Episode 444: The Toyota ‘Pull the Cord’ Method Your Construction Business Is Missing

A vague scope, incomplete selection, missed budget item, or weak handoff may not look like an emergency at first.

But when that bad information moves downstream, the multiplier effect begins. One small mistake turns into extra phone calls, rework, schedule delays, change-order disputes, frustrated team members, and a client who starts questioning everything.

By the time the problem reaches the jobsite, fixing it is more expensive, more disruptive, and more likely to require the owner’s involvement.

In this episode of The Construction Leading Edge Podcast, Todd Dawalt explains how construction business owners can apply Toyota’s “pull the cord” concept to preconstruction. You will learn how to identify critical control points, create validation steps, require proof before work moves forward, and correct the process that allowed the problem to happen.

Listen / Watch

Prefer to watch? Watch the full episode below:

Who This Episode Is For

This episode is for construction business owners who are tired of discovering preventable problems after production has already begun.

It is especially relevant if you:

  • Feel like you are the final inspection or backstop for the entire company
  • Spend too much time resolving problems that should have been caught earlier
  • See the same estimating, scope, selection, or handoff mistakes repeated across projects
  • Depend heavily on memory, experience, good intentions, or tribal knowledge
  • Start projects before the team has complete and reliable information
  • Have superintendents or project managers who inherit unfinished preconstruction work
  • Want to strengthen project buyout and the office-to-field handoff
  • Need a second set of eyes on high-risk decisions
  • Want stronger controls that can reduce mistakes, profit bleeds, and fraud opportunities
  • Need an operating system that tells the team when to stop instead of always pushing work forward

Problems This Episode Helps Solve

This episode helps answer questions such as:

  • Why do we keep discovering construction problems too late?
  • How can we stop the same project mistakes from happening repeatedly?
  • Why does every problem eventually come back to the owner?
  • Where should we add quality-control checkpoints during preconstruction?
  • What is Toyota’s Jidoka or “pull the cord” concept?
  • How do we prevent bad information from moving into production?
  • Why is a second set of eyes important during buyout and handoff?
  • What proof should be required before a project moves forward?
  • How can internal controls reduce the opportunity for employee fraud?
  • How do we fix the root cause instead of repeatedly putting out fires?

Episode Summary

Many construction companies do not have a people problem. They have a process that allows incomplete or inaccurate information to continue moving forward.

A scope is unclear, but the estimate continues. A trade package has gaps, but a subcontract is issued. Selections are incomplete, but the project is handed to production. Everyone assumes the missing details can be resolved later.

Eventually, production uncovers the problem. By then, the job has started, the meter is running, and other decisions have been built on top of the original error. The result may include rework, material changes, schedule disruptions, arguments, client frustration, and lost profit.

Todd explains that Toyota’s production system addresses this through a concept called Jidoka. Quality is built into the process instead of being inspected only at the end. When someone identifies an abnormality, they have the authority to stop the line and correct it before the defect travels further.

Construction companies already understand this principle in the field. Foundation, framing, rough-in, pre-drywall, and final inspections prevent work from being covered or occupied before it has been checked.

The same principle should be applied during preconstruction.

Todd identifies two especially important control points: project buyout and the handoff from preconstruction to production. These are moments when an error can become a costly defect if the project is allowed to continue.

At each critical control point, the company needs a validation step. A second person should review the work, and someone must have the authority to say that the project is not ready to move forward.

The standard should also be “show me,” not simply “tell me.” A verbal confirmation is not proof that the buyout is complete, the handoff is ready, or the required approval has been received.

Finally, the team must correct the process—not only the immediate problem. Each defect should lead to questions about where the error began, why it was not detected, and what needs to change so the company does not solve the same problem again.

Key Takeaways With Timestamps

00:23 – The Toyota action many construction owners would fear
Todd introduces the idea of giving team members the authority to stop work when they identify an abnormality or incomplete information.

01:41 – Bad information is being allowed to move downstream
Scopes, selections, budgets, and buyout details may remain incomplete until production discovers the problem after the project has started.

02:49 – The owner becomes the final inspection
When the process does not catch mistakes, every unresolved issue eventually escalates to the owner.

03:47 – Memory and experience are not systems
A company cannot depend entirely on someone remembering what happened, knowing what is normally done, or assuming another person handled it.

04:21 – Fixing the immediate issue does not prevent recurrence
The same mistake will continue appearing when the team corrects the job but leaves the process unchanged.

05:16 – Production often finds problems that began months earlier
Many apparent field problems were already present during estimating, design, selections, buyout, or the office-to-field handoff.

06:39 – Small assumptions create a multiplier effect
A missing detail can expand into calls, change-order disputes, field frustration, client concerns, and hours of damage control.

07:39 – Repeated chaos teaches the team not to trust the process
When projects repeatedly begin with missing information, employees may develop workarounds and accept disorder as normal.

08:17 – Clients lose confidence when they catch the mistake first
Once a client discovers an issue before the contractor does, they may begin scrutinizing every decision, invoice, and project detail.

