Building Financial Clarity with Per Pettersson

Builder and tech veteran Per Pettersson discusses how project management and financial clarity are essential for success and efficiency in the construction industry. Drawing on his experience, he shares strategies for better planning, cost tracking, and communication to deliver projects on time and improve client satisfaction.

https://www.linmakconstruction.com

Show Notes:
Background and Introduction of Per Pettersson (0:00)
Transition from Tech to Construction (6:46)
Challenges and Opportunities in Construction (11:33)
Financial Management in Construction (22:01)
Lessons Learned and Industry Insights (39:13)
Final Thoughts and Advice for Builders (45:01)

Find Our Hosts:
Reece Barnes
Matt Calvano

Podcast Produced By:
Motif Media

Transcript

0:00

Welcome to builders budgets and beers. I'm Rhys Barnes and I started this podcast to have real conversations about money in the building industry, the wins, the mistakes and everything in between. I believe builders deserve to feel confident about their finances, and that starts by hearing from others who've been through it too. This industry can be slow to change, but the right stories and the right tools can make profitability feel possible. Let's get into it. Alrighty, Per mics are hot. We're rolling. Thanks for jumping on on the show, on the pod, super excited about this episode. You're an absolute wealth of knowledge. So everybody who's listening, get out your notepads. But pear, before we jump in business per usual, give the listeners a little background on Per Pettersson, yeah. So from a construction standpoint, we've had our company. We started about four years ago as a formal construction company, and we build primarily spec, do a little bit of custom work we've done. I counted up this morning, we've done 24 spec houses over the last four years, and then a handful of custom remodels and couple of new construction so that's construction side. Prior to that, grew up around the industry. My dad was developer to departments, land development, things like that. As I was growing up, he got out of the business while I was old enough to start working in the business. So my experience learning from him was around our farm and projects and property maintenance, things like that. But prior to construction, formerly, I was in an analyst worked in the tech industry, we flipped probably one house a year, and I just got I started to hate sitting behind a desk all day and dealing with all the meetings that come with large businesses totally so started construction company really saw an opportunity to focus on running a better business, and from that standpoint, mean like project management clarity, financial clarity. Because what I saw, my wife has a interior design company. What I saw from her working with with contractors, and then just other people I know that have dealt with it is there's just so much like, I'd say, lack of information in the industry, or just misconceptions on how things work. You know, you ask anybody, they always have a horror story of working with a contractor. You know, they didn't show up on time. I didn't know when they're coming cost overruns. They didn't tell me what it's gonna cost all those things. And coming out of a from an analyst background, you know, information was key, and thought about, you know, how we can bring that over into the construction space. Love it. And, yeah, I think that was like initially, because you are an adaptive customer. Like, when it was like, I don't remember this being like, a challenging sales cycle, in the sense that you were pretty quick to recognize and see the value of adaptive. And then what always stood out to me was like, you basically self onboarded the product. And I think at that point, that's when I was like, Wait, who is this? Like, para, like, and then I was like, I think I looked you up on LinkedIn, because you were at Microsoft, weren't you? Yeah, it was five, five years at Microsoft. Five years analytics consulting before that, for Microsoft, Costco, some other tech retail companies, yeah. So like, you like, and that's just like, further to your point of like, coming from, like, the analyst background, the tech background, the tech background, and the opportunity to bring that perspective into building the product that is homes. So I think that's super interesting one question. So you mentioned that your dad got out of the business as you were entering the business. Yes, we don't have to go super in depth in it, but I'm just curious, like, Why did your dad jump? I think he was just wanting to slow down so he everybody joked growing up that my dad was my grandpa. He was 5052 when I was born. Oh, cool. He'd been in the business for a while before I came along, makes sense. And so he had started off in residential, doing working for an uncle when he came over from Sweden, back in the 50s. And so, yeah, yeah. Hence the weird name. I love it. Great name. Go ahead. Yeah. So he came over in the 50s, started working for an uncle, got into doing into doing remodels, then some custom stuff, then few spec homes, and then got into apartments. And that was his kind of bread and butter. Was building apartment complexes. And he built and owned several of those, and then got into land development. And then it just got, I think, really. Difficult on the development side around Seattle area, and then he kind of hung up the hat on that kept his apartments, but then got into other business ventures. And so he he wasn't a hands on contractor, I'd say, since probably the late 70s, early 80s, and so he still had commercial properties that I did maintenance on. And then we were always building something around our farm that we grew up. Around our farm that we grew up on, whether it's, you know, adding on to the house, building another barn to put stuff in, whatever it might be, totally just the classics. Yeah, go ahead, I was just gonna say that's so. I mean, it's like, not like, he like, exited for any other reason than he'd been in the