⚠️ Warning ⚠️ This episode is not for the easily offended or naive. Sean Graystone shares his 40 plus years of experience in construction including little-known industry insights including Agile contracts. We explored improving our industry, mental heal...
⚠️ Warning ⚠️ This episode is not for the easily offended or naive. Sean Graystone shares his 40 plus years of experience in construction including little-known industry insights including Agile contracts. We explored improving our industry, mental health, construction project emotions, what it takes to create high-performance teams. Today, he is working as an Owner’s Representative. Sean specializes in collaborative project delivery, Integrated Project Delivery (IPD), Independent/Integrated Forms of Agreement (IFOAs), change implementation and management, historic structures, is an Approved Instructor for the Lean Construction Institute, and certified instructor for the AGC Lean Construction Education Program (AGC-LCEP). Sean is also a member of the AGC Lean Construction Forum Steering Committee.
Show Noted Links: The Real Meaning of Kaizen - Katie Anderson
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Today's episode is also sponsored by the Lean Construction Institute (LCI). This non-profit organization operates as a catalyst to transform the industry through Lean project delivery using an operating system centered on a common language, fundamental principles, and basic practices. Learn more at https://www.leanconstruction.org
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Sean Graystone 0:00
I should come with a warning level.
Felipe Engineer 0:01
Warning! If you're a general contractor you might be called a thief multiple times during the show. If you're an architect, you might be offended multiple times during the show
Sean Graystone 0:09
the people who are in the industry will understand it. If you know someone who knows the system really well the system is manipulatable to the sense that you can put undue pressure on people and do a different type of force performance scenario than say certain tripartite contracts facilitate, for lack of a better word. So...
Felipe Engineer 0:27
Welcome to the EBFC show, the Easier, Better, for Construction podcast. I'm your host Felipe Engineer Manrique. This show is all about the business of construction. Today's episode is sponsored by construction accelerator
The design and construction industries come up with and build great things. But we also build in waste in how we do those things, in our interactions, in our contracts in our logistics. So what does this do for our bottom line, or our next project, the best firms maximize their value by removing that waste, and only doing what's essential to the work what makes them money. Construction accelerator will train you to see the waste and give your teams the lean tools and experience to remove it immediately. All online. Construction accelerator is made up of three to nine minute videos that can be watched again and again, in the field, at the office and at home. All broken down by topic. need to learn pool planning, we have videos on the process, how to set up a room and how to kick off a team need to set up a target value delivery project. We discuss all the aspects of TVD especially cost or maybe you just need to brush up on five as well. We have videos on that as well. You can download and print reference materials to use on site to immediately translate watching into doing subscribe today at tri ca now.com. Let's build an industry not just a project.
Felipe Engineer 1:54
Today's show is also sponsored by the lean construction Institute. LCI is working to lead the building industry and transforming its practices and culture. Its vision is to create a healthy and thriving industry that delivers outstanding project outcomes every time for everyone. Check the show notes for more information. Now to the show. Welcome to the show, Shawn Graystone spent many conversations with you.
Sean Graystone 2:20
Fully enthralled is the only appropriate adjective to describe my feeling when we're talking not being facetious at all. You tend to draw the best out of me when we talk.
Felipe Engineer 2:28
Thank you, Sean. Appreciate that.
Sean Graystone 2:29
My name is Sean Graystone. Currently I am a owner's representative side of the business I got into probably 15 years ago or more. Born in New York City. I was raised in Chicago. I lived in Europe as a teenager, I came back to the United States went straight into a carpenter's training program in New Mexico, which is where I ended up before I even graduated high school. So by the time I stepped out of high school, I had a full time job as a carpenter for a construction company that started me off on a lifetime career was brought into a small company and asked to become a junior partner in a three man company, which I did until I hit probably my late 20s. At which point I opened up my own one of eventually three or four construction companies myself, I became a general contractor I functioned mostly out of state and Mexico although we did work nationwide, we had multiple divisions. I did straight up public works for a very long time. That was one group we did historic restoration of significant buildings. That was another division completely after the bonding and surety crisis after 2001 we had been doing some very high end residential operations. But as many people in the industry are aware 2001 changed the insurance and surety markets completely. They already had a rough state by the end of the 1990s. In the late 1980s. I have a very strong association with the Associated General contractor's of America. When I was being trained and brought up in the industry, I was told that you're not really not really a professional contractor unless you belong to one of the large organizations AGC at that time. So I joined AGC. And it wasn't very long after that, that the president of whom had become national president of AGC, he called me up took me to lunch one day and said you will be taking a greater role in industry affairs which led to my being involved in the board of directors of the Mexico building grants and the Associated General Contractors through that I met Greg Khalil, one of the two founders of lean construction Institute, Greg lied for the charity University of New Mexico that led to an immediate friendship and Association. That point in my life, I was already asking questions about the industry. Why do we not control our own industry? Why do we work in industry that has contracts being written by other entities completely meaning at that point, AIA was kind of the document source. Why was there such a disparate risk assignment assessment in the standard contracting world at that point, these led to my having very long conversations with Greg Howe, in particular prior to the days of the formation of lean construction Institute, and unfortunately, we lost Greg Howe last year very sadly, that was a man who influenced so many of us in the construction industry, and actually was one of the most important change agents that I'm aware of in the last actually in the history of American construction, frankly, and I'm a bit of a history buff.
