, 2000, written by Jim Olsztynski
NRCA’s 114th Annual Convention Rosemont, Ill. – The National Roofing Contractors Association (NRCA) will hold its 114th Annual Convention and Exhibit Feb. 14-17, 2001, in San Francisco. As the largest roofing convention in North America, the show will attract more than 8,000 attendees and more than 425 exhibiting companies from around the world. In addition to learning about numerous roofing products and services, attendees will have opportunities to participate in many educational and social events. Educational Sessions A variety of educational programs has been scheduled. Technical, business-management and safety issues, among others, will be addressed. During the General Session on Thursday, Feb. 15, John Perry Barlow, former lyricist of the Grateful Dead, will discuss how the Internet is affecting our lives. On Thursday, Feb. 15, the Opening Luncheon will feature keynote speaker John Madden, television sports broadcaster and former coach of the Oakland Raiders. Madden will share anecdotes and provide observations about teamwork. During the Member Breakfast, to be held Saturday, Feb. 17, Beck Weathers, a survivor of a dangerous trek up Mt. Everest, will discuss the story of his survival and lessons he has learned. Also on Saturday, Feb. 17, musical group Napata and the Kisses will entertain attendees at the Final Banquet. The SMRCA office has additional copies of the NRCA registration brochures for the 2001 convention. If you need a registration brochure, please contact the SMRCA office at (810) 759-2140. NRCA Launches Grassroots Friendly Website As part of its website overhaul NRCA has created a new government relations tool to help you pass along your thoughts to Congress. Under the Government Relations heading at www.nrca.net you will find a section called “Grassroots Advocacy” where you can put in your zip code and find out a host of information. You can determine who your representative is and how they voted on issues important to you. There are also recommended letters that you can either email or print off and send. Let your voice be heard – go to http://www.nrca.net/government/grassroots/ today! Excerpt supplied by the NRCA’s November “10 @ 10”, by Dani Doane, Director of Federal Affairs, 324 4th Street, N.E., Washington, D.C. 20002. Schedule of Events 2001 January 18-19 Chicago Roofing Contractors Association’s Convention and Trade Show, Chicago, IL February 7-8 CAM Design & Construction Expo 2001, Pontiac Silverdome, Pontiac, MI February 14-17 NRCA 2001 Annual Convention, San Francisco, CA April 20-24 The Roof Consultants Institute’s 16th International Convention & Trade Show, Hilton Baltimore, Baltimore, MD August 2-4 MiRCA 36th Annual Convention, Shanty Creek, Bellaire, MI October 11-12 MRCA 52nd Annual Convention & Trade Show, Nashville, TN
ERGONOMICS IT'S TIME FOR EMPLOYERS AND Ergonomics is a common term in today’s workplace. To MIOSHA, ergonomics means: working smarter and safer. Ergonomics can help protect a worker’s body from unnecessary wear and tear, and reduce painful injuries. Nationally, OSHA estimates that annually there are more than 600,000 lost workday cases of work-related musculoskeletal disorders (MSDs) such as back sprains and strains, tendinitis and carpal tunnel syndrome. Twenty-five percent of these cases are back strains and sprains. The Bureau of Labor Statistics reports that 25 percent of all general industry jobs are in manufacturing and material handling-yet these industries account for 60 percent of all MSDs. One way federal OSHA has emphasized their commitment to MSD reduction is by pursuing an ergonomics standard. Public hearings across the country have been conducted by OSHA on the proposed standard. Although at present, there is no OSHA or MIOSHA ergonomics standard, the MIOSHA enforcement divisions have issued citations to companies with excessive MSDs. The violations are written under the provisions of the general duty clause of the MIOSHA Act 154. The general duty clause obligates an employer to provide a workplace free of recognizable hazards. Costs of Work-related MSDs The costs of work-related MSDs to employers include: loss of the experienced worker on the job, reduced productivity and quality performance, low employee morale, increased absenteeism and turnover, and the potential for increased workers’ comp insurance. OSHA research indicates the average amount in direct costs saved by employers, for each MSD prevented, is $22,500. If an MSD appears on the MIOSHA Log 200, it is a “red flag” which may indicate serious problems. By definition, cumulative trauma occurs over a period of time. If one employee develops an MSD, it is likely other employees may develop similar injuries-it’s just a matter of time. A coordinated ergonomic effort is needed between the worker and the employer. This coordinated effort must be directed at the job risk factors associated with MSDs, which can be readily seen and identified. Controlling and eliminating the basic job risk factors of excessive force, repetition and poor posture can make a significant impact in MSD reduction. Controlling Job Risk Factors There are various methods to correct jobs with excessive job risk factors. These include engineering, administrative and medical controls. Engineering the problem out of the job is the preferred method. Engineering controls include the design/modification of the workstation, the tools required to perform the job, and material handling equipment. Ideally, the