Is there a better way to execute car projects

[XLexusTech]

Disclosure: For several years I have been having this internal dialog with myself about mixing an early semi-retirement with car building. Specifically how to retire from the business that I am in and taking a significant salary reduction but getting the opportunity to work in a custom car building environment.

I have spent the last 15 or so years building teams that design and implement custom software solutions. Prior to that I spent 10 years with Lexus 2 years with Jaguar and a few of my formative years at a race engine shop and a corvette restoration company.
In the last 5 or so I have been using Lean/Agile methods to deliver custom software solutions to big banks and financial institutions. The adoption of these practices has increased quality, customer stratification and profit while simultaneously reducing time to market. I would love to explore if I could replicate these successes in the context of custom car projects.

It got me thinking... could these principles help solve the problems that plague the custom car customer? Over budget, scope creep.... body shop hell... call it whatever you like... typically what you end up with is paying too much for less than you expected and getting it later than promised. Meanwhile the builder feels like he lost money...

Problem 1: I will be far too old and unskilled to be a hands on craftsperson.
Problem 2: The business itself is plagued with bad business practice (the ole better craftsmen then businessmen issue)
Problem 3: Every build by its nature is custom and as such subject to lots of uncertainty.
Problem 4: To my knowledge no structured project management principles have precedence in the custom car world.

So on to my question.. Is this pipe-dream something that the pro-builders and customers would have an appetite for?
Is there a problem here worth solving?

My experience and reading on this forum and others leads me to believe that from the customers point of view there has to be a better way of doing things. From a shop point of view the idea of increased productivity, higher profit and more satisfied customers is a win win. I was wondering if something like doing a project in a “Lean or Agile” structured way via these methods would be attractive to anyone?

Referance Lean in the construction buisness: http://ennova.com.au/blog/2011/09/ag...d-construction

[68Cuda]

Just some random thoughts and my observations based on watching places operate, and my prior experience running an auto service shop. I have also thought about this path for "retirement".

I am a former ASE certified Master Tech, have an Auto Tech Associates degree, have a Bachelor and Masters in Mechanical Engineering, and 19 years experience in a variety of development, design, manufacturing, and project management roles on top of my 8 years as an auto mechanic. I was heavily involved in round track and drag racing when I was younger and even worked at MSD (Autotronics Corp - El Paso, TX) for a short period in the 80's when I was a student.

This business is hard to model in the traditional sense, the body, paint and fabrication work still require some level of craftsman / artist type work which is difficult to estimate. The variation in the work is also hard to get a handle on, most vehicles need to be taken down to bare metal before you have a good idea of the scope of work. With sufficient experience base I think one could get reasonably good at estimating. I think the problem also lies in the fact that if you have to do a large amount of sheet metal replacement, bodywork, and paint then your time and materials will quickly outpace the value of the vehicle in most cases.

I think some of the really big operations have good project managers / shop leads. The problem is that in order to be efficient, you would have to have some scale and have a group of workers with a variety of skills and some flexibility. The issue this creates is that you need a workload that can keep this machine fed. The few shops that seem to be able to pull this off and do well have a customer base with deep pockets and run a large number of big projects with long timelines. Then you can fill with smaller projects and schedule work around the bigger ones. That kind of customer base only seems to be available to a few shops with reputations of building top level show winning cars. Kindig, Foose, Strope, Trepanier... and I think the common denominator on these guys is that they are artists first.

Other shops, like DSE, have a core business that involves selling a product. The builds in their shop seem like partly R&D for their products.

Finding and keeping good tradesmen is a difficult task. Having a good recruiting practice and good people management skills would be key, it would also be helpful in dealing with customers. At some level you may also have to make a call on what you can do in house and what to farm out. For example, I know a local shop that does custom upholstery, headliners, and convertible tops that would be hard to beat.

And you forgot about Problem #5: A lot of customers have cash flow issues... real or perceived. I have seen a lot of projects stall because the customer stopped paying.

[Munssey]

Great topic!

I have lead team and projects using a great deal of methodology from the PMBOK for years and have had the same thoughts\ observations. I think its a great idea if the details are worked out. There is CLEARLY a small PMO presence in many of the shops we've dealt with, which leads to missed deadlines, unexpected costs and fuzzy expectations.

A small story of one place I did see it in action:
In my business travels, I have only see one shop use a formal methodology and was so interested in the process that I had a one on one with the owner to share his thoughts and see how well it works from his prospective.

It was a custom paint shop, which was shocking since body guys are notorious for having creeping completion dates.