Felipe Engineer 5:09
Would you say that so lightly, you're a massive history buff like it's,
Sean Graystone 5:14
I'm an avid, obviously love history and I'm a firm believer in the fact that we don't know where we came from. Not only do we not understand today, but we can't really form a clear understanding of where we're going. I'm a great fan of George Santayana, whose quote about history is on the entering lentil stone of pretty much every state archive in the United States, which says words to the effect of people who forget their past are doomed to repeat it. But my other favorite santiana, quote, history is nothing but a pack of lies about events that never took place written down by people that weren't there. That rake had a profound effect on me. I ended up joining lean construction Institute in the very early days very active in the very early conferences. I gave a paper in 2004. Back when I became head, the president of the New Mexico building grants the AGC on the crisis and construction labor, which we are now seeing the fruit of probably anyone watching this, who's very active in the construction industry as well aware of labor as a crisis education as a crisis, as it was then it was part of the paper I gave you them in 2004. I'm very sad to say that a lot of the things like forecasts came true. I'm very happy to say the New Mexico building branch of the AGC was considered very progressive. We formed our own self funded work comp pool early early on, I think we're the second state besides Alabama, who successfully did that. So we bought a high school outside of Albuquerque, New Mexico, and it's still active, and it's training trades. I'm a big advocate of trade training 2009 to 2012, financial crisis kind of changed things, things were getting very pressed in the construction industry, there was a tendency at that point of large owners to delay on payments. It's always been a problem unspoken use of construction companies as lending companies drawing out payments, progress payments and final payments along with contract to use it as a mode of financing for owners. I don't mean anything bad by just talking about anybody in particular. It's just a trend that has taken place in the industry for a very long time. That caused me to reevaluate I got some very serious offers. One of them was to become the owner's representative for the restoration of john Russell Pope's first monumental commission building in Washington DC to me, in my mind was like being asked to go supervise the restoration of the Statue of Liberty. It's one of most iconic buildings in the United States. It's a 16th street for buildings important historically. So I took that project on got certifications to teach the AGC LCP
Felipe Engineer 7:31
The acronym Sean's the AGC American General Contractors Association.
Sean Graystone 7:34
The LCP is the lean construction educational program developed jointly originally by the lean construction Institute, Greg Campbell and the AGC and then the AGC was licensed to actually manage the classes themselves. So that's seven units of lean Education Association lean construction Institute continues. I'm an approved teacher for all of their modules. I'm a member of the coach's community of practice for LCI. I'm on the Associated General contractor's national lean steering committee. So I've gotten very industry involved as I was pushed to do when I was very much younger. And I think it's really important, I don't think I need to tell you that we work in a very dangerous industry, we work in a very time consuming industry. We work in an industry that has traditions and practices that go back to the end of the 1800s.
Felipe Engineer 8:16
I knew I went back Sean, but I didn't know it went back that far.
Sean Graystone 8:19
Modern American construction starts roughly right around the time of the Civil War. Shortly afterwards, there were two I would recommend that anyone who likes this stuff, join the construction history society run out of Georgia Tech, basically, two forms of construction started with two or three of the oldest construction companies in the world. Norcross brothers was one of them, they no longer exists, they went out of business in the mid 1920s. Basically, what we would now call cost plus, which is timing materials plus and arrange profit, or the fix on both of these styles of construction started legislation at the national level, which happened 1890s or so which attached shorties to public works so that there was a guarantee any building project that has any tax money involved in it to ensure the completion they stand behind the general contractor to performance and they guarantee the completion of the work the payment of all of the trade partners, the price of the bids, there's bid bonds, performance bonds, material labor bonds, so that influences the way business is done in the United States. AGC is founded in 1918 by a presidential executive order actually president said they were unable to muster the American construction industry in a manner that he thought commensurate to the response that was required to win the First World War. We still have AGC founding companies as members of the nr 500 best companies in the United States. That's engineering news record that
Felipe Engineer 9:41
You're gonna use Lanai for, and I'm sure.
Sean Graystone 9:42
The only group I know that has more acronyms than we do in construction is the Navy. All of this leads to an intimate understanding of how construction is done in the United States. The construction needs to be changed. It hasn't really changed in a very long time. It is not the most human of industries we have some of the worst permanent light, crippling injury and death. Rates sell the construction industry has moved into the number one spot of suicides per capita, Greg Howell was amazing man that saw things in a completely different light and acted as a change agent. Because we were missing the human element. We were certainly missing the team element in construction, we were certainly missing the collaborative thinking environment and construction. And again, this can be traced to legal insurance methodologies, the way contracts are written the concept of liability and where liability boundaries stand define. Oftentimes, in the old days how relationships between companies were formed when I was coming up through the trades as a carpenter speaking to the non human element of it when they told me to work 120 hours a week you worked 120 hours a week otherwise you were passed over to go from a crew boss to a foreman and from a foreman to a junior super and from junior super to senior super and from a senior super to project executive vice presidents in charge of divisions. For example, did budgeting climb up the ladder of advancement if you didn't do exactly what you got to do the site opened up at 6am you need to be on the site at 530 in the morning with your cords rolled out their tools. ALC is the clock started six o'clock. And if they didn't hear the sound of saws buzzing or whatever piece of equipment you're using, if that sound wasn't audible at 6am it tells you to pack your stuff up really cords up Get the hell off the jobsite. And we can tell stories about the old hazing ways of getting into the trades and stuff. And there's been a lot of societal change, the construction is slow to change. You know, we're still one of the last advanced technological countries in the world that still procures at the federal state and Public Works level by little bit. But to me, the concept that Greg Howell and Greg and Glen Ballard had back in those days, as well as many other unnamed people that we need to talk about, because the two of them did not just invent lean construction was which is what we now call it. There were many people who input into this and there are many influencers in that too many to be named the way contractual arrangements were in the days when I was coming up and being trained was contracts were drafted in such a way that anything that you did that would cause me to lose money on my project, I had a set of barrier walls that isolated me if the electrical trade partner what we used to call subcontractors, and I very particularly don't use the word subcontractors because the connotations that the word has, we are all one team with one set of operating rules with one goal which is to have a healthy safe project that makes money pleases the owner that everybody walks away without injuries on and the owner calls us all back and says we want to do another one a little
Felipe Engineer 12:29
The term subcontractor is normal. It's inside of contracts.