10:04 – What Jidoka means for a construction business
Toyota builds quality into the production process and allows employees to stop the line when they find an abnormality.

11:01 – Stop, check, and validate before moving forward
Construction teams need defined places where work pauses until the information has been confirmed.

12:28 – Construction already uses critical inspection points
Field inspections prevent work from being covered or occupied before it meets the required standard. Preconstruction needs similar checkpoints.

14:00 – The four-step validation framework
Todd introduces a practical process for finding control points, validating them, requiring proof, and fixing root causes.

14:55 – Step one: Identify the critical control points
Ask where an error becomes a defect—where allowing the issue to continue begins increasing its cost and impact.

15:28 – Catch the error before other work is built on top of it
Todd shares an example of a hospital wall framed incorrectly and explains why catching the layout during chalking would have been much easier.

18:28 – Buyout is a critical preconstruction control point
The buyout phase exposes scope gaps, budget misses, subcontractor issues, and other problems before they reach production.

19:14 – Use the Buyout Playbook to strengthen this checkpoint
Todd recommends his free construction project buyout resource and Episode 378 for listeners who need a stronger buyout process.

20:02 – The office-to-field handoff is another critical control point
Once incomplete information is transferred to production, preconstruction errors become field defects.

21:24 – Step two: Create validation steps
Use a second set of eyes to review high-risk work instead of allowing the person who created it to be the only person confirming it.

23:25 – Give someone the authority to pull the cord
If a scope, buyout, selection package, or handoff is incomplete, the team needs permission to stop it from moving forward.

24:33 – High-risk decisions need checks and balances
Two signatures on a large check illustrate how companies can require additional verification when the potential cost of an error is high.

25:50 – Weak controls can create an opportunity for fraud
Todd shares the case of an office manager who admitted to embezzling more than $1.7 million over approximately eight years.

26:27 – Reduce the opportunity side of the fraud triangle
Owners may not control another person’s motivation or rationalization, but better validation and financial controls can reduce opportunity.

29:16 – Step three: Apply the Missouri standard
Do not merely ask whether something is complete. Ask the team to show the evidence that proves it is complete.

30:13 – Require proof instead of a verbal yes
Checklists, approvals, signed change orders, completed buyout information, and documented handoffs are stronger than assumptions or meeting-room agreement.

31:39 – Step four: Fix the root cause
When the team catches a problem, ask why the process allowed it to get that far and what must change to prevent recurrence.

32:28 – Make this the last time you solve the problem
Every issue should improve the operating system instead of becoming another isolated fire that the team forgets after the project moves on.

34:03 – “My team should know” is not a strategy
Important work should not depend on memory, assumptions, or undocumented knowledge.

35:11 – Validation is not unnecessary bureaucracy
Moving carefully through preconstruction can help the project finish faster by preventing bad information from entering production.

36:08 – Validation can reduce micromanagement
A clear quality-control process allows the owner to stop personally inspecting every detail because the checkpoints are built into the system.

37:00 – Custom does not have to mean chaotic
Highly custom projects need validation even more because complexity increases the risk and cost of unchecked assumptions.

40:51 – Identify one problem that should have been caught sooner
Todd challenges listeners to review a recent fire and determine where it began, when the error became a defect, and where a validation step was missing.

Key Concepts From This Episode

Jidoka

Jidoka is a principle from the Toyota Production System that builds quality into the process.

When an abnormality is detected, work is stopped so the problem can be corrected before the defect continues downstream.

Critical Control Point

A critical control point is the moment when an error becomes significantly more expensive or disruptive if the process continues.

In preconstruction, project buyout and the office-to-field handoff are two especially important control points.

Second Set of Eyes

The second-set-of-eyes principle requires someone other than the person who created the work to validate it.

This provides independent confirmation and reduces dependence on one person’s memory, judgment, or assumptions.

Missouri Standard

The Missouri standard is based on the state’s “Show Me” nickname.

Instead of asking whether an activity has been completed, leaders require evidence such as a checklist, approval, signed document, completed buyout, or validated handoff.

Error vs. Defect

An error is an inaccurate or incomplete piece of information. It becomes a defect when the company allows work, commitments, purchases, or field activity to be built on top of it.

The goal is to catch the error before the multiplier effect begins.

Root-Cause Correction

Root-cause correction looks beyond the immediate fire to determine why the company’s process allowed the issue to occur and continue.

The process should then be changed so the same problem is less likely to appear on future projects.

Resources Mentioned

Construction Leading Edge Resources

Systems and Frameworks Mentioned

  • Toyota Production System
  • Jidoka
  • Fraud triangle
  • CLEOS

People and Companies Mentioned

  • Toyota
  • Jocko Willink
  • Tammy Barkas

Recommended Next Step

Choose one recent project problem that became expensive, disruptive, or frustrating after production began.

Identify where the error originated, when it became a defect, and what proof should have been required before the project moved forward. Then add a validation step and give someone the authority to stop the process when that proof is missing.

The Buyout Playbook can help you strengthen one of the most important control points in preconstruction.

