You can be a construction business owner with high standards, strong values, and genuine integrity—and still give your customers a frustrating experience.
You intended to give them clarity, but they experienced confusion. You wanted them to feel confident in your team, but they felt uncertainty. You promised a smooth project, but missing decisions, weak handoffs, and incomplete information created delays and surprise costs.
That gap between what you meant to deliver and what the client actually experienced can damage trust and keep you awake at night.
In this episode of The Construction Leading Edge Podcast, Todd Dawalt explains why customers experience your systems, not your intentions. He also shows how a stronger preconstruction process can help you make promises your business is prepared to keep.
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Who This Episode Is For
This episode is for construction business owners who care deeply about their customers but know their current systems do not always support the experience they want to deliver.
It is especially relevant if you:
- Have promised a completion date and later had to revise it more than once
- Have told a client “we’ve got this” while knowing important details were still unresolved
- Struggle to answer simple questions about scope, schedule, or cost
- Discover major project issues after the construction contract is signed
- Notice clients becoming more skeptical as the project continues
- Avoid difficult client conversations when you do not have a clear answer
- Depend on memory, optimism, or individual heroics to keep promises
- Want your customer experience to reflect your values and integrity
- Need a stronger preconstruction process
- Want to reduce owner stress, client scrutiny, and broken expectations
Problems This Episode Helps Solve
This episode helps answer questions such as:
- Why do customers lose trust even when the contractor has good intentions?
- How do weak systems make a construction company break its word?
- Why do client conversations become more difficult over time?
- How can contractors stop avoiding bad-news conversations?
- What is the relationship between integrity and business systems?
- How does preconstruction improve the customer experience?
- What should be complete before signing a construction contract?
- Why are allowances and incomplete selections so risky?
- What is an anticipated cost report?
- How can a builder make promises with greater confidence?
Episode Summary
Construction business owners often think about integrity as a personal character trait.
That matters, but Todd explains that integrity inside a growing construction company also requires structural support.
When the business is small, the owner may personally remember every detail, answer every question, and ensure every commitment is fulfilled. As the company grows, work is handed to more people. Without clear systems, the customer experience begins to drift away from the owner’s intentions.
A missed detail becomes a schedule delay. An unclear scope becomes a dispute. A selection that was supposed to be finalized later becomes a surprise cost. The client starts wondering what else the company may have missed.
Trust usually does not disappear all at once. It erodes through a series of small disappointments, unclear answers, revised dates, and preventable surprises.
Once trust weakens, every interaction becomes more difficult. Clients scrutinize pay applications, question updates, and react more strongly to minor problems because the relationship has lost its margin for error.
The contractor may then begin avoiding conversations until more information is available. That silence creates a vacuum, and clients tend to fill a vacuum of information with their worst fears.
Todd explains that this is not simply a communication problem. It is a systems problem.
Systems form the bridge between what the company promises and what the customer experiences. Strong systems do not create integrity, but they make it easier to maintain integrity under pressure.
The highest-leverage system is preconstruction.
A strong preconstruction process forces important truths into the project before the contract is signed. It reveals missing decisions, scope gaps, schedule problems, pricing holes, incomplete selections, and weak trade commitments early enough to correct them.
Todd identifies three things the company should prove before making a promise to the client: scope, schedule, and anticipated cost.
Key Takeaways With Timestamps
00:15 – The pain of a business making you break your word
Todd describes the frustration of intending to provide clarity and confidence while the customer experiences confusion and uncertainty.
01:10 – Good intentions do not guarantee a good customer experience
A builder can have high standards and integrity while weak systems still create missed dates, unclear answers, and surprise costs.
02:33 – Client trust begins to slip before the client becomes openly angry
Changes in tone, more cautious questions, and growing scrutiny can signal that the customer is losing confidence.
02:56 – Customers do not experience your intentions
They experience the processes, information, decisions, and results produced by the company’s systems.
03:39 – Systems are the bridge between promises and experience
The company’s systems determine whether its values and commitments survive the pressure of an active project.
04:58 – Integrity needs structural support
Character matters, but a growing construction business also needs processes that help people tell the truth early and set expectations clearly.
06:05 – Growth makes systems more important
As work is delegated, the owner’s memory and personal involvement can no longer support every project promise.
07:21 – Trust usually erodes slowly
A missed expectation, unclear answer, surprise cost, or slipping date can gradually change the entire client relationship.
