HERE’S THE “MAKING TOO MUCH MONEY” Confirmation Email:
From: doug@reitmeyer.com <doug @reitmeyer.com>
Subject: [info] Your New Bureau of Land Management (BLM) contract, March 31, 2011
To: “Jeff Williams” <JWilliams@ joefunkconstruction.com>
Date: Thursday, March 31, 2011, 6:49 PM
Hi Jeff,
This email is a confirmation of our phone discussion today. You called about your first BLM contract pay request for $190,000, being sent to the Contracting Officer (CO) today.
Your concern was that, under the terms of your federal contract, the BLM wants you to fill out forms that will tell the BLM how much of the $190,000 is being paid to which specific subs and suppliers.
You are only paying out $100,000 of the $190,000.
Thus the BLM is going to know that Joe Funk Construction is making about $90,000 in margin this month on your contract. And because it is a unit priced contract they’ll know that nearly half of the full contract price is profit.
What if you are asked to explain the huge profit margin?
OK – I got the picture and understand your concern.
Here’s what I explained to you:
First – it is OK to make A LOT of money on a federal contract, so there is no need to suffer guilt. My $960,000 Walter Reed Army Medical Center contract cost $308,000 to complete, so the profit on that job was $652,000 – a whopping 68% of the contract! Our bonding company, when they saw the numbers, actually asked if we were laundering drug money (in all fairness, the job was in Washington DC when its Mayor, Marion Barry, was jailed for drug possession and use).
Like I said, it is OK to make A LOT of money in this business and you don’t have to explain it – you are just really good at what you do because you learned how to greatly increase margins and revenues by “The Industry Expert”. Given the fact that your BLM project was competitively bid and you were the low bidder by $4,000, Uncle Sam already received the benefit of competition in the marketplace.
Second – Understand the agency budget – over $1.1 Billion. Get familiar with each agency you work with and let them know that you have studied what they need and why they need it. Tell each one that you work with that you want to be a valuable resource for them. Over time they might surprise you with a request to take over a project for them. Building relationships with Federal procurement officials brought me many millions of dollars in contracts that never went out for bid. A couple of the attachments to this email should help you to become conversant in the language of the BLM budget, requirements and goals.
Third – the more money Joe Funk Construction makes from doing federal contracts, the more resources it will put toward the effort to get more of them. That’s a BIG PLUS for us taxpayers; We want and need competition. Profits always breed competition, so high profits are very good for the economy.
Fourth – As you were taught at the 3-day workshop, never give the $ amounts to your field people or the inspector. Always deal in percent complete and, in this case, because this contract has unit pricing, the quantity delivered. Only the Contracting Officer (CO) has to see the $s and all the CO needs to disburse the funds are your invoice and the corresponding approval of the # of units or percentage completed as determined by the inspector. Money affects different people differently, for some it even gets emotional, so I teach that you always want to keep the $s out of the field. Run your field operation on % complete only.
That all said, I’m proud that you came to the workshop, took notes, followed through with the phone calls, attended the webinar and followed the Blueprint exactly as it was laid out for you.
And your first year results have been even more impressive than my average over the past 35 years! Commendable indeed!
Keep up the great work. Attached are some of my comments regarding the “Sales Dance” as posted on the LinkedIn “Construction Business Owners” Group.
All the best to your continued success with our program,
Doug Reitmeyer, Phone
512-750-2677
GCExperts.com
Results:
cc: Rusty Norris, President, Joe Funk Construction Engineers, Inc.
You might enjoy this email we received from Carlos about 3 months after he had attended the Workshop:
——– Original Message ——–
From: “Carlos Bazbaz” <CBazbaz@lanterra.com>
Date: Fri, October 07, 2011
To: <doug@gcexperts.com>
Hello Doug,
I wanted to take this opportunity to let you know how much I was mind-boggled by the new type of construction we learned at your workshop.
I never would have thought that we can be successful at building projects across the country. When I originally received your email about your workshop, I was enticed by the idea of doing work for the federal government because our volume of work in the private sector was dwindling with tighter margins and we desperately needed to make a strategic change.
One evening I received your email and I kept reviewing your presentations. I think I exhausted Google search to try and see if this workshop was some kind of scam. I was very skeptical and I was afraid to commit the $10k for the cost of the workshop. Needless to say, I could not find anything negative about you or your workshop and all the references that I called were positive. When I discussed this with my father, who is also my partner, he told me “something cheap is usually not good and anything good is not cheap”. He advised me to proceed and go to the workshop.
Since we got out of the workshop, we have received 5 awards totaling over $300k in revenue with margins that are much better than we could expect in the private sector. When you originally asked me how much value I associated to the workshop after having attended it, I told you probably 1:1 because I was bidding but not receiving any awards at the time and everything was only theoretical. However, when we starting receiving awards, I began to realize that that the value of the workshop was probably closer to 100:1. The reason why I think so is because this is knowledge that can be used to run a profitable business year after year. How much would you have to buy a business that is performing accordingly? I would think that at least $1mil.
Anyway, you and your son Sean are highly qualified and seasoned in this business and your insights and mentorship are extremely valuable to us. Thank you for allowing to be part of your team.
Warm regards,
Carlos Bazbaz
Lanterra, LLC
T: 713.460.2588 ext. 102
F: 713.795.9565