If your larger challenge is that the company lacks a documented operating system and too much information still lives in people’s heads, 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 438: Your Customers Experience Your Systems, Not Your Intentions

Todd Dawalt explains why customer trust breaks down when a builder’s systems cannot support their promises, and why pre-construction is the key system for creating clarity, confidence, and a better client experience.

FAQ

What does “pull the cord” mean in a construction business?

It means giving team members the authority to stop a project or process when required information, approvals, selections, scopes, or other critical details are incomplete.

What is Jidoka?

Jidoka is a Toyota Production System principle that builds quality into the process. When an abnormality is detected, the process stops so the issue can be corrected before it creates additional defects.

Where should contractors add validation during preconstruction?

Two high-value areas are project buyout and the handoff from preconstruction to production. Errors allowed through either checkpoint can become expensive field problems.

How does a second set of eyes reduce construction mistakes?

An independent reviewer may catch assumptions, omissions, scope gaps, or inconsistencies the original person missed. This is especially valuable before making commitments or handing the project to production.

Is validation the same as micromanagement?

No. Micromanagement depends on a leader hovering over employees. A validation system defines the checkpoint, evidence, standard, and decision authority so the process can function without constant owner involvement.

How can internal controls help prevent construction company fraud?

Controls such as approval limits, dual signatures, independent reviews, separation of duties, and documented evidence can reduce the opportunity for one person to misuse company funds without detection.

How do you stop the same construction problem from happening repeatedly?

Do not stop after correcting the immediate issue. Determine where it originated, why the process did not detect it, and what validation step, responsibility, checklist, or standard must change.

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 (00:23.832)

There’s one simple action inside Toyota’s manufacturing system that would terrify a lot of construction business owners if their team had the power to do it. In this episode, I’ll explain why that one idea, that one concept may be exactly what your construction business is missing. Hey, you’re listening to the Construction Leading Edge podcast from constructionleadingedge.com where it’s all about systematizing your construction business to maximize freedom, impact,

 

and wealth. name is Todd Dewalt, spelled D-A-W-A-L-T. And my team and I have helped over 400 construction companies eliminate chaos, grow their profits, and grow their team. And there’s, I’ve realized in the last six months or so in our coaching calls, that there’s one concept that’s overlooked in one part of most construction businesses. And it’s the root cause of a lot of problems. It’s even the root cause of

 

some fraud, which I’ll explain later. So whether you are a $10 million a year home builder, a $25 million a year commercial GC, a remodeler doing a million bucks a year, or a trade contractor of any size, this concept that I’m going to talk about is going to help you eliminate a lot of problems. So be sure to listen all the way until the end of this episode. I’ll talk about fraud, which is something that every business owner needs to be concerned about.

 

And I’ll give you a four-step framework that you can put to work quickly. So let’s talk about some of those problems. Let me know if any of these sound familiar. You keep finding problems too late. It’s not because people don’t care, not because your team’s lazy, not because people are incompetent. The problem is that your process lets bad information move downstream and problems…

 

get found out too late. Maybe scopes were unclear, but it moved forward, your buyout process had gaps, selections weren’t made, and by the time the problem shows up in production, you’re on a job site, the meter’s running, and it’s harder, more expensive, and there’s a lot more emotional baggage, lot more emotional cost to fix it. If you’re the business owner, maybe you feel like you are the backstop.

 

Todd Dawalt (02:49.806)

for everything, you are the final inspection. If something goes wrong, eventually it finds its way back to you because there’s no process to catch it earlier. Maybe the process you have didn’t catch it. So you become the person everybody calls when the estimate doesn’t match the scope. You become the person that the superintendent calls when they’re frustrated. When there’s a client problem, the client has questions, it goes, they climb the ladder and they go to you.

 

And you just feel like the final inspector for the business. Maybe you feel like an overpaid firefighter and you were wondering, why am I paying these people on my team when they keep missing things? Things keep slipping through the cracks and I have to deal with them anyway. And a lot of construction businesses are, maybe you feel this way. Maybe if you look at it, you would realize that your business relies on

 

memory, either your memory or your team’s memory, experience, and it really relies on good intentions. Maybe you find yourself saying, I thought we covered that. I assumed she knew, or she usually handles that. We’ve done this a hundred times, and maybe it’s different every time. And the team is busy, distracted, overwhelmed, and it’s based on memory.

 

Maybe you realize memory is useful, but it’s not a system. is not a system. Experience is valuable, but it is not a system. And maybe if you’re like some people, the same issues keep popping up. I talked to a guy a few months ago who was building the same house plan and something was wrong. The shower framing was off by an inch.

 

and it was wrong, they caught it on the first house, they did it again on the second house, they made the same mistake four times before somebody actually caught it. And actually, they caught it, but they made the mistake four times before somebody could fix it. So you’re having recurring problems because the process only reacts after a defect shows up. Maybe you fix the immediate problem, but the system that allowed it to happen stays the same. So…

 

Todd Dawalt (05:16.002)

You’re like, it’s like Groundhog Day. You just keep reliving the same day, the same mistakes over and over. And it’s the same pattern. Production uncovers something that should have been caught earlier. The team scrambles, you get pulled in, there’s a fire drill, the client loses confidence, then everyone moves on and they go back to their normal job without fixing the process. So think about this. How many times has a job kicked off?