Sean Graystone 12:33
Trade partners versus subcontractors is the emphasis on the fact that no one is on a job. They're not my sub. They're my partners. We don't produce construction projects as an individual I don't go out on a job site excavate, pour the concrete lifts the skill, put the finishes in commission the place and step off. It takes an enormous amount of people agcs lean construction education program emphasizes on an average project, let's say a $20 million dollar
Felipe Engineer 12:58
20 million sums average.
Sean Graystone 13:00
There's 5000 people involved in the production of that directly. And if you understand that we are all connected. And we are all connected. There's nothing that any person does on a jobsite, which doesn't directly affect everybody else. Whether it seems apparent or not. If you create anything other than a win win scenario for any business endeavor that you're involved in, ultimately the deal will fail. So in our world, that means that if everybody made money in the electrical trade partner went out of business, if someone is put in a position where they are crushed, a lot of things are sacrificed and like the rules of ethics have been breached on certain level, you know, the ends justify the means it's okay, if a trade partner goes out of business and everybody else walks away. Do you know how these things work especially and the nature of our world has only gotten more complicated, more intense, more difficult, we really have to change what I call the rules of engagement, we have to radically change rules of engagement. This is partially why the lean construction Institute per se and only named them again, there are multiple organizations that are catching on and teaching this there are multiple owner organizations that are understanding the paradigm shift that is necessary. They're multiple construction companies slowly but surely, and it's slow, but who are beginning to shift their understanding of the change from everybody's on their own, you need to protect your skin versus understanding that collaboration is the best way to succeed in highly complex, highly dangerous high stress. Shawn, we're seeing the same parallel even just in our entertainment, you just look at blockbuster movies over the last 30 years you went from the individual lone hero to now everybody works in a team that Harbinger Institute's book leadership and self deception one of the bottom line lessons of witches if you have the opportunity to do something constructive, and quote unquote, good for someone else, and you don't take that opportunity, whether it's a stranger, a family member, or business associate or anyone who you happen to come in contact with in the course of your daily living, and you don't take that action to benefit them. you're engaging in an act of self deception thinking that is behind what they call inward and outward. mindset, to me is critical we refer to lean as if it's a methodology and a system, I want to say that lean is a paradigm change. Not only do we have methods and practices, there's the last planner system is choosing by advantages. There's tools that are available that you can exercise all the tools in the world. And if you don't understand the paradigm shift, or the fact that it's a change in the way of thinking, we can't think our way into a new way of acting, but we can act our way into a new way of thinking, which is why implementing things like the last planner system trains people to think in a different manner, as well as being a good technique to change the way we schedule,
Felipe Engineer 15:32
It's easier to act your way into a new way of thinking than to think your way into a new events.
Sean Graystone 15:36
This is a paradigm inward and outward mindset rather than fixed mindset, emotional intelligence, psychological safety, the whole lean system, per se, is they understand that it's a human system, what is the basis of fear reactions? What is the basis of hedging and inertial behavior and defensiveness, and Garstang, those are the keys behind the types of contractual arrangements protect myself at the at the expense and loss of everybody else. And at one point in time, that was considered to be acceptable. But even the US military in its high performance operations, the Department of Defense document power to the edge, they understood that cross training, understanding emotional intelligence and psychological safety leads to radical changes in the performance of the team failure analysis and collapses in procedural methods. Oftentimes, people want to go just to process thinking, or systems analysis, that to me, systems analysis, without the understanding of the human element is only a partial, it's looking to happen.
Felipe Engineer 16:34
It's gonna fall short. It's like Newtonian mechanics versus quantum physics. Sean, you and I have friends that the Department of Defense and we know that now in the 2000s 2021, right now, they've got agile contracts, they want their contractors, their builders to operate an agile ways they need to deliver fast and be agile to keep up now with new speed of computers and the internet and interconnectivity. It's things are just accelerating. Yeah.
