Webinar Replay: Building a Better GC/Subcontractor Relationship
Posted March 2nd, 2022
Matt Vetter (Schafer Construction) and Mike Kepsel (Campbell & Shaw Steel) were two of the first people to join our mission, probably because their companies are already living by the DO YOUR PART principles.
This GC/Sub partnership is built on respect, trust, and integrity. They show up ready to actively listen to each other, to collaborate in order to find solutions to challenges, and to focus on present performance, not past perspectives & stereotypes.
Hear their story first-hand and learn actionable strategies to build better relationships with your partners.
Autumn Sullivan 10:57
All right, awesome. Yeah, we had, everyone was just waiting room was waiting at the door. So we’ll go ahead and we’ll get started. Thank you, everyone for joining us today. Today is our very first webinar in our do your part campaign. This is our mission at mobilization funding, and hopefully yours too. Since you’re joining us today, to reframe the way people view think and talk about construction both inside the industry and out. If you have not yet joined our mission and taken the do your part pledge you can find it at on our website, and Scott posts about it on LinkedIn quite a bit as well. So I hope that you join us today I am delighted to bring you the CEO of mobilization funding Scott paper with our special guests, Matt better who is the Vice President of Shaffer construction, and Mike capsule, who is the General Manager of Campbell and Shaw steel. They’re going to share with you how their two companies have built a solid GC subcontractor relationship based on common values, clear communication and shared successes. Scott will be leading the conversation. We want this to be collaborative. So please put your questions in the q&a box. And I will let the guys know when you have a question. And with no further ado, take it away, guys.
Scott Peper 12:10
Awesome. Thank you very much, everybody. Thank you for joining, Matt. And, Mike, I really appreciate you guys joining. I’m super excited about this topic I’ve been. Matt, you. And I’ve talked about this endlessly on previous webinars on different other conversations personally in private. And I just moved so excited that as soon as we thought about this topic we launched to do your part campaign mission of ours. We wanted to have live relationships on that could actually talk about how they do this the right way. And I knew reaching out to you, you’d have a great person and you’d have a great trade partner. And Mike, I’m so glad you agreed to join us. Welcome. And thank you very much. Welcome. Awesome. Well, as autumn talked about the do your part mission for us is really about just removing the stigmas that around the GC sub relationship. Ironically, I actually had a meeting at the local ABC chapter here in Tampa this morning, where these exact topics came up. Everybody in the room wants to have a different conversation. But yet everyone is sort of scared to start it off. And so we’re in a unique place to be in the middle of both. We’re not necessarily we’re not a general contractor. We’re not necessarily in construction. We’re certainly not subcontract or trade partners, materials, suppliers or anything in between, but yet we work with everyone. And so we have a unique perspective. I think, to that I want to share with everybody and doing that with my folks that I talked to routinely and even knew, I thought this would be a great forum. So I again appreciate you guys for doing it. And if you want I think it’d be great if everybody could just kind of give maybe a little one minute overview who you are your business. Where are you located? And then I have a list of questions. I’m excited to ask you guys
Mike Kepsel 13:59
go first man.
Matt Vetter 14:00
Sure, sure. I’ll jump in saw Matt Vetter. I’m actually now the president of Shaffer construction or a commercial general contracting firm we’re based in in Brighton Michigan, which is Southeast Michigan. We’ve been in business this is our 25th year and we we build everything short single family homes.
Mike Kepsel 14:23
I’m Mike Kepsel. And the general manager Campbell and Shaw steel. I business has been there probably 30 years we do commercial and industrial steel frames for buildings
Scott Peper 14:39
do key thing that’s what we need for sure. So how did you guys get into construction both then your businesses or decades all? How did you get into construction?
Mike Kepsel 14:52
Um, I think mine I was going to school to be an architect and somehow or another was drafting class. And I was approached by one of the teachers instructors that a local steel company needed, needed help as a draftsman or something. And I went to reply and got the job. And they offered me apprenticeship. And I basically ended up quitting school and became the structural steel detailer through them. And then it just progressed.
Scott Peper 15:26
I think you haven’t tried to go back and design buildings where you bend steel into a perfect arc. Do you try to keep them pretty straight?
Mike Kepsel 15:34
Now we’ve done it all. Yeah, curves don’t bother us yet places we Google stuff. Like, go ahead, Matt.
Matt Vetter 15:43
I was just gonna say I think you make it better steel guy than architect Mike’s, I’m glad you went that route. I got my start in my late high school years, because, quite honestly, I could make a lot more money moving lumber around job sites, and I could do almost anything else at that age. And, and so that’s really where it Springboard I built houses for a long time, moved into commercial in early 2000. Around that timeframe, and it’s just been kind of snowballing ever since.
