BULLETIN: 11-08

August 15, 2011

Trust, but Verify

On his desk in the White House, President Truman had a sign that famously stated, “The Buck Stops Here”! As a state licensed contractor, you should be aware that the law holds you accountable to contract exclusively with properly licensed contractors.  According to La. R.S. 37:2158A(4), the board may revoke, suspend, refuse to renew a license, or issue cease and desist orders to stop work, or debar a person or licensee for “entering into a contract with an unlicensed contractor involving work or activity for the performance of which a license is required…”

This prohibition not only applies to subcontractors that you may hire, but also to contractors that hire you. Even though you may not actually sign a contract, to verbally agree to perform work for an unlicensed contractor for a fee would still be considered a violation. Contractors found in violation of this statute may be subject to a maximum fine of $1,000 plus $500 court costs, as well as possible suspension or revocation of their contractor’s license. The unlicensed contractor is liable to the State Licensing Board for up to 10% of the value of his contract plus court costs, and will, in most likelihood, be removed from the project.

Don’t take a chance on unnecessary delays on your project, or put your license at risk. Take the time to know the status of contractors that you are working with.  Our website provides easy access for current information on all state licensed contractors.

If you still have any questions, contact the Compliance Division at the main office located in Baton Rouge for assistance. Don’t find out the hard way that when it comes to licensing law in Louisiana, “the buck stops with you.”

 “Properly licensed and qualified contractors…It’s the Law!”

For questions or further information, please visit our website at http://www.lslbc.louisiana.gov/ or contact us by phone at 225-765-2301 Ext. 213 or send an email to newsletter@lslbc.louisiana.gov.

Project Management,  the key to proper coordination and communication is vital to TQM. This is where it all comes together… costs, schedule and production.  Without efficient systems driven project management, the attitude just becomes “whatever happens today is OK”.  If you have ever built a home without someone specifically directing the choir, you know what I am talking about.

Forcing the project into a schedule keeps things on track and on time.  A construction project that allows the birds to start nesting is a recipe for disaster.  A large part of the cost of a new home is the direct result of time spent during the construction phase of the project.  I call it “general conditions cost” or “soft cost”, which can run as much as 7 to 10% of the total cost of a project.  By reducing the construction time, the general conditions costs are significantly reduced.  Dailey “proactive” project management saves time and money.  The one man “Chuck in a Truck” often cannot see the forest for the trees, and the added costs of project management far outweigh the alternative.  Effective project management is a skill that cannot be attained on one project, it takes years of proper training, education and experience.

Penn Homes would like to introduce Justin Penn, Project Manager.  We are proud of Justin and his accomplishments.  He comes to us with a Bachelor of Science Degree in Building Construction from the University of Louisiana at Monroe.  He is currently enrolled with the University of Housing at the NAHB which reiterates his dedication to the housing industry.

Justin’s construction experience began before going to college.  I can remember taking him to the Schumpert South Wing Project back in the late eighties.  He would don his hard hat and go with me up on the structure.  I can remember writing his name and placing his hand print in the freshly poured concrete.  He said he always wanted to be in the construction industry like his dad; man that was a special time.  During his high school years, he used to clean the job sites.  He eventually graduated to the framing crew during the hot summers between his college semesters.  It was hard work, but well worth the experience.  He quickly learned what he didn’t want to do the rest of his life, and I was proud the day he received is diploma from ULM.  Justin has three years experience in supervision and project management and is learning our process at a rapid pace.  His knowledge of computers and drafting are a big plus for his position within the company.  Justin lives in Shreveport and enjoys lifting weights, riding four wheelers and tooling around with his chocolate lab  named “Dutch”.

The project manager’s attention to budgets, schedules and production jells the critical components required for Total Quality Management.  We’re proud to have Justin on our team and respect his commitment to the industry.

Part III will focus on Financial Management,  the key to resource support and TQM.

What is TQM you might ask?  TQM is short for Total Quality Management.  I would like to start this 3 part series where the rubber meets the road…the job site.  This is where all of the effort, both the back end and field work, comes to fruition.  The finished product is what drives the builder; it’s what you are proud to put your name on.