Sean Graystone 16:58
And actually, the speed of operations are getting to the point that the old fashioned command and control module no longer work. And in that document that I just referenced power to the edge of God, the theater of operations, and I am no military expert, don't get me wrong, I played military games, when I was a kid having an operation that is moving so quickly, that you can't rely on taking the order to proceed. And I'm using a construction term not a military term on a decision that's critical in the field. Without going all the way back up the command and control ladder, the guy in the field has to talk to his foreman less to talk to the floor foreman who asked to talk to the Junior superettan bringing to the site super then has to go to the project manager who then has to go to the PX and then has to go to someone to make some critical decision. And they have to check with the insurance company with the architect. And then by the time that's come down, you've lost days in operation. And you created a whole bunch of makeup work scenarios that we take this into the military theater and you have dead peoples which you have someone who did not get an order to fire quickly enough, the moment of engagement in that theater of operations was ineffective. The level of engagement that we deal in where people's lives are on the line for deaths and 16 life criminal electrical injuries per day and construction that's higher than US military losses and operations, no resources Unlimited, I don't care what it is, if we're not thinking to improve something every day, we're not dealing with the reality of the situation as it is. And in lean thinking this becomes really critical because this is Kaizen and continuous improvement concept. I think the learning cycles are eternal. And the minute we get laughs at that we just stopped rolling me That's it. You know, you don't have that burning, lusting desire to know then go ahead and continue on with your operations daily. How do you affect change up the line? If your boss has been doing the same thing that they've been doing? It's made them successful? What motivation do they have to change, but don't Many don't. And this leads to end transients and inertial reactions and failure to move forward. But again, to me, that is not the proper approach. Lean thinking collaborative thinking high intensity, high performance, high mean engagement, intensity, thinking, it's not just the application of the last planner system, the five asks,
Felipe Engineer 18:59
Yeah, it's not a tools application. Why do you think it deems improvements important, and you nailed it with your answering about how it's so connected to learning and I'm finding that as a very common theme among people that pick this up and don't let it go and if we all agree as people that learning is good and good leaders are do a good job of helping enable change, you know, in their span of control, why is there so much resistance to change in the industry
Sean Graystone 19:22
Or is the motivator for the lack of change the inability to look at oneself the inability to look at one system, the responsibility for being able to change a system fear can act as a motivator, that the more power we put into the fear the more powerful the fear the source of what drives the fear grows. So therefore, a defensive reaction doesn't work. We need to embrace the weaknesses and the things that we fear in ourselves. First, you have to understand that human beings are filled with flaws. Just like lean thinking teaches that there are no mistakes. There are only learning opportunities. We only learn from our mistakes at best. There was a blowout on a project there's a major project there was about to go they're about to go bad read notices. We're about to hit the fax machine. We're talking about surety stepping in and all the rest of this stuff and they send me out and I gotta go fix and I fix it. It's four hours of what I call headbang, behind closed doors. And when I come back to the office, my mentor and boss at the time, very heavy, low bid Federal Procurement thinking and train looks at me and says What happened? Because I get back the opposites like, six 630. And he goes, What happened? I went, I fixed it. I nailed that. He looks at me, he goes, focus on what I mean, I just, I just nailed that. He goes, remember this other situation? That was about two years previous, where you went, you got sent down to fix that stuff and all blew apart? Oh, yeah, I do remember that. And he said, You need to understand that I'm not impressed by your successes. All this success today means to me is that you learn from that failure to yours. That's it, go back to work. Understand that the most valuable experiences in our lives are our failures. Your successes are meaningless, how you rise from your failure. And what you learn from that lets me know whether or not you're the type of person that we want to work with whites change difficult. Why are there still a lot of problems within the modern construction industry? Why do people resist change? Why is their initial resistance to change? Why isn't lean being adopted by or lean thinking and only want to call it lean? Why is it high intensity collaborative thinking and team understanding being taught right now at the most leading edge? schools teach and some are okay, some are slowly but surely doing it. But why isn't this the mo for every major successful construction company in the US and the rest of the world? Because it's not some of the resistance that I've run into training and teaching and so many of my peers this is all just a bunch of hooey. I've been doing this successfully for 60 years. Don't tell me what you know what i do works. Now. Did someone get damaged psychologically, emotionally, financially, as a result of that action? Yeah, but that's not my business. They didn't fit it, right. They didn't behave correctly, they whatever. But this speaks to a gruesome disconnect. And I'm gonna say something that probably a lot of people aren't going to agree with it I firmly believe deep down inside. Everybody knows the difference between right and wrong. Everybody, have some people grown in modern business? Can people just go ahead and steamroll through something without dealing with the repercussions? What do they say?
Felipe Engineer 22:01
It's business, it's not personal. It's all personal.
Sean Graystone 22:04
Yeah. And that's part of the change in this understanding of the fact that there can be no interaction between two human beings of any nature whatsoever is not a human engagement. The rules of engagement between human beings are consistent thing, we don't operate without understanding. We are in the words of the arvinder Institute book committing an act of self deception.