Scott Peper 16:18
So one of the things that we’ve always seen is this, this natural tension that’s created sometimes, or seems like a lot of times and between a trade partner in any train, and also the general contractor. And some think that it’s maybe because of the nature of your own opposing views on the control on the actual contract itself, that you have the projects, you have others. Can you guys each give a little bit of background, or just a perspective on the way you viewed it? Maybe Maybe all along the your career or or if that’s changed at all?
Matt Vetter 16:57
I’ll jump first, Mike. You know, when I first started in commercial, especially, we did a lot of plan spec work. And it was all, you know, low bid shit that, frankly, nobody really wins in, you know, whoever ends up with a job was typically the guy that made the most mistakes on his estimate. And I think, you know, that that mentality of the the low bid construction is kind of what, what puts us at odds with each other, right? Because nobody wants to admit, nobody wants to lose money, first and foremost. But then to do that, nobody wants to admit fault. And so I think it creates this, this unnatural tension between between the GC and the trade partner. You know, we it gets pretty heated in that. And, you know, we’ve tried to avoid that now. But I can see it very vividly in my, in my memory of times, when that happened when it just leads to screaming matches, and it’s, it wasn’t any fun for me, which is why I got out of it. Like, what do you think?
Mike Kepsel 18:01
I kind of have to agree. You know, and that’s, I have I balanced that with the estimators at the office, and they’ll come to me the projects. And I guess first thing we asked, you know, who’s the contractor? How’s he gonna do it? And you’re like, yeah, that guy’s gonna do the low bid. Why waste your time where I’ve kind of changed the direction the companies go on to more partnerships, and not always have to chase the low bid, build relationships with the contractors, because when you’re fighting with them, or if you know, you end up in a battle, whether it’s no fun. And it’s at the point where by age, as long as I’ve been doing this sometimes, like it’s not worth the effort anymore. There has to be easier ways of doing it. Trying to reach out and build relationships going in trying to help with design ideas. Oh, seems to work out better. And chasing the little bits all the time just never seems to work.
Scott Peper 19:02
I think one of the key things you both just mentioned that it was exactly where my brain was going when we first got into this business was anytime we saw a low margin or low bid, write it everybody lost. And candidly, anytime we financed or work with someone in a low bid situation, we ended up losing two. And we had we went through the same evolution as you both described, but yet we were not a trade partner or general contractor. We weren’t even on the project side. It’s it’s you couple that with the natural, just challenges of a construction project, specifically cash flow and how a fault flows from the bank, to the owner and so forth all the way down. You’re right focusing on something that’s low bid is going to create problems for everyone. So the folks I listed on this I think that’s the key takeaway. We talk about all the time, performance rules the world and that’s the most important thing it’s not price and if you’re thinking price when you’re Estimating. Just know, you hear it, you’ve heard it here that price leads to problems and just change your focus on that. Which brings me to what’s the first construction projects you both worked on? And how did you realize you both had the same synergies and thought processes? The first project
Matt Vetter 20:18
we worked on together, yeah. Holy cow. So I met Mike. Got to be 10 plus years ago now. Yeah, I was running the pre construction department at a, at another company, another GC. And actually, at the time, Mike was at another steel steel supplier. And to be honest, at that time, I knew Mike because he was he was a grumpy as steel guy that you could call it questions. And I was the stressed out, you know, kind of asshole estimator who had no patience and want everything now. And, you know, we we worked together on a lot of projects, when we were both of those separate companies. I don’t remember when you when you move to Campbell, Shawn, Mike, I think it was a bit before I left, where I was at, I think, and tell me if I’m wrong, but I think the real synergy between us kind of happened after we both changed and took over different roles in new companies. Yeah,
Mike Kepsel 21:18
I agree with that. Yeah. I can always remember the conversation, we have the architect, an engineer on the motorcycle shop, on the big fancy canopy, and the architect was looking at it saying, well, the owner needs to get his arms around the project, or whatever it was. And so the only thing the owner gets his arms around is his checkbook, it’s not going to let go that
Matt Vetter 21:44
I remember that conversation.
Scott Peper 21:48
How did you guys manage through it?
Mike Kepsel 21:52
We basically totally architect an engineer, this is what we’re going to do to make it work. And you just have to go along with it. Because we know where the owner is. And all we have to do is pick the phone call up and this is what he’s going to pay for.
Matt Vetter 22:04
Yeah, we were, they were trying to strong arm us into, you know, going back to the owner, and basically saying, You’re a wealthy guy, you should start spending more money. And I can’t say who the owner is, but But Mike knows him, and I know him pretty well. And that wouldn’t have gone well, we would have ended up probably in a ditch somewhere to be quite honest with you. So yeah, it was, it was probably that day that that I really started pushing back on the design consultants, you know, because it’s real easy as a, as somebody with no skin in the game, to just say, just put this in there and pay more money, right, when you have nothing to lose, because you’re going to get your damn fee, hell or high water, whether the project goes, whether it falls apart or otherwise. And I’m not knocking on the design guys, completely. But I think it’s just a different mentality that, you know, the, you know, kind of the blue collar side of the of the industry brings to the table, we got to be more realistic, right, where we’re fiduciaries of our clients, of our clients dollars and of their needs. And that’s what kind of spawned this whole, you know, real design build that we do now, where we try to take the onus of that responsibility onto ourselves so that we can provide the best for our owners, Mike, and I still get along real well, at the end of the project, everybody makes money, and we all win versus yelling and screaming and pointing fingers.