business forever, and he was probably ready to enjoy some retirement, or, well less of a full on retirement, I don't imagine probably more. It was never a retirement there. It was always doing something. But I think the only downtime he got was he broke his back a couple of times. Gee, what? The little safety plug? Where your harness? He fell off two stories off a roof, landed on a stack of lumber, broke his back. What? Yeah, yeah, that was the second time. First time was a plane crash. And then third time was, he was 85 and he was like, 20 feet up trim trees, and fell off the ladder. So, holy shit. Okay, be safe at heights, yeah, but also, be safe. But also, I mean, those pedersens are just resilient humans. Yeah, can't, yeah, we can't keep them away. Yeah, they bounce back. That's right. Okay, cool. So I think, and going back even more into your background, right? You mentioned that you were always kind of handy, obviously, you, and this is, this is a tale as old as time is like, typically, people that get into construction, have some type of family tie in the construction, right? Your dad's a contractor. You went in the tech world. You came back into construction because you saw the opportunity. Okay, you'd mentioned that you were flipping a house a year, effectively, when you were in tech. But what was kind of the launching point for you doing a flip a year, and then you gain the conviction to full time, send it in construction. So it been probably for about five years I was scheming on, how could I actually make the switch? Because they joke about the golden handcuffs of it's really hard to leave a company like Microsoft, and so trying to find an exit strategy that made financial sense for the family. And so coming out of covid, Seattle was growing quite a bit, and actually a bank mortgage company that I worked for for a number of years reached back out to them to find out what they were doing on the lending side for construction loans. And found out they actually had stood up a program where they were helping acquire and permit properties and then basically assigning them or selling them to builders or developers to build out. And then they had a financing program set up where they would partner on the deal. And so they put up a lot of the equity required, you know, you think a typical construction loan at 75% LTV. So, you know, we'd have to come in with 25% whatever the finished value was, which Seattle market is quite a bit. Yeah, yeah. And so they, they had a separate investor pool where they would partner on that equity portion. And so it cut my port, like my cash up front, down quite a bit, but still kept a pretty healthy profit share out of the deal. And so worked with them to try to find the right spec deal. And once I got that locked in, that was really the kind of the starting point to feel confident enough to start doing my own thing. You know, if I just jumped over and, you know, started trying to build a business, doing remodels and things like that, it'd be take quite a while to build back up, was my concern. And so having a pretty solid pipeline of new build projects lined up was, was really the key, yeah? I mean, that's smart. And I think, like, even more so. So you came out of covid, and then it was like, So you worked in mortgages too, yeah, yeah. Was that, like, consulting tech, or were you, like, actually, no. So, out of college, sold cars for a little bit. I was terrible at it. Hell yeah. Oh, Bear betterson, the car salesman, I love it. And through that, met the president of a mortgage company here in Seattle area, and so got kind of recruited over there to do home loans. Got partnered up with a gal that was really well established in the business, and so worked with her through, you know, that financial crisis of 2007 2008 oh, wow, cool. Time to start selling home loans. But yeah. And so then, after about a year and a half of doing that, I was tapped by the the CEO to stand up a marketing department, because we'd grown from about 30 to about 300 employees. Dang. And so we didn't have any formal marketing department, and so I was tapped to kind of found that and kicked that off, and spent a couple years doing that. And that's where I realized, like the data side of things was was huge, and how we could start leveraging that. And so that's where I ended up getting into analytics consulting, and left the mortgage company. And so as that mortgage company, they they had restructured over the last would that be 15 years, and got more onto the construction side of things. And that's how I connected back up with them. So Got it, okay, very cool. I had no idea that's a cool part of your story, and even then, okay, so it's like, there's just, like, kind of this trend of like, like, a stronger business acumen in your journey. Yeah, right. Like, like, selling cars. Like, for sure, I think that's like, just selling anything is like, a pretty like, normal way for business people to get into the business world, going into mortgages, learning that, understanding that 2007 2008 really hard to sell stuff there. Then you get tapped to do marketing. Then you go on your own and lean into the data analytics side, consult there, work for Microsoft. Then you reach back out to the mortgage company, and that's when you find the conviction to actually go into specking homes full time, yeah? What is that? Yeah, for sure, definitely full circle, I think, generally, like just going back into the opportunity that you saw to bring more, call it business acumen to this vertical or business Lane being construction, what were some of like, the glaring opportunities that you saw initially? Like, call it on your first spec, or, like, right when you entered, I'd say the biggest one on the project management side, just as I talked to other builders and looked at projects, and you drive around town, you see what projects are taken you know, when they started, how they're moving along, realized the project management side you could do, I felt you could do a lot better than what a lot of folks