Contractor Advantage September/October 2014 by Annex Business Media

COMPLIMENTARY

SEPTEMBER/OCTOBER 2014

CONTRACTOR ADVANTAGE

ALSO:

Basement Renos Financial Facts Solar Panels

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CA N A DA’ S M AG A Z I N E F O R P R O F E S S I O N A L C O N T R AC T O R S

TRANSFORMATIONS

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ONE TOUGH AIR BARRIER SYSTEM FOR TODAY’S CODES & BEYOND.

Owens Corning™ FOAMULAR® CodeBord® Air Barrier System is another innovative solution providing long term energy efficiency performance and comfort for homeowners.

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THE PINK PANTHER™ & © 1964-2014 Metro-Goldwyn-Mayer Studios Inc. All Rights Reserved. The colour PINK is a registered trademark of Owens Corning. © 2014 Owens Corning. All Rights Reserved. 73% recycled content is based on the average recycled glass content in all Owens Corning fiberglass batts, rolls and unbonded loosefill insulation manufactured in Canada. SCS certified. GREENGUARD Certified products are certified to GREENGUARD standards for low chemical emissions into indoor air during product usage. For more information, visit ul.com/gg.

CONTENTS

Features Face the financial facts / 18 A skilled contractor is only as effective as his tools, and when it comes to building a business, many of these tools come in the form of cash on hand.

Garage transformations / 24 Garage improvements provide healthy ROI for homeowners and a solid revenue stream for contractors.

Nailing basement renos / 30 A lot can go wrong in basement renovations. Plan carefully and watch for some prevalent issues.

Inside

NEWS WATCH / 5 LEED growth continues to climb PRODUCTS SHOWCASE / 7 New and improved products BUSINESS STRATEGIES / 10 25 tips for marketing success SMART MONEY / 12 How to keep your eye on the prize ECONOMICS 101 / 14 Responding to disappointment LEARNING CURVE / 17 Building success September/October 2014 Vol. 19 No. 5

Editorial Director Castle Building Centres Group Ltd. Jennifer Mercieca Managing Editor Paul Barker Art Director Mark Ryan

Castle Building Centres Group Ltd., with building supply outlets in every province, is Canadaâ&#x20AC;&#x2122;s leading supplier of lumber and building materials to professional contractors, builders and renovators. Publications Mail Agreement #40006677 Return undeliverable Canadian Addresses to: 100 Milverton Drive, Suite 400 Mississauga, Ont. L5R 4H1

Contributors Nestor E. Arellano Lawrence Cummer Victoria Downing Stefan Dubowski Alesia Latson Paul Rhodes David Chilton Saggers John G. Smith

Electronic estates / 38 Prices for home-automation technology have dropped, making it more accessible for the middle class.

Alternative energy options / 44 Canadaâ&#x20AC;&#x2122;s probable energy future will depend on ever increasing inputs from renewable sources such as solar, wind, biomass and geothermal.

Open the envelope / 51 Every layer of a building envelope has a role to play when creating a liveable space. Advertising Enquiries Vendors whose products are carried in Castle Building Centres stores have the opportunity to advertise in

Contractor Advantage

For more information or to reserve space in the next issue, contact: Jennifer Mercieca Director of Communications Phone: 905-564-3307 Fax: 905-564-6592 E-mail: jmercieca@castle.ca

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Just another case of window envy. With good looks and available state-of-the-art features like our leak-free V-Weld technology, it’s no wonder our windows attract attention. A variety of styles and price points ensure that we have the right fit for any project. Next time you’re building, choose our Canadian-made windows and doors to take full advantage of our commitment to ontime delivery and after-sales support. Just don’t be surprised if the job site attracts some attention.

Visit allweatherwindows.com to learn more.

000663.23.07.14

NEWS WATCH

LEED growth in Canada continuing to climb, CaGBC findings reveal

he Canada Green Building Council (CaGBC) has announced that the number of LEED registrations and certifications in Canada continued to grow during the second quarter of 2014, with 124 registrations and 109 certifications between April 1 and June 30. This brings the total number of LEED certified projects in Canada to 1,756. Year to date totals by LEED certification level (up to June 30, 2014) are as follows: • 67 LEED Certified • 89 LEED Gold • 85 LEED Silver • 12 LEED Platinum “The second quarter of 2014 was a big one for us at the CaGBC with the launch of the LEED v4 Alternative Compliance Paths to Canadians, and the release of the first-ever major green building study in Canada,” said Mark Hutchinson, director of green building programs for CaGBC. “That momentum showed itself in our LEED registration and certification numbers for Q2, with strong levels of growth across all building types.”

Some of the project highlights of the second quarter of 2014 include: • T he IBM Canadian Leadership Data Centre in Barrie, which certified LEED Gold. This is the first LEED certification for IBM; they were able to greatly minimize power usage by deploying underfloor systems that bring the air delivery closer to the data servers in order to be cooled. • The Midori Uchi project in Vancouver, which certified LEED Platinum. This residential project (the name means Green Home in Japanese) used ambitious building techniques to earn LEED’s highest level, and strove to do so in a way that would be affordable for

potential homeowners. The energy its solar panels generate mitigates heating costs in winter, and in the summer creates more energy than the house consumes. • BIO-Canadian Coast Guard Building in Dartmouth, which certified LEED Gold. As the new Maritime headquarters for the Canadian Coast Guard, this building incorporated sustainable features such as a cooling system that uses seawater from Bedford Basin and a green roof. LEED v4 is the latest version of the

LEED green building rating system, reflecting the latest green building knowledge, technologies and practices. The LEED v4 Alternative Compliance Paths (known as ACPs) provide equivalent means of meeting credit and prerequisite requirements of LEED v4 by referencing standards that are more familiar to Canadians. In order to ensure greater ease of use, the CaGBC has developed ACPs for eight sets of requirements, and will develop additional ACPs in the future as required.