Scott Peper 23:37
Interesting. You know, before you before you guys had these individual experiences, did you ever have any preconceived notions about, like Mike and your case, other general contractors that either were from previous experiences that cemented for you that a negative feeling or a positive feeling? And then your interactions with Matt, change some of that, or, or maybe others? Can you talk a little bit about that?
Mike Kepsel 24:04
There was always, you know, as coming up in the steel business as being in engineering and a detailer. And then I got involved with a larger contractor design build. And Matt used to work there. But this goes way back before Matt’s time, we were brought in way ahead of the design part with one of the partners and had to sit down we would have lunches and basically the napkin sketch. You know, we put it together figure out what it was. He had numbers he wanted to get to as budget and we’d work to help them get to that. And then they would bring in the design team. And so this is where we’re going to go with it. This is what our base sizes were heights, etc, all that stuff. And they design to it. But then you go back to the plan and spec and quoting that’s a whole different animal. that’s already designed and stuff. And then the contractors trying to work for the owner, I don’t know that or the owner trying to push the contractor or beating them up just to keep getting a better product for less money goes back to chase and low bid. A long time ago, I decided I don’t even want to do that. I just want to work with this and do the design, build stuff up front and be able to get in, you know, the front door within a relationship with the contractor. And then Matt came on, I don’t know, a few years later, probably about 10 years ago or so. And I think he caught on to the whole thing, or he was working towards the same thing. It just grew from there.
Scott Peper 25:44
Now on your on your side, you’re working with a guy like Mike who’s got the experience, he’s gone through the evolution of low bid margin, clearly can understand both sides of it. How do you shift when you’re working on projects that whether they maybe Mike’s not working on them, or you know it better yet, it’s just a whole different trade? And that business owner or person you’re working with has a different philosophy than Mike, how do those interactions go? And how do you try to coach them up? Or let him understand or feel comfortable that, you know, you can have a different thought process with you as a trade partner than maybe what the stereotype is?
Matt Vetter 26:26
It’s not easy, you know, that? That’s the simple answer is it’s not easy to convince some guys, that that we as a general contractor are not out just to hose everybody else. Because that’s, that’s the mentality that was driven by the low bid process by the the architects, frankly, that that pumped on that drum. So, you know, when we come across new subcontractors that are either looking at projects we’re working on, or we’re trying to build a new relationship, it takes a lot of work to foster that trust for for me to foster that trust from them that, okay, we’re not, we’re not going to string you out to dry. And I can talk all I want, you know, I can paint a real good picture of my vision and how this industry should work and where we’re trying to take it. But you know, at the end of the day, you’re dealing with folks who have quite likely been burned pretty bad in the past by this system that we were all kind of forced to work in. So it just, it takes time. And you know, Mike touched on relationships. That’s it, like, you have to build that relationship before it ever works. And, you know, to answer your question directly, Scott, there is no quick answer. I don’t think, you know, if they if they believe me right off the bat, and I sold them on my, my outlook then great. But I think more often than not, it just takes a lot of time, a lot of conversations, before we get to that point where there is a mutual trust.
Scott Peper 27:56
Mike anything you’d add to that?
Mike Kepsel 27:59
No, I mean, I agree with them. It’s all about the trust and conversation. Before I was with Campbell & Shaw I was with the previous place. And that’s still company, they chased the low numbers, they would lowball it. Because their attitude was we’re gonna make it up in extras and back charges, and then you’re chasing a whole different animal, you know, down that rabbit hole, it doesn’t work. And you get into all these conflicts with the contractors and it was just nuts. It was a nightmare.
Scott Peper 28:29
In conflicts cost money to
Mike Kepsel 28:31
Yeah, it was a lot of time to chase that. And, you know, in the end, it would settle for 50% of it, but you still everybody’s like, you know, you walk into a building or to a meeting and they know, okay, that’s the lowball guy. I didn’t want to be none of that and didn’t take long at all for me to get tired of it.