ergonomic problem should be addressed at the design stage before the worker is exposed. Too often there is resistance to implementing engineering controls. The terms engineering controls and unreasonable costs seem to go hand in hand for some employers. In many situations, long-term solutions can be attained with minimal expense. In a recent study by OSHA, it was estimated that the average annual cost to alter a job so that it will not cause an MSD is $150. Administrative controls are generally implemented when engineering controls are not feasible. These include: work rest cycling, job rotation, work enlargement, and training in hazard recognition. Medical controls include the use of personal protective equipment, early intervention and treatment. Personal protective equipment should not be implemented without consulting a medical professional. Again, administrative and medical controls are usually not as reliable a solution as engineering controls for permanent corrective action. The Key is Training The key to addressing MSDs is Training: ¨Training in Ergonomic Awareness-recognizing the job risk factors and their effects on specific body parts,¨Training in Hazard Recognition-applying the job risk factors to the problem jobs, ¨Training in Ergonomic Job Safety Analysis-using analytical tools to identify the tasks and sub-tasks of a job, and ¨Training in Team Building and Problem Solving. Below are the key elements in Team Building and Problem Solving: ¨Encouraging participation at all levels,¨Understanding the role of each worker, ¨Consensus decision making, ¨Brainstorming and networking abilities, and ¨Developing an environment of trust. This article was obtained from the MIOSHA newsletter, Fall, 2000, Vol.4, No.4 and written by Richard Zdeb, Safety Consultant of the Consultation Education & Training Division ?
JAC ROOFING SCHOOL DONORS Platinum Benson’s Oakland Wholesale, Inc. Gold M.W. Morss Roofing , Inc.* Silver JR Enterprises* *Denotes Charter Member Donations for the JAC Training Center 2000 Program now total $22,350. We would like to thank all contributors, that have donated money, materials or who have volunteered their valuable time to this worthwhile project. The JAC Training Center 2000 Program is still accepting donations. The SMRCA would like to thank-you for your continued support. ANNIVERSARIES Rick & Corinne Schultz (Steyer Corporation), November 20th. Mike & Meg Casey (T.F. Beck Co.), January 2nd. Happy Belated Anniversary to Roger & Kathy LaDuke (LaDuke Roofing & Sheet Metal) who celebrated their 24th Wedding Anniversary on October 16, 2000. HAPPY BIRTHDAY CORNER!!!! HAPPY BIRTHDAY TO YOU . . . Dan Casey (T.F. Beck Co.), January 7th. Happy Belated Birthday To . . . Jon Sinkowski (JKM Roofing, Inc.), November 9th. Congratulations to Jim and Yvette Rizzo on the birth of their son Antonio Philip Rizzo, who was born on September 27, 2000 at 4:50 p.m. He weighed in at 9 lbs. 4 oz. ANNOUNCEMENTRIPF/SMRCA The SMRCA office has scheduled a Safety Director’s meeting for Friday, December 15th, 2000. The actual meeting will start at approximately 2:00 p.m. Please come at 1:00 p.m. for lunch before the meeting. The meeting will be held at the JAC School, 21190 Schoenherr Road, Warren, MI. The guest speaker will be Mr. Brian Carson, Safety Director for the Roofing Contractors Safety Alliance. Mr. Carson will touch on important issues related to MIOSHA. The SMRCA encourages participation in the Safety Director meetings. We feel that they are beneficial for everyone concerned. Hope to see you there! Congratulations Smitty! For those of you who have not heard, Mervin Smith (Smitty) made a hole-in-one at Glenhurst Golf Course on September 14, 2000! The hole-in-one was made on the 13th hole – 127 yards. Smitty used a nine wood to knock the ball in! This was Smitty’s 2nd hole-in-one this year. Congratulations once again! If you have any announcements or information you would like to share, for publication in the Roving Roofer, please feel free to contact me at the SMRCA office. Glenna Lile HAPPY THANKSGIVING The staff at the SMRCA office would like to wish you all a healthy and safe holiday season. We are looking forward to a prosperous New Year!!! MERRY CHRISTMAS & HAPPY NEW YEAR
NRCA'S November "10 @ 10" In Limbo – Despite their best efforts, the House and Senate were unable to find agreement on the appropriations bills with the Clinton Administration, requiring a lame-duck session. Congress is expected to return the week of November 13th for what should hopefully be a short session. Without the politics of the elections in the way, many pundits think solutions will become easier. Once their work is completed Congress will adjourn for the year. Unfortunately and unexpectedly, this 10@10 is also being penned before the final outcome of the Presidential race. Since this determination will necessarily impact the legislative issues, I am providing a summary of what is occurring in Congress. Final Tax Relief Bill – Prior to recessing for the election, the House passed a significant tax package. The bill included several bipartisan measures such as the Community Renewal bill to help distressed communities and the Small Business Administration re-authorization, as well as a $1 increase in the minimum wage. The vehicle for the tax package was a small business loan bill and it included several pro-small business provisions. Some of the important small business tax reforms included in the bill are an increase in the business meal deduction