CONTRACTOR ADVANTAGE CA N A DA’ S M AG A Z I N E F O R P R O F E S S I O N A L C O N T R AC T O R S

In the next issue of • Interior paint • Mouldings • Bathroom renovations • Gypsum • Building code trends 2015 • Professional associations and development

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BECAUSE FOUR WALLS AND A ROOF CAN BE THE FOUNDATION FOR GENERATIONS TO COME,

WE BUILD.

At CGC, our mission is to make sure we never stop building. From walls to ceilings to floors to exteriors, we will continue to deliver the products, innovation, service and support, as we have for more than a century, so you can construct the places where we work and live. Build your world at CGCINC.COM

CGC Sheetrock®

CGC Durock®

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USG Ceilings®

© 2014 CGC A USG COMPANY and/or its affiliates. All rights reserved. The trademarks CGC, CEILINGS, DUROCK, SECUROCK, SHEETROCK, IT’S YOUR WORLD. BUILD IT., THE CGC LOGO, and related marks are trademarks of USG Corporation or its subsidiaries or its affiliates.

PRODUCT SHOWCASE

Building Blocks

Innovative Products for Today’s Renovators ENGINEERED WOOD SIDING PROVIDES 25-YEAR DURABILITY

LP CanExel prefinished engineered wood siding is produced using wood fibre, resin and wax fused together under pressure to provide more than 20 years of beauty and peace of mind, the company says. The siding is highly stable and resistant to harsh Canadian weather, and finishing is performed in the plant to improve lifespan and help reduce maintenance. The finish consists of a five-coat, heat-cured process for exceptional durability. Plus, LP CanExel prefinished siding offers the toughness to resist cracking, splitting, warping, splintering and buckling. It is available in three product families, all of which offer a deeply textured wood-grain appearance, come in 20 prefinished colours, and have a self-aligning system for easy installation. A hidden nail assembly provides a clean appearance. All planks are a standard 12’ long but vary in width and appearance. LP CanExel’s Ridgewood D-5 Lap Siding has the look of authentic Dutch lap siding; 12” wide planks have a central groove to give the appearance of two 5” planks and create accentuating shadows. The company’s Ced’R-Vue Lap Siding provides the beauty and durability of cedar without the need for constant maintenance. Ced’R-Vue planks are moulded in 9” widths to create the look of traditional assembly.

LP CanExel’s flexible Ultra Plank Lap Siding can be installed vertically or diagonally. Deeply grooved 12” wide planks create the effect of two 4-5/8” wide planks, for a traditional or contemporary look. LP CanExel prefinished siding products have been subjected to testing in seven different North American climate regions that includes UV resistance testing. They carry a 25-year limited warranty against cracking, deflection and hail damage; 15 years on the finish; and five years on labour. Visit www.canexel.ca for more information.

COLOUR VISUALIZER EASES PAINT SELECTION

Dulux’s new online Paint Color Visualizer on its website enables users to choose colour in an engaging way, helping ease the decision making process. The visualizer allows the user to upload a photo and digitally paint a room or house, colour match an uploaded photo to any of the 2,016 paint colours by Dulux paint, create and save colours and projects, explore the brand’s most popular hues and colour choices via email. Visitors can also upload photos of their favourite sites or vacation hotspots, and the Dulux paint software will automatically help them recreate the feeling of the image in a room by suggesting a paint palette based on the colours in the particular photo. Visit www.dulux.ca for further information. To access the visualizer visit www.dulux.ca/DIY/colour/ colour-visualizer. CONTRACTOR ADVANTAGE

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PRODUCT SHOWCASE

HANDHELD AREA LIGHT IS PORTABLE, RUNS COOL

DeWalt’s 20V MAX* LED Hand-Held Area Light (the DCL050) is a portable, durable, versatile and cool-running lighting solution for the jobsite, the company says. The DCL050 has a rubber over-mould for a sure grip during hand-held use or can be placed on flat surfaces to use. The 140-degree pivoting head allows the user to illuminate surfaces above or below their work area. It has two brightness settings, 500 and 250 lumens, to provide either greater light output or longer runtime, includes two LEDs (light-emitting diodes) for maximum light output and provides up to 17 hours of runtime with a 4.0Ah 20V MAX* lithium ion battery. The LEDs are encased in an overmoulded, non-marking lens cover for protection and durability when using the work light in tough jobsite conditions. A 360-degree rotating hook gives users the ability to operate the area light hands-free; allowing the unit to be hung in various locations on the jobsite. The DCL050 20V MAX* LED area light comes standard with a three-year limited warranty, one-year free service contract, and 90-day money-back guarantee. Visit www.dewalt.com for more information.

VINYL FLOORING LOOKS LIKE STONE, ADDS COMFORT

New designs in Armstrong’s CushionStep vinyl sheet flooring collection feature an exclusive veincut, linear travertine design and a new thicker construction for everyday durability and added comfort. The company recently released 11 new designs and colours, with an extra thick 155 mil construction includes a 20 mil wear layer, in patterns of vein-cut stone and high-end woods. Mineral Travertine is a plank visual available in three colours; Capadocia Travertine, a staggered Travertine, also in three colours; and striated sandstone called Tidal Sandstone in four colors. While traditionally stone appears cross-cut, a vein-cut appearance looks more high-end, according to Armstrong. In addition to stone, CushionStep also features several other patterns that capture the beauty of natural material, including new looks in timeworn, rustic and whitewashed wood planks, including Deep Creek Timbers and Whitewashed Walnut.

All CushionStep products feature Armstrong’s exclusive CushionCore, which makes these floors comfortable and quiet underfoot. Visit www.armstrong.com for more information. CONTRACTOR ADVANTAGE

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BUSINESS STRATEGIES

25 Tips For Marketing Success Peers are often great sources of advice about how best to improve sales. Below are some worthwhile marketing ideas from them. BY VICTORIA DOWNING

ur best ideas come from the renovators with whom we work, and we work with thousands each year. To give you an idea of some of the great tips that are shared between these successful renovators, we have gathered 50 great marketing tips (25 of which are below) that were shared with us recently. With so many to choose from, I am sure that you will find a couple of ideas that will be effective in your business.