were or a lot of builders were doing. Not to knock any builders, but I think there's, there's some that definitely run projects smoother than others. And so with the first spec deal again, and I've been doing, you know, some little remodels at the same time. You know, you get in for a week into somebody's house and do something, but on the spec side, it was just project planning up front, you know, getting all the bids together, matching that up with the budget and the pro forma that you have for the project to make sure, you know, is this thing actually going to pencil out. But also just getting everybody lined up. I know, last week, couple episodes ago, somebody was on talking about, you know, setting project schedules and how they just kind of go out the window. I forget who that was great episode, but, and, you know, while that's true that I think the key there is just making sure everything's sequenced in the right aspect, and you're not, you're not creating either bottlenecks or large gaps in the project. And so especially coming out of covid, you know, material supply was, was tough, the supply chain was, was kind of shocked. And so I really saw the opportunity to really plan the projects up front, figure out when we need everything, who's coming, when, so so that we're, you know, getting the project done in as quick as time as possible. But also when you factor in things like interest carry like these projects get really expensive, really quick if you don't run them as efficiently as possible. And so then trying to find the balance of, you know, we don't, obviously don't obviously, don't want to cut corners and, you know, build an inferior product by trying to move too fast. But just going back to your question, I think the real opportunity was just running it in in a really well organized manner, rather than, you know, scratching out on paper. You know, what happens when calling the guy a week before framing starts and asking her, Hey, do you have time to start next week? You know, had I given him a month's head up? And they said, No, we got projects that are coming up. We can't start till this date gives me time to pivot and, you know, find another crew, do whatever I need to do to really make sure it stays on track. And so that kind of dovetails in the financial side. But I think the initial one is really just the project management. I mean, do project management and financials go hand in hand? I just did a post on LinkedIn effectively about that and how that relates into the client experience. I digress. Why is it like, okay, contractor? Well, raised by a contractor flipper on the side of a tech analytical professional career jumps into specs, recognizing the opportunity of call it effective, scheduling, right and project management. How can somebody with calling a spade a spade? Such little construction experience, like fully committed construction experience, recognize that opportunity and execute on it. And then you've got project managers and business owners that have decades of fully committed experience, just totally getting owned by scheduling and getting subs lined up, yeah? How? I don't get it? Because, like, to me, it sounds like it's like, again, the guy that's like, I'm not a builder, right? Like, I don't I my, my dad was a builder. I don't have any interest being bags on, like, that type of thing. But I just don't get it. Because you hear story after story after story of a project manager calling a sub beating him up, like, god damn it, I need you here at this time, and you're going to be here. And it's just like, well, what if you what if you just organized it better? What is the disconnect? No, that's a really good question. I haven't really given much thought to it, but I'd say one aspect just outside looking in, you know, it's, I came into it without that, you know, hardcore construction experience, like you said, and so I had to rely on the other skills that I had, which was running a project, tracking the numbers, just organizing it. And so I had to lean in pretty heavy on the project planning side to make sure I wasn't missing things. I didn't miss inspections. I had all the trades lined up. And so I think that kind of kicked me off from a good start. And I don't know, you know, I can't speak to to the other side of, you know, the 20 year veteran that's struggling to make the transition or run more efficient, efficiently, effectively. But I think it's hard to get out of old habits, and it's really easy to get mired down in the day to day of, you know, especially if you're a smaller company and you're on site, managing the subs, doing everything, and then it's like, oh crap, I got to look ahead two weeks and figure that out. What's coming up, what do I need to order? Like it is a juggle, but I think it's being diligent in time management to make sure I'm setting aside that half an hour to an hour every day to check on the schedule, make sure it's updated. Think about what's coming up. But also the start of the project I do this on our custom ones, is I go in and build out the entire schedule before we even start. And so, you know, yes, it's going to go to hell. You know, it's the plumber is going to call and say, Hey, we can't start this date, and I got to bring somebody else in while the plumber is supposed to be there. And, you know, it's cascade of issues, but at least it gives that good, that good starting point at the the onset of the project. Now, I'm just, you know, throughout it, I'm making tweaks. I'm not trying to kind of build the ship as or build the plane as we're flying it. So it gives me a good foundation. I think also, you know, coming in without the long term construction experience like I, I had to spend a lot of time on project management in my other roles. And so I looked, I approached it like, you know, it's no different than, you know, building a software feature or anything else. There's a set of folks that that have to be involved. There's a set of steps that have to take place just get those things lined up, you know. And obviously