 

You’ve mobilized to the site, production has started a job, and at some point, maybe very quickly, uncovered something that should have been caught earlier, something that was missed. There’s a big question. There’s a gap. Think about your day over the past month. How many fires are you spending time putting out that could have been prevented?

 

how many problems were lurking there in your project for the past month, two months, maybe since you signed the contract, and they just popped up and they became a fire. Those problems don’t appear out of nowhere. They were there all along, but they just were allowed to keep moving. And the scary part of this is that a lot of these problems are kind of quiet at first.

 

They don’t look like a five alarm fire when they start. They look like a little assumption, a vague scope, an incomplete handoff, a missing selection, an unselected subcontractor, a decision that nobody confirmed, or, know what, we don’t need to know that right now, we’ll figure it out later. It seems harmless. But then, way down the track, further down the process, the multiplier effect.

 

kicks in. This is when one detail becomes, one missing detail becomes several phone calls, change order arguments, a frustrated superintendent, an annoyed client, and hours of your time spent doing damage control. Not to mention the financial cost in some cases. And if it keeps happening, like some people, you realize your team starts to expect chaos.

 

Todd Dawalt (07:39.159)

this happens over and over, they start to believe, well, it’s just gonna be chaotic. Why should we plan? Why should we trust the information that we’ve been given? Why even have a process when it’s just gonna be a shit show? So they start maybe building their own workarounds. They stop believing the process. They just abandon the process and they just take it one day at a time. And then your clients feel that too. When things pop up,

 

during the build process, your clients, sometimes you can insulate your clients from it, but your clients feel it too. They may not know exactly what went wrong upstream, but they can sense when the job is disorganized, when something got missed, and they know when your team is reacting instead of leading. And they really know it when they’re the one who catches the mistake and they have to let you know about it.

 

And when a client catches the problem before you do, it changes the whole dynamic, right? It changes the relationship. Now they start looking closer at everything. They pull out the microscope, they start questioning, they start wondering, they start micromanaging. And in their minds, maybe they’re thinking, what else are these guys missing? And it erodes the confidence, right? Every time there’s a mistake, confidence takes a hit.

 

confidence and trust, it’s like an eraser, you know? You can make a few mistakes, but eventually if you make enough mistakes, that eraser is gone and the trust and confidence is gone. Not only do these mistakes erode customer’s confidence, but your confidence takes a hit, your team’s confidence takes a hit, your subcontractor’s confidence. And you can keep solving the visible surface.

 

problems on the job sites. But if you don’t address where the problem is coming from, the root cause, it’s just going to show up again on the next project. And it’s like playing a whack-a-mole, right? Where you’re just trying to whack moles as they pop up. And if you think a few years down the road, five years down the road, if nothing changes, you’re dealing with the same fires, it’s still going to be the same thing, different project, different client, same problems, just like Groundhog Day.

 

Todd Dawalt (10:04.556)

The how do we get out of this situation? How do you get out of this Groundhog Day, whack-a-mole firefighting situation? Well, the answer, the solution is based on a Toyota manufacturing concept called Jidoka, J-I-D-O-K-A, Jidoka. In their production system, the Toyota production system, the idea is not to inspect quality

 

only at the end, like when they manufacture a car, they don’t do quality control only at the end. Their idea, the idea of Jadoka is to build quality into the process so problems are caught as soon as they happen, before they keep moving downstream. And this is where the pull the cord idea comes from. In a Toyota factory, when someone spots an abnormality, they can pull the cord.

 

stop the entire line and fix the issue before that defect keeps moving through the production process. So people on the line have the authority, if they see an abnormality, they pull the cord, stops the line, and they fix the problem. This is the mindset that construction business owners need specifically in their pre-construction process. This also applies, definitely applies in construction, but…

 

It applies in pre-construction, right? Too many times we have this idea of, we just have to keep the job moving no matter what. We got to make progress. We’ve got to keep things moving. We’ll figure it out later. We’ll figure it out in the field. Production can clean that up. The mindset needs to be, where are the places in our process where we need to stop, check, validate, and make sure this thing is right before it moves forward?

 

because the further a mistake travels, the more expensive it becomes, right? If there’s a mistake, if something is missing in a project, the further down the track it goes, the more expensive it becomes. So think about it this way, right? Just about every construction project has inspection points.

