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Hammer & Grind : Built For Contractors

Hammer & Grind : Built For Contractors

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    Hammer & Grind : Built For Contractors
    Episode•March 17, 2025•47 min

    EP210: How to Build a Profitable Contracting Business – Lessons from Anthony Amunategi

    The bidding process presents a hidden issue for the building sector, sapping millions of dollars in income lost without anyone realizing. When contractors bid on jobs, they put in a lot of time, effort, and resources, but most of that work doesn't get paid or noticed. In this episode, Brad and Anthony talk about: How bidding can drain $1.5M from the construction industry. The dangers of unapproved change orders. Why clear documentation can protect contractors. The impact of AI on construction efficiency. Lessons learned from real-life construction failures. Mentioned: Website: https://www.futurefactory.com/ Facebook: https://www.facebook.com/anthony.amunategui.3 Instagram: https://www.instagram.com/anthonyamunategui/ LinkedIn: https://www.linkedin.com/in/anthonyamunategui/ Link to Resources: Grab Brad's tell-all book: The Contractor Profit Blueprint https://thecontractorprofitblueprint.com You've been invited to check out Job Tread! https://www.hammerandgrind.com/jobtread Help us get the word out to other contractors by leaving us a review or sharing our podcast! Hosted on Acast. See acast.com/privacy for more information.

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    Transcript

    0:03

    AI is here the next couple of years of our industry. Those who embrace it will take off and they'll separate from those who don't embrace it so quickly they won't be able to catch up.

    0:13

    Hey, it's Brad here. And before we get into the show, I want to tell you about the show sponsor. Now, I personally use this company in my own business. And so I was thrilled whenever they reached out and said they wanted to sponsor the show. Today's sponsor is JobTread. JobTread is an all-in-one construction management software. JobTread streamlines processes for builders and contractors from estimating and scheduling to job costing and invoicing. With JobTread, you can... create precise estimates quickly. improving the chance of winning jobs. And their dynamic scheduling allows you to keep projects on track with Gantt charts and scheduling tools. JobTread also allows you to collaborate with teams, vendors, and clients in one location. No more missed information. Who said, she said. It's all in one location. And their API integration tools connect with your favorite software like QuickBooks Online, HammerCRM, or any other API. friendly apps. JobTread is perfect for builders and contractors of all sizes. Whether you're a solo contractor or run a large team, JobTread scales to fit your needs and works great for remodelers. home builders, deck builders, pool builders, and general contractors. Try JobTread today and learn how it can help streamline, manage, and grow your construction business. Visit JobTread. com or click the link in the show notes for more details. Now let's get to the show. Hey, welcome back to the show. I have another great guest for us today to interview. I have Anthony Amunategui with CDO Group and the Future Factory Podcast. Anthony, welcome. the show.

    1:58

    Brad, so happy to be on your show. I get to be on your show now. Excited about this.

    2:03

    Yeah, yeah. I was recently on your show a little while ago. It did pretty well, according to you, so that's awesome. But yeah, let's talk about who Anthony is. Give us just a brief intro into how you got started in construction and then where you're at today. Just kind of a 30,000-foot view.

    2:18

    For me, it started really kind of different. I mean, I'm not as different than others. I worked my way through college painting houses, right? this little painting company down in Florida. We pressure clean and paint. That grew into some commercial projects. I got myself into a company called Discovery Zone. They're a playground for kids. I got to do my first commercial projects. I figured out how to paint those things faster than anybody ever painted them. A project manager saw me and invited me to this deal in Chicago where I got to come up there and talk about how I did it so fast. They were trying to help figure out how to make their projects go faster. And the guy offered me a job. I went to work for them. And my career cut to off from there I went from you know Discovery Zone as a project manager to Boston Market to Einstein Bagels to Panera Bread and worked my way internally for a bunch of these different brands doing hundreds of projects all around the country I traveled every single day and then working myself out of a job it was kind of tough so i once started a third-party outsourcing company called cdo group where it kind of stood for chief development officer and corporate development outsourcing it's kind of everything that fell under the chief development officer's role i could do for companies back then nobody did that there was no such thing as a third party uh support person uh either you were an internal or you were gc they they wouldn't there wasn't so we kind of started this kind of new idea that you could hire company to come do your construction management work and it took off the floodgates open for outsourcing maybe 15 maybe 18 years back and we happened to stand in front of them and it grew dramatically 2017 we were doing a lot of McDonald's projects McDonald's asked us to become a general contractor We were always a construction management firm, but not at risk. But we flipped over to the GC side and started growing that. And, you know, since then we do, you know, roughly, you know, something from $50 million to $85 million worth of construction a year, building all chain work. We don't do any residential. We do really. chain work, McDonald's, Raising Canes, Pan Express, those kind of brands are typical projects, somewhere between $1.5 and $5 million ground dump type buildings. We build a lot of those every year.

    4:34

    Yeah, I was looking at your website before. I mean, you have some impressive clients. I mean, Starbucks, CVS, Chipotle, Gap, Best Western. I mean, just a whole list of them, corporate and national franchise companies that you've worked with. with. So I didn't know, I didn't know this. So you told me, so you kind of got started as you created a kind of a position, as you said, the CDO. What, how did you think about that? Like, how did you come up with that idea?