08:27 – Once trust declines, every issue feels larger
Pay applications, updates, phone calls, walkthroughs, and punch lists become more tense when the relationship has lost its margin for error.
08:46 – Avoiding the conversation makes the problem worse
When contractors wait until they have more clarity, the client must deal with both the original problem and the uncertainty created by silence.
09:53 – People project their worst fears into an information vacuum
A lack of communication often feels worse than receiving difficult news clearly and promptly.
10:25 – Weak systems create an emotional conflict for the owner
The owner sees themselves as a person of integrity while the customer’s experience may suggest otherwise.
12:05 – The real problem is not always the customer or subcontractor
Recurring confusion, delays, and surprises often point back to a business system that is not delivering on the company’s intentions.
13:45 – Imagine making promises the business can actually keep
Todd describes a process that exposes project risks before the contract, schedule, and client expectations are established.
15:05 – Strong systems make integrity easier to maintain
They provide the information, boundaries, and structure needed to make sound decisions under pressure.
16:09 – Customer experience can begin matching the owner’s intentions
With the right systems, trust can increase as the project continues instead of deteriorating.
17:10 – The goal is not a project with zero problems
The goal is a relationship and process strong enough to handle unavoidable issues without destroying trust.
18:01 – Preconstruction is the lead domino
Todd identifies preconstruction as the system with the greatest ability to support integrity and improve customer experience.
19:00 – Great construction companies are great preconstruction companies
The strongest builders create clarity and solve major project problems before production begins.
20:20 – Preconstruction must prove three things
Before signing a contract, the company needs confidence in the scope, schedule, and anticipated cost.
20:58 – First promise: Scope
The company must clearly define what is being built, including the design, selections, specifications, exclusions, assumptions, and clarifications.
22:27 – Avoid the “just enough to start” trap
Starting with unfinished design, loose allowances, or unresolved selections creates a predictable path toward future conflict.
23:24 – Pricing follows design and selections
A reliable price cannot be created before the project’s scope and material decisions are sufficiently complete.
24:31 – Second promise: Schedule
A schedule should explain how the project will be completed—not simply provide a hopeful duration.
25:38 – Subcontractor commitments support the schedule
A project schedule based on unselected trade partners and unconfirmed durations is still largely optimism.
26:19 – Third promise: Anticipated cost
The contractor needs a realistic forecast based on actual scope, current pricing, and committed project costs.
27:13 – Buyout turns estimates into commitments
Selecting trade partners and securing pricing before signing the client contract helps expose hidden cost gaps.
28:19 – Financial surprises usually existed long before discovery
Most cost problems were already present. The company’s process simply failed to identify them early enough.
29:19 – Decide when the project cost should be known
Professional builders should aim to understand the anticipated cost before construction begins, not after the client has committed.
31:17 – Preconstruction forces the truth into the project early
It gives the company’s integrity something solid to stand on by revealing risks before promises are made.
32:05 – Employees are also customers of the company’s systems
Good systems improve the experience of employees and trade partners by providing clearer expectations and more reliable project information.
33:24 – Focus on scope, schedule, and anticipated cost
Todd identifies these three areas as the practical foundation for closing the gap between intentions and customer experience.
Key Concepts From This Episode
Systems-Supported Integrity
Systems-supported integrity means the company has processes that help employees make accurate commitments, communicate clearly, and follow through consistently.
The systems do not create the owner’s values. They help those values survive delegation, growth, complexity, and pressure.
Trust Erosion
Trust erosion is the gradual loss of client confidence caused by missed expectations, unclear answers, surprise costs, changing dates, or inconsistent communication.
Once trust weakens, clients begin examining every detail more closely.
Information Vacuum
An information vacuum occurs when the client does not receive clear and timely updates.
Without reliable information, clients often imagine the worst possible explanation for the delay, cost, or unanswered question.
Scope Before Price
Scope before price means the design, selections, specifications, assumptions, exclusions, and project requirements must be defined before the contractor can create a reliable price.
Pricing an incomplete project is largely an exercise in assumptions.
Build the Project on Paper
Building the project on paper means creating a real sequence of work before construction begins.
The schedule should account for project phases, trade partner commitments, long-lead materials, critical activities, permits, labor, and major milestones.
