Austin Gray: Hey, what is going on? It's Austin, your host of the OWNR OPS podcast. Welcome back to the show! Thank you guys so much for listening. I hope you're continuing to enjoy the show. If you are, would you mind taking 30 seconds to leave us a five-star review? You guys have heard me talk about this before. Building a service business is super important to get five-star reviews, and the same goes for a podcast.

We're putting a lot of effort into this, and if you're getting some value out of it, I...

My goal with this was to create a podcast where those of you out there who want to start a business can come and listen. My goal was for this to be the last podcast you listen to before you take action. Look, you can consume content all day long, but until you start taking action, you're never going to get results.

So, my mission here with this podcast is to help other people who are stuck in the corporate world or who have that entrepreneurial bone—that gut feeling that you know you're going to start a business. You know you want to; you know you have it in you, but you just haven't done it yet. I want you... My hope is that you listen to this podcast and it encourages you to go take action and just start. That's all you have to do.

So, two guys on this podcast—on this show—Mike and Brock, two of my friends in the excavation business. Mike does general excavation and Brock does septic work. They are two guys who have jumped in headfirst. So, take a listen to this episode! I think you'll enjoy it.

We sort of did a roundtable with three people on the podcast, all of us being in industries where we operate heavy equipment. We're all talking about the same types of things. So whenever you get into bidding and estimating, it doesn't really matter what service you're offering. If you've got heavy equipment involved, if you've got trucking involved, you have to think about it similarly.

And so we get into some topics about how to market your services, how to charge for your services, and how to send estimates.

Yeah, this was a fun one! This is the first time we've gone roundtable with three people, so stick around for the whole episode. Let us know if you like it in the comments below. And as always, work hard, do your best, and never settle for less!

Now, let's jump into the episode!

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Mike Flaugher: Let's just have an excavation roundtable talk. Awesome! I don't know where the conversation's going to go, but I think it'll be fun.

Brock Peel: Yeah, sounds great, man! So what's on first here, Austin? What are you thinking? Catch us up. Right now, the snow's starting to melt. Mike, I'm sure you're starting to get busy too. Brock, I know you're probably slinging some septics already. What's the word for this year? How's this year's schedule looking so far?

Mike Flaugher: Yeah, we're just waiting for... Well, we got half loads. I don't know if you guys deal with half loads much down there, but load restrictions... So, yeah, we've been fighting with that on a lot of jobs. But fortunately, there's someone looking out for us, and they're lifting load restrictions early everywhere.

So, as of this Monday, load restrictions are off. That kind of means full steam ahead for us. We’ve got one job that we've taken on that we’re on right now. We started last week; it was kind of last minute, but it’s on a no half-load road. So even all throughout the year, there's no load restrictions.

So, we took it on. It's pretty far out of our way; it's pretty far from our shop. But we took it so that we could kind of get some work and some income, and not have to worry about half loads. So, we're kind of eager to get going now that they're coming off this Monday.

Brock Peel: Can you explain what half loads are for people listening?

Mike Flaugher: Yeah, so up here in Canada, I don't know if they do this in the States. Obviously, you guys get the same amount of frost in the northern parts of the States, but load restrictions are just to protect the roads from frost. When the frost is melting in the ground, heavy trucks can heave the roads and destroy them.

What they do is they make it—like so half loads for us—are from March 1st to April 30th; two months. And actually, some townships have it from March 1st to May 31st, three months. So you can't actually go in until June. They call it half load, but it's not a true half load. What it is, is five tons per axle. So, for our tandem truck, right, it's five tons per axle. By the time we take the gross weight of the truck into account, we can legally put 2.5 tons in it right on a half-load road.

So we have a truck that's capable of 16 to 18 tons, and we can only put 2.5 tons. So, we're doing roughly seven trips for one dump truck trip without half load. So yeah, if you do the math on that, it's not even worth starting the truck, right? Because you're doing seven to get to—I mean, to get one load’s worth, you're doing seven trips.

So, like a tri-axle, depending on where you are, a tri-axle is normally good for say 22 tons, but during half loads, it's good for about 4.5 to 5.5 tons. So, you're four to five trips for what you would normally get for one trip. So, generally, everyone just parks their trucks this time of year because you can't even—you can't even float anything; you can't move anything around.

You know, the terrible part about it is even... And they're on hand and note fines left, right, and center, and they're definitely watching for it. A friend of mine who's got a septic V truck as well, I was kind of hoping they would turn a blind eye on us, but we’ve never really run into it.

But with our septic truck as well, they turn a blind eye to it for that because it's partially deemed essential. I know gas—like any truck that's delivering fuel and milk trucks for dairy farms don't have to abide by half loads.

So, you know, I've seen literature before that said that a septic truck would be exempt as well because it's essential if someone's tank is backing up. But a friend of mine got nailed this year in his septic truck. He didn't even have a full load on, but with the weight of it, he was overweight. So they hit him with a list of tickets a couple miles long—they gave him everything they had.

And then another buddy of mine runs a hydrovac, and actually, the truck is so heavy from the factory that he was completely empty—no water, nothing on board—and he got a list of tickets for that too. They pulled him over, and he was overweight empty!

So, basically during half loads, he can't even run that hydrovac truck. You can't get off the highway; you get on a back road, and you're overweight.

Brock Peel: I complained about ours!

Mike Flaugher: Say that again?

Brock Peel: I said I thought I was going to complain about ours. Our year was great, but that's brutal!

Mike Flaugher: Yeah, no, it's tough. It just adds another whole element, right? Like that's what's really tough. You think, you know, you make it through January, February... You know, tough times of things being slow and it's cold, and you're just getting geared up for the year, and then boom! They hit you with half loads.

So then really you can't start work until May. Right? And yours come at the same time every year. You're given dates like that; the signs are right on the road.