    5:01

    The truth was I got tired of working myself out of a job. I'm one of those guys who can't, being unemployed was not my thing. My fear of being broke, I was, we were broke. My mother worked at Denny's and to go back to being broke was not something I ever wanted to do. I mean, I guess when we were kids, we didn't know we were broke, but I know what it felt like to have nothing. And I generated some success in working for these companies. I got, you know, I remember my first job, I made $35,000. I thought, oh my God, I make $35,000. I thought it was great. Then I made like $65,000. I'm like, oh my god, I make $65,000. Oh my god, this is great. And then I made $85,000. I'm like, oh my god, this is great. And I broke the $100,000. I'm like, right? So the idea was that I was making a great living, and my lifestyle was getting better. And I loved it, right? I traveled. I worked really, really hard for these companies. I would give my blood sweat. I literally, I would travel seven days a week. And I was young. I just got married. I would, I would oftentimes I would fly home, have dinner with my wife, sleep there and leave in the morning. I would, you know, I would travel from. you know from puerto rico to hawaii in one week i would travel you know multiple cities two or three cities a day sometimes just going around and doing uh you know we were building uh somewhere between two to four hundred projects a year for these companies and i would go and land do punch walks pre-bid meetings uh you know job site walkthroughs you know that's what you did as a project manager I loved doing it. To me, I thought that that was the rock star of the industry, right? To be a project manager on these kind of projects felt like everything I've always wanted to do. Being able to get paid to travel. I was like, I remember the first day I went to Discovery Zone. I walked in and the guy goes, go to that lady's office, she's going to give you a credit card. I'm like, she's going to give me a credit card? I was 20 years old. She goes, go to that guy's office, she's going to give you some tickets. You have to be in Puerto Rico tomorrow. I'm like, My first day I'm going to Puerto Rico, she goes, yeah, you got your passport, right? I'm like, yeah, I brought my passport. And then he hands me 30 files and goes, come back when these are built. Like, that was my first couple of hours. First of all, I thought, they're all going to find out that I'm a fraud. I was this kid from Mochito, Florida, who was painting houses a couple of years, just a few months ago. I just got a couple of these commercial projects. I'm like, they're all going to find out I'm a fraud. But I worked my ass off for them, and I did, you know, I learned from some, they gave me some great guys to work for. I mean, that boss was a great guy. He really did put me together with some great people. And maybe there's some higher power that looks over us and gave me the gift of being able to work for this company. So it was fun.

    7:44

    So did you, with Discovery Zone then, was you like, was you an independent contractor or were you an employee? Like, how was that structured?

    7:52

    Yeah, so I was actually an employee for them, right? I was a junior project manager. Okay. They didn't get any project management role until a couple years into it, right? And I worked for, and the project manager, so you're watching maybe 300?

    8:07

    Yes.

    8:09

    Project managers to me were like those guys. They were like, they were literally, in my brain, they were these rock stars. They walked like those guys did Army. They were like these badass human beings that were smart. This guy, Fred Gores, who ran the construction, he hired really great human beings. And I was like a junior to those guys. And I just loved being on their team. And I got to learn from them. I'd watch how they talk. I was really great at paying attention and I'd watch how they talked, how they carried their bags and what they did on a job site, the questions they would ask. And truth was, I was like a parrot. I would just... really copy what they did. Yeah. And, you know, you kind of fake it till you make it a little bit. Maybe that's the truth. You know, a lot of that, you know, but I guess ultimately I had grown up in construction. My father and I, we would rehab houses and we would learn from that. So I guess I had a good fundamental, but I didn't have it at that level for sure.

    9:10

    Yeah. No, that's, uh. somewhat similar path, but nothing like that. I mean, when I, when I got into construction, I started out as a superintendent for a local, just a local developer. I mean, we were just basically building our own stuff. And then about a year in the construction manager that we had, the project manager, construction manager, he got laid off, quit. I don't know the story, but he was gone. And so the boss, so it was like the boss, construction manager, me, superintendent, and everything was subbed out. Right. And when the construction manager left, the boss said, well, we'll just, split his responsibilities like i'll do kind of the hiring stuff you do kind of this job site stuff well what ended up happening is i did everything Like I just, you know what I mean? Like for the first week he helped out and then I just started doing everything with very little experience. And so similar, but I mean, I ultimately ended up leaving there. He got into financial troubles and I saw the writing on the wall and got out of there. But that's interesting. So you, you were into the discovery zone and then when was that transition for you to like, say, I want to go do my own thing or how did you go from there?