He had a calendar on the wall in the main shop area and it was outlined in a 2-week sprint layout. When I saw it, I knew there was a SCRUM methodology in play at his shop.

At our lunch meeting, he explained that it works as long as you can have what he called 'heavy resources'. More specifically, your customers have to have committed payments made at the end of every 2 week sprint. The other part of the heavy resources that he was constantly in need of was qualified paint and body employees. He explained that attrition was a problem by nature of mixing body and paint guys and structured project management because of 2 observations he's made:
1. Very good paint and body guys like structure and quickly move from working for others to working for themselves because of their own self-motivation.
2. Less accomplished paint and body folks who do the daily grind are usually not driven by structure so applying PMBOK methodology to their work day would be met with push-back and typically, loss of employment.
He accepted that attrition is something that comes with his labor community.

The car we had in was not only painted and returned ahead of time (by two days but hey, that's great) but the project schedule was hammered out with us before the car went in and we had to sign a commitment to deliver the car on X day in order for him to honor the schedule and payments were made at the end of each sprint or the work done in that time. It worked great and at the end of each sprint, there were picture updates sent and description of what the next sprint would include. Needless to say, we were impressed and incorporated small parts of their process into our own.

I think you're on to something and it's needed in the industry on a larger scale. Helping customers realize the advantage to the added cost that implementing formal PM processes may take time. Seeing that time is our most valuable resource on Earth, I could see how others would pay a bit more knowing that when you set a delivery date, it will be met.

Cant wait to hear what others have to share on this topic. Good one!

[ironworks]

This is a great topic and something I have really tried to put my total effort into for the past couple years. I feel this is the most important aspect of any business. But I'm not convinced you can have a solid pre planned program when so many variables can be out of the shop owners control.

Customers cash flow - This has no relation to the the depth of the customers pockets. This has to do with the urgency of the customer to pay for the agreed bill during and at completion of the project.

Project Creep - Customer wanting more and more from the initial project scope. And after the project was torn down or fit up work really begins, finding parts don't fit like they should. Or the car had more bondo then was expected.

Flaky vendors - Outside vendors with parts or services that that don't do what they say.

Lack of Communication on the Builder or Customers part. The builder needs to know before he does the work, you can't pay your bill this month and the customer needs to have some idea why a certain aspect may have taken longer. Now I realize the builder can work on their responsibility, but they cannot control the customer.

The lack of actual knowledge the customer may have in the process, even though they want and do act like they know just as much as you do. This is the reason car builders get some kind of undue rock star status, cuz its in style to be knowledgeable about how to build cool cars. When really car builders do anything redeeming for society. We are kinda like Paris Hilton, famous for being famous for nothing important.

The Hot Rod shop model relies all it's revenue on a few customers so the percentage of revenue is much higher per customer, not a bunch like an autobody shop or auto repair shop that has tons of invoices for much lower amounts.

The other thing about this industry is that this is a not a necessity in life or survival so peoples desire to spend money can change much quicker, with the down turn in the stock market or just the fact their wife found out how much it really costs. If your car breaks and the stock market crashes, you still have to fix your car.

I think it just takes some one to actually run their shop like a business, not a hobby and work to the executive or management side with great importance. So many builder hate paperwork and just don't do it or leave it to be handled by some one that does not deal with the customer directly. And this is where the break down begins.

[Blake Foster]

Good discussion.
I am sure most shops are in the same boat on one level or another.
I know guys who spend all their time and money building cool cars to use for advertising and are so "INTO" building cool cars that they end up just building cool cars and never get the business working. I on the other hand spend 90% of my time on the business side and if a cool car happens then that is awesome. but I figure with out a business that makes money there won't be any cool cars. I have friend that continually prove me wrong on this point.

Our focus is a little different in that the PART are #1 and building cars and installing the parts are #2 (not that we don't do a good job on the cars also)
but I do not pursue the high end super custom cars been there done that!

I agree with Rodger about the customers that have the money to pay are not always WILLING to pay. and that causes problems with the scheduling.

I have a excel spread sheet that I use to HELP Estimate jobs, it is not perfect but it does help. one thing I notice is that when you lay it all out and show the customer on paper what the REAL cost is.......... most are scared away.