Brock Peel: Yep, says right there—signs on the side of every road: five tons per axle from March 1st to April 30th.

Mike Flaugher: Yeah, the roads go by; they'll go out when you start getting warm up, and they auger down in the shoulder gravel and start checking for frost to see where it's at. They kind of monitor it by individual county.

So they go through, and they'll turn on. There are years when there’s actually roads that didn’t see a lot of traffic through the wintertime, and there really isn't any frost in them. Sometimes they won't even turn them on in certain sections of the road, or they will like when you're getting those back-and-forth days where it's still getting, like, 20 at night but like 45 during the day.

They'll turn them back off so you can run at night because once it freezes back up, they'll give you like midnight till—you'd have to move equipment between midnight and 8 a.m. to get moved.

And then, you know, do stuff like that. They're kind of going away from that because a lot of guys took advantage of that, you know, log truck guys hauling. And then it's like, well, we'll just get one more load, and now it’s nine and now it’s ten. So they kind of shut down a little bit on that.

Brock Peel: But we were pretty fortunate this year. We were pretty mild, and ours didn't come on until, man, I want to say the second week of March maybe... What do we know? We're into April.

Yeah, it was probably the first week of March, and they were probably only on for 10 to 12 days. Then they shut them back off because we were warm for so long.

This was wild for this year, but normally they’re on for like a month. But we can... Michigan's an axle weight state, so they kind of have a different gross setup, and it depends on your axle combination and what your spread is on tandem setups and everything.

So basically, the biggest factor is what size tires you're running. You can get 700 pounds per inch of width of tire normally. If you have, like, a big, you know, oversized steer tire that's 12 to 13 inches wide, you can put, you know, 7,000 and some pounds on each tire.

So the front axle would be 14,000, whatever... you know however it configures out.

Mike Flaugher: And then Bross laws, they go down to 450 per inch, so it's not even quite down to half.

Anyways, if you can stuff a bunch of axles—which we can— we're allowed a max of 11 axles. So if you have a lowboy and, like, we call them a Joe dog setup, so you have a double kingpin hitch, that adds another set of axles up in the front.

A company I worked for, we actually moved a 48-ton excavator during frost laws on a state highway—not on a county road. The state's a little higher, but yeah, we moved a pretty big hoe in frost laws if you can stuff enough axles at it and get pretty wild with it!

Brock Peel: Yeah, you guys down in the States got more axles than anybody! It's always interesting going down there; you see trucks and it’s just nothing but a lot of axles down there!

Mike Flaugher: I know! And it's funny that we even complain because you go to any states around us, and, you know, everything you see is tandem axles.

If you see a semi at a lead, they only have two axles on the lead, so you’re not even really worth all the money you’re going to spend in a tractor in a lead because it’s really just GNA all about the same as what a tandem's going to get anyway.

So most guys are running tandems, and then they look at us like we're a bunch of clowns, which is why our roads are garbage here in Michigan. But yeah—our asphalt trucks and stuff, the lowboys can run 11 axles total—trucking and trailer.

So you got eight-axle trailers running 50 tons on the load. They can scale 50 tons plus the truck and trailer.

For both of your operations, I mean, Brock, like you mentioned, it doesn't even make sense to go out on—and you were saying you're going to go out on a job doing half loads this year?

Brock Peel: No, well, we're on one right now. There are some—the roads up here… if you're not on a back road, like highways aren’t half-load roads, right? Or like say major county roads.

So someone reached out to me for a job and the first thing, you know, it was about an hour and 15-minute drive from our shop. So, it's a big pull for us.

I don’t like going that far, but I looked at it, and there are no half-load roads from there. Any of the pits… well, there's pits local. So I looked at the job and said, okay, this is a job we can do and not have to worry about half loads.

So, I ended up, you know, I designed it, quoted it ASAP, kind of got it, you know, from the time I went on site to the time we started was about just over a week.

So I wanted to lock it in really quick. It’s pretty rare to find a job that's not on a half-load road.

Mike Flaugher: So we’re on that right now. And then, you know, obviously, we’ve got a bunch of work coming up as soon as, you know, basically starting this week now. But now that we got this torrential downpour, you know, we were on that site and then we had to call it on Friday because there’s just too much water.

You can't even move—the machines anymore; it’s just a complete mud mess. There are spots with two or three feet of water. You know, we dug the base for the septic—it’s a big cut, real deep cut.

We had to trench to the farmer's field to dewater the whole area and try and get it dewatered for the weekend, but it hasn't stopped raining.

So, really, it's not going to dry up on us. And when you take, you know, like low-density soil like filter sand and try and put it in where you know in clay that’s just soaked in mud, it's soaked and wet... it just makes an absolute mess out of everything.

And inspectors don’t like to see it, and you end up using probably 40% more material because you just wreck half of your material trying to put it in there. So it's not even worth trying.

Austin Gray: Yeah, so I want to talk trucking on this because this brings up an interesting conversation—and it’s something that I've been kind of running on our model on the back-end, just calculating everything. I want to talk trucking; both of you own your own dump trucks, is that correct?

Mike Flaugher: Yeah.

Brock Peel: Yeah.

Austin Gray: So what would you—if you didn’t own your own dump truck—real quick before we jump into that, what would you pay in your market to contract a tandem?

Mike Flaugher: Like 180 bucks an hour.

Austin Gray: 180 an hour? Yeah, wow. That’s pretty rough.

We’re in a very rural area, which you would think would make pricing cheaper—but there are a few guys around that you could probably get cheaper.

But the most available and ready company is the one that I used to work for, and they're just into such high commercial, municipality jobs and stuff that their prices are set because their guys get paid a lot; their trucks are new.

You know, their insurance is high, so it all reflects, and really, if you want to get something done, it’s going to be through them, and that’s where their prices are.