    10:12

    You know, I want to hit on something before we got off that. I think that's something where you said. It's something that if you're a young person, you're listening to this, no one ever gives us the next role. You got to kind of take it. Right. I don't think that that's something that's not, you know, people are like, well, when are you going to give me a promotion? I'm like, take it. Yeah. Right. Take, take, take on the role and all of a sudden make it where I can't not pay you. Right. I tell people that all the time now, take the role, right. This whole nonsense that I got to wait to be groomed to be a, no, no, go take the role. And that's kind of what you did. Look, I just, I just went and, you know, it started moving. But, but to your point, you know, the question you ask, When I said on my own, I'd been through Discovery Zone, and then they knocked on the door and said, you know, I'm on vacation, and I got a call from my boss saying, hey, you've got to come in. And they said, hey, we're letting everybody off, right? It was like we're done building, we were bought by Blockbuster Video, and we're done there. And they didn't let me go. They actually kept me on. I did some work for Blockbuster. It was great, right? And then I got the call from Blockbuster people saying, oh, we're going to let you off. And that feeling of that jerking of the chain of not my own control, I was going to just the room with somebody else, Then I went to work for Boston Market. Same thing, right? I got this kind of, hey, we're going to let you go. It wasn't anything I did. I worked really hard, but I hated that feeling of not being in control. Somebody else would jink my chain. And all of a sudden, I had this young wife and just moved to Chicago. I didn't want to be broke again. So then I went to work for them, and then I went to work for Panera Bread, and that was good. They were a lot of fun, but some guys that worked for the grocery market said, hey, you want to go start our own company? I'm like, sure. So they were really more real estate guys. They were more from the real estate end of the business, where they wanted to help companies do site selection and demographic modeling, and I was like the construction... you know junkie or monkey junkie at the at the end of the line right they just kind of brought me on because they didn't want to do that work and they were these fancy real estate guys but i loved the construction part of it and i realized i'd worked for these companies Internally, and then just in my office, my needs would change every day. Some days it'd be like, okay, we're going to do 100 new stores this year. But then the next day, hey, we just bought another company. We're going to do 100 new stores and 30 remodels. And then that would change and go, hey, we want to change, you know, bagels in the front to bagels in the back line. So then I'd have 60 new remodels. The needs in a construction department kept changing. Yeah. So I realized that that was one of those resources that I was going to be at the whim of. whatever the initiative was. It wasn't anything I could control, but owning my own company, I could then go out and work for all these brands, and one would grow, one would stop, one would grow, and I could leverage myself over multiple clients. And that was really the gig. That's really how CEO started. And, you know, it's been, you know, last February, it was just 28 years. And 2025, February 1st, was 28 years. And, you know, and all that's kind of been a gift of, well, we can get into that a little bit more, but what it means to grow for 28 years, what does all that mean?

    13:24

    So, yeah, the idea of like, when you work for, and this is like corporate America in general, right? But when you work for large corporations, like one executive makes one bad business deal and then your job's gone. You know what I mean? Like it's like one decision, one bad decision and you have no, and you could be dedicated your life to that company. And then also like when you're an employee and you're doing these projects and they're like, well, we changed our mind. We're going to do this and this. Like there's a little bit of frustration there because you got to switch paths. But when you own your own business and they're saying, Hey, we're going to do this differently. Like that's fine. You're going to pay me. I'll remodel your store. I'll redo it a hundred times. It doesn't matter because you're going to pay me. It's a different dynamic in that whole aspect. So, okay, so we got through that, and then you started CDO, and then do you remember who your first client was? Yeah,

    14:14

    for sure. It was Einstein Bagels. Our first client was, well, Einstein Bagels, and we had a rent-to-own company. This group, Skyrim of Ekman, had hired these Stanford grads. They went out and searched and paid these MBA graduates. for a year to go search all the different businesses that they could figure out that would be the best return on investment, fastest growing, easiest to operate. And they come up with, what would you guess, rent to own, right? So they were these guys, these MBA graduates who created this company called RentWise. And so they were one of the first, very first, first customers. And I worked for these young, really smart guys. They didn't know. anything about construction and they were really they didn't know anything about running a business but they wanted to grow fast and they had all this money from Irvin and they so that was one of the first and then nine cent bagels I had worked for them some guys were internal said hey I'll give you 35 stores to do I did about 35 stores for them and they were just so there was kind of like first couple stores and then I remember one day we were we got a big room on a program for Red Lobster. And there was four of us in the basement of my house. We had an old living room table, right? Like an old brown living room table that my wife didn't want upstairs. She puts it down in the basement, right? So I sat on one end. The girl that had this, she sat in the middle, and my buddy sat on the other end, right? And three of us sat at this brown, and we had another employee, he sat on the garbage can like Lionel from the, he was like this big tall guy. And he sat on, he, put a board on the garbage can and he sat on that. So four of us were in the base of my house and we got, um, we're on a call from, uh, uh, Darden restaurants and, uh, it was Red Lobster. And this guy gave us this remodel program. He goes, look, we're going to do this thing called a dining room enhancement. It was back when, I don't know if you guys remember when Red Lobster had the wharf look, right? The kind of the seaweed and the ropes around the posts on the front. Yeah. All that stuff. And they were going from that to what was called a coastal home look. kind of getting rid of the nets and the starfish and the buoys and going to more of like a coastal home look, which is a little bit more fresh and kind of... And they were taking the bars out of the corners. They used to hide their bars and they put their bars out in the kind of main room. So we got to do these remodels. I remember when the guy gave it to us, he had no idea how small we were. None. Maybe not embellished, but maybe we didn't tell anybody how small we were, right? You know, I always tell people, when you go to a bar and you meet a girl, you know, walk in and tell her all your defects, you tell her good things, right? The same thing you do when you do customers, right? Make sure when you communicate with the customer, you're talking about the good things you do. So they gave us this program and we set off to do these and because we were so small, all four of us dove in. We had, I mean, when I say 100%, it was 150% of all of us. We traveled every day. I went to LA. We got California and we had the East Coast where they had a bunch of stores. I went to California 27 weeks in a row. So just imagine, like, I would leave every Sunday and come home every Tuesday, and I would just visit job site after job site after job site all the way up and down the West Coast. And then I would come home. I'd be home Tuesday night, Wednesday, and I'd leave Thursday morning to go to New York. And I'd go from New York from like, I'd go in the, I would drive into, I would take the train, I'd go to some projects in Newark and I'd go over to New York and then I'd go down to DC. And that was my second half of my week. I did that for every single week. Right. So you gotta be willing to go. If you're doing business, you gotta be willing to go and chew glass and travel. And that's a lot, right? You gotta, you gotta be willing to do that.