there's, you know, the quality control and the you know, you got to walk the site and talk to the subs and do all your, you know, your setup meetings and your planning and everything like that. So that part's different. But at the end of the day, it's, you know, no different than building anything else or running any any other project. Other project. That's why, you know, if you look at like a Gantt chart, you know, they look exactly the same, whether it's construction or software, you know, really any other business, because it's just a set of steps, you know, one after the other. Totally, I think, like, and I literally just did an episode. Do you know Paul Atherton at high Spire? Do you know high you never heard of Highspire? Basically, like a business consulting Well, a construction specific business consulting group heavily emphasizing on, like, scalability, raising capital, that type of thing. I think he would actually like talking to Paul. So if you want to enter, let me know. But point being, we were talking about, basically, builders getting out of the way and out of their own way, rather and, and, and grasping the identity that is required to go from being in the field bags on to the owner, business owner identity, right? And I think that's a lot of like. What my takeaway was is like, of course, you have a background in like, product management, project management, the similarities between the two, almost it being an advantage of you not having all the years of experience and getting sucked into the minutia of the day to day that is building a home. Not to say that you aren't involved, but you were at least able to come in with a perspective and place an importance and emphasis on the project management side that I think a lot of builders struggle with, and I think that primarily is chalked up to a where am I comfortable as a professional, and it's really easy to get sucked into the day to day of. Managing the project. Bags on on the project, and not prioritizing that project management. Oh yeah, 100% and I mean, I I still put the bags on a fair amount, and we do all our own in house carpentry. And just because I got tired of I started off that way, went back to subs for all the finished work. Now we have full time carpenters that are, they're doing that. And I'm, you know, there's probably at least a day a week where I'm, you know, bags on, so to speak, field. And it is, it's tough to separate that, because that's fun and it's enjoyable. And you can see, you know, the end of the day, you can see your progress, whether it's, you know, hey, I framed up a wall. We got that set of cabinets installed, whatever might be. You go home at the end of the day, and, you know, it's a very tangible output that you have, whereas, you know, managing the business, it's not very tangible, you know. And it's, you know, the end of the day, the end of the week, it's okay, great. I have a cool looking schedule, and I made, you know, 200 phone calls, but it's, it's not that same feeling as as creating something and to your point of, like, stepping out of that, you know, bags on. I think that psychological aspect is really tough, because you're going from a tangible to an intangible kind of result totally. And that was one of the reasons I got fed up with the corporate thing because there was no tangible result, I was just gonna say that go ahead. It was like the entire intention for you leaving Microsoft was because you were tired of sitting behind a screen, right? Yeah. And I loved, I loved working on projects, but in order to make it a sustainable business, I had to find the right balance of keeping up the business. Computer work, so to speak, and actually working out in the field, and strike a balance between that to make it make sense. Totally, totally okay. Now this is great. You mentioned on the back end of like, the importance of project management, and how that is like a direct run into like tracking project financials. Where did you start to see like, project management improvement or project management slippage impact financials? I mean those big, glaring opportunities Go ahead. Yeah. I mean the big one on the spec side of our business is like interest? Carry, because the longer it takes, yeah, you know, we're looking at projects that are, you know, 800 $1,000 a day in interest, like, 800 to 1000 a day on interest. Carry, yeah, what's the loan amount on that? So, what's that? Wasn't it, 75% is all 75 and then with, with other investors, you know, they're, we're paying interest on, on their money as well, sure. And so, yeah, we're, you know, we're up five, $6 million on, on some of the loans. Dang. Like we've done a couple of 12 unit project or, sorry, a couple of six unit projects concurrently, 12 units at a time, that was a that was a grind. But, yeah, that's on the bigger ones. That's where, yeah, the interest carry becomes a really big factor. And so that one's just a speed aspect, you know, the quicker you get it done and on the market, the less you pay an interest. I'd say. The other ones that are kind of smaller, but it's, you know, ordering materials. You know, if you get in this, if you order, you know, say, I need, you know, my mill work pack, you know, my doors, my baseboards, all that stuff. If I wait until the last minute, either I'm paying a rush fee, I'm not able to shop suppliers that don't have time to negotiate. And so it might only be 5% 10% difference on a$10,000 line item, but you do a bunch of those, and it adds up. And so the project or the management side of it, having that lead time and leeway to look at different options and figure out different solutions is huge, but also just on the so that's the material side, but on the kind of process side of things, you know, really thinking through, you know, who's coming first, what aspect of the build are we doing at what time? How does that help save money throughout the course of it? Whether you know, I can, you know, in multi unit projects, I can, you know, get drywall stock before we do rough ins, because if