You may get lucky and find somebody around the 140-150 range, but they’re probably just going to be a one or two-guy operation, and they’re probably busy; good luck trying to hunt them down.

Austin Gray: That’s crazy! Looks like Brock was having a couple connection issues. I'm going to send him the call-in instructions here real quick.

Brock Peel: Sounds good!

Austin Gray: He said if he dropped off, he would do it.

But while I do that, can you talk about... Looks like he's back here. Yeah, Brock, you got us?

Brock Peel: Yeah, I got you.

Austin Gray: So, Mike was just kind of wrapping up his contracted pricing. What would it be if you were to just contract, you know, an OWNR OP, tandem guy up there?

Brock Peel: Yeah, P, so for a tandem, you're looking at about... you're probably looking at 120 to 130 bucks an hour for a tandem, and you’re about 150, 160 an hour for a triaxle up here.

And then, you know, obviously, of material depending on whatever their markup is going to be on that.

Austin Gray: Yeah, for sure. And that... what is a triaxle run?

Brock Peel: Tri... yeah, triaxle... yeah, most of them are around 21 to 22 tons. Some of these new Slingers, you can get close to 25 tons on them, but yeah, you're about 22-23 tons most tandems.

So we have our tandem—it’s an old tri-axle. It’s an old short tri-axle, so we removed the lift, so we can get about 16.5 tons on it, or most tandems are around the 14.5 to 15-ton mark that you can get on a tandem.

Austin Gray: Yeah, definitely! Do you guys run belly dumps for anything in your operation?

Mike Flaugher: No, no, I’ve never... I’ve never seen them too often—not where we are. We rented a company that I used to work for when I did for one job, and it was actually pretty slick, but don’t have a lot of use for them, I guess, in what we do.

We were doing a road complete dig-out; it was all clay, so we were half with putting traffic on one side and had the other half of the road dug out.

And we would just have traffic control shut traffic down and belly dump the sand and chase it with the grader and just fold it into our cut. So, that’s the only time in 16 years that I’ve been doing it that we found a use for it.

But most of the time, everything's so stinking tight and definitely trying to end dump and get things into places—belly dump wouldn't work out very well.

Austin Gray: So for your business, Austin, are you—oh, sorry, I cut off there.

Brock Peel: No, no, I just said, for your business, Austin, you wouldn't be running much trucking for you, though, doing the land clearing, would you?

Everything's generally repurposed, like you’re just grinding things up, mulching things up, but you wouldn’t really use much trucking, would you?

Austin Gray: We do! I mean, when I started the business, I was saying yes to everything. I think you and I had this conversation last time, especially when we were talking about the decision to specialize or generalize in your market.

Yeah, I mean, we did dirt in the beginning, and like, that’s how I paid the bills. You know, I would say yes to a driveway job, I would say yes to building new gravel driveways.

We did some septic stuff year one. We’re just—my right-hand guy, who is about to be a business partner, is very, very talented and very versatile.

So, yeah, we’re in a constrained market here, and there’s just not a ton of service providers, so that’s the direction like I've taken with my business: we're open to taking more jobs.

And I know Brock you have your opinions on that, but yeah, we've run—I mean, I’ve got a couple guys. I don’t own any of my own trucks, but I have good relationships with two owner-operators with tandems, and so they'll run for us anytime.

But we’re at 135. At least, last year it was 135 an hour contracted.

So, where I was going to go—questionwise, like you owning your own trucks—well, whether you own or whether you contract, whenever you guys are putting in your estimates and you're building trucking into this— so let's say you Google Map something; 19 minutes, or TW—let's say 20 minutes for round numbers—from the pit to the job site.

How much buffer time do you add in for your trucking to account for the fact that it's a dump truck taking material at a slower rate than a normal vehicle would be? Do you guys have an equation that you use for that?

Mike Flaugher: For me, like when I do have my estimates, I work everything off a per-load basis.

I generally know what it's going to cost on average per load in that area, so I don’t really look at, like, per hour what it's going to take for trucking because a lot of guys around here that I'll use—they're almost flat-rate pricing, right?

So for filter sand, I’m going to be flat-rate pricing per ton delivered, say, within a certain vicinity. So if I'm two minutes from the pit or 20 minutes from the pit, it’s going to be the same price a lot of times.

They'll charge you a fee if it's beyond a certain area. And same thing for us— I mean, with the truck, even if we're running our own truck, I do my costing on a per-load basis.

So I evaluate, okay, how many loads am I going to need? I know it's going to cost roughly this amount per load, and I work it off of that.

And I do my job costing based on hiring everything out, right? So I do my job costing on not supplying my own truck.

And then if I supply my own truck to increase efficiency or, you know, maybe save some money... I mean, you never really save money running your own truck, but say, you know, if my driver’s not doing anything, or she doesn't need to be on another job, then okay, we'll bring the truck in.

We'll run there to increase efficiency. Like we just had a route last week, and I was so thankful I did because I had our truck going plus two other trucks going from another—another company.

They were supposed to bring us say like seven loads, and we ended up getting like three loads. They just couldn't keep up; they told us they could bring us that, and they didn't.

So I had my truck running, I brought my truck down there, and we had our truck running flat out trying to just bring the material in there, and I’m glad that we did because they screwed us on a few of those loads.

But I was happy I had my own truck, right? So I had to drive my truck, you know, my driver had to drive an hour and 10 minutes down to the job site.

So by the time you take that into account, you know, you're not really saving money by the time you pay for fuel, but it was just the fact that we got those loads in there.

So again, my job costing is based on what I'm paying for it from other companies, and if I can haul some of it myself, that’s a bonus.

But I don’t look at what it’s going to cost to run my truck per hour or anything like that and what I need to be charging. I just base it off what am I going to pay these bigger companies renting me for.