    18:02

    Do you remember how many projects for Red Lobster you were doing at one time?

    18:07

    We did, all together, we did 160 projects for them. Now, this is where we learned a big lesson. And the big Enron thing happened. I remember when Enron had this big thing. And Darden had to stop all their projects, right? They had this big accounting thing they had to go through. And they stopped. Now, one of the things we learned was we had all of our eggs in one basket. All four of us worked on those projects every day. And when they stopped, we were like, we got a call that was like, stop. And we had to shuffle really fast. So one of the things we learned was be careful not to put too many eggs in one basket. And that was a big change. It was a gift. At the time, it wasn't a gift. It does not feel like a gift at the time. But, you know, if somehow the world's always happening for us and rather to us, now I look back and go, man, we learned a lot because of that. It was great.

    19:07

    I think it's easy for anybody in that situation, especially when you're newer, to be like, oh, I just got a contract for $100. projects for this company. And so, you know, it's going to take you say two months per project. You're like, Hey, I got next three years worth of work lined up. And then all of a sudden midway, they call and say it's over. And you're like, Holy crap. What am I going to do now? So like you probably learn in that instant, like we asked, we have to actually have other projects in the, in the pipeline to move on.

    19:36

    It literally was that way. We got lucky. Then after that, we had a Boston Market remodel program where we worked with a firm that did the work, but we did all the punch lists. So that was like a 640-store program. And we would do 10 of those a day, some days, right, all around the country. So the four of us, you know, we'd divide them up, and we still had some of our lobster stuff cleaning up. So, you know, you start to learn how to. grow a little bit. We grew a couple more people there. And so all of those, you know, you're also, you're bailing and rowing, right? And then someone would say, you got to work in the business a little bit, right? You got to make this thing happen a little bit more streamlined. You can't be on every job site and run the company, right? You have to like go through the payments and checks and, you know, you're going to spend a couple of days in the office a week. And it was not something I knew how to do. In fact, I will tell you, I hated it. In fact, I still don't know that I love it. I love being on the field and being with people on job sites. It's kind of my favorite part. So, you know, as an owner, as you grow, you kind of had to learn to do the things that weren't necessarily the best. But, you know, that's what it needs to do to grow a successful business. You got to make sure you pay people properly. You got to get checks out and invoices in and the paperwork side of it.

    21:00

    And that's usually what keeps a lot of small guys, you know, they stuck because they don't understand the paper side, the business side of the business. You know, a lot of us focus on the trades. Like I'm really good at painting. I'm really good at carpentry. And that's all I need to know. And it's like, that's not true. Like you have to know the business side. And if you don't know, you got to find people that can help you do that for you. So let's talk a little bit about, so the Red Lobster, that was your first like big. multi-project multi-location project with your new company right so i'm assuming that you guys had a like an instant crash course on how to make the process more efficient because you know the first one you did was probably chaos and the second one might have been a little bit a little bit better and by the time you got to the hundredth one you like it's streamlined you know exactly what to do so can you kind of walk us through that process of figuring that out. Hey, just a quick timeout from the show. If you're a frustrated contractor who's dealing with low profit margins, stuck working on the tools every day, or doing free estimates for people who are never going to hire you in the first place. I invite you to my private contractor community, The Profit Club, where contractors just like you are adding two to three times more profit each year without producing any more jobs and finally getting completely off the tools to never do another free estimate again. So if you're ready to increase your profits, stop doing free estimates and get off the tools, then all you have to do is click the link in the show notes to learn more about The Profit Club. and see how I can easily two to three times the cash in your pocket, give you a proven sales process that will convert more jobs with ease and get you off the tools once and for all. And the best part is you can do all of this without having to produce more jobs than you currently are. Click the link to learn more. Now let's get back to the show.