I wait, I can't get a drywall lift in there, and I have to hand pack in drywall up three stories, because now there's another building in the way. So just things like that. I mean, we're, we're able to save a little bit of money here and there by thinking through, you know, all the all the steps of the process beautiful. Um, how long did it take for you to get to that standpoint? Because I think, like, I think I'm picking up what you're putting down with the drywall. Example. Basically, it's like, we've got to get material up to the unit that we're drywalling. And. And we can't explain it a little bit more, I'm envisioning like, like, some of a boom lift, yeah, I think, yeah. And the the denser area where we're building some of our projects, so a lot of the new construction that we're doing is considered infill development. So we're taking an existing lot in in Seattle area or general area, but existing residential lot tearing it down, building, you know, two, three houses in its place. And so site access becomes really tricky. And we might have a site where, you know, one unit is back behind the other one, without an alley, without street access without anything. And so by the time the ones go up in front of it, we can't get any equipment to the ones in back. And so, you know, after the first project of doing that, and I kind of boxed myself in, we had to really rethink how we how we approach or how we stagger out the trades and deliveries and things like that to make sure. You know, we don't we can keep it moving as quick as possible, but we don't exclude the ability to use equipment and speed things along. And so like the drywall example, we had one project where the drywall would lift would reach the building, but if I built finished framing the house in front, I couldn't reach it. It's like, once I got house in front, up to the first story, I could still reach over the top of it to get to the one in back. And so we, you know, scramble, get the roof on, get get the house papered, pack all the dry get all the drywall delivered. So we pause framing for a couple of days, get all the drywall in and then go back to framing the front line. And so that way we can, we're reaching over houses, reaching around houses to get things done, yeah, trying to reach around over with deliveries, with, you know, sometimes it's paint, you know, we're building five feet off a property line. So I got to think of, you know, how can I get a lift in, or get ladders in for the painters so they can do their job efficiently? And so just a lot of those little, little things that, you know, if I were to take a more traditional approach of, like, we're just gonna frame the whole thing, then I'm gonna get the plumbers in for the whole thing, you would miss out on some of those, those opportunities. Yeah, okay, so no, and that makes total sense, and that's where the project management and the financials go hand in hand, for sure, because it's like you're sitting there on, like, call it like a first project, and you aren't thinking about this stuff, which I think there's a lot of builders out there that are intrigued by spec building, right? And if you're not thinking that many steps ahead, it gets really expensive, really quickly, yeah. So I think that, like, you just explaining that is, is helpful. Because I think when you are going into a spec build, really, the pressure is coming from, like, the interest, right? And like, how fast can I get this thing off my books? Well, yeah, and then yeah, and then thinking through of, like, Okay, if I, you know, I'm delayed a month. Well, now the house is coming on the market, and, you know, Thanksgiving, which, you know, nobody's shopping at Thanksgiving, Christmas time. So you know that mad scramble of, you know, getting a day, you know, hitting your financial targets, and then getting it on the market at a time that you know the market's receptive to shopping, essentially, and so, yeah, um, okay, because custom sites cut clients really like that, that management aspects, they know what's happening when. And totally okay. So even in terms of Okay, so the project management is a huge win. You again, you had mentioned, like playing in this into the financial side. What opportunities Did you see to run a construction company better from like, a financial process, we understand the project management wins. We understand how that starts to, like, bleed into the financials. But what was the financial opportunity? Call it the financial ops opportunity. So I it kind of kicked off with so my wife has the interior design company, and her working on projects and just getting, you know, upset, because a lot of the design aspect comes into play at the end of a project, right? Like, that's when you're installing the tile, the light fixtures, the, you know, plumbing fixtures, furniture, everything. And so seeing those budgets get cut from her because the projects were coming in over budget, you know, just made me think of like, Why? Why are these things coming in over budget, and then you're having to cut corners at the end of a project? And you know, that had nothing to expect on the custom side, but just trying to think, like, Why? Why is this happening? And talking, you know, friends, acquaintances, things like that that have had projects. You know, it came down to poor financial planning and then poor communication throughout the project was kind. Of the crux of it. And, you know, to oversimplify it, it's like we didn't know where our money was going. And, you know, I blame that 100% on on the contractor. You know, it's not the customer's fault. You know, a customer might build, you know, remodel, new build, whatever might be, might do, you know, 123, in a lifetime. And as builders, we're doing, you know, multiple a year. You know, we were the experts on on how that runs and what's it going to cost. And so the excuse of, you know, hey, it costs more than we we thought, you know, I get that to a certain extent. You know, five, 10% makes sense. But when you know, you hear people that