Scott Peper 28:52
So, you know, both of you have probably developed younger guys on your own teams, or are new to the business, how do you coach and teach and train inside your own organization to help shape the mentality to approach your new customers or customers you want to work with with the with the mentality that may they may they may have been precondition with before
Mike Kepsel 29:16
That’s what we’re working on now. And kind of bring people in and that’s part of the problem with this business is the lack of people that come in it’s Matt and I’ve talked trying to chase guys and get him into the business or bring kids in you know, they’re just not walking in the front door, throwing an application at you and and looking for a job right now. I mean, wait, go ahead. Go ahead. I’ve got two guys that I work with to help them and they were estimators I guess where they came from, and they were used to a certain thing, you know, plan and spec but didn’t do a lot of design build. I came along when the owner was there and start non teaching, because it’s a different way of doing things, working with different people and kind of turning that corner away from those contractors, like just throw things out the bed, because we know it’s a waste of time, and getting them to help, and I’m introducing them to contractors. I’ve got I’m missing the maths golf outings. So good to know those people. And it’s just changing, changing the whole the aspect of trying to do business.
Matt Vetter 30:34
Yeah, and, you know, we’ve done it on the, on the GC side, I’ve, I’ve tried to shape and mold numerous estimators in my career. And you can tell a very distinct difference when you get a guy that comes from one of the, you know, the big five construction firms versus somebody who comes from something maybe smaller or, or who has never done it before. And to be quite honest with you, I would rather the latter, I’d rather the guy who has no experience in construction whatsoever, but has an open mind and is willing to learn, then try and take the guy from I’m not going to use her name, but the giant paper pushers and bring him into my world and try and deprogram that that mentality because it’s it I’ve found it’s nearly impossible. Maybe I just suck at doing it. But I’ve gone through more candidates and more new hires, from that world trying to bring into mind that I care to even admit, it’s really difficult.
Scott Peper 31:35
Hard to deprogram and reprogram it takes a special person to have it that has a desire to want to realize, Hey, I’ve learned a bunch of things that probably don’t suit me well. And by the way, I want to accept the fact I’m going to blank them out and relearn. It is a special kind of person, regardless of your training skills, man.
Matt Vetter 31:56
Yeah, it definitely is.
Scott Peper 31:58
So what let’s talk a little bit I mean, we probably have, we have a lot of subcontractors, general contractors, material suppliers, different administrators of different companies that are here on this webinar listing. For folks, they’re like, what are some proactive, specific things that they can both do to help change the culture around the GC, subcontractor relationship on their projects? What would you recommend, first and foremost that they could they could do? They don’t have the trust, yet? They got a job jump out in their project, they have a culture around them. That’s either the way we’ve been talking about that’s the norm. And or it’s some combination of both. And how could they go do their part to help make it different?
Mike Kepsel 32:44
Talk? have discussions? Yeah. Have a discussion. The sad part, I think right now is we don’t have data, we don’t have enough face to face discussions, don’t have enough meetings, Graham, you have this whole virus thing that screwed that up. And technology today is made it easier not to have face to face meetings, and discuss things and get views. I think we need to go back to that person. I’m old school. So I guess that’s the old guy you’re talking?
Matt Vetter 33:21
Well, I’m not that much younger. And but I agree with you. I mean, this sort of stuff is great, because right we’re having a conversation from different different sides of the country. And it’s got its purpose. But you know what, what Mike and I do on a day in day out basis for our our actual jobs, you learn much more you communicate better when you’re when you can sit across a table from somebody, you can have an old fashioned set of paper drawings, and you know, highlighters and you can scribble on them. I think talking is a huge point. But I think just shutting up and listening more would would serve a lot of people because I’m gonna keep going back to the relationship side of it, you have to get to know Mike, right, you have to get to know where he’s coming from and what his mentality isn’t to understand how he’s approaching a project. And until you can do that, you’re just going to be spinning wheels. So I think overall communication is really the key. And as a society we’ve gotten away from that.
