by Alex Bajc, Founder
In my late teens I was a programmer. Like Sorcerer’s Apprentice, computers were doing what I tell them to do. But I didn’t have an idea what I want them to do. Screens were green, computers and programmers were kept in dark rooms, mostly basements, for easier climate control, web was still locked at the UCLA basement. Prospect of calculating payroll was not appealing. To the disbelief of my teachers and friends I went into architecture. After 30 years around building industry I know what I want computers to do.
In the summer of 2015 I was working on 5 different projects in different phases. Each one of them was on different collaboration site, which is fancy name for glorified FTP site. I had 5 logins, each one assigned to me by a project owner and each one was about to be killed the moment the project is over, like I never existed. All “introduce yourself to the team”, “add info to your profile”, “customize your view”, “see team directory”, “create a group email”, “create a document template”, all gone. New project, new profile, starting from 0 every time over. I want my own profile! I want it to stay with me through all the projects, to know what I like, to know who I worked with before, to show to other people which projects I worked on, to tell me how many of building degrees of separations I am from Frank Gehry, to tell people who remember my performance from 3 years, 3 companies ago how to contact me today, to allow me to use document template I made 3 projects ago.
In 2015 I was telling Alexa which music to play while working on an 200 million project making specifications in Excel. At some point I said “I can’t take it anymore” and made fields to change automatically, but I didn’t lock them. Next time I looked at the document all my formulas were overwritten with hard values and I had people steaming at me because I changed things. I want a database that knows who and when changed things, that doesn’t allow me to change things I’m not supposed to, that knows to contact my vendor to put in his product info so I don’t have to email him and transfer all the info to my document, that can follow piece of equipment or material from design thru purchasing and installation to maintenance.
On the same project we came fast to more than 10 revisions after final official construction documents issue. Some sheets were issued in REV10 , but some of them were last issued in REV3 or REV 5 or…. Who has the latest sheets and how do I get them? Between 10+ teams on the project we were running circles. I want one click download of the latest set!
Do you know how hard it is to dive into work, trying to stay focused and give you best, while calculating in the back of your mind probability of not being paid. I know how desperate it feels when you realize that you can’t fire a contractor because he has your check. I didn’t go to school to do collections, I don’t want bounced checks, mechanic’s liens, small claims courts, lawyers. I want escrow where I can see the money that I’m working for and that will be released to me when I’m done.
My kids are laughing at me for peeking thru the construction site fence every time I get a chance. I really want to see it, because once it’s done we can’t see insides anymore. All the delicate work of “how it’s made” is hidden forever. I like demolition sites the most because they reveal insights of the building that we were using for years and didn’t know what’s holding it. I like to see it and I’d like to share it. But if I try to share it on social networks, I’ll be unfriended fast, since I also have friends that are not from building industry. I can post few of them, but I want to post many of them and I want to see my friend’s construction sites as well. When my coworkers go to the construction site, I want to see the pictures. Nobody has time to download them to hard drive and send them, it’s so last century. I want photos posted…all…instantly, like Insta.
I want much more….and I want it now!
Dan Ariely, Professor of Psychology and Behavioral Economics at Duke University, writes about honesty:
“One percent of people will always be honest and never steal,” the locksmith said. “Another one percent will always be dishonest and always try to pick your lock and steal your television. And the rest will be honest as long as the conditions are right – but if they are tempted enough, they’ll be dishonest too. Locks won’t protect you from the thieves, who can get in your house if they really want to. They will only protect you from the mostly honest people who might be tempted to try your door if it had no lock”.”
Similarly, escrow, documentation, records, photos, will protect you from mostly honest people who might be tempted, or frustrated, or angry, or challenged, or…. Maybe even more importantly, it will protect you from your own temptations. It makes both parties more accountable for their behaviors, performance, expectations and claims.