Brock Peel: They’ve already set the business model together, right?

Mike Flaugher: Yeah, exactly! We know—we’ve bought material sometimes. I’ll have to check; if we're working in a different area, you know, if we're working in a different area, then I'll usually call around a little bit and see, okay, what's this worth a ton or what's this worth a load, kind of thing.

But in my area, I know exactly what it's going to cost roughly.

I mean, things—all things change a little bit—but if I'm, you know, if I'm going to be doing a job—like if you're doing 5,000 loads, you probably want to know exactly to every penny what that’s going to cost because that's a big difference when you’re running 10, 15, 20 loads.

If you’re off by 10 or 15 bucks a load, it's not really a big deal; or even say 20-30 bucks a load, because if I’m doing—if I know, okay, you know for a load to septic, say I’m generally, depending on where the job site is, I'm generally 475 to 525 a load.

Okay, I'm going to do my job costing at 550, right? And then, you know, I want to be—accountant to say sell that for 625 or 650, right?

I don’t want to be—you know when we’re doing this many jobs, I don’t want to be calling my trucking company every day and going, “Hey, how much deliver to here? How much deliver to there?”

It’s like I just—I’m not going to do that because that’s not how they base it off; they don’t have a good metric for us to use, right?

So if I said, “Well, tell me per hour,” it just wouldn’t work out that way. So I know roughly what it’s going to cost per load, and that’s just how I do it.

Mike Flaugher: Yeah, pretty similar. Like I have a gravel parking lot that we’re doing here in a couple of weeks, and it's massive.

So there’s 600 tons of gravel to go in just to basically put a one-inch freshen up on top of it. My trucks won't even leave the house.

I mean, when you're talking the difference of 12 gravel train loads or 60 loads with my trucks, it’s, you know, putting a band-aid on the Hoover Dam when it leaks type of deal.

So, it’s just using everybody else's prices type of deal for the same thing.

I mean when we get into small stuff, say, you know, where I just have two single axles that I keep around because a lot of the stuff we’re working in around here is around the lakes and everything—houses are slammed together.

So they're pretty tight—not a lot of space. There are a lot of instances that tandems don’t even get in to these areas that we're running.

I mean, you could, but you're just scrubbing mirrors off on tree branches and stuff. I mean, so in those cases, those ones are going to be more local.

But my trucks are more or less for a 15-mile radius around where we’re at. Anything outside of that, we're going to be—we're going to be calling, using somebody else's numbers.

And then when I do it, I'm going to use your 20-mile thing for example. You know, okay, so round trip—if you were just to there, turn around, come back, you’re 40 minutes.

Well, you have load time; you still have an employee factored into that. He’s not going to be running it quite as fast as you are if you're in a rush or, “Oh my gosh, you know, we’re behind; got to go,” whatever it is.

That’s an hour round trip. I mean, you can easily add 20 minutes for load, dump, and another five minutes for the unforeseen type of deal.

So you're going to be an hour around and then take your hourly rate for that truck and add it to it and buy how many loads you need.

And then when you get to the end, if it kind of comes down—you know, tonnage-wise, when I figure out, I do... I guess I do it all by the ton because everything's off the scale here—not by the yard.

So if it comes down to—you know, you’re at a fraction of a ton, you're going to round up to the next load, basically, to give yourself that little bit of leadway.

Is kind of where I throw—basically throwing an extra load there for a plus or minus type of deal.

Austin Gray: When you convert yards to tons, what’s the number you guys use?

Mike Flaugher: So there’s a few ways. I was always—I was always taught that you figure out your yardage, multiply it by 3,000, and divide it by 2,000 to come up with tonnage.

And then I multiply it by—if it's gravel, 25% for loss and compaction when you’re going in there. So if you're going from loose fill to compacted fill—and then sand is kind of like a 20%.

So would that be 1.5 multiplied by 1.5? If you took, if you went 3,000, divide it by 2,000, did I do that math correct?

Brock Peel: Yeah, I’d have to double-check it.

Mike Flaugher: That simple, man. What’s your—what’s your math?

Brock Peel: Yeah, yeah, so if you take your cubic... So to calculate your cubic yards, right, you take your square footage divided by 27—that gives you cubic yards per 12 inches of lift.

If you’re in square meters, you times it by 399; that gives you your yards per 12 inches of lift for that area—whatever it is.

So whatever yardage that you come out to for your cubic yards, what I use for, if it’s gravel, I just take that yardage times it by 1.15. If it’s sand, I times it by 1.3.

If it's topsoil, depending on the time of the year—if it’s wet or dry, times it by 1.4 or 1.5. And then clean fill, I do times 1.6 for—and you know, because it’s obviously like a loam material.

So if I calculate, you know, if I want to dig a hole and whatever I calculate that compacted fill at, I take that yardage calculation I have, I times that by 1.6—that’ll give me my tonnage to base it off truck.

So say if I have—if I’m doing a cut, you know, just for simple math, and it’s—you know, it’s 100 cubic yards that I need to dig out if I did that for, if I converted that to tonnage, say using the sand calculation at 1.3, it’s going to say give me 130 tons.

This is say for 12 inches; in an area where it doesn’t matter, the lift size is how many yards. But if I'm trucking it out in trucks, then I want to times by 1.6 and then divide that number by how many, say, ton that truck can hold, right?

21-22 tons on that truck, and then that’ll tell me how many truckloads I need, right? Because again, for me, I base what I do generally off truckloads. When you're doing huge jobs, you need to do more, or like when you’re running a lot of material, basing it off tonnage is usually better.

More accurate tonnage than hourly, kind of thing, but like when you're doing smaller jobs, it’s generally a truckload that costs X amount to have a truck there.

So whether I load up—you know, when I’m doing clean fill, if I bring a truck in and load them with half a load or full load, it costs me the same amount of money, right?