Scott Peper 34:24
Yeah, I agree. Yeah, it’s funny, um, I was talking to I had friends now for as I get older, and I’m almost I’m in my late 40s But while I get well I get lots I’ve gotten older and I’ve done different deals or negotiated different stuff, whether it’s either inside mobilization funding or out I’ve just you get more confident with yourself and as soon as it’s like almost like one day and you can think about along your journey people tell you hey, you’re you’re okay you know, you’re pretty good. Like Thank you take those comments. Sometimes you don’t, you don’t accept them and other times you start to get some on the one hand, so there’s you believe them all and you think you’re better than you are But ultimately, as you build some confidence, that competence also says, hey, look, I did a good job. But here’s all the other reasons why I did. And in this case, it’s you focused on performance, you didn’t do a little bit, well have the confidence to know why you are good. Be specific, hey, you know, I don’t bid low bid jobs, just be who you are, and that people are gonna either like it or not. And just be clear about who you are, what type of projects you want to work on. You know, if Matt’s telling you, hey, look, we did this one time, this is gonna be tough, but you just tell him, Hey, man, I’m not your guide. And I can’t do that kind of work. I can’t afford to carry the cost. But you know what, when you have this type of job, and this one, this one, I’m your guy, and I can do great on that frame. And here’s the reasons why, like, then Matt doesn’t waste time, you’re not wasting time and vice versa. And Mike, you don’t have to burn up your resources. I’ve just found over the years that if I get more clear with what I can do well, and what more importantly, what I can’t, it allows the other person to hone me in where, where they can see me fit well. And I think it applies to construction really, really well, in the same manner. Because every projects different. You know, they’re all the trades are different. Everything can be specific. I think if everyone just talks like you said, Mike, I mean, that’s the best advice, just talk. And when someone else is talking, now, you and the other side, listen, and do it without judgment. And everyone can get a little more confident to be vocal. And if you’re inside an organization, and you’re not the boss, or you’re not the head of something, ask questions challenge why people are doing it, you know, why do we do it that way? Well, that’s the way we’ve always done it. If you hear that answer, you’re on the home run spot and keep peppering that thing until someone gives you a better reason than because we always did it that way. Because to Mike’s point. It’s there’s a lot of technology out there now. And there’s better ways to do things. None of it’s better than sitting face to face, in my opinion. But there’s technology that definitely helps a construction project, there’s technology that definitely helps bids, and designs and workflows and all kinds of stuff. So those would be some pieces of advice that I would offer up on just listen to you guys conversation. I think you guys in well nailed them.
Matt Vetter 37:14
Yeah, you know, look, this industry is is stressful as hell. So the way I’ve started looking at it in the last, you know, half a decade or so is if I’m going to stay in this industry, and I’m going to sweat and toil to make a living doing what I what I do love to do. I want at least have some damn fun, right? And if if every day is stressful and miserable, because you’re not, you know, you’re always at odds with somebody, and then what the hell’s the point? Because nobody, nobody is getting mega mega rich doing what we do, we can do pretty well. And we’ve got other opportunities, but you know, you’re not hitting billionaire status by being a smaller scale general contractor in southeastern Michigan. Sorry, if that’s a newsflash to you, you know, you can do well, you can have fun, though, you can make a good living, but you got to be able to do it on your own terms.
Scott Peper 38:05
Yeah. Mike anything you’d offer up on that,
Mike Kepsel 38:11
No, I gotta agree with them. You know, it’s this business is stressful, it’s, it’s hard and can be long bass and times, and you got to figure out how to enjoy it. I guess I come to the conclusion here lately, you know, we build buildings, put a product out there. But I have to remind myself, and I’ve started to remind everybody else, one thing we do is we just built buildings, we’re not all surgeons, we make a mistake, can own up to it. Nobody’s gonna die an operating table, if we make a mistake, or something gets broke or something falls down. We can get back up tomorrow and fix it and keep going. And that’s just kind of the attitude we have to take and keep plugging along.
Scott Peper 38:57
So, here’s an opportunity for you guys. Let’s just say this entire webinar was being heard by all the major owners and bankers and architects and designers in the world. What what are the one or two things that you guys wish they were doing differently at the top of the waterfall that would help impact everyone positively?
Matt Vetter 39:24
You know, I think it comes back to communication but learning to you know, we have a constant struggle seemingly lately, especially with with lending institutions that do not understand the design build model of construction. They only understand and they only have on paper, you know, the rules that that govern the old, the old school design bid. Right? And trying for us and that’s been one of our biggest pain points in the last few years is as we’re growing as a company and working on larger and larger projects where we’re, by the nature of the beast dealing with more and more banks and lenders firsthand and trying to educate them that. Look, this isn’t the way that you think it’s done. This isn’t the way you’ve been told, it’s always been done, we do things differently, there’s a different approach here. For example, architects, in our model, I hold the architecture contracts, where in previous models or other models, the owner does or the developer does, we have a constant battle with lending institutions to even get them to understand that I’m in a battle right now I have a have a call with my attorney after this, to discuss this very topic, because we have a bank wanting me to get my architect to sign over rights and to agree to a bunch of nonsense, should the project go south, so that he would essentially then be working for the bank? To which I said that it’s not impossible, right? We hold their contract. So so maybe we could have that relationship with the lender. But, but it can’t be a way around, and it’s just, uh, you know, I’m not knocking on them. But it’s, it’s an old school mentality, or that they don’t, they don’t seem to want to figure out or want to learn how it is that we do business. It was a long winded answer around it. But you know, we were seeing it constantly, it seems, and I don’t know how best to fix it. Because just talking hasn’t, hasn’t helped.
