Masonry Magazine April 2008 Page. 40
CASE STUDY
Like his grandfather, father and uncles before him, Bill Pacetti began life as a bricklayer in South Side Chicago. Job after job, he saw waste as a result of poor planning and hasty execution. In the midst of this, he heard contractors bitterly complain that they were not making any money on the projects. Believing that with good planning and careful execution, he could run a profitable business, Pacetti was the first in his family to become a masonry contractor.
Lasting advice
IN SETTING UP HIS NEW BUSINESS, Pacetti's accountant gave him some valuable advice, "Know your costs." The formula here is as wise as it is simple. By precisely capturing your costs, you can add your margin and come up with a real profit. Pacetti understood that, beyond the careful execution, any error on the cost side was something he would have to eat. With a young family, this was a risk he was not willing to take.
As he planned his first big job in the early-1980s, Pacetti kept hearing over and over in his head the words of his accountant, "Know your costs." This was a $100,000 job, and he had to put up his house to get the starting capital. He knew that a mistake would cost him dearly and seriously impact his family.
Pacetti kept thinking, "I can't wing it. I've got to know my costs. I've got to protect my family." Just to be sure, he did the take-off three times. After capturing the real costs, he carefully worked the job and, in the end, came in extremely close to his projected earnings.
Pacetti knew he had something, but the time involved in carefully estimating the costs of a job was considerable. This was especially true as the jobs grew bigger and more complex. He needed help, but was not willing to trust an estimator with his family's future. At that time, IBM came out with its first business computer, and a friend of Pacetti's suggested that he purchase one for his business. Pacetti's first reaction was, "Can I mix mortar with it? Can it put material on a scaffold?"
Pacetti resisted at first, until his friend let him borrow a computer for a month. Slowly, but surely, he began to see the value of a computer. He searched for estimating software, but back in the mid-1980s, few options existed. Available options could not go into the kind of detail that masonry contractors needed. It was not until he was introduced to a spreadsheet that the "light bulb" went off.
Like an automatic ledger, a spreadsheet enabled Pacetti to capture all of the individual material and labor costs to precisely calculate his total costs. This, in turn, would give him the ability to provide an accurate bid price to his customers. Moreover, once he set up the spreadsheet, he could plug in new numbers so that it could be used over and over again for new jobs. Still, the spreadsheet simply told the story in numbers and, while numbers are essential, Pacetti worked in the world of plans and details from which the numbers were drawn.
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