Anticipated Cost Report
An anticipated cost report is a realistic forecast of what the project is expected to cost based on actual scope, current pricing, committed costs, and identified risks.
It is more reliable than a rough budget or hopeful estimate.
Resources Mentioned
Construction Leading Edge Resources
Recommended Next Step
Review the next project your company plans to contract.
Before making promises to the client, ask whether the scope, schedule, and anticipated cost are supported by real information.
Confirm that the design and selections are complete, the schedule is based on actual commitments, and the anticipated cost reflects current pricing and buyout—not assumptions or plug numbers.
If your business regularly makes commitments before these questions are answered, apply for a Business Evaluation Call.
Client Success Stories
Want to see how other construction business owners are applying these ideas?
Watch client success stories from builders, remodelers, and general contractors who have worked with Construction Leading Edge to reduce chaos, improve their systems, and build companies that run with less owner dependency.
Related Episodes
Episode 442: The Nail the Handoff Framework: 4 Crucial Handoffs to Increase Profit and Eliminate Chaos
Todd Dawalt explains how construction companies can reduce chaos, protect profit, and free owners from the day-to-day by focusing on four crucial project handoffs from sales through operations.
Episode 430: Nail the Handoff System: Build a Rock-Solid Preconstruction Checklist Your Team Actually Follows
Todd Dawalt explains how builders can eliminate chaos, delays, profit bleeds, and field confusion by designing a team-owned pre-construction process that fully hands projects from the office to the field.
Episode 440: 3 Keys to Operating from a Position of Strength in High-End Remodeling with Andy Kolp
Andy Kolp explains how strengthening pre-construction, scope development, trade partner bids, client communication, and team systems helped his high-end remodeling company reduce surprises, protect margins, and create more owner freedom.
FAQ
What does “customers experience your systems, not your intentions” mean?
Clients cannot see the owner’s intentions. They experience the schedules, communication, pricing, handoffs, decisions, and results produced by the company’s systems.
How can a contractor with integrity still disappoint customers?
Strong values do not automatically create reliable execution. Weak scopes, unfinished decisions, poor communication, and incomplete preconstruction can create an experience that conflicts with the owner’s intentions.
Why does client trust begin to erode?
Trust often declines after repeated missed expectations, unclear answers, revised dates, surprise costs, or moments when the client feels the company is reacting instead of leading.
Why is silence dangerous during a construction problem?
When customers do not receive information, they often assume the worst. Clear bad news is usually easier to manage than uncertainty and avoidance.
What should be complete before a construction contract is signed?
The company should have a clearly defined scope, complete design and selections, a workable schedule, and a realistic anticipated cost based on actual pricing and commitments.
What is the difference between an estimate and an anticipated cost report?
An estimate may include assumptions, historical data, and uncommitted costs. An anticipated cost report reflects the defined scope, current pricing, buyout, and known project risks.
How does preconstruction improve customer trust?
Preconstruction identifies problems before promises are made. It helps the contractor communicate more accurately, reduce surprises, and create a project experience that better matches the company’s commitments.
Todd Dawalt
Founder of Construction Leading Edge and host of The Construction Leading Edge Podcast
Todd Dawalt is the founder of Construction Leading Edge and host of The Construction Leading Edge Podcast. Since 2014, Todd and the Construction Leading Edge team have helped construction business owners systematize their companies, reduce chaos, improve profitability, and build businesses that run with less owner dependency.
Full Transcript
Todd Dawalt (00:00.174)
One of the most painful things for an entrepreneur is when your business makes you break your word. You meant to give your customers clarity, but they got confusion. You meant to give them confidence in you and your team and your process, and they got uncertainty. And that difference between your intentions and their experience drives you crazy, maybe keeps you up at night.
Hey, you’re listening to the construction leading edge podcast from construction that leading edge dot com, where it’s all about systematizing your construction business to maximize freedom, impact and wealth. My name is Todd Dewalt and my team and I have helped over 400 construction companies eliminate chaos, grow their profits and grow their team. We’ve been at this for about 12 years now. So here’s the deal. You can be.
a builder with good intentions, high standards, and actually have real integrity and still create a customer experience that feels frustrating, confusing, maybe even disappointing. Think about this. Have you ever given a customer a completion date for their project and then had to give them another one? And maybe you missed both of those dates. Have you ever looked a client in the eye and said, we got this?