So, alright, listeners, you guys are getting the dirt guy math! That’s all part of my book on septic design!

Brock Peel: Yeah, the big... yeah!

Austin Gray: Yeah, yeah! So—

Mike Flaugher: Yeah, I have a septic design book that I've been selling a bunch around here to a bunch of guys. So it’s just like a site overview, and then I used all my takeoff calculations. I put a table on the back and how I do all mine.

Again, there are so many different ways of doing it, but this is the way that I've done it, and it really seems to work out every time.

And again, if you're running a site that's running, you know, hundreds of thousands of tons, it might—it might—you might use a different metric.

But generally, for what we’re doing, all these metrics work! But your square footage, you know, your square feet divided by 27—that is your yards per 12 inches of lift, right? That's just—I mean, that’s a known equation.

But because we do everything in square meters, you know, I kind of rework that number to come up with 399. So if you take your square meter and times it by 399, that’ll give you your yardage per 12 inches of lift.

So you have to remember, you know, that's per 12 inches! I do everything in 12-inch lifts. So even for a septic, they’re actually in 10-inch lifts, but I base my numbers off a 12-inch lift just for contingency and, you know, village stuff like that, right?

So I just do it in 12. So it’s actually 30 inches for your contact and surface area. But I base it on 36, right? I just do all my calculations in 12-inch lifts!

So again, if you're prepping for a pad and you want to do gravel, you take your square feet divide by 27—that’s your yardage for 12 inches.

Divide that by three; that’s going to give you your yardage for four inches if you’re digging it out. Times that number by 1.6; that’s going to give you your tonnage.

Then divide that by say 22 per triaxle, and that’ll tell you how many trucks you need to pull out the master class right there!

Brock Peel: Where can we buy that book?

Mike Flaugher: You can just reach out to me on Instagram. I don’t have it posted; I don’t have an online thing for online ordering right now.

I just have, if anybody reaches out to me, we’ll just get it sent out to them. We're just basically charging what it costs for me to print them.

So I need to go to Instagram right now and send you a direct message if I want to purchase this?

Mike Flaugher: Yeah, yeah! Send me a direct message with your shipping address, and we’ll get it noted down, and we’ll get it shipped out to you.

And then we’ll just let you know what the shipping cost is. We’re charging—it's 17 bucks for the book. It cost me 15 bucks to get it printed, so that's it.

So you make two off the deal?

Austin Gray: That’s it! That’s it—two bucks!

Mike Flaugher: Two bucks for—I GNA say pure capitalist!

Austin Gray: No, yeah! AUD have you read it?

Mike Flaugher: Yeah, exactly!

Austin Gray: Alright! I just sent you a message in the chat.

Mike Flaugher: Yeah, if you go on my Instagram, I put out a video actually a little while ago of me going through the book, and you can see me running through it.

When did I put that out? I put it out on March 15th; there's a reel of me walking you through it there, so you can kind of take a look and see if it's worth you buying.

Brock Peel: Nice, I'll buy it for sure! I just sent you my address, so just send me whatever link you need me to pay.

I think that’s awesome! Have you ever looked into like self-publishing on Amazon?

Mike Flaugher: No!

Brock Peel: No? I think it’s pretty easy to do, and then you could just make it for sale on Amazon, and then people could buy it like a digital copy.

I’ve seen it before; I’ll see if I can pull up something for you, and I’ll send it to you after this.

Austin Gray: That’s awesome that you wrote that book! Mike, you said you have a gravel—you're doing a gravel parking lot, could you walk us through, for anybody doing something similar on a grading job like that—just like how you thought about estimating that and just your thought process and then sort of calculations you used?

Mike Flaugher: So, pretty much my bread and butter is we have a six-ton excavator and I’ve got a track skid steer. Kind of does what we’re doing. This one's going to go more back to my background with building roads and everything else.

Got contacted—they're like, “Hey, you know, is this something you’d be interested in?” Yeah, let's go take a look at it because, obviously, I'm just starting out; I'm not, you know, my machine setup is my bread and butter.

Now the goal is to not stay where we're at. I’m trying to hit a market that’s in between kind of the residential guys here and the really, really big guys like I used to work for.

There’s kind of a dead space, so that’s where we're trying to get built to. So it’s like, yep, this is getting up our alley; let’s take a look at it, you know, we’ll get there.

So you get there and you have a 350 by 600 parking lot. You pretty much set out about four or five days running with the skid steer. An excavator does you zero good on that job, and then you get to the end of it.

How are you carrying grade that’s not going to pull water across that distance with a six-foot wide bucket on a skid steer? So you pretty much throw all that stuff in the bag.

The skid steer is going to go to work around the edges of the building and up to the concrete approaches and stuff, but other than that, it’s like, okay, where’s our next option? Are we buying, you know, like a land plane for the skid steer?

So now you're getting out a little better, and it carries grade a little more, or are we still wasting our time here?

So, I start running numbers on that, doing a little research on what guys are doing with them, and it’s like, you’re still looking at probably three days.

So it really comes down to call the company I used to work for. Got a good relationship with them; they rent equipment to me if I need it and they're not a rental company.

So it kind of helps out that we can do this. So we’re actually renting a grader, running a roller, and using all their trucks to haul the gravel. So, when you go in, you're going to pitch that kind of work to them.

They have no problem, you know, renting equipment to use. So really, what it comes down to is—in all reality, it should be a one-day job. They're maybe 10 miles out from their quarry where the gravel's coming from, so the 600 tons comes down to 12 train loads, plus maybe a little change, so factored it for 13.

And they're going to come in; there’s plenty of room for them to turn around, and they don’t even have to unhook to dump or anything.

So they’re actually going to chain their gates and spread dump out pups and leads, and never stop basically make full loop. They’re going to send six guys for two rounds. They like to start at about 5:00 in the morning.