1 “We used very high quality before-andafter pictures on our website, portfolio, and large wall pictures on our office walls. Clients really respond and get excited with the possibilities. Budget: a fullday photo shoot costs $1,400; large (20” by 30”) wall photos cost $450, (8”x10”) photos cost $10. Results: clients get excited about what can be done to their home, buy into our design/build and feel we have the creativity to design well.”

2 “Mailing to radius around job site that consists of: cover letter; company bio; and, customer reference list. All were prepared on 8½”x11” paper. Budget: $1 each. Results: way more response to this than postcards; 2-5% response rate.”

3 “Include the customer in your marketing plans. Budget: $0. Results: it brings a personal touch to the advertisement.”

4 “When the client selects the paint colours, we provide three brush-outs of

each colour for the client to sign off, then the painter gets one, the owner gets one, and the contractor gets one. Budget: One pint of paint plus peace of mind. Results: The brush-out rules when the owner/client says the colour is wrong.”

5 “We have a 50/60/50 program. The first 50 customers each year who are over 60 years old get $50 worth of service for free. We co-op the promotional expense with our lumberyard. Our cost was $2,000 and we received $25,000 in direct business the first year.”

6 “Our local Capitol Region Food Program collects food for needy families between Thanksgiving and Christmas. We volunteer our trucks and crew (in company shirts and hats) to help deliver the food package.”

7 “Support the kids in the community and their projects. I helped our local team on a worldwide problem solving contest (made local trophies in our shop); a case of doing good and enjoying every minute of it!”

8 “We offer a four-year scholarship at our local high school. While our yearly cost is $3,000, we receive press coverage through the Foundation and for the award presentation. Special arrangements ensure this scholarship will continue after we are gone.”

Victoria Downing is president of Remodelers Advantage Inc. and is a leading authority in the remodeling industry. She has authored and co-authored several industry books, including The Remodeler’s Marketing PowerPak. She can be reached at victoria@remodelersadvantage.com or by phone at 301 490-5620 ext. 105. 10

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CONTRACTOR ADVANTAGE

9 “Corporate sponsorship of local public radio stations and arts organizations gives us exposure in theatre and music playbills, which our top customers see.”

10 “Why not try a high-exposure volunteer public service? We put up a much-needed banner cable across Main Street in our town. It took two crews and myself a full day, but we were featured in a front page picture in our local newspaper.”

11 “If you have a good-sized office/showroom, let community groups host events there. We let the Chamber of Commerce, Pampered Chef, Longaberger Baskets, Lions Club, Boy Scouts and Rotary Club use our space and that helps people learn about us and feel they know us.”

12 “Sponsorship of a Cancer Society fundraising ball and $500 a plate dinner with 500 guests who represented our highend client. Cost: $2,000, which included a display at the function and an ad in the program.”

13 “We donated four tickets for a local professional baseball game and dinner at the stadium club for the local school auction. Cost: $45.”

14 “I was in a hotel recently that included a small handout with the company vision and a list of charity and community involvements that are sponsored by the hotel. A great addition to any company packet!”

15 “Take a focus group of previous customers to dinner. Sell them again on your company and get feedback from them on what you do well and how to do things better.”

BUSINESS STRATEGIES

16 “We got the management of the Home Show (200,000 attendees) to pay us to create a feature display in their show in cooperation with the gas company. No hard costs.”

17 “Contact regional design related magazines and offer your expertise as a resource for their articles relating to the home. It creates a blizzard of activity as freelance writers will use you for their own benefit (and yours).”

18 Our marketing director writes a column in the local county newspaper. It costs nothing and he gets paid. Lots of visibility and name recognition.”

19 “Submit (and follow up with a call) a story of one of your most intriguing remodeling projects to your local newspaper reporter. Budget: virtually

zero. Results: leads that separate you from the competitor, because you are the expert.”

20 “We went on the Internet and found local listings of house sales for the last four years. We used this list to send out marketing information about our firm. We are adding these names to our database for future mailings.”

We want them to spread the word about our unique product and systems.”

23 “Give a $10 store gift certificate if the client returns the six month punch list callback form.”

24 “We send Valentines to clients with only the hint of a logo. People have to recognize the logo to know who sent it in.”

21 “Generate window leads by using shat- 25 “Teach a building course at a community terproof glass in a window at a mall or other public location and let the public throw baseballs at it to prove the glass will not shatter.”

22 “We invite our customers into our office and cabinetmaking shop for a picnic and to observe their kitchen production in process. We provide the picnic lunch in a woven basket with a plaid tablecloth.

college. It might be three Tuesday nights from 6-8 pm with a charge of $35 or less. List it in the newspaper to get free publicity. You will get at least three leads a course and one big job out of every two courses (we got a $600,000 job).” In the next issue of Contractor Advantage, Victoria will share another 25 marketing tips from successful renovators.

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SMART MONEY

Cash Is King Cash flow is the top priority for most contractors. Here are a few ways to make sure you are keeping your eye on the prize. BY PAUL RHODES

s a business owner, either just starting out or growing an already established business, it is easy to get buried in the project work and neglect the administration or business details. This article highlights three big picture ideas that any construction business owner should keep in mind. WORKING CAPITAL in the business is likely to be made up of several components. Effective management of cash and near-cash items requires that each component be reviewed to ensure that it is used optimally. For example: Are progress bills always rendered on time and in accordance with the contract? Segregate any disputed bills, so payment of other progress bills are not delayed. Are holdbacks always billed as soon as certificates of completion are issued? Is project work divided into smaller contracts so less holdback is tied up until completion? What is the process and policy for chasing overdue accounts? Are credit limits reviewed periodically and adjusted as necessary? Do you perform credit checks on owners prior to entering into a contract (such as reviewing the loan agreement and audited financial statements of the owner)? Do the terms of the contract allow you to periodically receive information relevant to the ownerâ&#x20AC;&#x2122;s financial position? Are inventory levels minimized? Are

order quantities optimized for different materials? Where possible, do you negotiate favourable payment terms from suppliers and subcontractors? Are corporate income tax instalments decreased, where possible, based on expected earnings for the current year? Does the company perform any work which is research and development in nature and may qualify for investment tax credits? Consider leaving profits in the business to avoid borrowing, or pay bonuses