It is odd to me that this is about the only profession that I can think of where you give an ESTIMATE before you ever see the job, then do work and hope you get paid, all the way along till the LAST invoice then the whining starts and the negotiating and nit picking and the builder takes it in the shorts every time. contract or no contract
it is like it is not a legitimate industry (and sure some are not legitimate but that is what you get when you take your car to a guy in his garage and get a low labor rate )
I always joke I should have been a plumber then the only tools I would need are a white Chevy van, pipe wrench and plunger. Instead of 100's of thousands of dollars worth of equipment to charge less than a plumber???

[Ron Sutton]

One thing I find interesting in our industry is the hourly labor rate.

Today ... 2014 ... Auto Dealerships, Copier Repairmen & most Technical Trades with repair technicians commonly charge customers a little over $100 per hour for a pretty common service. It has always seemed odd to me that ultra talented shops building trick race cars, customized show cars or some combination in between charge less per hour.

I'm not suggesting shops raise their prices to $110 an hour, as you may price yourself out of the market. But it does seem odd that common repairs of production cars, copiers, etc, are billed at $100+ while work performed by rare talented craftsmen is billed at a lower rate. It makes the business of building race/custom cars more challenging to be profitable at & harder to keep employees long term.

I owned a race car chassis building shop & starved for a couple years until a mentor taught me the "business of business" ... and I made my shop profitable & smooth running. But it is no small task. I am sure there are ProTouring shops that do a great job at both ... making money & keeping employees. But it is very challenging in any business ... and even harder if the market pays less for higher grade work.

[Munssey]

Ironworks, Blake, Ron... Excellent points!

Communication, communication, communication right?

One thing I try to constantly remind myself to run like a checklist is the communication to customers on how this process will go, what is expected of them by when and what exactly we will be doing so they can get the understanding that it's an involved process.

So this might be a good conversation for this topic. Best practices to keep project management and the discipline to run it like a business instead of a hobby. I'd love to hear what others think should be\ not be in the list from either an owner\ operator or a customer's prospective.

Three documents that I find are life savers but take some discipline to use and I have had to evolve into what I use today:

1. Written Detailed Estimate of Work (to outline all the details discussed before hand). Not just 'build part x' but build it for this customer, using these materials and then amend with a start and estimated end date when possible after timing has been agreed on and the Estimate turns to a contract. I am not only surprised by how many shops dont do this but am uncomfortable when I have work done and they do not supply me with this as a customer. I always feel like a surprise is in my future and make it a point to connect with the manager of the project so they know I really appreciate knowing of changes up front instead of waiting until the end and get hit with it. I'm a big boy, I can take bad news... just less gracefully if it's at the end when the bill shows up.

2. MOU (Memorandum of Understanding) I explain this as the 'rules to the game'. Since Monopoly can be played different in every household, it's best to agree on the rules before the dice are rolled. That's usually where we discuss what is expected of the customer as far as engagement, payment schedule, how to access their customer page for project updates and... the change orders (which is #3).

3. Change orders - If something changes from the written detailed estimate that was signed, it must have a change order stating what changed in work, time and\ or price. Very simple to do, and cheap insurance for the customer to make sure they understand and are happy.

Does anyone agree? What else is there that might compliment or even replace any of these?

Learning hat is on.

[youthpastor]

Originally Posted by Blake Foster

Good discussion.


It is odd to me that this is about the only profession that I can think of where you give an ESTIMATE before you ever see the job, then do work and hope you get paid, all the way along till the LAST invoice then the whining starts and the negotiating and nit picking and the builder takes it in the shorts every time. contract or no contract
it is like it is not a legitimate industry (and sure some are not legitimate but that is what you get when you take your car to a guy in his garage and get a low labor rate )
I always joke I should have been a plumber then the only tools I would need are a white Chevy van, pipe wrench and plunger. Instead of 100's of thousands of dollars worth of equipment to charge less than a plumber???

Haven't read all the posts yet!! but this one struck me as all to true- Nail on the head

[DBasher]

Originally Posted by Blake Foster

I have a excel spread sheet that I use to HELP Estimate jobs, it is not perfect but it does help. one thing I notice is that when you lay it all out and show the customer on paper what the REAL cost is.......... most are scared away.
this is a good thing!

It is odd to me that this is about the only profession that I can think of where you give an ESTIMATE before you ever see the job, then do work and hope you get paid, all the way along till the LAST invoice then the whining starts and the negotiating and nit picking and the builder takes it in the shorts every time. contract or no contract.

You've got to learn to qualify your customers. That first meeting when they're asking you all sorts of questions, interviewing you, you've got to be doing the same. Last thing you need is what you describe above. That outcome isn't good for anyone on either side.

