Changing the Paradigm

Remodeling News

October 1991

"The future of remodeling is being able to put together a win-win situation for both the homeowner and remodeler," says Richard Connolly, president of three-year-old Cornerstone Consulting Inc. in Weymouth, MA. Connolly, who was a hands-on general remodeling contractor for six years, says he was "burned" on a couple of big jobs and was forced out of business back in 1981.

The bitter experience made Connolly take a hard look at himself, his company and the market forces that had led him to that solitary place. He came to the conclusion that there was a basic flaw in the way homeowners and remodelers interact with one another. This flaw caused not only the untimely demise of his small construction company, but needless conflict and anxiety before, during and after the completion of countless remodeling projects.

He felt that many business practices used by contractors and preconceived notions that homeowners have about remodelers combine to perpetuate cycles of bad dynamics that alienate the two groups from each other. "In short," Connolly says, "homeowners and remodelers don’t trust each other, and because of this, remodelers are losing out on a lot of work. Many homeowners out there would be willing to go ahead with a project, but their fear of remodelers and the remodeling process keeps them from even considering it."

This observation is confirmed by a survey conducted by Remodeling News in 1989 in which homeowners were asked about the concerns they had related to having a job done by a remodeling contractor. The four biggest "fears" and complaints were:

  1. Won’t return my phone calls
  2. Poor work quality
  3. Job progress is very slow or job is never completed at all
  4. Won’t come back to fix problems

On the other side of the fence, the biggest fears and complaints remodelers had about homeowners were:

  1. They may try to hold back money when the job is completed
  2. They don’t know what they want, so homeowners end up supplying every contractor with a different set of specs. This means I can’t bid competitively.
  3. They don’t want to pay for quality work
  4. They have unrealistic expectations about how long the job will take and the disruptions they will have to endure during the construction process.

The Building Blocks Of Cornerstone

Connolly decided that he was going to find a better way to help homeowners and remodelers work together. "I wanted to educate homeowners and contractors in a positive way, he says. So, in 1988, with eight thousand dollars from a cashed-in CD, he began Cornerstone Consulting Inc. His plan was simple. He would offer his services to homeowners who were in the planning stages of remodeling projects. He would walk them through every phase of the project on paper first, before they signed one contract or hammered in one nail.

With a programmer experienced in developing user-friendly software, Connolly also developed a computer program that generates an ultra-detailed specification list for every job.

"The contractors love us," Connolly says. "These detailed reports put them all on a level playing field so they can bid competitively." Normally, every remodeling company has its own pricing strategy. One will bid low and try to sell as much as possible as an "extra." Other companies will bid high and figure in the best of everything, anticipating that this is what the owner wants. This isn’t fair to either bidder. With a detailed list, each one can bid on exactly what the job calls for. They are comparing apples to apples, so to speak. In some cases, his firm even provides a videotape of the proposed job-site to potential bidders.

Connolly’s service doesn’t supply contractors for his clients. As a matter of fact, he insists that the homeowners come up with the names. He simply gives them all the information they will need to make an intelligent decision on their own.

Connolly says that his remodeling consulting service is quite different from the services performed by construction management firms. Such firms are a popular alternative to general contractors in commercial building. In recent years, however, due to the sluggish economy, construction management firms have been moving into the residential market. Connolly considers a construction manager simply a general contractor going by a different name.

"My service advises homeowners of all the twists and turns involved in a remodeling project," says Connolly. "Very often, once I have spoken with them, the do-it-yourselfers realize that it is more than they can handle, so I advise them to call in a professional."

Connolly estimates that 20% of his clients opt not to follow through and begin their remodeling projects. On the flip side of this, Connolly says he’s able to convert 76% of his leads into sales. According to Connolly, some of the more common reasons his clients decide against remodeling are too costly, impractical, not functional, or "If I sell, can I recoup my investment?" etc.

What’s In It For Contractors?

Although the consulting fee is paid by the homeowner, many of the contractors say they are getting even more of a benefit. The homeowner has been brought through every step of the job. So, for example, if a contractor doesn’t show up on the job-site for a couple of days the homeowner knows this is normal and doesn’t panic. Also, the specification sheets save the contractor a tremendous amount of time when computing the estimate. With these sheets, a good deal of the problems have been worked out.

One aspect of the consulting process that may unnerve even the heartiest of remodelers is that all information is common knowledge to everyone involved with the job. This means that all the competitive bidders are told the results of each other’s bids.

Connolly says, at first, contractors he dealt with were uncomfortable with this arrangement, but soon realized the tremendous benefit. They could find out just where they stood in relation to the competition – whether they were to high, too low or just right. Connolly recalls one very large job when two of the bidders came in within $67.00 of each other, and the third contractor was $30,000 lower.

Against his advice, the homeowner took the lower bidder and – yes, you know the rest of the story – the contractor went bankrupt before the job was completed. "The low bidder knew I had the other competitive estimates but he never bothered to call me to find out what they were. I knew it was impossible for him to do the job at the price he had quoted. He went ahead anyway, with quite predictable and disastrous results."

There is a preset consulting fee depending on the size and complexity of the job. It covers soup-to-nuts consultation and the highly detailed specification sheets. If, along with the consulting services, the homeowners want the job coordinated on-site, on a daily basis, Connolly’s firm charges a percentage of the total job. Connolly says that the payback for jobs under ten thousand dollars is moderate, but on jobs over this amount, the savings he can garner for a homeowner can be enormous.

The first ten months Cornerstone was in business it brought in about $20,000 in consulting fees. Three years later, the company is grossing $76,000, annually. "It is like any other business," Connolly says. "In the beginning, I worked 100 yours a week to get it to go. And I did it in a market that some say is off by as much as 40%." Cornerstone has services over 115 clients in the three years he has been in business. Connolly says he doesn’t do any remodeling work himself anymore. "You can’t wear both hats effectively. It’s a conflict of interest," he says.

According to Connolly, one of the main ingredients to the success of his service is the computer software. The detailed analysis that the computer does in a matter of minutes would take someone hours to do manually. But the best part is that it was designed for people who have had absolutely no experience working with computers. "The system is very user-friendly. An untrained person can sit down and, in a very short time, be generating full-blown spec sheets," Connolly says. The program, called CCI, runs on the most basic Apple Mac Classic computer (selling for under $1,000)

Connolly is beginning to sell his consulting service as a franchise. Two are going into operation in the very near future, one in Bangor, ME, the other in Southboro, MA. The start up cost is between $20,000 and $24,000, with $14,000 of that covering software, a training manual and detailed marketing plan. The rest is for the computer itself and incidentals. Connolly’s firm will finance $14,000 of that fee – $5,000 down and $9,000 over five years, interest free. After the fifth year, a royalty fee will be charged.

Anyone who is interested in pursuing a franchise opportunity can request an information packet. If after reading the packet you find that you are more seriously interested in a franchise, Connolly will arrange a full-day meeting with you at his office in Weymouth to explain all aspects of this opportunity.

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