 

Todd Dawalt (12:28.93)

Foundation inspection, rough-in, plumbing inspection, electrical rough-in inspection, framing, pre-drywall, final inspections, right? So you already understand the idea of stopping at key points in the build process to confirm that the work is right before it gets covered up, before it gets built on top of, or before the project moves forward, right? So if there’s an issue that’s flagged during a…

 

an electrical, a rough intellectual inspection, you’re not gonna cover it up until that defect is fixed. Same thing with a final inspection. If you’re trying to get a certificate of occupancy, that is a checkpoint, that’s a validation that’s built in to make sure that project doesn’t go any further, that it doesn’t get occupied until these defects are solved. And I’m here to tell you, you need to do the same thing during your…

 

pre-construction process, okay? You need these inspection points or validation points before the work gets covered up by a signed contract, a subcontractor agreement, a production schedule, or starting the job, okay? So want you to think about building in validation points in your pre-construction process and then…

 

being willing to pull the cord, so to speak, and stop them before those projects go any further. This is the key, is to think about how can we build in validation points in the pre-construction process. Let me give you a four-step process to do this. We’ve been working with some of our clients recently to create their processes, and we’ve really been focused on creating some validation points. And here’s a four-step process to use. This is not…

 

We’re not talking about getting certified in Six Sigma, lean manufacturing. This is something you can do relatively quickly, probably in the next hour. right, so step one, four-step process. Here’s the first step. Step one is to identify the critical control points. All right, so the first step is to ask, where does an error become a defect? Okay, so the first step is to ask, where does an error become a defect?

 

Todd Dawalt (14:55.894)

A mistake is not always a disaster immediately. It becomes a disaster when it moves downstream and something gets layered on top of it or built on top of it. There’s a moment where a potential problem crosses a line. Before that moment, it’s easy to fix. After that moment, the multiplier effect kicks in. So, for example, years ago, I was managing a

 

was a hospital project. We were building a surgical suite, two operating rooms, quite a few ancillary rooms, about a 10,000 square foot surgery suite. And we were in the metal stud framing phase. I think we had just started in wall rough ends. And I was walking around the, it’s kind of a racetrack. Most of these.

 

whether it’s an emergency department or hospital, it’s a racetrack layout. And I was walking around one part of the racetrack and I noticed the… So with the metal stud framing phase, sprinkler, overhead sprinkler pipes are in, duct work, overhead duct work is in, we’re starting in wall rough in. And it’s after hours one day and I’m just walking around checking things out. And I noticed that one of the walls, metal stud framed walls,

 

It wasn’t parallel with the sprinkler main. I thought that’s unusual because the sprinklers are, they put them in, this was a rectangular building. It was, everything was pretty parallel. And this, I noticed that the wall wasn’t parallel with the sprinkler line. So I thought that’s interesting. So I pulled out the plans and yeah, everything should be parallel. Then I pulled a tape and I realized that…

 

the metal, one of the walls had been framed up all the way to the deck. Wrong. It had been laid out wrong. They had, they were off by five or six inches on from over the course of a say 30 foot long wall. And this was, it was good that I found it. It’s at this point in the game, there was.

 

Todd Dawalt (17:19.316)

some in-wall rough-in going in. So it was good that I found it before they finished hung, finished drywall, installed ceilings, and then caught it. That would have been a real mess.

 

What would have been better would have been if that had been caught while they were just chalk lines on the slab, right? So if we go back to this question of when does an error become a defect, in this case, the error became a defect after they snapped the chalk lines down and as soon as they shot that bottom track, that bottom metal track down, that’s when it became a defect. Because that’s when the multiplier effect kicked in. They started framing that wall, then once it was framed…

 

blocking was installed, rough-in went in, and that’s when the error became a defect. So, step one is to identify the critical control points. When does an error become a defect? Because if you identify that point, this is the point when a missed detail becomes a schedule disruption, it ends up leading to rework, client frustration, hole in the budget, etc. So, in the pre-construction,

 

phase, if you’re wondering, if you’re thinking, where do I even start with pre-construction? What are the critical control points? There are two places you can really focus your efforts in the pre-construction phase. So,

 

For the purpose of this episode, there two critical control points in pre-construction. The first is buyout. The buyout phase. This is when you are buying out the project after you’ve signed a contract with the client and you are issuing POs and subcontracts to your subcontractors and vendors. The buyout phase. This is one of the highest leverage places.

 

Todd Dawalt (19:14.99)

to catch problems before they come and become production fires, right? This is where you identify scope gaps, where you identify budget misses, where you’re forced to solve problems. It’s during the buyout phase. So if you want help with that, if you want to know, maybe you’re not familiar with what a buyout, what buyout even means, or if you want to know what that looks like, two things for you. Go listen to episode 378 of this podcast.

 

You’ll learn all about Buyout and you can also download my How to Buyout a Construction Project Playbook. There’s also a training video that goes along with that. You can get your hands on that for free. There’s a link in the show notes or you can go to constructionleadingedge.com forward slash buyout, B-U-Y-O-U-T.

 

That is critical control point number one. The critical control point number two is the handoff from the office to the field, or the handoff from estimating to operations, or the handoff from pre-construction to construction. This is a critical control point. And the truth is a lot of the problems that pop up…

 

on the job site and look like operations problems or look like time management problems with your superintendents or look like.