So by 8:00 in the morning at the latest, they’re done and out of there. And now I have 10 hours to run this grader across—which with a 14-foot blade going across there, it’s not too many passes.

So really, it comes down to—I just, you know, it helps with my past experience of directly working with them. I know what their trucks can do, how long it’s going to take them, what kind of time it’s going to give me to work on the job.

I know, you know, basically how many miles of road I could do in a day, you know, running the grader, whatever we did before for parking lots that size.

You know, basically what I can accomplish in a day's time. So essentially, that's about half of what I would normally be able to get in a day's time. Plus, we're already based in, so we’re really just trying to carry enough material to freshen it up and fill the holes.

So it’s pretty easy just to kind of scoot across it and have a guy chase you with a roller and keep getting it pounded in so that way, once you've worked your way across, you can get back on a compacted surface and basically brush it out and fine-tune it, a couple passes, and then be done and gone out of there.

So worst-case scenario, the next morning you got a few hours type of deal cleaning stuff up, whatever it is, and get moved out of there.

Austin Gray: Do you blade that first with the grader before you truck in the material if it’s got potholes or ruts in it?

Mike Flaugher: Yeah, so if there’re some pretty good potholes and stuff in it, I’ll lay the blade down and kind of taper your way out of it for quite a ways.

Because otherwise, potholes are just going to want to chuck back out. Depending on what grader they send me—there’s, they have three of them.

There are a couple that have scarifiers on them, so when you get up by the building or anything like that where you're going to need to run through and scarify, you're going to kind of roll some material out because obviously, it's already filled up flush with the concrete and stuff.

So we’re going to want to roll some out so we can get some fresh gravel up in that’s going to want to stick and compact in there instead of old stuff that’s all broke down.

So we’re going to cut around the edges, roll the blades back to kind of taper your way in to get new gravel up at the edges and anywhere there's potholes or anything like that.

Going to scarify or just basically blade way out at least like 10 feet in all directions of the pothole just to make sure you don’t redevelop the pothole in two weeks.

Austin Gray: Makes sense! So how did you bill out that grater?

Mike Flaugher: So hourly, I guess essentially they sent me what a day rate is for rental. I broke that down to an hourly.

And then I have everything figured for a day and a half because obviously, I know that we can do it in a day, but there’s always it blows a line; you know, whatever something happens—a truck, you know, a truck breaks down.

And next thing you know, they don’t get gravel in quite as fast as they thought, or whatever happens. So, I factored it for a day and a half because I know they would work with me.

So I have a day rate, but if it comes down that next morning I needed it for a couple of hours, they don’t need it directly the next day.

So the lowboy driver is not going to be sitting there beating on the door telling me to load it up first thing the next morning.

Austin Gray: Got it!

Mike Flaugher: So, yeah, factored it in that way. And then also kind of compensate for some of it because if it turns out where, you know, we need to do a little more, I have the skid steer and the roller factored for two full days, and all of our labor time and stuff is all two full days.

So, that way, if something happens, we get burned a little bit on the grader, say we have to put a second full day in, there's a good chance the skid steer and stuff aren’t running that full second day.

So I kind of rob Peter to pay Paul type of deal, but just to try to make sure you’re covering tracks to, you know, allow that EX for time.

Austin Gray: Definitely!

I’ve been putting in a lot of grading bids this week just because we’ve been doing a little bit of marketing, and yeah, we brought a grader in on our fleet just for gravel driveways around here and whatnot, and then just like HOA roads.

So I’m really interested in how you do this; it sounds like we're very in line with how we're both looking at it.

What is that day rate for the grader, just curious, up there?

Mike Flaugher: $1,750.

Austin Gray: 1750 for the grader?

Mike Flaugher: Okay, yeah, and that's for an eight-hour day?

Mike Flaugher: No, they're not really watching hours. I can run it; I could run it the whole time.

Yeah, there’s—in a lot of our rental companies around here, there’s a couple that— and they don’t like to really disclose it.

There are a few guys that got burned that were renting some equipment that, you know, run it 12 hours because that’s what they run, and get charged for two days because they had an eight-hour fine print thing down in the bottom there.

Most of the places I deal with, when I need to, I haven’t had in over a year, but they—it's yours for the day if you got it for 24 hours from the time you pick it up to the time it needs to be back.

So really, you could run it, you know, with travel time and stuff, and you’re looking at a couple hours, but you could put logistically 20 hours on it and still get it back in time.

So if you wanted to stay up all night—that’s just for the piece of equipment.

Right? Like that’s 1750 a day—not including an operator when you build it out.

Mike Flaugher: Yep, that's—so they go off of, because they don’t normally rent; but if they have slow tying or anything, certain people that they work with, they will rent out.

So in the wintertime, basically everything is available for rent through them if somebody needs it. But they’re just going to Cat rental rates, so they’re going to look at what their piece of equipment is, go to the equivalent size and Cat if it’s not a Cat, and give you whatever Cat’s rate is.

Austin Gray: That makes sense. What are both of you guys billing operator rates at right now?

Mike Flaugher: Mine are figured into the equipment. It’s, I guess, for me it’s easier to track that way. So like my trucking and my equipment rates are all machine and operator.

You know, because I guess to me it doesn’t really matter which guy I put in because you get so many people that it’s too hard to keep track of that are trying to flip-flop around and well, this guy gets paid less, so then you know that machine rate would be less.

It’s too hard to track it out at the end of the job or even just trying to bid the job, I guess.

So I basically have a cost set that’s going to just go across that machine because I’m not going to stick a guy in it, you know, putting the newer, the new guy in it, you know, quite fair.

You know, fair amount of the time, but not in long spurts. I mean, he's got to learn too! We all were in that point where you needed to learn and all you want to do is run it—you know, you’re young—but you know certain places, applications, you know, sticking them in there and giving them a couple hours in it type of deal.