Scott Peper 41:34
I think developing relationships in the banking world are just as important. You know, I, I’ve found a lot of friends that are developers or partners, and they, you know, who their bankers and how they develop those relationships and educate them along on what they do and how they do it. Is, is important, you know, if you think back if banks can land into the world, where they’ll allow a developer to clear a piece of land, and they’ll understand that there’s going to be ultimately a building on it, and they have a lease with a tenant that for something that’s going to be built, they’re going to turn it over, they can understand the construction side, too. They can they’ll get the design build some of them. But you’re right. It’s not it’s not every bank, it’s certainly not the big ones, either. I can promise you that. Big banks are not going to be the ones that gonna take time to figure that out. Um, is there any, is there one or two things that you guys have found that are in that AIA Contract that you wish for change? Or you do change often, to benefit one and I?
Matt Vetter 42:41
I mean, I do by not using them? We’ve, we’ve moved away from them completely. We still have some legacy projects that were under AIA documents. But But there’s other options out there. You know, and, again, I sound like I’m shitting all over the architecture profession. I’m really not. But an AIA document was written by architects, and is designed to protect the architect and the owner and it it does nothing. For the general contractor. It certainly does nothing for the subcontractors, and it causes divisions in and of itself. So there’s other options we have used. Consensus docs has a pretty reasonable set of documents that protects everybody, but it’s got it was written with input from subs and from GCS, not just the design side. There’s, there’s other forms and formats. That would be my answer, just stop using them.
Scott Peper 43:41
Yeah, it’s interesting, because it’s why I brought that up. Mike, anything you want to use? What do you see working with different folks
Mike Kepsel 43:48
to agree with him? I mean, I’ve done some routes from what Matt calls the Big Five area, and I’ve gone through their contracts that use those and I’ve redlined them and marked a mountain. So I’m not going to do this, or I don’t agree with it, or, you know, and I’ll send it back to him that sign and so you need to change, revise it. And I’ve literally had their legal call me and say, You can’t mark it up as well that I’m not signing the contract. You know, you’re going to go to the next guy. Next thing, you know, no red, line it and blank it out and I’ll get the contract. But it’s always a nightmare. And if you don’t take the time spent a whole day reading the contract and going through it. You’re leaving yourself exposed. Yeah. Matt says there’s there’s better ways.
Scott Peper 44:38
Matt, is this contract something that you have that you guys have created or modified? Or is it something that everyone can go get on their own? At least start with from a template perspective?
Matt Vetter 44:48
Nope. Consensus docs. I think it’s consensus docs.com Or someone something around that it’s it’s not free. I mean, you got to pay for it but But anybody can go and buy their their template. That’s, which is what we’ve done. And then we modify them accordingly, you know, based on based on project based on need, you know, we, you can start from scratch. You know, my, my attorney is always asking me to let her create us a contract. And while I appreciate the intent, I think more of it is to get the billable hours and doing so. But, you know, again, the consensus docs, it’s not perfect. It’s not perfect by any means. I don’t think there is any perfect contract. But it’s, in my mind, from what I’ve seen, it’s, it’s way more well rounded.
Scott Peper 45:34
You know, I can say, from our perspective, having read reading a lot of contracts that are executed that come to us, the AI is definitely and most of our con, most of our customers are subcontractors. And it’s definitely not a favorable contract without some tweaks to it. And you’re you hit the nail on the head, Mike, matter of fact, one of the webinars we did was with an attorney having to be out of Texas, but very familiar with the doctrines and he recommended the five or six places that you really should like, make some modifications. If you want to have like, any, if anything bad happens, you’ll at least be in a somewhat okay spot versus just a disaster. And so I recommend everyone go do that. We can post that later on and show but you got the money you spend on those contracts. Redlining is worth every penny and a couple hours you spend your trade new than it is getting in a fight?
Matt Vetter 46:26
For sure. 100% agree. Yeah. So many people don’t read them. You know, and that on the GC side, the sub side, the owner side, so maybe we’ll just, you know, if we could all work on a handshake, that’d be great. I’d love it. But that’s not the world we live in. And if you don’t take the time, and spend the money to really understand what the hell it is you’re signing. Good luck to you.
Mike Kepsel 46:52
Yeah, you need to read them.
Scott Peper 46:56
I’m gonna look and see here we have some questions. It looks like there’s been some comments, I want to ask you guys a couple of right from the audience here. Um,
Autumn Sullivan 47:04
We do have questions. We have one from Ben, that says, What have you done to educate the project owners who are hesitant to do the design build approach, it seems they’re hesitant because they don’t personally know or trust, a GC or subcontractor. So they feel like they’ll get taken advantage of Whichever one of you wants to jump in first,
Mike Kepsel 47:30
I guess I probably got the longer exposure. We sit down, going back to that one contractor, and he would bring a lot of his trades in and meet with the owner face to face. And we will put numbers together. And he was shown those numbers. It was basic, open book. We had a profit margin, but I could do it with Matt, anybody, I’d sit down and show you our cost for all of our materials, show your labor hours, and our profit margin. Do. You know, if a contractor is willing to do that with an owner? I, I don’t see how it couldn’t work. Maybe they’re not showing up. So maybe that’s how the honors who like maybe they get taken.