and a repeal of the provision prohibiting the installment method of taxation. The Senate is expected to pass the bill next week and send it to the President’s desk despite a looming veto threat. Pension Reform – A bill to create additional pension savings and reform, H.R. 1102, the “Pension Reform Act” was also folded into the tax bill. Some initiatives included in the final measure were: Ø Increased portability of retirement plan assets making it easier for employees to roll over assets when they change jobs, Ø A simplified pension system to encourage small businesses to offer pension plans and, Ø An increase in the limit on 401 (k) plans to $15,000 and IRA expansion from $2,000 to $5,000. OSHA’s Ergonomics Regulation – The ergonomics issue will prove to be one of the very last issues negotiated by the 106th Congress. In fact some surmise that ergonomics actually caused the lame duck session. Currently the Labor, HHS Appropriations bill contains a rider prohibiting the introduction and implementation of the ergonomics rule until October 1 of next year. The Administration would like to introduce the rule in the Federal Register thereby putting the onus on the business community to stop its final implementation. Some middle ground solutions have been discussed but no concrete solutions have been forthcoming. Unfortunately, the National Coalition on Ergonomics expects the Administration to introduce the final rule very soon. Immigration Proposals – Next to ergonomics, immigration looms as the second largest stumbling block to recess. Currently the Democrats and Republicans are sparring over immigration language on the FY01 Commerce, Justice and State Appropriations Bill. The Democrats would like to include the Latino American Fairness Act (LIFA), which would provide blanket amnesty for illegal aliens who have been in the U.S. since 1986. However, Republicans claim that this would unfairly benefit those immigrants that break the rules and instead seek to include provisions that help these immigrants work through the system to attain residency. School Construction Funding – One of the more contentious issues throughout the 106th has been education. Most of the debate lately has centered on the issue of funding school construction. The federal government has traditionally stayed away from ‘bricks and mortar’ funding, preferring to leave this decision to localities since federal spending represents only 8% of total education spending. In the FY01 Labor, HHS Appropriations bill however, billions were included to help schools fund renovations and repair. Bonds are to be issued as well to help communities build new schools. This will obviously create an infusion of work for the roofing industry. Asbestos Legislation – During the development of the tax bill, there were dozens of provisions considered for inclusion. One of these was H.R. 4543, a bill introduced by Representative Hyde (R-IL) to amend the Internal Revenue Code of 1986 to provide relief for payment of asbestos-related claims retroactive to the 1940’s. As supporters of the Fairness in Asbestos Compensation Act, NRCA did not believe it prudent to pass a short-term measure which would only provide additional resources to fund trial lawyers while further hampering efforts at true reform. The House-passed version of the tax bill did not include H.R. 4543. Excerpt’s supplied by the NRCA “10 @ 10”, by Dani Doane, Director of Federal Affairs, 324 4th Street, N.E., Washington, D.C. 20002.
QUESTION: It is my understanding that the elimination of Social Security for individuals who work past the age of 65 has been repealed. How does the law affect me if I turn 65 this year and continue to work until age 70? ANSWER: President Clinton signed the Senior Citizens’ Freedom to Work Act of 2000 in April, which retroactively eliminated the Social Security retirement earnings test for individuals who have reached the full Social Security retirement age (i.e., 65) but are not yet 70. Prior to this Act, individuals in the 65 – 70 age group lost $1.00 in benefits for every $3.00 earned in excess of $17,000 (year 2000 limit). The Act now permits individuals within that age group who are currently receiving Social Security retirement benefits to earn an unlimited amount of compensation without losing their Social Security retirement benefits. Prior to this Act, many individuals age 65 to 69 postponed electing Social Security retirement and continued working. Individuals who were otherwise entitled to benefits were permitted to apply by July 31, 2000 to the Social Security Administration to receive benefits retroactive to January 1, 2000. Individuals who are not yet 65 and receive Social Security retirement benefits continue to have their benefits reduced for each $2.00 earned above $10,800 (the year 2000 limit). Postponing benefits until age 70 using the full Social Security retirement age of 65 and factoring in projected annual percentage increases, an individual would need to live until his mid-80’s to recoup the benefits lost by postponing retirement during the additional 5 years. This postponement of benefits even with an increased monthly Social Security check once benefits begin, may not make sense because the number of years to recoup the lost benefits is typically beyond the life expectancy of today’s senior workforce. Using Employee Performance Review to Motivate Employees and Align GoalsIn the construction industry, performance is almost everything. The completed project and your client’s