But for the most part, it’s me or my other guy, and we are fully efficient operators, so you're going to get charged at that rate.

Brock Peel: What about you?

Brock Peel: How do you view operator rates on your billing and your estimating?

Mike Flaugher: Yeah, pretty similar. I mean, yeah, pretty similar—doesn't really matter to me the experience of the operator; it's a set of rate.

It's a set rate for a guy in a machine, like a machine and operator cost, right? So we have a cost for a skid steer and operator, min excavator and operator, large ho and operator.

That's just how we do it generally. If I was to break it down, I mean, I think what people—or maybe what you're asking is what are you accounting for for that operator?

Brock Peel: Generally, I would say you know you're looking at about 75 bucks an hour for an operator, right? That's in the range that you're going to be in.

And then kind of work your cost off, you know, work your cost off of that. Whatever you want for that machine, whatever your minimum is for that machine—if you work it off 75 an hour and say what the, you know, what the blue book rate I guess is for that machine and what you should be charging per hour for it, it would actually probably realistically be a lot higher than what we are charging for them.

So what do you run a skid for? Like, what do both of you guys bill out a skid for hourly?

Mike Flaugher: I do a day rate.

So I don’t—I don’t do hourly.

If anybody asks me to do it hourly, I won’t do it.

I do everything day rate—whether it’s eight hours, 10 hours, you know, 12 hours. I just do it by the day rate for us; just easier that way.

You know, we’re, you know, we’re 1,250—our skid and operator is 1,250 bucks a day.

So that's for skid and operator.

Brock Peel: Yeah, yeah. That's our skid and operator, 1,250 bucks a day!

Austin Gray: So roughly, yeah, you call it 625 for the operator, 625 for the skid per day?

Mike Flaugher: Yeah, exactly! And then how about you, Mike?

Brock Peel: Mine are all the same—125 an hour based off of a 10-hour day.

So, I mean, not really day rating it; most jobs, it’s going to be factored for a day anyway.

So, I mean, essentially, day rating it I guess but if you're getting into smaller jobs or something, if it’s going to be less than a half a day, I’m figuring it for a half a day where if you got a couple small ones, you’re going to try to hit two of them in the same day type of deal.

But once you’re getting to that six-hour mark, you’re not really feasibly getting moved and getting anything accomplished at another job once you kind of break that certain point.

So then you're basically going to bid it for a day type of deal because you're getting too close to that range anyway.

Brock Peel: It’s really not worth building...

Austin Gray: I mean, yeah, it’s funny when customers, you know, like try to, like pinpoint that.

So, I don’t know about you guys, but I’ve actually moved away from like sectioning out the line items on my bid because I just give a lump sum, and I just say, “Here’s what we’re gonna do.”

Because man, I feel like you just open up a can of worms for people to say, “Oh, well that’s not going to take a full day with the grader.”

It's like, but it—like, you don’t understand that I got three guys. I got three pieces of equipment that all need to be moved, and that’s all money out of my pocket that I’m having to pay—even if we're done at 2 PM!

Right? Yep!

They’re still on my payroll, and you know, it’s just one of those things where—it’s like, man, we’re offering you a service, and we’re going to do a dang good job of it.

We’re gonna do our absolute best to do that, and you know it’s like just going to pay for the day rate, right?

Brock Peel: Right!

Yeah, I had one time as a customer; I had worked, did, oh shoot, probably two, three jobs for, and then got to one, and for some reason, they wanted it broke down.

Which they had jumped into a fairly sizable project money-wise.

And they—they wanted, you know, they’re like, “H, could you break that down a little bit?”

And I was like, "Goes against everything I’ve ever, you know, stood for.”

But yeah, sure! You know, they’d been great to work with. So it’s like, yeah, that’s fine.

So I go through and I didn’t break it down tremendously; I kind of, you know, gave a couple—not really line itemized; I kind of like “here’s, you know how long I think it’s going to take” type of deal and da, da, da, da—a couple breakdowns.

And then they started asking questions. And next thing you know, what they're trying to do is they're trying to figure out where those big items were.

And, you know, they’re trying to pick it apart to the point where what they ended up doing to me was, “Oh, let’s stick with these.”

And it’s like, “No, those are really cheap because they kind of fell in... It’s like you don’t understand my way I’m looking at it; they kind of fell in and coincided with this thing you’re now saying you don’t want to do.

So it’s really cheap because I was already there, and there was going to be— I had to haul gravel in per se, and, okay, you want to add a little bit more over here.

So this wasn’t quite a full load; I can pitch that off on there. I already got to haul it, so basically, you're taking the trucking and stuff out of that other piece because it’s like I'm already coming with the load; I wasn't a full load.

I can throw some on you, yada, yada. Then they want to pick it down to that, and it’s like, “Well, no, that’s...

We're rebidding it now because this all went together as a lump sum price, and it’s like you don’t want to use the words with them hiding, but it’s like I’m hiding money from this to that and here.

So at the end of the day, it all shares out the same, but then all they’re going to end up doing is once you get in and working on it, “Oh, hey, never mind; you’re right! Let’s throw that back on.”

It’s like, “No, no, no, no, that’s why they call it estimating, right? Because you are taking your absolute best guess.”

And I know the three of us sitting here, none of us are in business to like shaft a customer by any means, right? But we all know how much this equipment costs, how much it costs to hire people, how much it costs to keep people, how much it costs for employee turnover, how much it costs for insurance.

It’s like we are managing so many different moving parts in this business, and sometimes unless the customer has prior construction experience, they don’t actually see what goes on behind the scenes, right?

And so, it's like, look, we're taking the absolute best guess, but I can guarantee you—I can guarantee you on every single estimate, there is something that's not going to be down to the penny for how I estimated.