Paul Rhodes is a partner at Soberman LLP. His professional experience includes providing assurance and advisory counsel to a number of clients in construction, manufacturing, real estate and internal audit engagements. Paul is a member of the Toronto Construction Association. 12

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and loan the net pay back to the company. Consider incentivizing the next generation of owners by awarding stock options in order to begin to transition ownership and also to conserve cash. MAINTAIN A CASH FLOW FORECAST: It is typically the case that insufficient time is paid to cash and cash flow forecasts, especially while the business is getting off the ground. The approach is typically that the founder or entrepreneur is more interested in creating and development of the idea. Given the amount of cash required by construction businesses to finance working capital, cash should always be monitored and managed closely. By identifying future financing needs early, management will be able to pro-actively

SMART MONEY

seek additional funding or take corrective action before it is too late. Maintaining a cash-flow forecast will allow you the benefit of being able to predict when additional credit is required beyond the current facility so you can avoid the need to raise financing at short notice. Leaving it too late typically leads to unfavourable terms and higher financing costs. CONTROL THE COMPANY’S GROWTH AND SET THE RIGHT GOALS. The downfall of many construction businesses is growing too fast and running out of cash, because the goal set is to maximize the level of sales and to win larger and larger projects. Maximizing the top line by doing more and larger projects can mean that low margin work is undertaken, which can decrease the net profit earned and working capital.

In addition, you, the business owner, end up working longer hours and under more stress for little or no return. The strategy should be to maximize net earnings and that can be achieved, in part, by: Only taking on projects that have sufficient gross profit margin to make them worthwhile; Making steady incremental increases in the size of individual projects undertaken; and, Closely managing the expenses below the gross profit line. If you have neither the time nor the inclination to deal with these issues yourself, then our advice is that you hire the required expertise. That will allow you to continue with what you enjoy while being satisfied that these important details are adequately managed. Alternatively, you

should sit down with your professional advisor and review your cash flow practices to look for areas of improvement. Having a system in place to manage these details will mean not only that you efficiently manage the company’s liquidity, but also that you protect the bottom line. For more guidance see CCA 28 A Guide to Improving Cash Flow in the Construction Industry and in CCA 50 A Prime Contractor’s Guide to Project Financing and Payment Security, which are available from your local construction association or from the Canadian Construction Association. This article has been prepared for general information. Specific professional advice should be obtained prior to the implementation of any suggestion contained.

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CONTRACTOR ADVANTAGE

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ECONOMICS 101

Responding To Disappointment Look at problem situations as opportunities to improve your team and show your leadership abilities. BY ALESIA LATSON

Manage yourself before you confront the employee Before talking with the employee about the disappointing situation, you first have to manage yourself. In other words, you have to be clear on what your intention is of the conversation. Because you are

in a position of authority, what you say during these moments will have a ripple effect. Of course, this is not to say that you are not justified in your anger or justified in your disappointment. You most certainly are; however, your expression of those feelings has an impact on how others view you and on what the employee will do in the future. Before initiating the conversation, take some time to step back and get clear about what you want to have happen as a result of the meeting. Are you simply looking to vent your anger? Is the goal on finding a solution to rectify the current circumstances? Or

Alesia Latson is a speaker, trainer, coach and founder of Latson Leadership Group, a consulting firm specializing in management and leadership development. With more than 20 years of experience, she helps organizations and leaders expand their capacity to produce results while enhancing employee engagement. For more information, contact her at alesia@latsonleadershipgroup.com or visit www.latsonleadershipgroup.com. 14

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do you really want to help the employee learn and grow from the situation?

Assess your role in the disappointment As part of managing yourself, take some time to reflect on your role in the disappointment. Before you declare, “I did nothing. It was entirely the other person’s fault,” realize that as a leader, you are ultimately responsible for your people. So ask yourself, “What role did I play?” and “How did I contribute to this disappointment?” Perhaps you did not give the employee enough training. Maybe you threw them into a situation that they were too “green” to handle. Perhaps you did not adequately prepare them for the meeting. Whatever the disappointing outcome was, chances are you had some role in it, even a small one. Acknowledge that prior to your conversation.

PHOTO: THINKSTOCK IMAGES

isappointment is inevitable for leaders. At times your people will disappoint you, and there will also be instances where you disappoint others. So the fact that disappointment occurs is not the challenge. The real issue to address is how you respond to the disappointment. Unfortunately, far too many leaders react to disappointment with anger and punishment. You have likely seen the scenario. An employee loses a key client, misses an important deadline or does any number of common things and the leader responds by demoting the employee, removing responsibility, not allowing the employee to take vacation time, firing them or taking other punitive actions. Such consequences are really nothing more than a knee-jerk reaction on the part of the leader and a missed opportunity for him or her to shine. In reality, how you handle disappointment speaks volumes of your leadership style and your credibility in your organization. To make the most of a disappointing situation and use it as the coaching opportunity it is, consider the following suggestions:

ECONOMICS 101

Assume good intent When you take the stance that the employee did not intentionally cause the disappointment, it naturally takes the edge off of your approach and any anger you may have. In the majority of cases, that stance is absolutely accurate: the employee did not set out to cause harm. They simply made a mistake or a bad judgment call, which resulted in a lessthan-ideal situation. Additionally, realize that the employee knows they messed up, and they have probably given themselves a thorough thrashing by now and are terrified to speak with you. Therefore, any anger you display will be mild compared to what they have already dished out to themselves. Of course, if there has been an intentional violation of an important principle, value or standard that compromises the integrity of the organization, then anger is understandable. True anger should be reserved for the most egregious acts. Successful school teachers know that when you discipline a student, you focus on the behavior, not the child. The same is true for business leaders. Even if the disappointment occurred because the employee was negligent in some way, you need to separate what happened from the employee personally. State your disappointment in terms of the outcome, and then explore with the employee the cause in an inquisitive and coaching way rather than a punitive way. Why? Because when employees feel punished, they become fearful, which decreases creativity and innovation on the job, which are the exact things you often need to rectify a disappointing situation.