are cutting out their dreams because now we can't afford the nice fixtures that we wanted, or, you know, we had to tap into our savings because we didn't know it was going to cost, you know, 20, 30% more than we were quoted. Like it just, I it was a big opportunity to be, I'd say, more kind of honest and upfront with customers on what was happening. And so the from an operation standpoint, for me, it it was okay. How can we, and I didn't really understand cost coding and all those things before I got into the business. But just for I want to touch on that, but keep going. Okay. Outside his perspective, is like, I need to know where all the costs are going. And then working on that first bank budget, it's like, okay, I need to be able to say, you know, how much am I spending on foundations, how much am I spending on lumber and mill work and finished carpentry and all those things. And it only made sense that if I have to say how much or draw against these expenses, I better be able to figure out what it's going to cost me across all these categories. And you know, the bank is a lot less flexible than, you know, going to a customer whose house is torn apart and saying, Hey, I need$10,000 you know, another 10 grand or I'm not gonna be able to finish your house. You know, if you go to the bank and say, I got, you know, I need another 1050, 100 grand, like it is a mountain of paperwork that you got to go through to justify that cost. And so, you know, organizing the financials in such a way on a project from the bidding standpoint, all the way through to completion was, you know, appeared to be a huge opportunity, and then, yeah, taking on that first spec project where it was, you know, kind of blank slate. Here are the plans. Here's the site. What's it going to cost to build it? You know, I had to do a lot across all the cost codes and figure out, you know, every step of the way, what this thing cost. Totally, I the point, and then that's, that's great because, I mean, frankly, like, that was the motivation to build adaptive was our co founders, they were working with spec builders and Phil spec builders down in Austin, and they were initially going to build a tool for, like, speculative builders to identify the most ideal lots. Oh, and Austin, yeah. And then they, like, quickly found out that there wasn't, like, a huge total addressable market for it, like, not enough spec builders effectively, to sell it to or build that product. But as they were working with these builders, they started to, like, understand, like, Okay, what's preventing you guys from, like, scaling or getting financing on this? And then they started looking at books, and they're like, and they're, like, all their books were a total mess. And like, they couldn't paint that. They couldn't paint that financial picture for banks to have conviction to lend them money or three Cost Codes of labor, materials and subs. It's, there's not, yeah, there's not the financial clarity that a bank's gonna want to see totally, totally. And I think the financial clarity and like, you bring up Cost Codes again, and you'd mentioned, like at the beginning, you didn't quite understand Cost Codes. Again, I'm not a builder, nor am I a CPA. I've just been working with builders for like, almost 10 years when it comes to construction software. Call it what, what was the learning curve for you, or what was, what was the difficulty in understanding cost codes for you? It made a heck of a lot of sense. Okay, so it did make sense. Oh yeah, it made it made sense right away. I just never encountered the because I had other little businesses over the years that I spun up just as, you know, side projects, and had to kind of do the accounting on, but yeah, starting my company like, I had to stand up QuickBooks. I had to figure out how to organize that. I had to do the whole whole thing. And so what, that's where I started researching the, you know, just construction financing in general. And cost codes kept coming up. And then you see the whole big list of the, you know, the, what is it? Nine, you know, the nine cost groups and everything. And there's division codes and stuff. Yeah, the, yeah, the nine, you know, hundreds and hundreds of cost codes. I'm like. This, this seems way too much. And so that's where I started thinking through, basically just looking at the steps of the project and being like, Okay, we have all our dirt work, you know, we have all our rough construction, we have utilities. And start putting together a list that made sense, and really that aligned with the bank draws, the bank budgets that they wanted to see, and that was my starting point for it. But it made, for me, it just made a lot of sense, and I've definitely refined them over the years, like I used to have, you know, for each cost code, I had materials and labor and subcontractors, and that was, you know, it became too much to try to enter all that information in, and so I had to find the right balance of what gives me, you know, enough clarity to understand where I'm, you know, how projects are running, where I'm going over, where I'm going under, where I can improve, but also not make it so cumbersome that when I'm entering it in, like it, it's the right thing, because you can, you can definitely go overboard on the cost codes. And, you know, things aren't getting categorized the right way. Because, like, you know, for instance, we have framing material. That's my lumber, that's my hardware. And, you know, you see some guys that break it out into, you know, four or five different cost codes, or the same thing for foundations, it's like, okay, there's concrete, there's rebar, there's, you know, labor, there's all these other aspects of it. And, you know, I get a bill from my, you know, a sub, and it's, you know, they don't break it out. So how the heck am I going to break it out into those different things? So I just had to simplify to the point that it made that I could track it or, you know, input it properly, but also gave me the clarity. And so, yeah, just circling