 

operations problems, they’re actually, if you dig into it, they can be traced back to a bad handoff. They’re actually pre-construction problems. So this is once you hand a project off, if there are errors,

 

Todd Dawalt (20:58.602)

in your pre-construction process, as soon as you hand them off to the field, that’s when they become defects. So focus on those two points, the buyout phase and the handoff from pre-construction to construction. These are critical control points that you can focus your efforts on. The good news is you don’t have to focus on everything. There are just a few critical control points in the process that you want to focus your energy on. So step one.

 

Identify the critical control points and ask, where does an error become a defect? Step two, create validation steps at those critical control points. Okay, so once you identify those critical control points, create validation steps there to detect those errors. This is the second set of eyes principle, where a second set of eyes is reviewing the work of the first set of eyes.

 

The person who created the thing should not be the only person who’s confirming that it’s ready to move forward. Right? So going back to my hospital example of that metal stud wall, clearly the guy who snapped the chalk lines down thought they were right. So the first set of eyes was wrong. If a second set of eyes had gone through and checked those chalk lines, or at least checked the bottom track, could have been caught very…

 

early. It’s just like having a third party building inspector, right? You have a second set of eyes on your pre-construction process. The framer doesn’t do the framing inspection. The electric electrician doesn’t do the electrical inspection. It’s a second set of eyes. And you want to do the same thing to validate those critical control points in your pre-construction process. Sort of like if you’ve ever watched a movie where they’re launching nuclear missiles, there’s

 

two sets of keys, right? So according to the interwebs in US nuclear missile silos, there are two keys that have to be turned. Two officers must simultaneously turn two separate keys that are 12 feet apart to initiate a missile launch. This is the two-person rule that ensures no single crazy person can fire a missile alone. And it’s kind of the same way. You want the same second set of eyes or two-person rule.

 

Todd Dawalt (23:25.758)

in your pre-construction process. So the point here is not to slow the business down with bureaucracy. The point is to prevent bad information from moving downstream. It’s to prevent errors from turning into defects. So at this point, somebody has permission to say, stop. This is not ready to move forward. This is a mistake. Somebody needs to have the authority to pull the cord.

 

like in Toyota manufacturing, or you have a second set of eyes reviewing. And so if a trade scope is not ready, somebody pulls the cord. If there’s a gap in the process, the buyout doesn’t get completed. We don’t issue subcontract agreements. If the handoff is not complete, if there are missing selections, if there are big issues, somebody pulls the cord and says, this one’s not ready to hand off.

 

So if production does not have what it needs to succeed, somebody has the authority to pull the cord. A second set of eyes looks at it and says, this is ready or it’s not ready. If it’s not ready, they pull the cord. And this is where we’re talking about like checks and balances. This is where checks and balances matter. In the financial world, maybe you’ve seen, you’ve received a business check that said something like checks over

 

$10,000 require two signatures or something like that. That’s a validation step that’s built into their process. It’s not there because everyone’s assumed to be dishonest or fraudulent. It’s there because when the risk is high enough, the process needs another set of eyes. It’s the same idea here with your pre-construction process. When the cost of a defect or a miss is high enough, you do not rely on one person’s memory.

 

one person’s judgment or one person’s good intentions. And this is also a good way to prevent fraud in your business. I mentioned fraud. So Tammy Barkas was an office manager for a Maryland home builder. And in 2025, she admitted to embezzling over $1.7 million from her employer over the course of about eight years.

 

Todd Dawalt (25:50.593)

She forged the owner’s signature on over 500 checks. She deposited the money into accounts that she controlled, and then she covered it up in the bookkeeping system. She took advantage of what criminologists call the fraud triangle. They say there needs to be three things present for fraud to grow. Number one is pressure or some kind of motivation. So Tammy had some kind of motivation to embezzle money. Second.

 

leg of the triangle is opportunity. Tammy had the opportunity to do this because there were weak controls in place. And three is rationalization or justification. So while you can’t fix the motivation of somebody who’s thinking about defrauding you, you can’t solve the rationalization of that person, you can reduce the opportunity.

 

you can put controls in place. You can put in some proper validation steps, some better controls, in this case, better controls, better validation could have deterred Tammy from doing this. It could have reduced her opportunity or it could have caught it early. I’ve heard story after story after story of key employees stealing money from their company, buying…

 

materials, buying cabinets, having people work on their projects, having subcontractors work on their personal home, and then charging it to the company or embezzling money straight out. So step number two is create validation steps, second set of eyes at those critical control points.

 

Todd Dawalt (27:37.176)

Pause for a moment. I’ll be right back.

 

Todd Dawalt (29:16.366)

All right, step three is to apply what I call the Missouri standard. So you may not be from Missouri, but you wanna pretend like you are. Missouri is the show me state. So you wanna pretend like you’re from Missouri and you don’t wanna ask when you have these critical control points and you’re validating it. It’s one thing to say, hey, did you validate that? Did you complete this? It’s not enough to do that.

 

It’s not enough to ask, it done? Your job is to say, show me it’s done. That’s a completely different standard. Like instead of saying, is the buyout complete? It’s not enough. What’s better is to say, show me the buyout is ready to go. Instead of saying, hey, did we do a good job handing this off to production? You would say, show me that the handoff is complete. So validation, it’s not a feeling, it’s not a verbal yes, it’s not, I think it’s.