satisfaction are measurements of your company’s performance. If your employees aren’t up to that standard, you will have a problem. Performance reviews can help bring your employees’ goals in line with your company’s expectations and encourage and motivate them at the same time. Evaluate employee performance more than once a year – not just when their salaries are in review. By concentrating strictly on performance, employees are more likely to pay attention to their performance issues rather than compensation. You attract more bees with honey, as the saying goes. Performance reviews should be positive. The reviewer should provide positive, sincere feedback both to encourage employees and to help them correct weaknesses. Positive performance appraisals have four elements: achievements, opportunities, priorities, and resources. Place these headings on forms you’ll use before and during the appraisal. One week before a performance appraisal, give the employee a blank review form with the four categories. Tell the employee to fill out the achievements and opportunities (areas for improvement) sections before your meeting. Fill out the same two sections for this employee before the performance appraisal. Also, be sure to update position descriptions to include any newly added responsibilities before you evaluate the employee. During the review, you and the employee each read your copy of the prepared achievements and opportunities. Take care to express appreciation for achievements and make sure you provide feedback on items listed as opportunities. Together, you can agree on priorities (the next category) for the upcoming time period. Priorities must be consistent with company goals, and you should have final authority on approving them. After priorities are determined, list resources available to help the employee achieve those priorities. Resources can range from people with specific expertise to tutorial computer programs. When you’ve identified several resources, set a date for the next performance appraisal and reassure the employee that you are available as a resource as well. Article taken from “FMI Management Letter” by Ralph James,
Ph.D.
If you are interested in any of the following seminars, call the SMRCA office at (810) 759-2140 for more information. RIEI SEMINARS December 2000 The RIEI provides educational seminars that include cities from coast to coast. RIEI addresses a wide variety of seminar topics which are of interest to roofing contractors, consultants, specifiers, plant engineers, and anyone else with a professional interest in roofing design, construction and maintenance. Preparing & Enforcing Roofing Specifications Dec. 12-13 Atlanta, GA Good roofing specifications are the first step towards getting a good roofing system. Each student will leave this seminar with a full understanding of how to write proper specifications through class exercises. This course requires a knowledge of roofing systems and practices.Roofing Technology Dec. 5-8 Miami, FL In addition to learning about the materials, application and maintenance of : BUR, EPDM PVC, TPO, Hypalon, Copolymers, SBS and APP modified bitumens and spray polyurethane systems, each student will understand Underwriters Laboratory and Factory Mutual wind/fire requirements. This is a necessary course for anyone who has roofing responsibility. It provides a sound, theoretical and practical foundation and understanding of roofing systems. It forms the basis to understand the advanced specialized courses offered by RIEI. Rooftop Quality Assurance Dec. 14-15 Atlanta, GA Verification of specification compliance is important to building owners and project specifiers. Learn about rooftop quality assurance and how it works with the roofing contractor’s quality control. Introduction to Roofing Dec. 11 Atlanta, GA Commercial roofing systems are not taught in college or most technical schools, yet no matter what roofing system is selected, certain requirements must always be met. This course serves as an orientation on roofing for those who do not require the depth of the RIEI Roofing Technology course to meet specific job requirements. OTHER SEMINARSMastering the Basics of Access Dec. 4 Dearborn, MI A workshop created especially for those new to Access and non-users who want to know more about how Access can help them and their business. How To Troubleshoot & Maintain PC’s Dec. 11-12 Livonia, MI Learn how to quickly and confidently solve even the most troublesome PC problems. At this short two-day workshop you’ll learn how to troubleshoot hardware malfunctions, problem peripherals, system errors, software conflicts, applications failures and much, much, more! Conference For Assistants Dec. 18 Troy, MI Learn how to build and strengthen your “people” skills, manage multiple projects, responsibilities and bosses. This seminar would be beneficial to anyone who is responsible for coordinating, managing or being an effective member of an office team. MIOSHA COURSES Powered Industrial Truck Train-The-Trainer Dec. 5 Kalamazoo, MI Safety Diligence & Work Comp Strategies Dec. 7 Temperance, MI Lockout/Tagout & Confined Space Entry Dec. 12 Howell, MI Introduction to Industrial Hygiene Dec. 12 Southfield, MI Ergonomics Seminar Jan. 9 Sault Ste. Marie, MI 10-Hour Construction Seminar Jan. 23 & 30 Southfield, MI Accident Inv., Recordkeeping & Work Comp Strategies Jan. 29 Southfield, MI Please contact MIOSHA directly, at (517) 322-1809, for further information on the above listed courses. |