back into question, like, how did it work, getting stuff on it? It's like, yeah, I just had to find a way to that I could align my books with what I want to do, which was provide, provide enough financial clarity for myself, the business, the bank, and ultimately, customers on the custom side that you know that made sense and they felt comfortable With totally I think this, like Costco is, I mean, to your point, it's just, it's tales all this time people making Cost Codes something that they're not. And they're like, Well, I want to use cost codes, and I want to know what the cost of every board, yeah, and how much they spend on two by fours, and how much they spend on rebar. It's like, that's not really the point of cost codes. And to your point, if you get cost code bloat, you're not going to use them consistently. It's not going to paint the picture that you think it is. And really, the entire goal of cost codes is for you to understand more of the like the progression the costs and the income of the progression of the project. Yeah, and I use it, yeah. And I use it quite a bit on, you know, on the kind of the flip side of that, on estimating out the next project. Because, you know, I don't go down and do take offs at the material level, level for framing and siding and all that. But each project is different. So it doesn't matter, you know, if I spend, you know, $5,000 an engineered lumber on one job, that's not going to easily translate over to 5000 engineered lumber on the next job, depending, you know, it's going to be a completely different build, engineered differently. I just need to know, what am I paying my lumber supplier for? You know, per square foot, and you know that average carries over. But at an individual material type level. It doesn't really, it doesn't matter, you know, now if I was, you know, say, if I was my siding supplier or my siding sub, and I was running, you know, their books, yeah, it's going to matter how many nails I use and, you know, how much flashing I use, things like that. But at my level, you know, kind of combining all those costs together. I just need to know what the siding costs, and then I can track it. You know, if we're, you know, if we're going up a level, or using a little nicer material, or, you know, something like that. Can make adjustments, but I have that base cost at a fine enough level that we can track the project, but I can also kind of bid out and project out the next project, and then understand, okay, that's this level of finish, and then I can make adjustments from there totally, I guess. And this is just might be a side comment, but I am curious, just with your background in tech, like you see software products out there that will go down to, like, the item level of tracking, right? It's like in builders, and there's, like the cost catalog job tread, they have like a third level of categorization. Oh, yeah, yeah. Why? Yeah, yeah. Are you a job track guy? Are you? Are, you're a resio guy, aren't you? I finally landed on resume. What do you use? First, a long history of trying other ones. Okay, cool. But to that point like, Why? Why are, why are software companies doing it? I understand from like, a sales standpoint, like, it's really easy and fun to sell. But then what's the application? Should have it. What value does it actually bring to the builder? I could see, I could see, if you do a lot, a high volume of smaller projects where, you know, you miss a shower valve on a bathroom remodel, that's a lot, you know, larger percentage of the cost than missing a shower valve on, you know, a full new construction house. And so if you're doing, you know, if your bread and butter is, say, bathroom remodels or kitchen remodels, I could see a world in which that granularity makes sense. But at at the scale of projects that we're doing, I just don't like it doesn't, it doesn't matter, like I need to look at aggregate costs of across categories, not the minutia of of every little detail. And I could be wrong on that, but, I mean, that's, that's my guess, yeah, yeah. And also, some people, you know, I saw this, this happen in over the years, in different roles, where folks that feel or that are busy counting something, doing something, making, you know, making something, whether it's Hey, I made the most detailed estimate I have ever made, and it took me 10 hours. They're going to feel really productive for those 10 hours. But really, if you was that, was that activity worth the effort at the end of the day, or was it just busy work? And I saw that like on the marketing side when I was working at mortgage company, we have loan officers that would go out and spend hours and hours and hours making these flyers, and they come to me and say, hey, you know pair, you know, can you, can you sign off on this marketing? Sign off on this? I just made the best flyer ever for this open house. Like, well, how much time did you spend doing that? Oh, you know, I spent all day doing it. And, you know, I had to go get the photos, and I cropped and just right, and I did all this stuff. Like, you could have gone out and met, you know, had lunch with a realtor and followed up on three leads during that time. Like it was, it was a wasted effort, but they felt really busy, and so they thought they were doing something really good, totally, you know, I could see that playing a factor. You know, you make a extremely detailed estimate, you feel really good about it, but were you any more accurate than if you took some some larger swings and made some broader assumptions, probably not, you know, maybe it was two, 3% better, you know, or closer to the pin. But in the grand scheme of things, was that, was that the best use of your time totally, I and that's that was, frankly, like, going to be my comment towards even, like, the, call it the kitchen and bathroom modeler that's trying to go, like, down to the screw on an estimate. And it's like, but like, while that might be a bigger hit on, like, a plumbing fixture, like, even when you consider the time