 

It’s not a meeting where everybody nods. It’s not where somebody says, yeah, we’re pretty good. I think so. If they can’t show you, it has not been confirmed. So you wanna pretend like you’re from Missouri and say, show me that you have double checked this. Show me the handoff checklist. Show me the buyout. Show me the approval. Show me the sign change order.

 

Show me what must be true before this moves forward. And this, this is where businesses start to mature because now the process is not dependent on somebody’s memory. It’s not dependent on somebody’s good intentions or somebody’s experience or your gut instinct. It becomes part of the company’s operating system, right? Your business needs an operating system. Every business…

 

needs a proper operating system. And a real operating system does not just tell people what to do. It tells them where to stop, what to check, and what proof is required, and who has the authority to say, is not ready. So you need a proper operating system in your business. And pretending like you’re from Missouri and

 

Todd Dawalt (31:39.853)

saying, show me that it’s been validated as part of that operating system. Step four is fix the root cause, not just the immediate defect. Fix the root cause, not just the immediate fire or the immediate problem. This may be the most important step. So when you catch a problem, the goal is not only to fix that one problem, the goal is to ask, why did our process allow this to get this far?

 

Because if you only fix the immediate issue, you are still going to see that same problem again. So you need to ask, how did this happen? What’s the root cause? Is this a process issue? Is it a people problem? Did we not follow the process? Did we skip steps? So if a trade scope is unclear, don’t just clean up that one scope, ask, why was it unclear? Was the template incomplete? Was the responsibility unclear? Was there something missing?

 

Did estimating drop the ball? Was there a gap between sales, estimating, and production? When should it have been caught? And what do we need to do differently next time? How can this be the last time we solve this problem? How can this be the last time we answer this question? So every problem you catch should improve the system.

 

Some of you hate problems, but once you have an operating system in place, you start to look for those and think, there’s a problem, good. We’re gonna be able to fix it once and for all. So every problem you catch should improve the system. That’s the point. It’s not just fix this job and get onto the next problem, fix the process so this problem is less likely to happen on the next job. How can you eradicate?

 

these issues instead of getting better at playing whack-a-mole, how can we get into mole eradication, right? So this is how you stop living with, this is how you get out of Groundhog Day, where you stop dealing with the same problems over and over. It’s how you stop forcing production to fix pre-construction mistakes. This is how you get out of being the backstop for all of the problems.

 

Todd Dawalt (34:03.842)

And this is how your business starts to operate like a real company with a real operating system. So.

 

Fourth step is fix the root cause, not just the immediate problems. So that’s the four step process. And I can probably read your mind, right? There’s a, at least some of you are thinking things like, you know, I shouldn’t have to do this. I shouldn’t have to validate. My team should just know what to do, right? Maybe, but my team should know this is not a strategy. It’s not an operating system.

 

The more important the step, the less you should depend on memory, assumptions, and tribal knowledge, right? And validation protects your team from guessing what done right means, okay? You might also be thinking, this sounds bureaucratic. I don’t wanna slow things down. We’re a fast-paced organization. We’re a high-performance organization. I don’t wanna slow things down.

 

And the fastest way to move a project forward is not to push bad information downstream faster. Okay? So there’s a saying that Jocko Willink shared talking about firing your weapon, slow is smooth and smooth is fast. So the slower you draw, the smoother you will draw your weapon and the faster you’ll get the shot off. So if you go slow on the front end, you’ll finish faster.

 

The temptation is to skip steps in pre-construction and go fast on the, just get started as fast as possible. But that is the just enough to start trap. That is the number one root cause of chaos. Some of you might be thinking, that sounds like micromanagement. I don’t wanna micromanage my people. I trust my people. It feels like big brother. Micromanagement is hovering because you don’t trust people.

 

Todd Dawalt (36:08.354)

Validation and what we’re talking about here is quality control built into the process, right? So a good validation step actually reduces micromanagement because the owner no longer has to personally inspect everything and look over people’s shoulders. Now you may be thinking our projects are different, every project’s different, how can we possibly build a process when every, we’re building $20 million custom homes, for example, and they’re all custom.

 

Every project still has critical control points, right? Custom does not mean chaotic. Complexity is exactly why validation matters, because the more custom the project, the more important it is to validate before assumptions move downstream. So I want you to picture this, right? So picture this. Imagine that you start to get this operating system going in your business, you have a process.

 

Critical control points are being validated. So imagine a business where problems get caught while they’re still small. Errors are identified before they turn into defects, before the client’s upset, before superintendents get frustrated, before materials get ordered wrong, before budgets are blown. Imagine your team.

 

knows where to stop, what to check, and what has to be true before things move forward. You’re not the human safety net for every mistake, for everything that gets missed. Your team knows where to stop. Well, first of all, they know what the process is. They know where to stop. They know what to check. And they know when to pull the cord before something goes too far down the tracks and a problem lands in your lap.