Learn from disappointments It is human nature to lash out during disappointing times, and because a leader can, he or she often does. Remember that how you handle disappointment reflects more on you as a leader than on the person who caused the situation. Additionally, realize that the majority

of disappointing moments are actually coaching moments in disguise. Savvy leaders recognize this and make the most of these situations. If you want to be viewed as a leader with courage, credibility and reason,

use the suggestions presented here the next time you feel the need to punish an employee within your organization for a wrongdoing. When you do, you will not be disappointed in the results.

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All ready to ship in 2 weeks. Find out more at cabinetsmith.ca

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After 38 years’ of pioneering exchangeable power tool accessories, Exchange-A-Blade now has a new name: the EAB Tool Company, or simply, EAB.

A new name needs a new look, so you’ll soon be seeing new logos for our exchangeable EAB products and non-exchangeable StaySharp line.

Our tried-and-true Exchange System is what makes us unique, but we believe there’s always room for improvement. New EAB exchangeable products will only display the Credit Value – making it easier to see and compare for yourself the real value of buying exchangeable.

Our new name builds on our “blade” roots, but better reflects our entire and diverse product line – abrasives, drill and SDS bits, diamond saws, hole saws, oscillating tools, recips, screwdriver and impact bits – to name just a few. You’ll also be seeing changes to our store displays and packaging that will make it even easier to find the right EAB tool for the job.

Look for the new EAB at your local dealer or visit us at

EABTool.com

LEARNING CURVE

Building Success Whether it has to do with wood or running the company, two books can help contractors improve their businesses. MANAGING THE PROFITABLE CONSTRUCTION BUSINESS Wiley According to one statistic, the failure rate of construction enterprises is three times worse during economic recovery than during economic downturn. For new businesses, those established less than two years, the rate of failure can be nearly double that. Managing the Profitable Construction Business: The Contractor’s Guide to Success and Survival Strategies from Wiley seeks to help contractors take control of their business and manage it through the natural highs and lows of the construction market. Based on author Thomas Schleifer’s 45 years of business experience as a contractor and in helping financially distressed companies, the book combines practical experience-based advice and Schliefer’s own no-nonsense philosophy: “We

cannot control the market, but we can control our response to it,” he says. Topics covered include: • Understanding the primary areas of construction business failure in the next decade • Minimizing business risk with real-world examples • Developing a positive and competent management attitude and strategy Managing the Profitable Construction Business helps readers discover how to maneuver through this complicated and risky industry through research and offers proven success strategies to sustain and grow business.

DESIGN OF WOOD STRUCTURES McGraw-Hill Updated with the latest codes and standards, Design of Wood Structures, Seventh Edition, from McGraw-Hill Professional is written to serve as a text on timber design or as a reference for the systematic self-study of wood design. This practical resource guide leads the reader The book covers: • Wood buildings and design criteria • Design loads • Behaviour of structures under loads and forces • Properties of wood and lumber grades • Structural glued laminated timber • Beam design • Axial forces and combined loading

through the complete design of a wood structure, aside from the foundation, with a sequence of material that follows the same general order that an actual designer would implement. Design of Wood Structures features detailed equations, clear illustrations and practical design examples. • Wood structural panels • Diaphragms • Shearwalls • Wood connections • Nailed connections • Bolts, lag bolts and other connectors • Connection details and hardware • Diaphragm-to-shearwall anchorage • Advanced topics in lateral force design

Both books are currently available from www.amazon.ca and www.chapters.indigo.ca.

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FEATURE

Face the

Financial Facts

Building your business? That will require the right financial tools. BY JOHN G. SMITH

skilled contractor is only as effective as his tools, and when it comes to building a business, many of these tools come in the form of cash on hand. “Cash flow is their lifeblood,” says Rahul Karnick, national manager for real estate and construction services at RBC. “Their liquidity and their ability to grow are highly dependent on their ability to get capital and financing.” There are plenty of lending options available, from credit cards to a line of credit, term loan, lease or even the so-called “love money” from families and friends. Each comes with unique features and benefits that support different uses. It is why Karnick stresses that every business must be reviewed to determine exactly where the funds are needed. “When we look

SEPTEMBER/OCTOBER 2014

at any new client we really want to understand what their cash position is going to be, and where they are going to need the bank, to understand what kind of debt they need and how much,” he says. Credit cards, for example, offer a flexible tool for buying building materials and tracking expenses, especially if contractors are managing independent teams on different job sites. Every purchase can generate incentives such as travel miles and cash rewards. “We allow for higher Visa card limits for this purpose,” he says. Castle’s own commercial credit card comes with no annual service fees, flexible payment and financing options, and automatic rewards. There is also a 25-day interest-free grace period on purchases if the monthly balance is received in full by the payment

CONTRACTOR ADVANTAGE

PHOTO: THINKSTOCK IMAGES

FEATURE

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due date. Minimum payments can be as low as $10 or 3.5% of the balance. A line of credit, meanwhile, offers a flexible pool of funds to support daily operating expenses. It is particularly helpful for a growing business that needs to cover an expanding workforce’s wages before collecting payments on a project’s receivables. The credit tends to be secured through the receivables themselves, explains Kevin Golder, vice president of commercial lending at BMO Financial Group in Calgary. The need for general working capital cannot be overstated, he says. “If there are delays, if there are disputes, if there are performance issues with a job, the working capital piece can really handcuff a company.” Other options for a growing business might include a term loan for financing equipment or property, although this financial vehicle typically requires a more tangible form of security. Tender loans help when responding to larger Requests for Proposals. During these bids, businesses are often expected to offer a deposit of up to 10% of a contract’s value to demonstrate financial strength and an ability to backstop any cost overruns, Karnick says. The shortterm tender loan comes at a lower interest rate than a line of credit, and will ensure that the contractor’s overall cash flow is not jeopardized in the search for new opportunities.