Felipe Engineer 22:23
I've heard from several psychologists that I know personally that have told me that the environment in which people operate does more to create shape and unable character than anything else,
Sean Graystone 22:33
You define a successful contractor. Everybody grown up if you grew up in a neighborhood not okay, if it was in the Southside of Chicago, someplace in Iowa, you know, small town kind of environment does everybody remember the family that was on the block where the uncle was always in the gutter drinkin sterno, and was just kind of the town drunk bunch of brothers and sisters. And one of them was in jail for bank robbery. And there were two people who were and died of overdoses are heavily addicted. And yet two of the brothers in that household, one of them became the governor of the state. And the other one became like the head of the Legislative Council service or the state love the group that wrote the laws for the legislature. What was it? Why did the family environment parently destroy destroys six out of the eight children in that family and two of them rose above everything, and came to be very successful, and very powerful. And so what made the difference were they understood compassion and empathy when others didn't, but it doesn't much matter. Those are people who basically came out of a grotesquely dysfunctional environment, and learned a set of operating rules by which they could make the connections happen. But what did they do they learn how to operate within that set of rules and create a success scenario out of and I said, that's a successful general contractor. Like I said, I was in my late 20s, early 30s, when I went, there's something wrong with the system we're operating can't have this many deaths. You can't have this many companies going out of business, you can't have this many injuries, you can't have this many dysfunction. Every mentor, a major mentor of mine in construction, died at their desk from their third coronary diabetic, at some years old, never went home and tied to their surety company, half the ones I know, all of their assets folded and we're talking about former heads of associate general contractors and national level we're talking about major community influencers. The guy I'm particularly thinking of right now, was on the board of every bank in five states. It was on the board directors of the Salvation Army goodwill, United Way. I mean, you name it, they were activists, they had great social conscience. That man in particular taught me that if you take your assets out of a community, you're required to put your assets back into a community. In other words, don't work in one town and buy your lumber out of state. Don't work in one town and purchase your skill elsewhere. don't hire from out of state go cultivate the people that you need out of the committee. That you're building for because otherwise, otherwise you're not creating the cycle of return. Right, you're not. And so we spent a lot of time recruiting our carpenters, you know, we would go to the old communities up in northern New Mexico when I was happening back then, and go recruit the children of the woodcarvers that had been up there for 300 years. Just like the story I heard about the building in the National Cathedral when they couldn't find the guys to do the stonework, they were recruited the great grandchildren of the old Vermont and New England quarryman in brought them down and taught them how to carve stone to complete the steeples on the National Cathedral, you need to be resourceful and you need think outside the box. And the standard ways of coming up with solutions to things are not always the way that you gotta go. So therefore, if you don't have an open mind, and you're not thinking outside the box, and you are thinking based on behavioral patterning, that you learned and this is not to get into the nature nurture argument, because the latest thinking on that is it's it's both. And what it's turning out to be is that nurture can overcome nature in many circumstances, because you can train yourself with great effort out of a self destructive environment, that it turns out the training, if done the right way, can overcome the nature influence getting into an environment in an IFA scenario, an independent form of agreement scenario where everybody puts their profit at risk, and you have an incentive bonus. And the only way you can construct those contracts is by revealing what you really make like what your real profit is, what happens when you put a mechanical contractor, a mechanical engineer and architect, the general contractor and electrical contractor, a masonry contractor, and whoever else that key signatories to an agreement, all of whom hide how they make their profit, what their profit margins really are, right? Because in a fixed bid scenario, you know, you don't reveal that stuff. Because that makes the difference between you getting a job and not you're going to enter into an IFA agreement that a major city like Los Angeles, or Boston or DC, and have to reveal 100% to a general contractor that you know, you're going to be in a low bid scenario with next year, and reveal to them what your real profit and markup margins are. It ain't going to happen. And I've been in these scenarios. And so what do you do you figure out an outside the box way to do it one on one major project, I came up with confidentiality agreements that were so gruesome, that you'd have to be insane to sign that confidentiality agreement and breach it. In other words, we're entering into this agreement, knowing full well that we're sitting in a room full of people who are going to be in a competitive low bid scenario with one another again, many times over the course of the next 10 years, if there's even wind of the fact that you have revealed what these people are revealing so that we can effectively sign us all so that you can actually accurately calculate your shared profit distribution, the profit pool distribution, standard IFRS eight, which is for those people who don't understand you could profit at risk in a in a highly technical if away. And if you bring the project and under you disperse not only your profit that you've been into the project, but the what's left over the incentive compensation layer, the ICL, everybody who is a member of the team gets a piece of the ICL based on their percentage of their input into a master contract. Well, you can't accurately do any of that kind of calculation unless everyone's being totally transparent how you're going to be transparent to a roomful of people. Who are your competitors, or general contractors are you going to later bid with and what prevents you from going no effing way? And I've been in that scenario where we've gotten to the negotiations on the I fo a, and two parties in the room, just cross their arms and slide their chairs back and you get these really vague answers. Well, it's 15%. It's like, No, we actually we need a full scale, fully revealed, certified by your chief financial officer understanding of exactly where you put your profit and exactly what your overhead is, and exactly what your labor burden architects make all that one way architects and engineers build and make their profit in one place. plumbers and electricians do that in another place completely. I'm not going to say it because these are touchy industry trade secrets, and the general contractor and the structural make theirs in a completely different manner. Someone asked me what what's a real high intensity lien if a scenario like I said, Everybody gets into a conference room together and they take off all the clothes, all of the warts, the big belly, my bald head scars, the stuff we're not supposed to talk about men, women makes no difference. Everybody gets in the room gets 100% naked and sits down at the table and negotiates a project, you don't have that level of transparency, you're not going to have a high level engagement, how the hell you're going to get to that level of transparency without a real, truly tested, vulnerability based trust agreement among the participants. And how do you get there when we're in a market which allows bid shopping which allows and God forbid I said that but you know what, I don't care who says what, in certain markets bid shopping is still common practice. Let's talk about reverse bidding, right? The deal that you have on certain owner projects in the United States where they open a reverse eBay style web page, and The numbers just keep going down by anyone who has a license anywhere in the United States and the division stay open is everyone just puts in a lower number and a lower number until everybody the numbers stopped. That's when they close the bid when the numbers stop going down, and then you have an electrician in one state roofer in another state, an erector in another state, a general contractor in another state, and they're all supposed to get together and build this and how do they end up those jobs end up in lawsuits, not going to create a vulnerability based trust, profit