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April 2008

Case Study

Know Your Costs

   
Information about the Masonry Industry
Bill Pacetti
When most people look at a masonry structure, they appreciate its warmth and beauty. Whether its brick or split face, stone or specialized veneer, masonry's lasting character evokes a sense of enduring quality. Yet, when a masonry contractor passes that same structure, he may see much more. To be sure, he will notice the design and workmanship. However, his experience drives him to something deeper. He knows that behind every structure is a story, and behind every story is a contractor whose passion and dogged persistence literally willed that structure into being.

This passion and persistence is not only true of masonry structures, but also of the products associated with the masonry industry. When you hold a good trowel in your hand, you appreciate the feel, the flexibility of the blade and the balance. Yet, like most folks, when they admire a masonry structure, it's easy to miss the story behind the trowel — a story that begins with an inventor whose passion and persistence literally willed that product into being.

Like his grandfather, father and uncles before him, Bill Pacetti began life as a bricklayer in South Side Chicago. Job after job, he saw waste as a result of poor planning and hasty execution. In the midst of this, he heard contractors bitterly complain that they were not making any money on the projects. Believing that with good planning and careful execution, he could run a profitable business, Pacetti was the first in his family to become a masonry contractor.

Information about the Masonry Industry

Lasting advice
In setting up his new business, Pacetti's accountant gave him some valuable advice, "Know your costs." The formula here is as wise as it is simple. By precisely capturing your costs, you can add your margin and come up with a real profit. Pacetti understood that, beyond the careful execution, any error on the cost side was something he would have to eat. With a young family, this was a risk he was not willing to take.

As he planned his first big job in the early-1980s, Pacetti kept hearing over and over in his head the words of his accountant, "Know your costs." This was a $100,000 job, and he had to put up his house to get the starting capital. He knew that a mistake would cost him dearly and seriously impact his family.

Pacetti kept thinking, "I can't wing it. I've got to know my costs. I've got to protect my family." Just to be sure, he did the take-off three times. After capturing the real costs, he carefully worked the job and, in the end, came in extremely close to his projected earnings.

Pacetti knew he had something, but the time involved in carefully estimating the costs of a job was considerable. This was especially true as the jobs grew bigger and more complex. He needed help, but was not willing to trust an estimator with his family's future. At that time, IBM came out with its first business computer, and a friend of Pacetti's suggested that he purchase one for his business. Pacetti's first reaction was, "Can I mix mortar with it? Can it put material on a scaffold?"


Information about the Masonry Industry
 

Pacetti resisted at first, until his friend let him borrow a computer for a month. Slowly, but surely, he began to see the value of a computer. He searched for estimating software, but back in the mid-1980s, few options existed. Available options could not go into the kind of detail that masonry contractors needed. It was not until he was introduced to a spreadsheet that the "light bulb" went off.

Like an automatic ledger, a spreadsheet enabled Pacetti to capture all of the individual material and labor costs to precisely calculate his total costs. This, in turn, would give him the ability to provide an accurate bid price to his customers. Moreover, once he set up the spreadsheet, he could plug in new numbers so that it could be used over and over again for new jobs. Still, the spreadsheet simply told the story in numbers and, while numbers are essential, Pacetti worked in the world of plans and details from which the numbers were drawn.

Ah-ha momemt
One rainy day, while visiting his in-laws in Florida, Pacetti took out a blank piece of paper and drew a wall section. He believed that, some how, you should be able to see the wall section in the computer, and the computer should be able to automatically do the take-off, inserting the numbers in the spreadsheet. Returning home, Pacetti contacted the friend who got him started with computers. After he explained what he wanted, his friend pointed him in the direction of a computer programmer at the University of Wisconsin.

Meeting with the programmer, Bill told him that masonry construction demands more detail than most other forms of construction. Explaining the importance of seeing the details on the computer screen, he asked the programmer, "Can you do it?"

This was back in the days of the DOS prompt, when computer monitors were dominated by a black screen with green characters in the form of commands. Both the operating system and the hardware lacked the capacity to do what Pacetti wanted. Still he pressed the question, "Can you do it?"

Information about the Masonry Industry

The young programmer simply responded by saying, "Do you know what this will cost?" Pacetti patiently reminded the programmer that he did not answer the question and, again, asked, "Can I have my wall section?"

The response came back that perhaps, in the future, with a new graphic interface, but not now. To draw the sections out numerically in DOS would take years and a sizeable investment.

While the programmer was right about DOS, his timing was off. The world was about to radically change in the early-1990s with the introduction of the Windows operating system, and shortly thereafter with the first Pentium microprocessor. The operating system provided the graphic interface Bill needed to draw his wall section, and the Pentium chip gave the computer the raw power it needed to draw the sections and compute the take-off.

As Pacetti began to work with the programmer, he needed to learn more about computers, and he needed to teach the programmer more about masonry construction. In the midst of this, he was still running a growing masonry contracting business and still using his old spreadsheet.

   
Information about the Masonry Industry

As time went on, Pacetti and his programmer began to add new features. Masonry walls often had various kinds of elements, such as architectural bandings of split face or soldiers. When a window or door opening was placed in the wall, it was not sufficient to simply subtract the square foot costs, but the actual costs associated with the actual material and labor components that were no longer required. The software also had to accommodate other common details such as columns, pilasters and parapets, along with the corresponding mortar and grout additions. All of this was simplified by the advent of another revolutionary technology, the Internet, which Pacetti quips as, "Having been made just for me!"

Instead of sending numerous floppy disks through the mail, Bill could now email his programmer. This not only simplified the development process, but expedited it as well.

As the program grew with new features, so did the expenses associated with further development. That did not matter to Pacetti. He kept hearing the words of his accountant, "Know your costs." His business was successful, because he stuck by those words and carefully executed each project. The software not only helped him estimate his costs better, it gave him two other things just as valuable: time and peace of mind. This was time not spent in going over take-offs a second and third time to assure they were accurate. This was a peace of mind that came from knowing that his business was not vulnerable to either a low or high bid.

Up to this point, Pacetti saw his software as an advantage over the competition. This was his tool for his business. However, his programmer saw even greater potential and suggested that he consider selling it to other masonry contractors to defray the development costs. Thus, Tradesmen's Software (www.tradesmens.com) was born.

Taking his programmer's advice, Pacetti sent out some 50 postcards to masonry contractors outside of his area. He soon received a call from a successful contractor who wanted to know more. So he packed up his heavy notebook computer at the time, and visited the contractor, showing the real power of the software. Throughout the whole demonstration, the contractor never made a peep. At the end, Pacetti asked if he had any questions, and the contractor broke his silence with the words, "What would it cost me for you to not sell this software to my competition?"

Pacetti was stunned. Going back and forth with the contractor, he knew he had something special and convinced him to purchase a copy. His message was as clear then as it is today: If you're not using Tradesmen's Software, you're not taking advantage of today's technology to increase your productivity and profit margins.

From that time to the present, more than 1,000 masonry contractors around the world have used and benefited from Tradesmen's Software. Pacetti has continually updated the program and is amazed how contractors, from the simple to the sophisticated, have discovered the time savings and peace of mind that comes from "knowing your costs."



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