[MeanMike]

I read this every time it comes back up and it gets me to thinking for a while. I really want to get back into building cars full time, but I won't do it like any of the shops I worked for. So, it's a worthwhile discussion for me.

I though about what was the original question again and I think it's these snips.

Originally Posted by XLexusTech

...
It got me thinking... could these principles help solve the problems that plague the custom car customer? Over budget, scope creep.... body shop hell... call it whatever you like... typically what you end up with is paying too much for less than you expected and getting it later than promised. Meanwhile the builder feels like he lost money...

Does anyone ever want less than they can afford or want to pay more than what they think something is worth? In this day and age, are there any craftsmen/artists that make what they should or businesses make more money than they need to justify staying in business? The people that have the disposable income to build at $250K car didn't get there by being frivolous with their money. Everybody shops for the cheapest deal to get more bang for the buck. The only shops that get away with charging to much are the ones that have "status symbol appeal" mostly because they are on TV.

If someone had their car planned out 100% before they got into it and stuck with it over the one or two years required to build, they would grow bored and sell the car before completion. Technology changes quicker than cars can be built, financial situations change over the course of a year or two, things don't always work in reality like they do in your head. Scope creep is inevitable.

Body shop hell is tradeoff for wanting cheap and good. If you want it quick it costs money or it's shotty work.

Originally Posted by XLexusTech

Problem 1: I will be far too old and unskilled to be a hands on craftsperson.
Problem 2: The business itself is plagued with bad business practice (the ole better craftsmen then businessmen issue)
Problem 3: Every build by its nature is custom and as such subject to lots of uncertainty.
Problem 4: To my knowledge no structured project management principles have precedence in the custom car world.

Problem 1: While this is understandable that you wan't to try to contribute. Unless you can save more money than you cost it isn't going to work. You are going to have to justify your salary by saving money elsewhere and I just don't see that happening if you don't produce. The money in this business just isn't there to justify more overhead. But you haven't given a good enough description of how you could save a shop money. How will you sell yourself?

Problem 2: Yes, this definitely happens. I think there are more shops than there need to be. So for the lower quality shops, whether through inexperience or dishonesty, they sell jobs way under their realistic cost just to keep money flowing. I worked for a guy that failed even while covered up in business and investors.

Problem 3: When you know there is uncertainty, you plan for the worst. This is an area where experience shines. Let's say you bring in an old body covered in paint. Who knows what hides underneath. Quote replacing every panel on the car. If the cost scares of the customer, you saved yourself grief. If they stick around and you end up only replacing half the panels, you save money and please the customer.

Problem 4: They do, you just don't have dedicated project managers or time to keep a project schedule. Good employees and shop owners look ahead and plan things out in advance without devoting all their time to it. If a car costs $250K to build, how much of that money can be dedicated to a project manager. There are books on this subject about what percentage of a budget should be allocated to what. I think it's less than 4% for all management on a project. You do the math, but at 4% you have to turn 1.25mil to justify a $50K salary if that's all you do.

Originally Posted by XLexusTech

So on to my question.. Is this pipe-dream something that the pro-builders and customers would have an appetite for?
Is there a problem here worth solving?...

Sure, there are always problems worth solving when the ends justify the means. With what a business expert or PM demands for salary these days it isn't going to happen in the car world. Most shops can barely afford to pay a craftsmen/artist what they are worth.

In the end, the car is not a money maker. There is no return on investment, so there is no justifying anything that is done, especially not extra managers.

Through my own frustrations at work, I have plenty of "stories" about how project managers add so much cost and confusion to a job. I've done jobs (engineer side) where the physical work took 2 days and $100K in labor and parts. But there were 7 PM's, two executives, 2 engineers, 3 contractors with PM's and engineers and the months of worthless meetings and indecisiveness that cost $500K. Honest truth, that really happened recently. It took me longer to make drawings and revisions than it would have taken to do the actual work. No mangers added value, in reality they took away from any value.

I think lean and agile work well in high volume mfg. When everything is special, how can you be lean with equipment of labor? Most shops are already lean on parts inventory, they keep none and order only when it's needed. The machinery required to build a car is as flexible as possible. Farming out all the machining, laser cutting etc.. will not save time and eventually it will cost more than owning the machines. You can't rent the equipment required and you can't pick up employees at home depot in the morning. Most employees in this field are very flexible. There might be specialists in sheetmetal, machining and other areas, but they can usually do assembly, wiring and other things also. Where would you lean out a car shop and still do real work there? I have my own opinion about what lean and top heavy management has done to manufacturing in the US and it isn't good.