 

Imagine that every project starts with a good handoff and there’s clarity instead of confusion. Your superintendent or project manager doesn’t feel like they’re inheriting this mystery box from pre-construction. They don’t feel like problems are just getting rolled downhill on them. The field team has confidence that this job has been checked off before it’s handed to them, that there’s a good

 

Todd Dawalt (38:29.134)

handoff, it’s like a good proper handoff in a relay race. And your field team knows when the project is handed off to them, it’s right and they have what they need. Your client, let’s talk about your client. Your client feels like there’s a system behind the experience. They’re not wondering, hey, did anybody check this? They’re not finding mistakes because the process makes it obvious that somebody has checked it out.

 

and errors are caught before they become defects. And every checkpoint that they see you going through builds trust. Maybe you talk to them about it. Hey, this is our process. We are validating things as we go along. And they have trust that you have control of their project. And your business starts to feel less like this collection of people who are with good intentions or just trying to remember.

 

things and trying to keep up and it feels more like a company with an operating system. The process is not in somebody’s head, it’s documented and it’s checked. Your business is not dependent on tribal knowledge, it’s not dependent on somebody’s memory, heroics, it’s not dependent on your nervous system and these checkpoints just become part of the way the company runs.

 

See, a real operating system does not just, it doesn’t micromanage people, it doesn’t just tell people what to do, it tells them where to stop, what to verify, and what must be true before the work moves forward. And that’s when pre-construction stops being the place where hidden problems are created, and it starts to be the place where these problems are identified, caught, corrected, and prevented.

 

before the production team ever feels them, right? So here’s the question I want you to think about. We’ve covered a lot of ground here, but here’s the question I want you to think about. What’s a problem that you’re dealing with or you’ve dealt with in the last month that could have been caught sooner if you had been doing these things, if you had better validation points in your process? What is a…

 

Todd Dawalt (40:51.392)

painful or expensive or annoying or frustrating problem that you had to deal with in the last month that could have been caught sooner if you had a better validation process in place. Think about that fire you’re dealing with, the frustrated customer, maybe the client who’s started to ask a lot of questions, maybe the superintendent or project manager who’s frustrated, a subcontractor whose scope was a little unclear.

 

Where was that problem, where was it born? Where did the error become a defect? Where did the process allow it to keep moving forward? And what would have happened if somebody had been able to pull the cord earlier?

 

Then maybe you’re thinking, yeah, this sounds great. Validation points would be great, but I need a process to validate first. And yeah, that’s true. In order to be able to validate steps in your process, you have to have a process. You have to have an operating system. So if you’re listening to this and you would say, you know what, my business…

 

has too much living in people’s heads. It’s all in my head. It’s in the collective heads of my people. It’s too dependent on good intentions and memory. It’s too dependent on tribal knowledge. There are too many fires that are popping up in production. Maybe you’re realizing, yeah, these are not really production problems. They point to a pre-construction deficiency. And if you’re realizing there’s not enough quality control built into your pre-construction process or

 

Maybe you’re just saying you have no process in place. If you need to make a change, if you recognize something has to change, you can’t keep doing what you’re doing because of the stress, the frustration. Maybe you can see where things are going and you don’t like it. And if you’re tired of DIYing it, if you’re tired of doing it yourself, if you want to, if you’re ready for a proven operating system specifically for construction businesses, then we can help.

 

Todd Dawalt (43:06.37)

will help you install a, among other things, a proven pre-construction process in your construction business that’s a part of our Construction Leading Edge Operating System, or CLEOS. And this is an operating system that hundreds of home builders, remodelers, general contractors, and trade contractors all over the US, all over Canada are using to eliminate chaos, grow their profits, build stronger teams, either to

 

scale the business up, make it more profitable or just have more freedom. Go from 80 hour weeks to 40 hour weeks or from 40 hour weeks to 20 hour weeks. That’s what our operating system helps people do. And if that sounds like what you’re looking for, the first step would be to click the link in the show notes and schedule a business evaluation call with me. So you can click that link, schedule the business evaluation call.

 

We’ll dig into your business, we’ll spend 45 minutes or so evaluating your business, identify the hidden profit that may be in your business, and then map out a plan of what this operating system looks like. So click the link in the show notes to schedule your business evaluation call, or you can go to constructionleadingedge.com forward slash apply, A-P-P-L-Y. These calls are not for everyone.

 

There are qualifications that need to be met and we only talk to a certain number of people per week. thanks for listening. I hope this podcast was helpful for you. This is the Construction Leading Edge podcast. If you got value out of this, you may want to subscribe so you don’t miss the next episode. And hey, if this was helpful for you, would you do me a favor and leave a rating and a review, whether you’re on Spotify, Apple podcasts, YouTube.

 

And leave a comment wherever you’re at. Spotify, you can leave a comment. YouTube, leave a comment. And let me know what was most valuable for you. Leaving a rating and a review helps spread the word, helps other construction business owners find this show and start systematizing their business as well. So my name is Todd DeWald from constructionleadingedge.com. I’ll see you next time. Thanks for listening.

 

Previous

Next

Submit a Comment

Your email address will not be published. Required fields are marked *