PHOTO: THINKSTOCK IMAGES

Changing appetites If there is a single underlying message in these examples, it is that there is no single solution or source to meet every need. In 2011, 36% of small and medium businesses used at least some type of external financing. More than half (55%) came from chartered banks, but funds also came from credit unions (16%), government institutions (7%), leasing companies (4%), family and friends (2%), venture capital or angel investors (1%), and a final trickle from foreign banks (0.4%). “Different institutions have different appetites, and their appetites can change from time to time,” says Scott Lewis, BDC vice president of financing and consulting. “Companies should use a variety of financing solutions.” Where a leasing company might be interested in financing fixed assets like a vehicle or office equipment, a big bank might

“

The Canada Small Business Financing Program will guarantee up to 85% of a loan for leasehold improvements and equipment purchases as long as a business generates less than $5 million a year.

”

focus more on financing short-term needs such as building materials and payroll. Frankly, some of a contractor’s lending needs are more appealing than others. For example, a lender might be more comfortable financing a truck that has many applications than a piece of specialized equipment that could only be used by a limited number of buyers. Where new equipment might be leased with a five-year amortization, used equipment might have to be amortized over three to five years. Then there is the question of just how much debt a contractor would be allowed to carry. The related answers often suggest that “it depends.” A debt-to-equity ratio of 2.5:1 is typical, but this can vary. A contracting company

with an experienced senior management team might be able to secure a larger level of debt, Golder says. Those who have signed contracts with governments or well-known builders have been known to margin up to 85% of their account receivables when applying for a bigger line of credit. Someone exposed to more lien rights and holdbacks, meanwhile, might need to offer more security. The type of security will vary as well. While a term loan does not need to be secured with existing business assets, lenders will increase the focus on the business owner’s personal financial wellbeing in these cases, Lewis says. In contrast, the financing used for a fixed asset can be easier to secure because lenders know the asset will maintain a determined value even if the business fails.

The business plan The underlying ability to pay any of these debts will ultimately be demonstrated in a business plan. Contractors should be able to explain where they expect to find business, how it will be secured, how costs will be structured, and how a job will be profitably priced to support changing cash flows, Lewis says. After all, contractors have some unique challenges to address when compared to other businesses that seek financing, Golder adds. “There are holdbacks to be dealt with, there are lien rights that are different from province to province, and there can sometimes be extended pay-

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ment terms and performance risks.” Lenders who work with contractors tend to focus particular attention on the predictability of future revenue. “There is a fair amount of volatility in that industry,” he says. A contractor’s potential customers will be weighted differently depending on whether they are independent homeowners, established residential developers, commercial businesses, municipalities or institutions. The types of contracts make a difference too, Karnick adds, referring to options based on cost, cost-plus or fixed pricing models. Lenders who are working with a contractor who bases work on a fixed price will likely focus on the management team’s experience with such projects. This is to ensure that everyone understands how to accurately price a job and has a track record of completing such work on budget and on time. References will help ease the concerns, as well as prove existing relationships that will support the business. Even if contracts are not available, a letter of intent to conduct business will help to ease a lender’s mind. When combined with the contingency

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plans which show how cost overruns, strikes, employee absences or supply shortages would be addressed, it all shows the business “in a much stronger light,” Karnick says. The plan which reflects this information should include three years of financial statements prepared by an accountant, as well as a list of all aged and current receivables, he adds. The advantage of all this paperwork is not limited to increasing the contractor’s credibility. It also provides everyone with a clear understanding of the viability of the business. The contractor included. As influential as the business plans will be, some contractors fail to clearly predict revenue or explain how loans will be repaid, Lewis says. A clear plan will show exactly how much money is really required. It is the type of information that will ensure a new entrepreneur covers start-up costs and also bridges the period until sales actually begin to cover expenses. Government programs offer other forms of financial support to those who might otherwise fall short of meeting a lender’s demands.

The Canada Small Business Financing Program will guarantee up to 85% of a loan for leasehold improvements and equipment purchases as long as a business generates less than $5 million a year. Up to $350,000 is available for equipment purchases and leasehold improvements, while up to $500,000 is available to purchase real estate with an amortization of up to 10 years and a maximum personal covenant of 25%. “It is especially useful if the business requirement is kind of outside our comfort level,” Karnick says. The options do not end there. Ontario’s Community Futures program offers small companies in select rural communities up to $150,000. Specific programs also offer incentives when creating jobs for specific demographic groups. A local chamber of commerce or municipal economic development officer is a good place to start when looking to learn about these. Karnick stresses the time to explore any financial options is now. “They should certainly approach their bank well before they need the money,” he says, referring to all contractors. “Not when they are in dire need.”

www.resisto.ca CONTRACTOR ADVANTAGE

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FEATURE

TRANSFORMA Garage improvements provide healthy ROI for homeowners and a solid revenue stream for contractors who specialize in this area. BY LAWRENCE CUMMER

o longer the afterthought they once were, homeowners are paying more and more attention (and capital) to improving the often-sad state of their garages. Given that the average cost of a garage addition can run nearly on par with a major kitchen remodel, this is creating opportunities for both contractors and garage designers. 24

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The reasons for this increased attention from homeowners are fairly selfevident, suggest the manufacturers and contractors alike who work in the space: garages have become more than mere carports with walls; and, in current home designs they can represent from onequarter to more than half of the front exposure, and that equals curb appeal. For one Calgary contractor, attention to customer needs is definitely paying off.

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“Our season gets in full swing around May 1, although there are some pre-sales over the winter, and by the end of May we were booked up for the rest of 2014,” says Derrick Potter, owner of Gecko Projects Ltd., which specializes in garage builds. While Potter’s company tends to focus on new builds, his growing business also includes garage additions and, of course, the replacing of doors with newer designer options.

FEATURE

ATIONS

PHOTO: GARAGA

Best face forward With garages no longer relegated to back lanes and alleys, garage door replacements, in particular, can be an inexpensive and easy way for homeowners to increase curb appeal. After all, the door is what all the neighbours (and buyers) see first. As well, homeowners otherwise investing in their homes do not want to leave them with an unsightly garage, suggests Russ Puchalski, general manager of

Westgate Door Industries in Abbotsford, B.C., and the payback is high. Puchalski cites Remodeling magazine’s annual “Cost vs. Value” report, which showed garage door replacements sit fourth in return on investment in 2014, behind steel entry doors, wood deck additions and much more costly attic bedrooms. Garage additions were found to kick back 69.3% of job costs into the home’s value, similar to that of a family room addition.