After signing a contract and a handshake, Joe the Contractor asks Jane the Homeowner to give him a check to buy materials and start. Jane feels uncomfortable about giving him a check, but doesn’t have a choice. Next week when she calls to check the progress and Joe says “next week”. Since Joe is an honest person, he really thinks “next week”, but Jane’s trust is a bit shaken. After one more “next week” conversation Jane threatens to hire a different contractor and asks for her check back, but Joe says he already ordered and paid for materials. Jane realizes that there is no way back anymore and gets on a warpath and Joe is on defense. Again, Joe is an honest person and has all intention of finishing the job, but other construction sites are not going as planned and his crew is busy. He’s assuring Jane that everything is going to be OK, but Jane seems not to care for his excuses. Joe finally starts the work and progress is visible. Jane likes the progress, but with lack of trust in Joe, she’s on the lookout for any possible sign of things going wrong. Joe feels the lack of trust and is frustrated himself because it’s not pleasant to work with somebody who is looking over your shoulder. Crew is also getting nervous. Jane, not being a professional in construction, doesn’t really know what to look for, and is often making naive mistakes and suggestions, which infuriates Joe and the crew. Situation reaches a climax somewhere half way through the job with a big shouting match and slammed doors. After calming down and realizing that easiest way out is finishing the job, they both continue. After few weeks job is done, small pickups are taken care off. Joe believes that he finished the job correctly, but Jane feels negotiating power on her side and feels that she needs to be compensated for the frustration. Joe asks for a final payment and Jane says “next week”. Joe is starting a new job for Paul and needs cash to pay his crew and support his cash flow on the new job. He pays the crew for the Jane’s job from the advance on the Paul’s job and continues calling Jane. Between Jane not paying and Paul asking if he ordered materials and when is he starting, Joe finds himself saying “next week” to Paul. After many calls Jane asks for a discount and Joe bitterly takes the cut because every day of postponement is costing him on the other side. Joe doesn’t pay himself a full salary this month and continues with Paul’s job hoping that it’s going make it up. At least he’s not going to lose it since Paul is already nervous asking for his check back.
Getting ready to do her home improvement project, Jill the Homeowner, did some online research and decided to use online platform for managing the project. She looks up architect on the platform that did similar kind of work before and contacts few to interview. She selects Philip and they sign a typical contract provided on the platform. They set tasks, timeline, fee installments and Jill puts full fee amount in the escrow account on the platform. Philip, since he doesn’t have any upfront cost, is willing to start when money is deposited. As the project progresses they are uploading drawings sketches, comments, decisions to the platform, and Jill is releasing payments to Philip on the schedule. After few weeks they are ready to involve the contractor. Jill selects 3 contractors to ask for a bid and invites them to the project on the platform and they get access to drawings and documentation. All 3 contractors submit proposal on the platform in the same format easy to compare. Their notes are visible to everybody making sure they are all offering same services. Jill selects Joe and they use Joe’s proposal he submitted on the platform to sign a typical contract, set tasks and timeline. Before start of the work Joe needs to buy materials and asks Jill for the payment. Jill deposits full amount of the contract to the escrow on the platform and asks Joe to send a purchase order for materials through the platform for her to approve the payment. Money goes straight to the supplier and material is delivered to Jill’s home, awaiting Joe’s crew to show up. Joe’s crew is busy on the other construction sites, but knowing that Jill might cancel his contract at any time and in the need for cash flow from this project to start coming in, Joe shows up with the crew in few days. As work progresses, Jill, Joe and his crew members are taking photos using the app that automatically uploads them to the platform. Jill is releasing payment from the escrow account for work completed. Joe’s doesn’t like that his ability to redirect money from this project to other project is limited to his profits, because he could really use some money on the other projects, but at least this project is going smoothly. Jill is happy to see the progress and feels safe with financial arrangement. Jill and Joe have good working relationship and are solving problems as they appear. They are using workflows form the platform to communicate and exchange information between themselves and others involved in the project. After few weeks job is done, small pickups are taken care off. Joe is proud at finished work and Jill is happy that everything went without any of the nightmare scenarios she was warned by her friends. Joe asks for final payment and after small adjustment negotiations Jill releases last installment from the platform. Joe can put some profits aside and use some of it to prepare for Paul’s project that is starting soon. Jill refers Joe to her friend that is planning to do construction at her place in few months.
One Monday morning few weeks into the job, Jill finds the crew sitting in the circle talking. After short “how was your weekend” exchange, she pops the question: “So,..what is the plan for today?” Guys explain that they don’t have a plan since Joe didn’t pay them for last week and they are not continuing until he pays. Hiding anger and humiliation Jane calls Joe who assures that everything is going to be OK. Desperate to get the work going she negotiates with the crew to pay them for one day if they continue working. They are happy not to waste the day without pay and Jane is preparing for nasty conversation with Joe while thinking how to prevent surprise like this in the future. Joe is fuming on his side, angry at himself, his crew and Jane: if they only understood cash flow problems he is facing with other construction sites.
Jill requested that Joe schedules automatic payments on the platform to his crew each time Jill releases a payment. That way Jill knows that money was distributed and that everybody is paid for completed work, crew doesn’t need to worry if they are going to be paid, Joe is not tempted to divert the cash flow under pressure from other projects.
Towards the end of construction Jane gets a notice in the mail that material supplier filed a mechanic’s lien against her property for material that was delivered but never paid. Jane has 2 options: pay the material herself and deal with Joe separately or press Joe to pay the bill. Both options don’t look appealing to her.
Bad Scenario 2 Prevention: Jill paid material directly to the supplier though the platform from the escrow amount. She knows that all material is paid and she owns all materials. Material is her asset, not Joe’s work-in-progress.