Like it—I mean, correct me if I'm wrong, Brock. You may be better at this; I just know every single estimate I sent, it's like, okay, I may be a little over on my material here, but I may be under on my TR, like—but at the end of the day, you just try to build in enough of a buffer to make it all wash out and lose deals.

Brock Peel: Yeah, and I think even on your Slack channel, talking with some guys and listening to other people talk, and I just—and like this is just a personal thing for me, is I just feel that too many people are hung up on this kind of like analysis paralysis of like these little numbers and tracking every tiny little thing and wondering what’s—trying to estimate a job and worry about every grain of sand or every, you know, dollar here, dollar there.

But at the end of the day, you know, you need to be estimating with the goal in mind that you have that buffer and that you’re, you know, there’s enough.

You’re looking for a 25% profit margin. You know, you know roughly what is on the job. You should understand where that job’s at and understand that, you know, if things are going as planned or you’re spending more money than planned.

You know, you planned on where it’s at roughly, you go, “Ah, okay, like, you know, I’m now cutting into my profit margin.”

But hey, we’re still in okay shape because I put 25 jobs. So, but if you're running tight and you’re running lean, all it takes is for one—you know, all it takes is for you to look sideways one day, and now all of a sudden, you're losing money on the job.

That’s just not how I want to operate. And like talking about time and materials and working—like I just keep myself out of those situations if I can.

Like, again, I don’t just have a certain rule that I work, you know, certain values that I have, and I just don’t really stray away from that, right?

I mean, I don’t—I just don’t want to work for you. I don’t need that job.

There are certain circumstances where I have—I did a—I like we did a time and materials job last summer. It was, you know, I was there for two months; it was a quarter million dollars in work that we did.

It was all time and materials based, you know, based on a rate—it worked out great for us because it was a last-minute kind of thing.

They brought us in there for a $20,000 job to do for them, and we ended up—there, and $250,000 later, we just kept going.

But also, I made sure my rates were high enough; I made sure all my materials was, you know, healthy enough that I could still make money, right?

But that was okay because if I tried to quote, I couldn’t have quoted that job in that short of time, and I would have kind of maybe hung myself out to dry or lose money.

So that was okay because it was a site work job, and, you know, kind of—you know, we were doing it for an engineer.

We were doing, you know, a little bit beyond the septic, so I’m glad that we did that on T&M. But for the most part, I’m not going to come in and work for a day rate, you know, to come in and do some work for you.

Work a half—like, you know, if somebody wanted me to work a half day or something or charge for a half day, I would just laugh at them.

I’m just not interested in that, right? That’s not what I’m here to do!

You know, there’s a mobilization cost to everything, right? So we just put a bid in on a job—you know, it's a septic, it's a $100,000 job—a $100,000 septic.

I know from the builder that the two other quotes came in at 120 and one came in at 130. We’re the cheapest price!

But I know how efficient we are at this system because we’re really good at it and really experienced with this system.

If I did this on time materials, yeah, I could probably, you know, I could do it for substantially less, but I’m already substantially less than everybody else.

We can do it at this speed because we’re good at it! So I’m not going to— you know, we’re good at it! So I know that we can do it in this amount of time.

But that’s why I want to increase efficiency in my business so I can make more money. So if all my guys are, you know, weapons and everyone’s good and everyone’s efficient, and know what we’re doing, what’s the point of, you know, like getting your guys and getting your business to that point if you're still going to charge people the same amount of money, right?

Like I’m quoting and estimating these jobs, and I’m trying to increase efficiency.

I’m not trying to increase efficiency generally just to save my client money, which we still are saving them money, but in turn, if I can save them money and make me more money, well, then everybody's happy.

But this client, even at $100,000, wanted me to break down every load, every hour, every machine cost, every operator, and I just wasn’t interested!

Right? I’m just like, that’s not how I run my business—this is a quoted job. You know, this is what we want to do it; we're the cheapest price you got.

So, you know, why—but what they’re trying to do is they're trying to look for value there, and they’re trying to understand, you know, if anybody’s asking you to break it down by the hour, it’s because they’re going to watch you, and they’re going to keep track of your hours.

And then if you get it done fast or efficient, they’re going to want, you know, some sort of discount or deal at the end in my experience anyways.

And it’s just too much overhead—it's like you— you got enough. And I'm not saying overhead is like a cost; I’m saying like it’s a brain overload, right?

It’s like to know that somebody’s tracking you and watching every hour going into it. It’s not going to go to the exact hour that you estimated at.

I mean, there’re just so many moving parts, and so, yeah, I’m in agreement with you on that. It’s like this is the cost to do it.

And you know what, if you want us to be there, it’s this price; if you don’t, it’s free. It’s like, you’re not paying for it because we're not gonna show up and do it.

Well, cool guys! Hey, let’s wrap this up. I know that one of you said that you had to be somewhere and have everything wrapped up here in 10 minutes. So, this has been fun!

I would love to have you guys back on. This is super fun to just kind of talk shop on the nitty-gritty behind-the-scenes details of just excavation-related businesses.

So thank you for joining this morning!

Mike Flaugher: Yeah, absolutely!

Brock Peel: Yeah, thanks for having me on! It’s good; we should do a Q&A or something sometime if there’s any questions in your Slack Channel—anything relating to septics or, you know, kind of how we’re doing things.

I sometimes—I don’t really know maybe the questions that some people want or the answers that they’re looking for, but I’m always, you know, willing to answer them if I can.

Austin Gray: Sweet! Well, there you have it, it’s Mike with Emphi and Brock with Canadian Sanitation. And you heard it from them; if you have any specific questions and you’re listening on YouTube, just post those in the comments below so that we can do a Q&A and organize that for next time.

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Without further ado, we’ll wrap up this episode and we’ll see you guys in the next one!