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Unread 03-30-2012, 04:46 AM   #1
mudduckk
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The Perfection Premium; Can You Afford it?

This thread originally appeared in [my own personal blog]

I have two tile layers.Both have own tools and are fully capable of running large tile jobs and leading tiling crews.

I have two identical projects; new school buildings within the same school district. The projects are located within my area of operations and close to both leaders' homes. Both men lead similar crews such that one could not differentiate the outcomes of one crew from the other based on individual or group abilities.

Now leader one is quite mercenary hard working and well loved by his crew. He wastes no effort in all that he does toward goal accomplishment, completing tile work. He harbors no wasted effort in his crew and similarly he is always teaching his speed tricks, and how to focus on completion as opposed to quality. As you can imagine, his work is not without defect. At the same time he is ever professional and expects the same from his crew, so his quality control is still quite tight. Its just that he has developed an intuitive understanding of where he and his crew may bend on quality

Leader two on the other hand is more quality oriented and demands near perfection from his crew. He is ever critical about the work of his fellows. Rarely gives positive feedback.

Leader one uses 400 mandays to complete his school, leader two 500 mandays. Leader two has a zero-punch list, he requires no additional effort going back to fix his work, while leader one requires 20 mandays of rework to remedy defects in his work all of which are but minor nuisances.

The 80 manday difference is what I call the perfection premium. Can you afford it?
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Last edited by cx; 03-30-2012 at 02:34 PM. Reason: Clarify source material
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Unread 03-30-2012, 05:23 AM   #2
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Well, as the business owner, you can afford it, as a guy who spent a number of years as the punch list guy for a large union shop, not so appealing.

I had that conversation with my boss more than once, especially about "Ron S.", who created lots of work for me and still kept the profit margin up. But he was a hack, quarry tile kitchen guy, no marble.

So go make your money and sleep good at night.

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Unread 03-30-2012, 06:32 AM   #3
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@gueuzeman

Schools are loaded with quarry tile kitchens mosaic baths with 4-1/4's on the walls. Not much marble. The market is highly competitive. Low profitability.

Do you think the market will support an additional 80 days of labor?

Conversely do you think the schools, their administrations, their architects and the taxpayers for that matter are willing to pay what constitutes a 19% labor premium in return for a Zero Punchlist?

Last, who would you prefer to work for? Leader one, the supportive task master, or leader two, he who cannot be pleased.

Thank you for your comments.
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Unread 03-30-2012, 10:41 AM   #4
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It's about strengths and weaknesses.

He's putting a guy who's strength is quality on a job that doesn't demand quality. Of course it doesn't make sense in terms of money because there is no premium being paid for the higher quality.

You have to put guys in environments where they can succeed. A race car and a dump truck are not equals, but each one will outperform the other depending on how they are used.

Which brings me to my next point: The blame is being put on the quality installer. The owner of the company, or whomever else would be responsible, needs to be held accountable. Get some higher paying, quality-demanding jobs for crew #2, or sit down with the installer and talk about where he could go that would be a better fit for his skillset. Keeping the wrong guy on the wrong job is only going to lead to animosity on both sides.
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Unread 03-30-2012, 10:54 AM   #5
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Jim absolutely nailed it!

As small business owners we are always looking to figure out how to best work the bottom line - nothing wrong with that at all. However, without looking at the big picture (proper skillsets in proper areas rather than an all-encompassing 'this is the job, do this' mindset) you will never fully utilize the resources you have at your disposal.

This equals less money. Utilization of, and the fault for, a 'perfection premium' does not lie within your employees. It is up to you to find projects where you can profit from the talent you have at your disposal. Putting a perfectionist on a commercial speed job is a bad decision on management's part.

Yes, you can afford a perfection premium, but you and your employees can make a hell of a lot more money, and have happier employees, by using a perfectionist on a job that demands perfection.
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Unread 03-30-2012, 10:57 AM   #6
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One point I'd make on your calculations, Malcom, is that the 20 man-days of punch-out are far more expensive than the perceived 80 man-days difference in the installation work, so the actual cost/benefit difference might be a bit closer than your calculated 20 percent. Still costs more, but maybe not quite so much more.

As for whether you can afford the difference in quality, I dunno. Never worked in that market.

I know that when I was building houses I demanded a higher level of quality than did many other builders, and I was an entire world different from the big national "builders."

Was it worth it to finish a house and have only two items on a punch list (one of which I put there)? Yes, to me it was.

I did not make anything close to the profit on a new house as did the tract builders (who called their homes "custom,"), but I paid my bills, and all my subs and suppliers on time, and slept quite well at night. I still do remodeling and repair work for some of my customers 25 years later. They recognize good quality construction, I recognize good customers.

Works out well for some of us, even though we're both well aware we're giving up that "perfection premium" at times.
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Unread 03-30-2012, 12:08 PM   #7
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I've said and thought many a time that i could make more money getting a crew of Illegals and just banging out jobs as quick as possible and paying them peanuts. Would I sleep at night using that business model, no, and that's the problem.