    22:44

    You know, our business, construction, notoriously has been built on chaos. My real logic is that, you know, let's say that my finger, right, and if you're listening, I'm pointing at my hand, and I've got my finger. I'd say that the lifespan of a project is, you know, of a building is 50 years, right? Construction's a part that touches my finger, right? That piece here. And people have put up with a lot of chaos in construction. for a long time. And maybe in the old days when you could do one project at a time, you know, if it was just you and I, Brad, we had one project at a time and we had no other partners or no other people, maybe you can get away with chaos. But if you want to grow an organization in order for it to be profitable and systematic, Chaos is the biggest eater of all of your resources and your money, right? And I really start to realize that I'm not willing to play in a construction game where it's chaos, right? And most of what I saw up until that point was really people trying to solve the mistakes they caused. Right? Not being on top of budgets, not being on top of schedules, not being on top of ordering, not being on top of deliveries. And you started realizing that our actions were causing the chaos in the business. And then you started realizing, okay, like for those remodels, we had down to literally hour by hour what happened on a job site. From the second you showed up, even before that, for a couple of weeks before the remodel, right, who the people were going to be on the remodel, the meetings we had, the pre-construction meetings where we had. every sub on there where we talked about what you wear, how you show up, how you talk on a job site, right? We started to mitigate all the problems we knew we were going to have later on, which were, you know, look, you're in a live store, right? If a construction worker shows up and he's got a big FU shirt on, right? That's going to offend somebody, right? Or if you walk on a job site and you think you can smoke in the restaurant, you can't. Or if you say something inappropriate to one of the staff members. Right. So we started with way back when, right in the beginning, before the project started, a couple weeks before each project. And we started with the crews and we talked about what you look like, how you act. We all started with the crews and talked about how you bill. Right. Because one of the biggest problems were these are very fast remodels. if they didn't bill us properly right if they missed the billing they were going to get paid and what would happen is they would not want to show up and and you know that's the that's the big problem is that you know we had so we would literally start training them on how to bill us and help them write their first invoice to us two weeks before the project started and people are like well why'd you do that like because you understand when you pay people they show up and you can blame yourself well they didn't bill me or they didn't do this great now how could That'd be, as a company, I started looking at it going, how could that be our fault? Well, they, you know, maybe the low cost providers, the people that we needed to win the remodels, to get them, they were often low cost providers and people that weren't great at the paperwork side, right? So we started to train them and go, hey, look, let's take a few minutes and show you how to fill out a pay application, right? So here's the G703, here's a continuation sheet, here's a lien release, I need you to do a progress release for your invoice, and we'd fill it out with them. And so that's how we realized it started two weeks before so that if you run day one. right day one success wasn't on day one it started that two weeks before how many people did you need on day one and we would talk about right what are you gonna do when you walk in the store or in the restaurant so a big part of that remodel was um moving the bar so the first thing we do is we'd cordon off the area where are you gonna put the dumpster which way does the dumpster face which one is the opening of the dumpster we would get very technical about where it goes and how it opens and we want to hide it so that some people would drive onto the site and not even know there was a remodel going on because we put a fence up right and we didn't want you know a drywall dust tracked in and out of the store so the way we put it the where we put it how we operated really created, mitigated a lot of the problems we would have later on. So that logic about, you know, there's a great book to read, Extreme Ownership by Jack O 'Rourke. It's a great book about if every single detail is thought out before you go on mission, right? Every gun is loaded, every thing is oiled, every sheet's folded, everything you need to make sure that no matter what happens on that job site, it's been thought through. You get on the job site and you find out that... 95% of what's out there, maybe call it 85% of what's out there, you've already solved. Now you're just managing that 20% that breaks out. I can manage that, right? I'm not on a job site managing 85% of the stuff that I didn't put together, right, which becomes this cluster. Everybody's frustrated. People are mad at you. You know, we've all seen it in our business where people show up and they're mad because... They expect to do drywall today, and they get there, and the firmware wasn't done, right? They already had to bid the project. We've already created inefficiency in the way that we bid a project. Now we're asking people to be more inefficient because we didn't do the work we're supposed to do on it.

    27:54

    There's something so powerful in what you just said, Anthony, and I want to touch on this because I know people listening to this. this happens a lot. And that is, you're talking about like, you know, subcontractors submitting payments. A lot of people would say, well, that's their problem. Like if they didn't turn in their payment, like, you know, I'm not going to babysit them. Like if they want their money, they'll come and get it. But the part that you don't understand is that it's going to affect you the next week or the next month or down the road. It's going to create problems for you, even though technically it's not your problem. So you, you nailed it, like reaching out to them and saying, Hey, you know, this is how we do it. If you're struggling or don't know, or maybe even sending a reminder, like just a simple reminder, like, Hey, you got to get your payments in by Friday if you want to get paid this month. And that's you taking the initiative on the front end to curb the problems for yourself later on. And so I just wanted to point that out. I think people would have glossed over that. Like when you're in charge, if you're the project manager of any kind of any level, whatever. It's your responsibility to make sure the people that you hire also are doing their job. Like you can't just be hands off, you know? So, I mean, I just, you said that I was like, I kind of got goosebumps actually when you said it, because it was, it's such a gold nugget.