sharing incentive compensation layer contract out of that. So the real question is, again, and I'm trying to still answer about why is there resistance at certain levels, these are some of the things that prevent the type of level of engagement that we know that the players are capable of people who are very familiar with the system, configure out wasting manipulate the system. And so I can tell you multiple examples of how low bitters on very expensive projects manipulate the timing of when payments are due, and they withhold payments. So you get to the edge of the lien filing requirements on a bonded project. And basically, at the last second, they'll call up a trade partner and go, well, we'll you know, three months worth of progress payments, and no one's answered the phone for ages. So if you take 10% off of everything we owe, you will call your check today, if not go ahead and call him this year. Because we have a bunch of paperwork that shows that you're responsible for this many days in the first month of the job responsible for this many months. And we're just going to prosecute you because we keep extensive job logs. And the day, we told you to show up with 16 people on the site, even though we weren't ready for you to show up with 16 people on the site. Nonetheless, our job lock shows that we call for 16, you Shut up, you delayed the job. So go ahead, you know, where's this going to go to? And of course, unfortunately, in many of the scenarios, and I'm basing this on real scenarios, okay, I'm being really light not coming in the details. You know, what happens in most of those areas, the trade partner goes fine, just because you know, what, they're three months out on an enormous layout of capital expenditure and borrowing and banking after 2009 was not what borrowing and banking was, in the late 90s. You know, contractors operated both trade and prime with massive credit line, massive credit lines, how else do you think we function when we have to capital outlay on owners who would frankly, delayed payment until one day before you were required by contract to file a lien notice, otherwise, you had no guarantee of being paid? After that point, someone who is highly sophisticated in the system, and it comes from construction groups, both trade and prime, who not to play these games. Now we're into a world and this is the unspoken side of construction. And there, then, again, that has to be dealt with an address, because we're not talking about that openly. And we're not talking about what the real some of the real games that go on, on force performance scenarios are, how are we going to once again get to vulnerability based trust, completely transparent incentive compensation layer, profit sharing contracts, and there are some owners in the United States that need to be complemented, because some of this has been very heavily driven by the owner side who finally went, why is it that every project that we're paying for can't come in on time, we're inundated with change orders, and the project 60% over the original budget estimate of what it is, and we can't complete? And what are we doing to the owners when we're doing that we are not we are failing. That's what we're doing. We're failing for the owners, we're failing for our partners, we're failing for ourselves. Because even if we can make money roll, go, ultimately, we're engaged in a massively non Win Win scenario. And there will be destructive repercussions from those actions.
Felipe Engineer 33:34
I'm supposed to, as an owner, pay the contractor for progress. I'm waiting until 90 days to make the payment. And what's going to shake out of that is, you know, people who can't make payroll, people that can't get credit to buy the equipment to keep the workforce engaged. And then we're going to also create pressure on the workforce. And on those teams. People don't want to come to work, or it's just dreadful. Yeah. And the environment is so dreadful. Now you've got a labor shortage. I mean, you forecasted this, over a decade ago, we're going to have a late labor shortage in the industry, because we're not attracting people to come to the industry, who wants to come to an environment where you don't get paid for the work you do. You have to argue for what you've actually done. You're treated like a thief actively treated like a thief I've had architects tell me the general contractors lie, cheat and steal on the first five minutes of meeting them. And that they were told in school...
Sean Graystone 34:22
A really large client, the guy goes, you know, my, my son wants to be a carpenter so we take them and we tried to be a carpenter and he wasn't meant to be a carpenter. He just wasn't he didn't like the construction environment or anything else we worked with for a few years. And one day he comes to me he goes, I know what I want to do. I want to be an architect or like, rock on dude, go and he goes to an architecture school. One of the five year programs in the United States and I'm leaving this all very day is pre 1990. In September, October of the end, he leaves during the summer, right? We don't hear anything from him. And I get a phone call at like, nine or 10 o'clock at night. totally unexpected Vaughn. My number was available to anyone who worked for me and Sean's like, Dude, what's happening? You know, how's it going like how's school he went on You're not going to believe what just happened today. I mean, what in the nicest way can be said the fact that we're all trained differently doesn't help anything either. The fact that an architect is trained one way, a mechanical engineer is trained in another way, a bricklayer is trained in another way, their educational disparities are and laborers are trained in another way completely, right? This they all speak different languages. And this is a problem. Okay. But this is a direct story about what you were talking about the crooks being called a crook, because I've been in multiple situations where the architect repeatedly just walked in the door anyone are all contractors are crooks. We know it. We know you're stealing from us. You know what, let's just get this over with as quickly as possible because I basically can't build this building unless I hire, the guy goes, I went into my first I went into architecture, one on one with this major university, he said, and I was in a hall with 250 architecture. 101 students, forgive me, any architects listening to this, but this is a true story. And he goes, so they put a guy's face up on the screen opening lecture, what owners are babies who have lollipops, and they want some contractors are crooks who like to steal candy from big architects or the police, that keep the bad contractors from stealing the candy out of the babies, talk about indoctrination. And granted, that can be a horrible teacher and a horrible scenario. But I do know, people that came out of that school of thinking, because I've had to work with them on and off over the course of my entire career. Nobody's good or bad in one way or another. There's, you know, the standard contractor, Joe, we're going to bid this project how we're going to bid it. And it's like, we're gonna hire three other contractors double their prices and take the low bid. And we're gonna keep the other half kind of deal. I mean, so no one's immune from the scrupulous actions or the incorrect thinking in certain environments. But we have to understand that there is a doctrine of training also lends itself to the disconnects that we experienced within the industry. And what makes it difficult for us to make an effective transition from inward thinking, mindset thinking, fixed mindset engagements to outward thinking, outward mindset, growth, mindset, high levels of all those things. We talked about psychological safety, vulnerability based trust, and there are modern people who are talking about this. There are people making change, the change is not affecting itself quickly, rapidly enough, nor effectively enough yet, although we are going to see a change in the curve here. I'm very hopeful that we'll see a change in the curve here. Eventually,
Felipe Engineer 37:34
Shawn and I talk like this pretty much every time we talk. And every time we talk we do with the smile on our face, because we're hopeful The opportunity is ripe for all of us. If you're listening to this podcast, you have an opportunity to take some beautiful action and make your project just a little bit better. It's not so dire for you, you have some responsibility, autonomy as a human being to get curious about some of these things that we talked about. And try some of these things out. It's perfectly okay and safe, collaborate with people regardless of what your contract says. You can have a high collaboration environment if you let the conditions be ripe for enabling it. And if you're on a site right now, and things aren't going well reach out to Sean or I we're happy to hear from you and talk to you about what you're struggling with. And we've absolutely been there some of us have been there multiple times. Yeah.