I think most of us perferctionists, especially one man shows like myself, leave money on the table with our anal retentive ways. But, like cx said, as long as the bills are paid and and we're sleeping good at night, I'd rather have the zero item puch list too.

Now, in the given scenario, yes, crew #1 are the golden boys. They know what's "good enough" for the kind of work they're doing and they're making you money. Crew #2 is a poor fit for that type of work. They need to be doing high end custom work. Everyone's happy that way.
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Unread 03-30-2012, 01:25 PM   #8
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What incentive are you giving to either crew leader?
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Unread 03-30-2012, 07:34 PM   #9
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@tilejoe

Incentives? We don't need no stinkin incentives! Just kidding, I love that line.

Incentives are important. After all they are the foundation of capitalisim, no!? And, it is near impossible to get your peeps aligned to what's important to you without them. My incentives come from a proprietary system based on the John Bridge post found here

The short of it is I use incentives. You should too.
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Unread 03-30-2012, 07:51 PM   #10
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@TileArt1 and @Tiger Mountain Tile

You guys get this.

There is no one right answer to this question, rather it is a function of your strategy. Are you a low bid leader in the commercial market? Or is your name synonymous with perfection to the uber wealthy in your market, often imitated but never duplicated? It's near impossible to do both.

Those of you who take issue with this post probably have a name that means impeccable quality, likewise you have a client list that is equally impeccable and you can demand whatever price suits your needs. I applaud you. For having such a reputation (like @MNTileguy) and pricing power does not come without a high level of commitment to our craft over a sustained period of time in the trenches paying your dues (meaning you slaved away for little in return for far too long). You are true professionals to me.

Likewise to all my fellow commercial hacks out there who perceive the beauty in a well led effort; meeting impossible schedules while delivering work that is suitable for its use, at or just under budget. You guys are magicians professionals through and through.
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Last edited by mudduckk; 03-30-2012 at 07:54 PM. Reason: omission
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Unread 03-30-2012, 08:04 PM   #11
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@CX

Having worked in the commercial hack market for a long while, I can assure you 19% labor savings on smart corner cutting is about 10 points on the job. Given commercial subs on average net but 3 points a year, 80 days is everything.

I will offer two concessions on your point. 1) corner cutting carries a substantial material replacement component, but my hypothetical Leader #1 is far too wise for that. 2) amount of defects or severity of some affects your ability to get repeat business from this or other clients, but that's my problem not his. His is QC, mine is QA.
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Last edited by mudduckk; 03-30-2012 at 08:04 PM. Reason: typo
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Unread 03-30-2012, 09:07 PM   #12
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Incentives...From a banner in "Apple" China factory...

'Work hard on the job today or work hard to find a job tomorrow'

Banner in Chengdu plant

Read more: http://www.dailymail.co.uk/news/arti...#ixzz1qeysJ9kT
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Unread 03-31-2012, 08:15 AM   #13
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Quote:
Originally Posted by mudduckk
Leader one uses 400 mandays to complete his school, leader two 500 mandays. Leader two has a zero-punch list, he requires no additional effort going back to fix his work, while leader one requires 20 mandays of rework to remedy defects in his work all of which are but minor nuisances.

The 80 manday difference is what I call the perfection premium. Can you afford it?

What are you doing when you have high end projects ? How the two leaders are performing ?

Or are you just taking '' commercial '' work and try to bend the '' perfectionist leader '' to your needs . What else are you asking him to bend in technical specificatons and products use to do the job right ?

How this affect the knowledgable and skillful workers , leaders ?

Closing an eye or more on commercial jobs happens all the time , but you are the one asking for it , in the name of efficiency , productivity , competitiveness , etc.


Since the question is '' can you afford it '' , I would say , if you mix high end and commercial jobs , you can . If you do only commercial work , in the long run , you may end up with less profits or none . Everyone is complaining about the disapearence of skillful workers , but isn't it what you are asking for ?

Knowing is a great tool in someone's arsenal , however sometimes is the biggest disadvantage . What you would choose ?
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Unread 03-31-2012, 08:40 AM   #14
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Y'all are missing the point. Think of it this way - with the Perfect crew you don't have call backs and you do have a sterling reputation. The latter part is priceless. Its what sets you apart and here is the key - allows you to charge more for that crew. Its how I've modeled my business and that concept has been working very well for the last 30 years. (I know, I look very young for my age) Bidding by the square foot is a dangerous road to start travelling down. Its why JB hisself doesn't do it.
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Unread 03-31-2012, 08:59 AM   #15
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Paul,

I agree with you 100% when it comes to residential work. Commercial is a whole different ball game, and that is why I stay out of it. I can't bring myself to put out work that will "just pass" so I could never make it in that world. On the other end there are commercial guys that can come in and knock out a shower that takes me 3 days, in 1 or 1.5 days. They can make it look acceptable, but it won't have the same quality. Bottom line.
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