    29:10

    Well, just how many of us, it's one of the beliefs I have about the business that, I have to admit it, I don't know, we'll go off on a tangent for a second here, but look, I think a lot of what's happened in the construction world is, you know, look, people work hard. We don't get credit for that because there's so much dysfunction in the business. One of the bigger beliefs I have about it is that we start with really poor plans, right? We have, all of us are being asked to go bid on projects that have terrible, terrible plans. Right. I mean, every single architect, and I'm not mad at the architects because you don't get paid enough to do great plans. Right. You get, you get a small budget to do your napkin delivery. Right. What happens is now our subcontractors are forced to try to figure out the set of plans and do takeoffs and all of the things they need to figure out at a field level, which really should have been done at the design level, right? At design, we should have linear feet and takeoff and material takeoffs at design and Revit. about to come into our industry, the difference between Revit and AutoCAD, that's about to make a big change in the industry where that's going to happen. Now, that's going to take a minute to get there. We can get into that a little bit. But at design, imagine at design having a 100% takeoff. Every square foot, every unit pricing. Imagine being able to give that to a subcontractor and saying, hey, look, Mr. Electrician, you have 35,1900 boxes. You have seven reels of a number seven wire. You have six reels of, and you can look at the conduit and the holds. and all of the materials it's going to take to bid his project. And by the way, here's a schedule I'm going to want you to do so you can show them material and takeoff. Imagine what you could do for someone to bid that way, right? If I could give that to you. And we're working on that today where we give subcontractors extreme takeoffs like no one's ever done before. Now, why do we do that before we go to bid? It's because... We spend probably a couple thousand bucks a project for a panda or a raisin canes or in time for our estimators to do extreme, extreme takeoffs. Now, why we do that there is because when we go to bid, by the time we get those bids back, we can literally show them, hey, you're not missing an item. Now, once we get a word of that project, that takeoff turns into a schedule now. People go to me, you give, we're dealing with drywall. Imagine, we do a drywall takeoff. There's 500 sheets of drywall and a panda. Right now, I can go back and go, look, on day one, I want you to do 150 sheets. Now I can schedule and know how much manpower I need. The guy might say, all right, I can do 150 sheets with seven men. Great, bring us 11. By the way, if you get... 250 sheets done, you'll be done early. But I need to know that at least 150 sheets are going to get done that day. At least then, you know, today, what do we get on job sites? I worked real hard. I'm doing my best. But there's no way to quantify what that means and how does that mean to our schedule or what they should be doing next. It doesn't mitigate that if those people show up and the guy before them or the men before them didn't do the work they're supposed to do. I wasn't called off. Now I've got a group of men that show up on a job site that aren't prepared. And remember, they already had to bid the project, right? Remember, we had to bid this project in the beginning. So, you know, let's say, Panda this is using Panda Express I'm not bad I don't mean I'm using examples of your listening don't get mad at me but let's say there's a hundred fifty line items on a Panda Express right you got electrical plumbing HVAC underground sewer curbs gutters asphalt line striping signage right it's called a hundred line items right and maybe see me where maybe she's as a number We get three subs for every line item. So that's three subcontractors for every line item to bid that for us because we want to win the project. Let's say that it costs every sub that works for us $1,000 in time to bid for us. So before we even win the project, we have $300,000 worth of work that came out of the construction industry. No one's paying for it. We're not paying for it. The client's not paying for it. The industry had $300,000 worth of effort. and no one's won. Now imagine if we are bidding against five contractors, right? That's $1.5 million worth of work that gets sucked out of the construction industry and no one's won the project yet. And now we're asking us, what do we do in a, you know, we try to pick the right contractor, not the low contractor, because that's not who we are. But let's say we've got a variety of those people. that have all been going through that behavior. That's why I really do believe that the way that we bid projects today is changing fast. It's just not a sustainable model for the industry. It forces bad decision logic later on because we've already spent this $1.5 million project on a $2 million project. Look, and Panda didn't pay for that. And they're not to pay, I'm sorry, I'm not trying to, the client didn't pay for that. Right? Our industry did. Right. Right. And we're all working our ass off to do this. And one of the reasons why is because we're not getting that thousand bucks should be a couple hundred bucks. Because if I got a takeoff and a schedule that I could use and I could take the takeoff and send it to the supply house and they can give me the number for materials I need. And I can go look at a schedule and see how many man with the manpowers I need. That estimate I put together should. dramatically be less. But yet our industry says, nope, let's give them half the information. Every set of plans we get. I mean, have you ever got a set of plans that's perfect?