Sean Graystone 38:27
Scarred and hopefully not growing old and cynical about this. One of the comments you're talking about just reminded me so I just found this new influencer on LinkedIn. You probably know her, her name is Katie Anderson Have you run across Katie Anderson yet?
Felipe Engineer 38:42
Oh, Katie Anderson has been on my show twice, Shawn.
Sean Graystone 38:45
I am so old. I'm old and behind the curve like way behind I try to think that I'm like all
Felipe Engineer 38:51
Clearly, Shawn doesn't stay up on this podcast.
Sean Graystone 38:53
No, I don't have this podcast. I like most people construction am a workaholic. And as much as I try to change that factor, you know, multiple home life scenario failures can can speak otherwise, she I just saw her whatever it is brief piece on the real meaning of Kaizen and continuous improvement. If you seen that little blurb it is brilliant. And what fleabay saying right now is I urge you to go find her on LinkedIn and watch this real meaning of Kaizen continuous. It's not five minutes, what is it? Seven minutes. I'm like that, Matt.
Felipe Engineer 39:22
Now we'll put a link in the show notes to Katie's video on it.
Sean Graystone 39:25
She nailed that stuff where you're talking about she nailed it. What a brilliant thinker. I'm hurt. I'm a new fan. I'd like to talk to her that she's got another fan.
Felipe Engineer 39:36
It's Sean Graystone.
Sean Graystone 39:37
She got a fan. This is a thinking person who has put together things beautiful and I love the fact that she uses the roots of words, which I'm very much into hidden languages within language, which is understanding where the roots of words come from, so that we can understand what we're really saying when we're using words. I try to be very particular with my words, even though it may not appear like that today. I actually try to be very particular with my words, because I think words have profound meanings. And she, through an analysis of the words that make up Kaizen, and some of the thoughts in their lead to things that you were just talking about and lead to, they're just this stuff is out there, I, along with fleabay, encourage anyone who's doing this to find that burning lasting desire to know and follow it, it's like magnesium fields, you know, once you light it, it's very hard to put out. And to me, the job of the teacher was always just to light it really is just like a magnesium fuse. For those of you played with stuff you shouldn't have as kids on construction sites or anything else. You understand that once you learn to make magnesium fuses are very difficult to light, the lights, they're lit, they're very hard to put out. And so it's but it's the same thing, you know, follow that be an agent of change. That's really what I was thinking fleabay is is beautiful. I was told as a, possibly a Chinese or Pacific Rim saying to change your world, change your country to change your country, change your state to change your state, change your town, to change your town, change your family to change your family, change yourself. So route to effecting great change, just like in chaos theory, his concept of the butterflies flapping wings on one side of the world creates a hurricane on the other side, there is, which is why, by the way, the understanding of the fact that there's no insignificant action in human engagement. In other words, something that you think is a casual go by situation on a job site, when you're walking by someone is not a casual situation, there is no casual situations, everything has to be done. And she speaks to this beautifully with the concept of intent, and purpose and understanding what your intent is. So if you're mindless of your intent, you're not performing according to this new paradigm set of thinking, right? intent is everything. Everything to make the change in the world. Yes, we have to change ourselves first, can I change myself, anybody change anything? Because I'm I'm a stubborn, hard headed, fixed, stupid people you've ever met in your entire life. And so I figured, yeah, it's absolutely the case. I'm not. But if I can get there, then I fail to believe that anybody can't get there. Frank, really, truly, and there is no measure of progress. The only measure of progress there is, comes from the old song story from Nicolas Modi, it doesn't matter if the changes you make is incremental. That's, you know, that's that other cliche thing to ship the battleship, or as they found out in the Suez Canal recently, to ship the giant ship one degree takes an enormous amount of effort, but a one degree shift early on, is, you know, a very wide split when you're 200 miles out. So again, it's like, Don't shy away from the work. No, don't shy away from the work of ourselves. Everyone in construction really works very hard. And they're very few slackers in this world. Where we don't put the focus is on is on changing ourselves. Because we're induced by fear, the failure to be able to face the parts of ourselves that we can demo. And just like that old theory about person in the office who screams a lot of stuff stealing in the office is the person who's doing the stealing. It's because people attribute to other people, the things that they think we don't understand, looking outside the box, thinking at all. We don't understand that word mindset, we attribute our own motivations to everybody else that's around us thinking that they think the same way. We have to get out of the place where we run from with fear and turn around and embrace these parts of ourselves. Knowing that we all come from one source we're all created by something beautiful in a world is supposed to be beautiful. So it's like work on making the world beautiful and making ourselves beautiful. Even the ugly word part. That's the getting naked in a conference room to sign an IFA contract. You know what, it turns out all of our awards and whatever other things we think are so horrible about ourselves, they're just awesome. They're awesome. We need to learn to love ourselves first. You can love anybody else can love yourself, can't be responsible for anybody else. If you can't be responsible for yourself, you can't master anything if you can't master yourself. But again, we talked about this stuff in construction, not often enough!