that goes into building out these catalogs and these products and, like, trying to leverage them in a way that's going to be beneficial. Like, can you really afford to be doing that? No, no. I mean, I tried to. I The first product I had. It was builder trend, the first one I had. And it was, you know, they're selling the cost catalog. And, yeah, I started to go down that path of starting to enter products in. It's like, this is absolutely ridiculous. Like, I'm going to spend weeks trying to enter in all the different, you know, permutations of products that I might use, materials that I might use, and it's going to go out the window in six months, when all these prices get changed 1,000% then you're updating that, it's just like, Yeah, okay, you'd have to have a full time person just trying to keep track of all that to make it make any sense. The expensive part of software is not the cost of the software. The expensive part of software is the cost of the overhead that it takes to maintain that software in order to see value. I'm gonna put that on a plaque. I've sold a lot of software. It's dude, it's the truth, it's the truth. And, like, I think, I think a lot of builders are blinded, and that's why I had mentioned like these, like those features. And frankly, like a lot of these products, they can be fun to sell, because idea of them is incredible. It's like, God, I could do all this stuff in there, and this could help me do this, and that I could get down to the penny on this. And it's like, but you're not considering the 40, $50,000 a year person that you should have in that seat, and if it's not a singular person, there's gonna be 40 or $50,000 in in man hours. Oh yeah, keeping it up to date across the team right to where to your point is, like, is this the best use of time? I was talking to another builder just recently down in the south shore Boston, and he was like, Dude, I just did something like, help me keep on track. Like, I need, like, a project management software or something like that. And I was like, Okay, well, like, what is your actual problem? He's like, I just, like, I need, like, my phone is, like, blowing up with text, and there's documents getting sent to me, and, like, organizing all of this. And I'm like, Okay, well, this is a one man show, and he's doing like, three specs a year, right? And, like, all the information. Is already there, and is the best move for him to go in and then, like, start just translating data into this, into these, like, types of software, I don't know, maybe, but when you think about the application of it, it's like, Dude, you're gonna get an admin some like, for this truly, to take time off your plate, you're gonna need to get someone that's gonna be doing this translating for you. Oh, yeah, yeah. And you know, those are getting back to financially. Those are indirect costs. So if you look at a you might improve the profitability of a single project, because now your track, your costs are just a little bit better. And so at a project level, your margins might get a little better, but now you've added in a, you know, a person's$50,000 and that's not going to direct costs. So depending on how you manage, you know, the P and L like, it's going to crush your business, unless you're making up for that somewhere else, you're going to have to increase your margin so much. And it might make sense, and it might work, but is it? Is it worth that extra cost? So it's, it's the effective time spend conversation. And frankly, like, that's like, kind of a good way to wrap up the conversation, which was like, project management, impacting financials, and you seeing the opportunities to win in this business. Um, yeah, no, Per, I think this was great. Like, I, like, I, we had started this recording. I appreciate you hopping on, because I do. I think you're a wealth of knowledge for everyone out there, if you want to, if you want to find Per, his construction company is called Lin Mak is it Lin Mak construction? Lin Mak constructions, l, I, N, M, a, k, yeah. Check out. Check out Per's website. He, actually, he's done a webinar with us talking about labor, tracking labor, so that's gonna be in our Help Center Online. But per, I appreciate you like, I like I mentioned jumping on. Do you have any any words of wisdom that you would leave builders with more so than you've already provided? I Yeah, I mean, I don't. There's so many people in this industry that have so much more experience than I do, and I, you know, definitely try to learn as much as I can from them and the podcast and that. So, you know, my little bit though, I'd say it's just run better, run great projects, manage projects well, like as an industry, we have such a bad reputation. You know, there's so many great builders out there, and it's not a bad industry, and but you just hear so many horror stories like, run good projects, be upfront with customers, be honest with customers. And I think the more planning and more planning that can be done, and the more, the better the communication is, like, it's just going to uplevel all this. And so that's just spending more time and effort doing that, I think, is huge. And if you don't know, like, learn how to there's so many resources out there to on project management, you know you don't have to go to some course or construction management program to do it. Like, there's some great tutorials out there and great info. This being one of them, this is now adding to the great resources that are available. I love it. I love it. Per, you're awesome. Thank you for coming on for the third time again, I need to work on this. Like, Midwestern goodbye. You know, it's like people like, they say bye, and then they start talking again. Yeah, you just keep coming back. I know, I know. I'm terrible at this. I can't get away from my roots. Have a great rest of your week. Excited to get this one released for the for the audience, and as always, if there's anything we can do, don't hesitate to reach out. Sounds great. Thanks. Reese. Take care, awesome, see you Per.