“Manufacturers across North America have jumped on board to offer different designs and patterns to give the homeowner lots of options,” he adds. Over the past several years, designs for overhead garage doors that mimic traditional carriage house doors have been especially popular. This prevalent trend was echoed by Daryl Laprade, director of sales and business development at Creative Door

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in Edmonton. “Basically we are talking about what starts as a white door with a raised-panel look or extrusions put on it to make it look like a carriage style or barn door, as opposed to the standard panels you see everywhere,” he explains. Relatedly, steel-constructed garage doors with the appearance of wood are also on the uptick, says Travis Reynolds, national marketing manager for SteelCraft Door Products Ltd. also based in Edmonton, as homeowners continue to try to emulate traditional designs. Such doors offer homeowners the warranties one would expect from a durable steel door, but with a more rustic charm desired by some homeowners. Beyond aesthetic tastes, garage door material choice is primarily dependent on climate conditions, which in Canada varies widely by region. Parking gates (in lieu of doors), may be popular in Vancouver, but will not cut it in the Prairies where a door with some solid insulating ability is needed, says Laprade. The owners of higher-end homes are increasingly turning their garages into extra living spaces or extensions of the interior, and that makes the R-value from an insulated door all the more important. Good insulation options are abound, and are practically a given for any designer garage door. “You can find an R-8 value, which is a green-built value in the marketplace, to provide better energy efficiency and reduce carbon footprint, up to commercial doors as high as R-30,” Laprade notes. “Residentially, today they go anywhere

from R-8 to R-20.” Puchalski concurs. “The more the homeowners are going to use their garage as an extension of the house, the more that door’s R-value becomes an important factor.” He also suggests that homeowners do not need to compromise design interests to reduce energy costs, using Northwest Door’s Therma Elite insulated garage doors, which provide an insulation value of R-10.4 but in a carriage style, as an example. Insulation for garage doors is generally provided through polyurethane foam injected into the door or through a core of extruded polystyrene (EPS, like Styrofoam) sandwiched between the door’s base and “skin.” Laprade and Reynolds both recommend the former. “It is injected, so any nook and cranny really gets

filled up,” Laprade says. “R-value to Rvalue is one-to-one, but the polyurethane has a little bit better value to it.” In terms of materials, each brings something to the table, but steel is the king when it comes to resiliency, suggests Laprade. Thanks to various improvements and innovations, like galvanized aluminum on which a wood grain can be embossed, that resiliency can be now coupled with aesthetics, he adds. Slightly more expensive than steel, fibreglass can extend colour options, now a large part of the purchasing decision; and is sometimes crucial for homeowners wanting to match garage doors with an existing fibreglass entrance door on the house. Tried and true wood is obviously the

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best way for homeowners who want the ultimate in “real wood” appearance, but is the most expensive option and one that requires constant maintenance. At the high end, custom wood doors can be intricate and stunningly beautiful. “With a few top custom wood door manufacturers, you create something in your mind and I guarantee you they will make it,” Laprade says. “I was on the

West Coast in a home that cost in the neighbourhood of $14 million and the garage doors were unique, custom-made wood doors and they were outstanding.” “If the homeowner has the money, the sky is the limit.” Darker colours are finding their way into modern garage doors as well. Where in the past, darker colours posed a problem with steel due to excessive heat build-

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up, innovation around coatings may be solving that challenge. For example, SteelCraft has turned to an organic coating technology that reflects rather than absorbs the sun’s rays to allow darker colours in its Elite series of polyurethaneinjected steel garage doors. The coating allows colours such as charcoal and, the company says, increases the lifetime of the door.

PHOTO: GARAGA, RICHARDS-WILCOX

Behind the door

While the garage door makes up the single-largest moving part of a home and often a huge part of its front-facing appearance, what goes on beyond it is as, or more, important. “The idea of the garage being used just as a garage is gone by the wayside for many people,” says Reynolds. While the car remains a focal point of a modern garage, today they are being used for traditional functions of parking, storage and as workshops, but also for entertainment, as guest houses or garage suites, and sometimes some very unique applications. “You have guys turning it into a ‘man cave,’ and we have had a few of those, but there are times when you have to make even more special accommodations in the design,” says Potter. “We have had a couple customers who do pottery, so we have had to build the garage and ensure it is up to code for a kiln so they can do their pottery in there.” Code-related work is half the job of any garage build or addition, and an area in which most homeowners become lost when navigating alone. Because of this, Potter says his company handles all the code and city bylaw work for their customers. His approach of paying heavy attention to the specific needs of customers takes extra time, but has been paying off to keep him and his employees amply busy. For contractors looking to build their customer’s dream garage, like any renovation or remodel, listening closely to the intended use is important; however, given the limited space most garages offer and

the limited budget thrown at many garage jobs, it can be all the more crucial. To helping optimize that space, contractors might consider partnering with a design and organization expert like Rick Scully, owner and chief transformational officer at Nuvo Garage in Toronto. “The trend is to move from a dumping ground of things that you cannot find to a functional space, and there is a skill involved in identifying space and coming up with solutions that are practical,” he says. “The garage tends to be organized in zones of activities based on customer needs. Are they an avid gardener? There needs to be space for that. If they are sports fans or have a lot of children playing sports, they need to have space to store and access sports equipment.” It all seems very obvious, and on a surface level some design solutions are, but the obvious is also frequently missed. “You really need to look at all the dimen-

sions of this finite space: length, width and height; oftentimes height is an opportunity overlooked,” Scully says. To that end, ceiling-mounted storage can bring homeowners organizational efficiency. Still, homeowners are looking at even more sophisticated ways to make use of their precious garage space, for example having car lifts installed to turn a one-car garage into a two-car unit. Garage door-related choices can also make a big difference in freeing up space. Side or wall-mounted door lifts, like those offered by LiftMaster, free up that overhead space, Puchalski says. Highlift tracks, like those formerly only common in commercial garages, are also being installed to free headspace in residential garages, adds Laprade. However this valuable space is being freed up and used, one mainstay of garage planning and design is clear: a focus on functionality is key.