But deep down, you knew there were still details that hadn’t really been nailed down and you were kind of hoping for the best. Have you ever had a customer ask you a simple question about cost, schedule or scope and realized the answer wasn’t clear because the job wasn’t fully defined upfront? Have you ever found yourself explaining something to a client that really should have been discovered before the contract was signed and this thing popped up?
this surprise popped up in the middle of the project. Have you ever noticed the tone of your customers’ voice? Maybe their emails change over time. They went from being positive and optimistic and excited about the project, but the voice changed or the tone of their emails changed, not because they were angry yet, but because trust…
Todd Dawalt (02:33.534)
was starting to slip. Have you ever seen the name of that customer pop up on your phone or you see an email pop up and you get that special knot in your stomach or maybe a tight spot in your chest because you know something’s not going well and you don’t have a really good answer for them. Again, maybe you had the best intentions to give your customer clarity, but what they got was confusion.
Maybe you meant to give them confidence, but what they got was really uncertainty. Maybe you meant to create a really smooth, professional experience and you had the best intentions, but what they felt was delay and ambiguity. Maybe they felt like the goalposts were moving. Maybe they saw you running around with your, like a chicken with its head cut off.
And that’s what makes this so painful, right? The real pain is not just the missed schedules or the surprise costs or working more hours. You can work more hours to put out those fires. The real pain is when your business makes you break your word. Because here’s the deal. Your customers don’t experience your intentions
They experience your systems. Let me say that again. Your customers do not experience your intentions that you have in your head. They experience your systems. And that’s really the core idea I want to talk about today. right? Systems, the systems in your business are the bridge between what you promise and what people experience. Okay? The systems in your business are the bridge between what you…
your intentions are and what people experience. People don’t experience your intentions, they experience your systems. And that’s why systems are really the foundation that supports your integrity. You’re a person of integrity. You want to do the right thing by your customers, you want to do what you’re going to say and say what you’re going to do. And systems are really the foundation that supports your integrity.
Todd Dawalt (04:58.402)
because integrity is not just about what you mean to do, it’s not about your intentions, right? In a construction business especially, integrity needs structure. It needs a design, it needs a process that helps you tell the truth early, set expectations clearly, and then keep your word under pressure. So a lot of builders
think integrity is just a character issue. And it is, it is a character issue. If you don’t have integrity, that is definitely a character problem. But in a construction business, integrity needs structural support. And maybe when your business was small, when it was just you and maybe a couple of people, your integrity could support the business. It could deliver on the promises.
What I’ve seen happen a lot is as a business grows and things have to be handed off or delegated to other people on the team, that’s when you need to have a structure in place. You need to have some systems in place. So if your systems are weak, then even with the best intentions in the world, your customer is still going to experience or is likely to experience confusion, delays, uncertainty.
maybe even some broken promises. And that’s why this matters so much, all right? This is not just about operations. This is not about project management hacks. It’s not about getting more organized. It’s not about software. This is about making sure that your business actually supports the kind of person and the kind of leader you want to be. Because if you care about doing the right thing, if you care about your reputation,
If you care about giving customers a great experience, then your systems have to be able to support that. And if they don’t, here’s what happens. Trust with your client begins to erode. Not all at once. I remember being on a call on a project that I was managing years ago. It was a $30 million office project, complicated project.
Todd Dawalt (07:21.198)
For a fortune 50 company and I remember having we had just signed the contract I was on the owner’s side We just signed the contract with the general contractor and we got on a call and I said alright guys Enjoy this because it only goes downhill from here, right? Every project starts off great. Everybody’s excited. We have the best of intentions It’s gonna be wonderful and then things start to go wrong, right? So trust begins to erode not all at once. It’s usually
Slowly, there’s a missed expectation. There’s an unclear answer. There’s an oopsie surprise cost. There’s an, shit, I forgot that. We missed this. Here’s a problem. Please advise. There’s a date that slips. There’s one more conversation where the customer starts wondering, what else don’t I know?
What else are these guys missing? And then once trust starts to slip, everything else gets harder.
Todd Dawalt (08:27.798)
Every update feels loaded. Every question is a pregnant question where there’s something behind it. Every phone call is a little more tense. Every small issue feels a little bit bigger than it should because the relationship has lost that margin for error. And you could feel it. You could see it in the emails. There no more friendly greetings. Maybe there are more all caps, more exclamation points, straight to the point.