Penn Homes would like to introduce Isaac Barnes, Project Superintendent.  Isaac has been with Penn Homes for 3 years and comes with over 15 years experience working his way through the home building and carpentry trade.  A proud second generation builder, Isaac has learned the trade from his dad, work ethic and by taking every opportunity to learn in the field.  With Isaac, you know what you are getting.  He just tells it like it is – good, bad or indifferent.

Isaac’s responsibilities are challenging to say the least.  His project starts with the final review of the plans and contracts prior to construction. Daily observation and direction is the object of each day.  Isaac says “without dealing with people it’s pretty easy.”  Of course with over 30 subcontractors, 45 suppliers and employees, it’s more than a job and not one for the faint at heart.  Isaac supports a rigorous lifestyle, working out to “burn off the stress” from a hard days work.  He is married and has two beautiful children which makes all this worthwhile.

Balancing the rigid construction schedule and budget is the trick, a talent that not many superintendent’s possess.  Weekly project meetings reviewing construction schedules, changes, budgets and warranty work wrap up a week with planning for the next.  It sets the expectation, one of high quality, speed and cost efficiency.

The superintendents attention to detail and communication is what puts the “quality” in Total Quality Management.  We’re proud to have Isaac on our team and his dedication to the industry exceeds our expectations.

Part II will focus on Project Management,  the key to proper communication and TQM.

After months of design, redesign, corrections, tweaks…Finally it is here!  Meet the Chateau Collection by Penn Homes.  The first two plans have rolled out and promise to be another spectacular creation.  The goal was to provide never before constructed sustainable exteriors that appealed to the demands of todays buyer.  Mixing old world stucco with used brick and stone was chosen as the facade.  Harmonizing the mix is key to curb appeal.  Our designer is provided as part of the total building package when selecting us to build your home.  Our designs include towering ten foot tall ceilings adorned with crown molding to suit your needs.  Open floor plans were selected where family can connect after the activities of the day.  Spacious Kitchens and Breakfast Nooks with granite countertops and stainless steel appliances anchor the finishes in this area.  The Master Suite provides for a perfect retreat from along days work.  Separate shower and garden tubs accompany each plan with large walk in closets in the Master Bath area.

Let Penn Homes build your dream home.  It all begins with a phone call to one of the numbers on this page or by simply clicking on the Contact Us button.

Have you ever tried to save a dime and wound up spending a dollar?  At times it is embarrassing, but when it happens to the largest investment you will possibly ever make, it often turns tragic.  Over the last 30 years, I cannot tell you how many times I have heard from a disgruntled homeowner…after the damage is done.  It is what some call a “Horror Story.”  I’ve heard it and I know you have, or possibly even experienced it.

Story after story, job after job, stories keep surfacing.   About one out of three calls received are from troubled buyers, dissatisfied with the results obtained by not properly vetting  the most important player in their new home or remodeling project:  The Builder.  So what can we do about this and how can we keep these unwanted results from occurring?

Recently, I was appointed by Governor Jindal to serve on the Louisiana State Licensing Board for Contractors.  This commitment, to making our industry a safer and more reputable environment in which to do business, is the goal of the board.  Actually, being able to make a difference for the industry is an honor and a way for me to give  forward to those future homeowners and builders.  Getting the “bad guys” off of the street and out of commerce is just treating the symptom and not curing the problem.  As long as there is a demand, there will be a supply.  The construction process starts with a need from a consumer and properly educating the buyer is one way of tackling the challenge.

The solution is a cooperative effort from both the building professionals and the consumers.  What are the warning signs a consumer should be wary of?  What are questions that should be asked?  Learn how to identify the building professional and the following is a quick summary:

• Proper Permitting.  The first indicator is if your project is permitted.  If you are asked to take out the permit, you become the contractor of record.  Becoming the contractor of record brings along with it the responsibilities of liability and workers compensation insurance, code compliance and OSHA regulations.  Unlicensed builders cannot pull a permit within the state of Louisiana as licensed builders are required to properly permit the project.
• Proper licensing.  The Louisiana State Licensing Board for Contractors maintains a database of contractors who are licensed.  Louisiana Licensed Builder.  Select the “Is a contractor licensed or registered?” button.  If your contractor is not on the list, ask for a license number and verify.  Contractors doing remodeling projects $7,500 or more are required to have a license.
• Proper Insurance.  Ask for general liability and worker’s compensation insurance certificates with you as the certificate holder.  This should be sent directly to you from the contractor’s insurance agent to prevent the document from being altered.  Insurance is required for proper licensing.
• Check References.  Your contractor should have many references from previously completed projects.  Ask for a list and make the calls.  Past clients will be honest and you will gain valuable information from this source.
• Continuing Education.  Proper licensing requires continuing education.  The National Association of Home Builders promotes continuing education and has created the University of Housing to administer their education curriculum.  To gain a list of builders in your area that have attained theses credentials, go to Builder Education Link  By completing 64 hours of training, a builder can receive his first designation.  Not only does continuing education demonstrate the discipline of gaining industry related knowledge, it symbolizes his commitment to the industry – a trait not found with the fly by night contractor.
• Ask for a firm contract price.  Never do “cost plus” work as it promotes two things, both not in your best interest.  First, it signifies the person or firm you are hiring is not capable of providing the most essential element of the contract, the price.  It may also show the only skill you are hiring is their ability to call and schedule subcontractors and material suppliers.  Secondly, the aim to reduce costs also reduces the contractors profit, and the motivation to save on costs is not part of this model.  New home projects should never use the cost plus method and only very complicated remodeling projects should even consider using this contracting method.
• Ask for a written contract.  If you don’t get it up front, you certainly will not get it when there is a dispute.  Make certain the contract includes a detailed scope of work and most importantly the price as defined above.  It should define the payment method and terms along with the completion requirements for final payment.
• Have the contractor sign a Lien Waiver.  This should be executed at each payment and also before the final payment.  You certainly do not want to pay for the work on your home two times!
• Ask for the warranty.  In Louisiana, the New Home Warranty Act is the base warranty for any new home constructed within the state.  Go to:  New Home Warranty Act   for a copy.  The law requires the contractor of record to produce a signed copy at closing.  Note that the warranty begins on the date of sale of the residence.  An owner building their own home is bound by this law and the warranty does not begin until they sell the home some 5 to 20 years later.

Home building should be a very exciting and pleasant experience when you use a building professional.  I hope that by using the aforementioned techniques, your venture will progress smoothly without blemish.  Should you need further building information please contact one of our home professionals at the number above.

The value of homeownership has been questioned by the media as Americans struggle in the current recession. But the truth is that most families are happy about their choice to buy a home.

Bankrate, Inc., a financial publishing company, recently surveyed more than 1,000 randomly-selected adults about their home purchase and 90 percent responded that they don’t regret buying their home.

Even during tough economic times such as these, many homeowners realize that the benefits of homeownership are overwhelming — especially in a time where housing affordability is at its all-time high. According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), 72.3 percent of all new and existing homes sold in the second quarter of 2010 were affordable to families earning the national median income of $64,400. At the end of 2007, only 46.6 percent of homes were affordable to families earning the median income.

What are some of the other benefits?

An immediate benefit is that interest rates are at record lows and there is a wide selection of homes on the market to choose from.  It’s a buyer’s market.  Purchasing a home now will allow you to negotiate for more items on your wish list than when the housing market recovers and you may have to compete with others for your dream home.

A little further down the road, when filing your federal tax returns, you will be able to claim two deductions — the mortgage interest deduction and the property tax deduction.

Much of your monthly payment, especially in the first few years after buying a home, goes towards the interest on the loan and not the principal. The federal government allows you to deduct those interest payments from your taxes in most cases. State and local property taxes paid on the assessed value of the home are also deductible on your federal return.

For many home owners these combined tax deductions can result in a tax savings between $5,700 and $11,400, depending on filing status.

Also, homeownership is the biggest source of net worth for most families.  It is the one investment that not only can help you put your kids through college or retire comfortably in the future , it can also be used to house your family and create lifetime memories and a strong, healthy community in the meantime.  You can’t get that from a stock or a bond.

These are just a few examples of the financial savings and other advantages of homeownership.  Learn more in the free “Opportunity Knocks” brochure available from the National Association of Home Builders.

If you are interested in purchasing a home, we’d love to help you with this investment.  Call Penn Homes and we can help you with one of our floor plans and three of our communities.