Matt Vetter 48:21
I think that’s just it, you know, Ben, he mentioned that they don’t know or they don’t trust the person that that’s the first three rules of sales, right? You got to you got to get your client to know like, and trust you. And if you’re trying to pull the wool over somebody’s eyes, why would they trust you? You know, we operate still, like Mike just said on a on a very open book, I’m happy to sit down with an owner and any of my trade partners that that are there and and we’ll show them every number, I’ll show you exactly what what I’m gonna make Michael show you what he’s gonna make. You may not like it, but, you know, at least it opens up the door for conversation. And that’s the way we change this industry is we have to start having those conversations, to gain the trust from the ownership community as a whole. Because it, you know, design builds been around forever. But for a very long time, it’s just been a catchphrase. You know, it’s been like hanging your core values on your wall and calling that good. People would throw it around to use it as a marketing term. We have to do better as an industry to really teach people what the hell it means and how it can actually work and benefit not just us but the owners also.
Scott Peper 49:34
The owners want their buildings built that mean that they’re not interested in the construction of the building doesn’t help them what that’s not the purpose of the building. It’s not certainly not going to make them any money. It’s not going to occupy itself. So I think we you just hit the nail on the head both of you is the confidence to actually say I’m making money on the project. By the way, guys, like I’m definitely doing that number one, and here’s how much I’m making. And I don’t feel bad about making that money and There’s a lot of risk, like on paper right now I make this money if I could put my fingers and it’s done, yeah, that’s what I’ll make. But you know what, there’s a lot of things in here that have risk I have to perform, I have to manage people, there’s a 10 month project, it’s a two month project, whatever it is, a lot has to go. Right for me to make that money more often than not, I’ll make less, sometimes I might end up making more if I can be efficient, but who cares? Like, you know, I’m making money. That’s it. And it’s that’s the brain shift that I’ve seen in our group, while we work with different folks that, and I’m sure there’s folks on here now thinking like, that’s insane. I’ve never done that before, I promise you, if you do that, you’re gonna win more bids. Because I believe it’s the unknown that people don’t trust, not what they know, if they know you’re, you show them all the numbers, they know, you’re gonna make 25%. And they think you should only make 15. They’re, they’re happy that you’re not making 30 As if that was on the table before 40 or 50, or whatever. And they feel like, okay, 25 is more, but they know, at least they know and they’re like, Alright, then they can talk to you about the things that are actually important, right? If I give you this, you’re gonna do a good job, like you promise you’re gonna do a good job. And this is why and here’s how I think they can run with that.
Matt Vetter 51:15
That’s what I believe. Well, why the by the F, wouldn’t we do that? Right? It’s, it’s, we have already talked about how stressful the industry is. It is fun, I like building stuff. But it’s not that fun that I want to do it for free. I’ve got plenty of things I could occupy my time with, if I wasn’t making any money, and it wasn’t concerned with paying bills, and it probably wouldn’t be building buildings. So we do it as a profession, we do it to make a living to put food on our family’s plates, you know, why the hell not have those conversations? And if the owner doesn’t like that, I’m putting 15% on it. We can have a debate, you know, but But you get back to that, that age old conversation. Well, what is my experience worth? Because you can’t do this yourself? That’s why you’re talking to me, you know, just like, I can’t do surgery, but I can build a hospital. You know, and and Mike’s got, you know, decades of experience under his belt, why the hell Shouldn’t he charge for that? Because nobody else has that you can’t, you can’t reproduce that, you know, there’s no technology ever that can reproduce that sort of thing. So we’ve all got to stop being so chicken shit about making money. We’re that’s why we’re doing this. That’s why we have these conversations is why we’re in business.
Scott Peper 52:36
I couldn’t agree more. You know, um, the other point I was gonna make was as you as you start to jump into these, you’re having these conversations about dollars and cents and money. You realize also Okay, yeah, 20% is whatever, like, that’s the margin, let’s say, for example, but they’re holding 10% of retainage. And they’re talking about 20%. And you’re like, Listen, man, I’m running the job on 10, which is hard. Like, how about I hold 50% of your profit? I mean, 10 seems like 10. But it’s really 50% of the profit. I mean, then you can might be able to get into a conversation where the owner might say, Okay, well, if you could bring your margin down to, you know, 5%, then I won’t hold any retainage. And then you have a choice, then you can make some decisions one way for you advantageous to you, maybe you’d rather have more of your money up front, and you can do it for less. Or maybe you can say I get a hold, you know, you can pay my guys or I can pay this or I can get better terms if you allow me to do this as a nurse. So yeah, I’ll do that. If you give me 10%. Up front, I’m a contract. And I can actually get out and get started and do this more efficiently. Now you can get into the meat of real conversations that actually will make the job more efficient, you can actually make more money on it. By spending less, you can get into some conversations, if you get past the price. And when everybody’s making just slap it on the table. That’s my personal opinion. I’ve seen that in my own world, with different business ventures. I’ve definitely heard folks like you guys who do that just just like this. And they’re every one of them are more happy. They do better projects, they avoid problems. And there’s less ambiguity, always.