They start to question pay requests. They start to scrutinize things. Those are signs of confidence and trust that has been eroded. This is where it gets dangerous because when you know you don’t have a good answer for your client, you start to avoid the conversation. This is something I was honestly pretty bad at. This was a problem for me 20 years ago. Avoiding tough conversations and avoiding situations. The phone rings, you see who it is and you just…
put off the call. You delay the update. You tell yourself, I’m going to reach out and give them an update once I have some more clarity. And then you get busy with other things, and then they continue to call. And what I found is people tend to project their worst fears into a vacuum of information. Have you noticed that?
Todd Dawalt (09:53.551)
So when these problems come up, you delay responding to them. Maybe you hope that you can solve the problem before the customer feels it. You’re optimistic that you’re going to figure this out. But that silence usually makes it worse. Because now the customer is not just dealing with this issue, this question about a change order, this question about a delay, or this question about something on their invoice. Now they’re also dealing with uncertainty.
And this uncertainty will almost always feel worse than the bad news delivered clearly. And now, and then we get into this downward spiral, right? The less clarity that you have, and the more tense it is with the client, the more you avoid them and the less you communicate with them. And the more you avoid them, the more trust erodes. The more they project their worst fears into this vacuum of information.
And the more trust erodes, the more pressure every conversation carries. The more scrutiny every pay request gets, more difficult the punch lists and the walkthroughs are. And for the business owner, for you, this is where the real emotional weight shows up. Because now you’re stuck holding these two realities at the same time. One reality is you tell yourself, I’m a person of integrity and my customer
I’m a person of integrity. I care about my customer. I really want to do right by them. I want them to have a great experience. I genuinely care. Right. But the other reality is your customer is having an experience that is that makes it look like you’re not a person of integrity. They are frustrated. They don’t trust you. They’re questioning you. And these two things are going on. And that tension will wear you out.
I’ve talked to so many people who lose sleep and are stressed and frustrated about this tension between these two realities. They are genuinely a person of integrity, but their customer is not feeling.
Todd Dawalt (12:05.42)
Right? And deep down, you know, it’s not just a communication problem. You know, it’s not, may blame it on the customer. Your team may talk about how difficult the customer is, but deep down, you know, it’s not really the customer issue. It’s not a subcontractor problem. It’s easy to point fingers at your subs. It’s not just a scheduling problem. It’s not just a bad luck problem. Deep down, you know, this is a systems problem. You realize that my business, which is a system, is not…
delivering on my intentions, right? And your customers don’t experience your intentions, they experience your systems.
And until your systems support your integrity, your customer experience will keep drifting away from your intentions, and there’ll be this disconnect between your intentions and their experience. This is a systems problem. And it’s, as your business grows, it’s not going to get better. It typically gets worse.
And until your systems, I’ll say this again, until your systems support your integrity, your customer experience will keep drifting away. The gap between your intentions and their experience will continue to grow. Now, I want you to a different situation. Imagine a different kind of client experience. Imagine being able to sit down with a customer during the sales process, during the pre-construction process.
and make promises that your business can actually keep.
Todd Dawalt (13:43.841)
Imagine being able to make commitments and promises, which is what you’re doing when you sign a contract with a client, and having very high confidence that your business will actually be able to deliver on those promises. Imagine a process that forces the truth into a project early, before the contract is signed, before the schedule is committed, and before the customer builds expectations around assumptions.
that haven’t been tested. Imagine having a process and a system that uncovers missing details, that identifies scope gaps and identifies pricing holes, selections issues, the handoff problems early enough that they don’t turn into broken promises later. Imagine a system that shines a spotlight on these problems that are there early enough that your customer never sees them and you can actually solve them before you make promises.
and sign a contract with your customer. Imagine what your customer would feel. Imagine the clarity that they would experience instead of confusion. Imagine them feeling like not only at the beginning of the project, but halfway through the project, imagine your customer saying, people have a plan. These people are thinking ahead. These people respect my time, my money, and they respect the trust that I’m placing in them.
I trust my contractor. I trust my builder. Imagine your customers having more trust in you and your team as the project goes on. And that’s what a good system does. A good system doesn’t make you more honest. It just makes it easier to stay honest. A good system doesn’t make you a person of integrity. It just makes it easier to maintain that integrity through the project.