Felipe Engineer 43:53
Sean Graystone 43:55
But the estimators desk at a company I worked for for years and years and years. These are guys who got their estimating degrees in 1935. They're responsible for building things like the Pentagon and Los Alamos National Laboratories, okay. There was a sign above the head estimators desk and the estimating room, because this is old school and this is what I grew up to at 17 1819 2021. The sign said the following and this isn't a good sign. Okay, don't take this like I'm promoting something. This sign contributed to my inability to think clearly in the field. For the first 15 years of my career. It said architects are professionals that know a little bit about a great many things and they go on learning less and less about more and more until they know nothing about everything. Engineers are professionals who know a great deal about a very limited field and go on knowing more and more about less and less. So they know everything about nothing. Construction estimators are consummate professionals know a great deal about very many things to do their constant association with architects and engineers, and up is frustrated angry old man that was a placard it was this big and it hung over the top desk like Have any people that sign influence, it's when architect bashing or engineer bashing was part of the name of the game. Now the flip side to that is I hate to say it, but I've known architects who have used contractual terms, especially liquidated damages conditions and punch lists that never ended kind of situations. I mean, I've sat in a meeting once with an architect nationally known made the covers of magazines who basically said to the owner, we never pay retainage, that, that's just you can rest assured you're going to get 10% back on this project, we'll make those punchless solonius. Right. And this is no different than a contractor saying they're gonna pad their bid to deal with certain people. I mean, these are all again, part of the dark, I don't want to call it dark, because I don't like to turn dark and light, there's a beautiful piece called don't hate the dark. We're not one of the like elephant blogs or something like that, that was really, really clever. Because just like the analogy I made about the tapestry, the dark parts of the tapestry is necessary to the definition of the picture on the tapestry of life parts, so that everything has a purpose in life, and the adversary is not evil.
Felipe Engineer 45:59
These are the things that elicit emotional responses shown.
Sean Graystone 46:02
These are also reflective of the misunderstandings and failures that cause hostile working environments, the territorial disputes, and all the rest of that kind of stuff that comes up in non constructive, what I would call unhealthy business engagements, whether in construction, or any other industry, we need to work hard to overcome this because I fully believe that human beings are good at heart, good in nature, at their core. Like I said earlier, I think everybody knows the difference between good and bad, right and wrong. And what we have to do is find out what causes us to react like that, and then heal the things within ourselves that cause that type of behavior. Because there is nothing more rewarding. Nothing, there's nothing more rewarding or powerful than being on a high performance, high functioning team. And the the human connections that grow as a result of that are unparalleled in any other experience that I have. It's another reason why as cynical and jaded as I may appear to sound at times, I love I've been in this since I was 17. And I come from multiple generations of what I do love building I love construction environment. I love creating things. It's self satisfying in such a deep level. And I spent years struggling on trying to figure out well, why am I so frustrated? Why am I so angry? Why do I go home and I can't sleep? Why do I panic? Why do I like so? And how and how ultimately do we really, really changed? Because implementing real change. And deep change is not easy, but it's achievable. It is achievable. And I've also found that the single individual effort is not what gets us there. It's the joint effort. It's the conversations I have with you. It's the conversations I have with all the peers in the industry. It's the long deep conversations, have the uncomfortable conversation, have it do it doesn't matter if it makes you squirm. It doesn't matter if it triggers emotional stuff, it doesn't matter, somebody gets angry. The point is, do it. Because in doing to it without conflict, there's no motion forward, constructive conflict is healthy. Anger is not a bad thing. Anger can be indulged in anger can be abused. But anger, per se is a healthy response. Just like guilt is just like other reactions that we have, other emotions that we have, and all the rest of this stuff. These are all signals that the highly sophisticated highly complex mind consciousness of who we are as human beings is always feeding back to us. We need to understand that nature or God or that which creates all things or whatever you wanna call it is always evident and guiding us and we just need to learn how to read to read from what they call the book of nature.
Felipe Engineer 48:51
Just want to thank you so much for coming on to the show. Again, it's been a pleasure.
Sean Graystone 48:55
It's mutual. I thank you for being brave enough to put me on a public forum.
Felipe Engineer 49:02
Very Special thanks to my guest. I'm Felipe Engineer Manriquez. The EBFC Show is created by Felipe and produced by a passion to build easier and better. Thanks for listening. Stay safe, everybody. Let's go build!