Autumn Sullivan 54:13
Yeah, there’s an added benefit to talking about money. Oh, I’m sorry, not in that the perception of construction is that it’s and we talked about this in the Do Your Part campaign, that the perception of construction as an industry is that it’s a dead end job. And that you have to go to college and you know, all the stories that we all know, right? But if the if, if, if the industry is willing to start talking about what you actually can make and construction if we’re just like you said less chickenshit and willing to talk about the money that can be made here. It’s it that’s part of changing the perception, you know, for the for the younger people who are coming into the industry, that it’s an actual viable career where you can make real money
Matt Vetter 55:00
Yeah, you don’t have enough time to get me on that soapbox. That could be a whole nother episode, but I will be 100% agree with you awesome.
Autumn Sullivan 55:13
Yeah, we’ll have you on for that one, I promise.
Scott Peper 55:17
Also say if everyone hangs out on this and complains about the topics we’re having, and do nothing different than I guess you deserve what you’re getting. But now that you’ve been on this and listened, try it. Pick the person have the best relationship with go show how much you’re gonna make on their project. Ask them if there’s anything you could do for them to help them better. Think about it from their perspective and ask them to think about the project from your perspective. And you’ll both find a lot of value in that and probably a great relationship. I promise you the unknown. This is a long lasting as the unknown is what people don’t trust more than anything else. The unknown.
Autumn Sullivan 55:59
Yep, very true. All right. And if you haven’t yet, go to our website, take the do your part pledge. Join us in our mission. Thank you guys so much for joining us. We don’t have any other questions. So I’ll go ahead and give you 15 minutes back to your day. Scott, did you want to close this out?
Scott Peper 56:17
Yeah, there was one in the chat. I think we answered it. It had to do with Luis, I saw your earlier will we be sharing this recording? Yes, absolutely. We’ll send out a link to this to everyone. We’ll also put on LinkedIn, it’ll be live. I’m sorry, not live. It’ll be on YouTube, you can always go get it. You can see this as and as many times as you want and slow motion. Rewind. And fast forward. Are you able to see it all? Um, I think we Matt mentioned that consensus docs was another question in the chat about where the documents are. And everyone that’s had so many positive comments, I thank you very much. We appreciate it. And most importantly, Matt and Mike, thank you guys so much for your time, I appreciate you guys having the courage to share this. Your own relationship and journey and interaction. I applaud both of you for having the confidence to do it the way you do it. And most importantly, this do your part mission you guys definitely represent and are already leading the way on it. And I’m so glad we chose you guys to Nashville, and most importantly, you accepted to jump on, it’s great to watch the both of you and what you’ve cultivated. And I’m certain one or a few people, if not hundreds, hopefully will be impacted by this and start to have a little bit different conversations. And soon enough, the world keeps spinning. And it’ll permeate out farther and farther. And will all of a sudden one day someone’s going to come to you and show an owner is going to walk in your guy’s dorm show you how much money they’re gonna make and ask you how much you’re gonna make. And maybe they’ll even give you a little more taste on.
Matt Vetter 57:50
That Scott, I appreciate you having us on. It was it was fun as always. Mike, I’m glad you came. Thanks for Well, thanks for helping along the way, buddy.
Mike Kepsel 57:59
Oh, welcome. Thanks for having me.
Autumn Sullivan 58:01
Thank you guys so much.
Scott Peper 58:04
Please join us in the do your part mission. There’s some cool guests, there’s lots of stuff we’re doing, it costs you absolutely nothing. We’re going to help educate things just like this type of topics, more gas, more conversations, different blogs, different ideas. Our part in this deer park mission is launching our cash flow tool that we will have we’ve gone through webinars on this before, but it’s a cash flow tool. It is 100% free. Anyone can download it right on our website, what is the cash flow tool, it basically helps you figure out if you haven’t been in an estimate and a schedule you need to keep. It’ll show you exactly how much cash you need to execute that job. And if you don’t have enough cash, just imagine knowing that in advance, and then you have the options and tools to be able to do it. Perhaps you take that tool into your GC or your owner and you show them Hey, man, I need $5 million to run the project because you’re taking too long to pay me if you pay me in 30 days, I only need 2 million. So help me out or hundreds of 1000s or whatever it is. But that tool is very impactful that may help you make proactive decisions and it’s 100% free. And all the tools are there for you to use it and show it and work off of it. So thank you all again, Mike. And Matt. I really appreciate you guys. Thank you so much. Thanks. Take care, everybody. You too