    34:52

    No, no. And in fact, I want to tell you a story when you get down about that. Yeah, get in there. When I was working for the developer that I mentioned earlier, we also were building homes, you know, spec homes for ourselves. And we did this. We did this home and he got a set of plans, like, you know, order them online or whatever. But we were going to flip the flip mirror. We're going to mirror the plans because it was a corner lot. It was the opposite lot. Well, he didn't want to spend the money to go out the plans flipped. So literally we're building like we had a we had to hold the plans up in the air to see the opposite. And so, but here's the, it gets even worse, Anthony, because the plans called for like hardy plank siding, but we were going to brick this house. Okay. Well, I don't know if you know, I mean, you're pretty smart, but brick is not the same thickness that's hiding, right? So we built this whole house. We managed to get it through there. And at the very end, we're getting ready for final inspection. And I'm up there, like I noticed like there's like a stairs that go up in the middle and there's a handrail, you know, in a corner, like a turn,90 degree turn on landing. I'm like, man, this looks really narrow. And I get my tape measure out and sure enough, the end of the baluster and the wall is like 30 inches. and you're supposed to have 36 for code. This is when I had the realization the house is done and I'm looking and actually I take it back. The framers came to us earlier and it's like, hey, you know, this doesn't line up because we're losing essentially eight inches of width because of we don't have a brick ledge and we made it smaller. And so I was like, well, they started on both ends, came to the middle and in the middle is where the stairs were. And it was like, that's where we lost the four, eight inches or whatever. And then at the end, when we found out that it didn't meet code, I mean, the inspector didn't catch it. Like we could have possibly and had to tear that all out and redo that whole thing. But the inspector didn't catch it. And that was the only saving grace on that. But it's crazy to think that, you know, not wanting to spend a couple thousand dollars on a new set of plans created all of this. future work and to your point earlier about having proper planning like think of all the problems that would have been avoided if we would have just fixed it in the beginning instead of trying to quote make things work with what we got

    37:02

    Yeah, I'm excited that what we're coming into is going to rattle our brain a little bit. The new technology is going to rattle the construction industry. A lot of people will get scared. Anytime we go through change, it's going to scare us. I've got plenty of my friends that say, I'm not thinking about AI yet. I'm going to retire before. I'm like, you're not going to make it. Look, AI is here the next couple of years of our industry. And those who embrace it. will, you know, will take off and they'll separate from those who don't embrace it so quickly they won't be able to catch up because, look, drawings will be done in AI, right? Our schedules will be done in AI. Our ordering will be done in AI. Those companies that start to embrace and play with that stuff today... will separate from those who don't so quickly. The model that we're talking about, this inefficient model of thousands and thousands of dollars of people working really hard to get to a point where you find out you're six inches off or eight inches off, it's just... It's not workable. Now, maybe we've gotten away with it, but the amount of frustration and cost of that is plaguing our industry. And we can certainly, great smart people have gotten through those problems. Great. But what's happening now, the cost of money, the cost of construction has gone up. All our materials are up there. Our margins are smaller. We need to eke out more dollars on everything that we do across the board. Right. So this is going to be more and more to find these tools to help us solve those problems quicker. You know, imagine what it would take to go back and rip that all open if the inspector didn't catch it. I mean, it could sink somebody. Yeah. I mean, how many framers, how many people, how many subs get sunk on a mistake like that? It takes them out.

    38:44

    Another project we did, he had a business partner, and it was a duplex condo on the riverfront. It was a big deal for our town back in the day. And his business partner had a whole plan from the very beginning of having a bunch of change orders. It was a project. It was a duplex, two duplexes, but he was going to live in one of the duplexes. Like, it was his personal residence. And so he went in and he was making all kinds of change orders throughout the progress, $250,000 worth of change orders. And one of them was a kitchen, $80,000 upgrade in kitchen cabinets. And at the end of the project, he goes, well, I didn't approve these change orders. Like I didn't approve the financial aspect. Well, I mean, if it's your project and you're the boss and you're a sub working on it and the boss comes in and says, Hey, I want to change this. Like, okay, you're the boss. You're paying, you're writing the check. Sure. Whatever you say. We put the cabinet guy out of business.

    39:33

    That malevolent behavior is stuff that we as a group have got to say, that's not acceptable. Mr. Owner, you cannot behave that way, right? My wife's an attorney, a construction attorney. And at least once a day, I heard her say to another attorney, do you want to solve this? Or do you want to just keep charging your clients fees? Now, the problem is once it gets into a legal scenario. We're never going to win. We as GCs and in the construction world, the only people that win when it goes to court is the lawyers, right? It's just such an expensive thing to go through. And, you know, being able to handle that paperwork and that decision. And what happens? The change or keeping up with change orders on a job site while you're, you know, you're a small company, you're running 100 miles an hour. You stop doing that paperwork stuff that protects you from that owner that gets the amnesia the week after the project. Yeah. Right. And all of a sudden, you know, great team of people that worked really hard got taken out because of a bad, you know, a bad agreement.

    40:36

    Bad person. Yeah. I mean, that put him out of business. That project put my boss out of business. And that was the writing on the wall. And I was like, okay, I'm out of here before it gets worse. But I mean, I think he ended up paying almost $50,000 in legal fees. You know, he won the court case and still lost.