A good system gives you the information, the structure, the boundaries you need so that it’s easier for your word to hold up under pressure. And it actually reduces the pressure. A good system reduces situations where you have to make those integrity decisions where it’s like, do I either take the hit and eat this cost? Do I tell the customer about these situations? A good system reduces.
Todd Dawalt (16:09.836)
those situations and it makes it much easier to be a person of integrity. And that’s what it looks like when the systems are the foundation that supports your integrity. And when that happened, when you get that in place, when you have this system that supports your integrity, that changes a lot in your business. Now your customer experience starts to match your intentions. Instead of there being this big disconnect.
your customer is experiencing, but what your customer is experiencing is very similar to your intentions. Now trust gets stronger as the project goes on instead of getting weaker. Now communication gets easier instead of harder. You actually imagine looking forward to having conversations with your clients. One concept I heard from one of our clients is
He was a remodeling contractor and he said his goal was to have dinner date clients. What that meant was after a project was over…
He wanted to have such a good relationship with his clients that they would go out to dinner as couples and they would be friends. Imagine that. Imagine being friends with all of your clients at the end of a project.
Imagine that even when problems do come up, the relationship can handle it because it’s built on clarity and transparency. Imagine knowing you have this backstop in place. You have a system that exposes issues before they come up, and that when you make promises to your client, that you can actually back them up. And that’s the goal, right? Not perfection. There will always be issues that pop up. We’re not talking about a project with zero surprises. There are some.
Todd Dawalt (18:01.842)
unforeseen conditions. But imagine a business where your systems help you tell the truth early, set expectations clearly, and deliver an experience that actually reflects your values. Imagine that. Wouldn’t that be great?
So you may be wondering, all right, what’s the answer? Do I need to hire more people? Do I need to hire a concierge? Is there software involved? Do I have to burn the whole thing to the ground and start all over? Do I need to bring in a customer experience expert? Here’s what I found. Okay, after helping 400 plus construction business owners, the lead domino for systems that support integrity is your…
pre-construction system, okay? The lead domino, the one place, the one phase in your process that will give you the most bang for your buck to support your integrity is your pre-construction system, right? This is the secret profit phase. It’s also the secret, call it the secret experience phase. It’s where customer trust and the customer experience is either made or lost. It’s in the pre-
construction phase, all right? If you want to grow your business, you need to be a great pre-construction company. The great ones, the really good, profitable, growing construction companies are actually great pre-construction companies, masquerading as construction companies, okay? So the lead domino for systems that support integrity is your pre-construction system. I want you to think about
your what you promise being on one side of a chasm and then your what your customers experience being on the other side and the bridge in between those that fills in that gap that fills in that chasm is pre-construction. Pre-construction is the bridge between your intentions, what you promise and what people experience.
Todd Dawalt (20:20.28)
So good pre-construction system backs up your promises by proving three things before you sign a contract, okay? There are three things that a good pre-construction system will do for you. This is, it doesn’t matter what size of a company you are. If you’re a one person bathroom remodeler or you are a, we’re actually working with a company right now that has hundreds of employees and…
and in the tens of millions of dollars of annual revenue, it doesn’t matter what size, it doesn’t matter what trade, it doesn’t matter where you’re at geographically. There are three things that you want to focus on. This is what a good pre-construction system will do for you. All right, first, these are the basics. These are the things you are promising and you need to figure this out. A good pre-construction system will help you
figure out these three things that you are promising. First is scope. It’s pretty basic. What are we building? Right? And a clearly defined scope is not a rough idea. It’s not a partial plan. It’s not 75%. And then we’ll figure it out later. Before you promise, which is what you’re doing when you sign a contract, before you sign that contract,
You need to have a complete design. All selections need to be complete. Yes, 100 % of selections need to be complete. All specifications, clearly define list of exclusions because sometimes what you’re not building and what you’re not including in your scope is just as important as what you are including. And no loose assumptions. If there are assumptions, if there are clarifications, you clearly define
those things and no allowances. Allowances are a trap. Okay?
Todd Dawalt (22:27.662)
Speaking of traps, the number one trap people fall into is the just enough to start trap. They’re in such a hurry to get the project started either because the customer’s excited about getting started. Maybe you need the cashflow, but doing it just enough to start a project is a trap. And imagine a very large steel bear trap like you might see in a cartoon. And if you…
start a project without a clear scope, without selections. If you have allowances, if you’re saying, we’ll figure that out later, I want you to imagine opening the jaws on a very large steel bear trap and putting it in front of yourself because that’s what you’re doing.