    40:51

    Yeah. He lost his business. 20 years of doing this, I've learned one thing. Anytime it goes to legal field, nobody wins. It's always the only people that win are the attorneys. And, you know, the whole goal is to mitigate that happening. How do we prevent ourselves from ever getting to that lawsuit? And that's the behaviors and the practices we are. So, you know, we're on a job site and you start digging, you find, you know, Jimmy Hoffa underground. Right? Everybody wants to do it. First thing we want to do, we want to solve it. Right? Our people, oh, let's go solve it. No, no, no. Hold on. Stop. communicate right so let's communicate to the owners what exactly we're finding here we're going to do to try to solve this we need to get a proctor out there we need to get some soil samples done you know now we need to quantify how big of an issue is it before we move forward let's have an agreement on how we're going to cover these expenses I know you guys want to move forward but what's going to happen is that subcontractor will go and do the soil work the client will not agree to it they'll stop paying and the whole job will stop down and stop later Right. And that's going to be the worst case scenario. And now we've got lawyers involved. So, you know, I think that's all. And, you know, by the way, sometimes I can even say I've caused some of that problem because I want to go fast and I want to be the GC that's not a problem. But the truth is, if you don't follow those proper procedures, you end up causing your own problems for them later on. They may be grumpy with you now because you had to stop, get an answer, but they fire you later. And, you know, following those procedures, you know, does help solve a lot of that.

    42:25

    A lot of really good people have gone out of business because they just thought that everyone's, you know, a good person and they're going to do the right thing at the end of the day. And it's like, I'm like anti-legal, you know what I mean? Like if I could build a, do a million dollar project, like I would shake their hand and be okay with it. That's my natural disposition. You know what I mean? But. I got to have the paperwork in case something goes bad. Not because I anticipated to go bad, but I got to have the contract. I got to have the paperwork to protect myself if and when it does go bad. And, you know, a lot of guys just get screwed because they just, you know, you seem like a good person and yeah, we'll go ahead and do an extra $5,000 worth of work and we'll just bill you at the end and, you know, everything's all good. And the client comes back and says, wait a minute, this is, I thought it was only going to be a thousand. Now it's 5,000. I'm not paying you.

    43:12

    Yeah. And the question, if we go back and look at ourselves and go, how did I cause that? Right. I mean, it's really easy to blame the customer. Those guys, that person, I point out and everybody else, the problem with that is that victim mentality of the business. There is no agency, right? I have no, from there. I have no agency in doing it. But if I look and go, all right, how did my behavior cause that? When I look back at Anthony and my company and the work that we did, and how did we cause this to happen? I can always look back and say, Oh, look at that. I wanted to be a nice guy. I shook the guy's hand, and I thought they were going to be all ethical about it, but I didn't realize that he's got partners and people, and the people I shook hands with aren't even there when I quit the job, right? When I'm over the job, right? All of a sudden, that guy leaves, or that person leaves. You know, all of the things that could have been stopped had we done the proper paperwork, which ultimately makes us go faster. It's just hard to see that in the moment when you have to stop. reassess, put a change order together, get it approved, make sure everybody agrees on it. Now I can order the equipment, I can order the materials, I can move forward with clarity and vision and everybody's like, yeah, great. I'm not mad or resentful because I did the proper paperwork.

    44:32

    You got to do that stuff. And I know we're coming short on time here, but even the best intended person. midway through projects, something catastrophic happens to their family. And, you know, that great person who was planning on paying you all of a sudden can't afford it. And so, like, it's just, there's so many things you can go wrong on that. I do want to ask you one question before we head out here. And I always ask everybody, and that is, what's a book that you're currently reading or one that you would recommend?

    44:57

    You know, right now, I love religious studies. I'm not a very religious guy, but I love reading religious books. So I'm in a deep dive right now in the Bible. I'm reading the Bhagavad Gita, which is... It's more of a Krishna book. And most of my stuff is business-related stuff. But right now I happen to be reading a deep dive in the Bible. I'm having a lot of fun reading the Bible with this great guy who's got a really deep knowledge of it. So we really hit the history of the Bible. I'm having a real fun time doing that, kind of a real study of that. And then I'm reading this Bhagavad Gita. I'm doing a project in Florence with a group of Krishna guys. And it started from this whole thing I'm working on for a school in India. It's kind of this weird whole thing. It's a long story. So I happen to be reading their religious texts, which is kind of interesting in itself. So those are the two books I'm reading right now, the Christian Bible and the Krishna Bible, which is the Bhagavad Gavita.

    46:00

    Awesome. Interesting. I love it. I love it. Well, Anthony, I had a great time on here. Tons of knowledge. Thank you so much for being on the show. Really appreciate your time.

    46:08

    I love your show. I love being on it. I'm grateful having you on my show. Brother, it's been great. I just love watching your success. Your shorts are awesome. Keep them up. You have the best shorts in the industry, so keep those up. Thanks.

    46:21

    I'll send over the check for singing that later on. Thanks again, Anthony, for being on the show, guys. That's the end of the episode. You know where to find me on the social media. Just search for the Hammer and Grind podcast. We'll put links in the show notes if you want to get in touch with Anthony and ask him any questions. Also, make sure you check out his podcast, The Future Factory Podcast. Great podcast about industry, tech, future, lots of things in there to also listen to. So thanks again, guys. Remember, until next time, profit is not a dirty word.

    EP210: How to Build a Profitable Contracting Business – Lessons from Anthony Amunategi

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