So, complete design, selections, clear scope of work. And here’s the mantra.
Todd Dawalt (23:24.536)
Here’s the mantra, you may want to put this on a Post-it note and put it on your computer screen. Pricing follows design and selections. Design and selections, this is scope of work. If people are asking you for a price and you don’t have a clear scope of work, what the hell are you pricing?
You have to have a complete scope of work. Pricing follows design and selections. You have to have a complete scope of work, right? So let me think about this. If the design is incomplete and the selections are still floating, how solid is your price really? And if that price isn’t solid, how confident should you be in the promise that you’re making to the customer, right? You are…
When you’re signing a contract, you are making a promise. And if you don’t have a well-defined scope, what are you promising, right? You’re promising to figure it out as you go. And that’s not a good thing to do. The second thing, the second promise you’re making is schedule. And this schedule answers the question, how is this actually going to get done? Not just…
How long do we think this will take? That’s what some people think. The schedule is, well, it’s going to take three months or this custom home is a nine month build. That’s not a schedule. Okay. A schedule answers the question, how is this actually going to get done? It answers questions like, how is the job actually going to flow? What are the phases? What has to happen first? What materials have long lead times? What are those lead times? What is the critical path of the schedule? What are the major milestones that need to be hit?
When do we need to submit a permit application in order to get started? What are the, in some parts of the country, you have weather constraints. When do we need to have this building dried in before winter hits? So you have to build this job on paper first. That’s what a project schedule does. If you have subcontractors, you need to go one more level down and get their commitments. A schedule that has
Todd Dawalt (25:38.53)
hopeful schedule durations from a subcontractor you haven’t selected yet doesn’t mean anything.
A proper schedule that involves subcontractors is based on subcontractor commitments. If you’re self-performing work, you need to have confirmation that it will actually work, that the durations of your self-performed tasks will actually work, and that you have the labor to do it. Because if you haven’t built this on paper, then what exactly is the customer trusting? Are they trusting a real plan or are they trusting your optimism?
Todd Dawalt (26:19.97)
So the third thing that you need, you’re probably thinking, yep, scope, schedule, we need a good budget. Partially true. What you need is an anticipated cost report, okay? You need a scope, the scope well-defined, you need the schedule, you need to build it on paper, and you need an anticipated cost report. Not a rough budget.
not a hopeful estimate, not plug numbers, not what you think it will cost, not based on historical data. Before you make a promise to your client, before you sign a contract, you need a real anticipated cost report that’s based on the actual scope. It’s based on real pricing and committed costs. This is where you pressure test the numbers. To have a true anticipated cost report, this means that you buy out the project.
You turn estimates into committed costs.
This is where you select subcontractors, suppliers and you lock in pricing. You have commitments in the form of subcontract agreements and you have purchase orders or at least you have firm pricing from your subcontractors. One of the traps I see a lot of people step into is they will sign a contract with a client and they’ll have plug numbers in for subcontractors.
Then they’ll go and get pricing from their subcontractors, from their drywall, plumbing, electrical. They’ll guess at it. They’ll bid the project out after they sign a contract. And that is so risky. So buy out the project before you make promises to your client. If you want to learn more about the buyout phase, which is the secret step, the secret…
Todd Dawalt (28:19.18)
phase of the pre-construction system. Go listen to episode 378 of this podcast. So this phase, this is where hidden gaps get exposed before they become expensive surprises. So many people skip over this phase and they believe the lie. Yeah, we’re going to be okay. We’ve got enough in there for that. We’ll figure that out later. We don’t need to know that right now. But this phase…
creating the anticipated cost report. This is where hidden gaps get exposed before they become expensive surprises. So think about surprises. Think about the last financial surprise you had on a project. That last, shit, we missed this, or this price went up, or this tile is discontinued, or this subcontractor is not available and we have to pay a premium. Think about where you had a financial bust.
right, a financial surprise.
Todd Dawalt (29:19.886)
there’s a pretty good chance that it wasn’t really a surprise. right? It just didn’t, that problem didn’t just manifest for the most part. That problem was there the whole time. That discontinued tile.
The tile had been discontinued. The subcontractor problem was there. The bust in the allowance, it was there. It was there for a long time. Your system just didn’t bring it to light early enough. financial surprise, at least 75 % of your financial surprises were there for a long time. Your system just didn’t bring it to light early enough. So…
Here’s the question, if you’re struggling with this, here’s the question. When should you know what a project is going to cost? You’re a professional construction business owner, a person of integrity, right? When should you know what a project is going to cost? In the middle of the project or before it starts?
Should you know what it’s gonna cost after you sign a contract or before you make that promise? And if you don’t know before it starts, who usually feels that gap later?
So, pre-construction is not paperwork, it’s not busy work, it’s not delay, it’s not overkill. Pre-construction is the system that forces the truth into the project early enough for you to make promises you can actually keep. I’ll say that again. Pre-construction is the system that forces the truth into the project early enough for you to make promises you can actually keep.
Todd Dawalt (31:17.278)
that’s how systems support integrity. They don’t make you more honest. They don’t make you a person of integrity. They give your honesty and your integrity something solid to stand on, because systems are the bridge between what you promise and what people experience. Systems are the bridge between your intentions and their experience. People do not experience your intentions.
They experience your systems. Systems are the foundation that supports your integrity, and it all starts with pre-construction.
So think about this, this was all focused on customers, right? Your intentions, the gap between your intentions with your customers and their actual experience. But what about your employees? If you have a team, what about your employees? You have intentions for them. Think about this, how will good systems close the gap between your intentions and your customers or your clients’ experience? And some people would say, I actually like this term,
that your employees are internal customers. You have external customers, people who are paying you, but you have internal customers. You have people who are making a different exchange of value, giving you their time and energy and attention and making a different exchange of value with you, your internal customers. Think about this, how would good systems help close the gap between your intentions and the experience of your
internal customers. And for some of you, you don’t have problems finding external customers. Your biggest challenge is finding and keeping internal customers. So how might systems help you with that? And then if you work with subcontractors or trade partners, imagine how the proper systems and a good pre-construction process
Todd Dawalt (33:24.598)
will close the gap between your intentions with them and their actual experience.
So it’s very possible you may need to focus on your internal customer experience or your employee experience. And it all starts with pre-construction, focus on scope, schedule, and the anticipated cost report. So if you take nothing else away from this, it’s the anticipated cost report that’s gonna be most important for you. That’s the thing that will…
will give you the most bang for your buck and close the gap between your intentions and your customer’s experience and help you sleep better at night. So if this episode hit home, if it stung a little bit, and you know your construction business is making promises that your systems are not consistently backing up, if you know there’s a gap between your intentions and your…
customer’s experience, then the next step is pretty simple, right? It’s to schedule a business evaluation call with my team. On that call, we’ll help you get really clear on what a customized pre-construction process should look like for your business and what it will do for you, not somebody else’s process, not generic boilerplate templates, not theory. On this call, we’ll identify the gaps in how you’re currently handling things.
and then show you what a stronger customized pre-construction system could look like for the kind of work you do. And just so we’re clear, this is not a sales pitch. There’s no pressure. There’s nothing for sale on this call. We may not even talk about our program. The purpose of this conversation is to help you get clarity, clarity on where your current process could be exposing you to avoidable chaos.
Todd Dawalt (35:24.558)
where trust could be getting eroded with your customers. How much hidden profit there may be in your business. A lot of people wanna scale their business, but there’s actually quite a bit of hidden profit in their business that’s available without scaling. And then we’ll talk about what a better pre-construction system would need to include to actually support your integrity and back up your promises. So if you wanna see what a…
customized pre-construction system would look like for your business, click on the link in the show notes, go schedule your business evaluation call, or you can just go to constructionleadingedge.com forward slash apply, A-P-P-L-Y. So before we go, I want to challenge you, what is a five-minute action item? There’s something you can do in the next five minutes that will…
help you take advantage and actually improve this situation. What is that five-minute action item? And then take action on it. Schedule some time, send the email, make the call, but take action on this stuff. Otherwise, you just spent the last 30 minutes or so listening to something and you’re not getting any value out of it. So it’s very possible that your five-minute action item is to go schedule a business evaluation call with my team.
If that’s the case, there’s a link in the show notes or go to constructionleadingedge.com forward slash apply a P P L Y. My name is Todd DeWalt from constructionleadingedge.com. Thanks for listening. I’ll see you next time.