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FEATURE

Nailing

A lot can go wrong in basement renovations. Plan carefully and watch for some prevalent issues. BY NESTOR E. ARELLANO

SEPTEMBER/OCTOBER 2014

CONTRACTOR ADVANTAGE

PHOTO: GOODFELLOW

BASEMEN renos

FEATURE

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hether the idea is to create a home office, recreation space or additional living quarters for the in-laws or renters, the basement is very often the space of choice. Basements cover anywhere from 30% to 50% of a home’s entire living space and yet they are normally unseen by passersby and houseguests and their use is often limited to family members. Thus any renovation work on the basement tends to be more personal in nature, often meant to cater to the tastes of the homeowners rather than their visitors. Ideas for transforming a basement are abound, but before contractors can proceed with any building plans, there are several key issues that should be considered.

PHOTO: CATHELLE

Is the basement ready for a reno? “A common mistake that even many professional contractors make is failing to identify and deal with existing flaws before renovation,” according to Mike Lain, national retail sales manager at Canadian bathroom products manufacturer Mirolin Industries. “When left unattended, some flaws have the potential of impacting the look and performance of renovation installations.” There is no sense spending thousands of dollars and hours of hard work only to find out that everything just installed needs to be ripped out; however, this is the likely outcome if you happened to build upon an unsound structure.

Are there cracks on the walls or floors? Are the walls bowed or do they lean? Will the electrical wiring and furnace be capable of handling the demands created by the planned renovation? Is there a

leak in the basement or a mold problem? Inspect the basement for any of these problems and determine what remediation work needs to be done before starting any renovation work.

The following are some of the things to look out for: • Mold, mildew and musty smells are the result of a damp basement and an indication that the building envelope, that outer layer of concrete and waterproofing system that separates the living space from the outdoor elements both above and below grade, may be faulty and is letting moisture and water seep in. This can eventually cause floor and wall coverings to deteriorate and could lead to health problems. Have the problem assessed by experts who can recommend the proper measures to ensure the airtightness of the basement. Sealing cracks on the outer walls with polyurethane compound and installing a drainage membrane to produce an air gap between the wall and the ground is often recommended. • Fibreglass insulation can trap water vapours that naturally escape from the walls and eventually create mold. Close cell spray-on foam, rigid foam board insulation or a combination of both is a recommended substitute. • Cracks naturally occur as cement hardens. If wall cracks are about ¼” wide or less and cracks on floors are about ¾” wide or less, these are generally acceptable. Observe cracks over time, or ask homeowners about their history. If they appear stable, simply clean them and caulk. Larger or still-active cracks could mean roots or water are creating pressure on the concrete, which will require more work. • When cutting new space, make sure you are not damaging or eliminating structural walls or beams. Look out also for firestops, which are typically 2” lumber or other fire-insulating material, required by building codes to act as a fire barrier between building stories. Firestops can be found separating wood-framed vertical chases from the horizontal chase, every 10’ across the wall and at openings around vents, pipes, ducts and cables. •G enerally, if the wall is bowed by less than an inch and the bow is not progressing, it will not cause any problems. If the bowing threatens structural integrity, reinforcement is needed to prevent further sagging. A wall that is bowed by nearly a foot may last a few years, but is likely to cave-in eventually. • Many jurisdictions require the installation of separate exit from the basement apart from the door leading into the main house when a basement is being used as an extra-living quarters.

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Floor and ceilings In any part of the house, remodeling done on floors and ceilings are definite eye catchers and this is true for the basement. “One of the most significant ways to alter a basement’s look and to make it appear more hospitable is to remodel the floor and ceiling,” says Jeff Morrison, national accounts manager for building materials distributor Goodfellow Inc. By using specific patterns, styles and

colour of flooring and ceiling materials, homeowners can make a basement seem larger or more intimate than it is and create a desired mood or theme for the space. Because of the beauty and luxury they exude, many homeowners today are using hardwood flooring on their basement; however, dampness and water vapours in the basement can potentially warp and damage these expensive materials over time.

Plumbing Basements in a lot of homes built before the 1970s were not wired and plumbed with the thought that homeowners might want a bathroom or kitchen installed; “however, newer homes are often plumbed for easy installment of basement bathrooms,” says Lain. “Their rough-in usually includes pipes and drains for toilet, bath and sink.” Still, contractors are likely to encounter basement rough-ins not properly sized or configured to bathroom or kitchen installations.

PHOTO: GOODFELLOW

Look for the following: • A 4” round PVC sewer line, capped at floor level or a bit above to accommodate a toilet; • A drain and vent stack (usually 2”) running from the ceiling to the floor to serve as drain for the sink; • A 12” square plastic cover set in the floor. This serves to protect a drain line below the concrete for a bathtub or shower; • The area where furnace, washer and dryer are found should be sloped or graded downwards towards a centre drain on the floor. “One of the most common mistakes I find is that tiles or flooring material have been installed over a drain,” says Lain. “The drain was placed there for a reason. If you cover it, where will excess water go?”

Carpet may make basement floors warmer, but this material also retains moisture and mold. Cheaper laminate flooring with a high-density fibre core is resistant to moisture, making laminates ideal basement flooring. For added protection, Morrison recommends that a product, such as DMX 1-Step underlayment, be installed as a vapour seal between the basement floor and the flooring material. The anti-bacterial membrane has an air-gap design that allows air to circulate between the laminate and the basement floor to prevent the growth of mold. The mainstay of basement ceilings used to be gridded dropped ceiling tiles. The material has sound absorbing qualities that block noise from the floor above and the suspended configuration provides a way to hide electrical wiring. The latest trend in basement remodeling these days is to use suspended decorative ceiling tiles, Morrison says. The tiles have the sound absorbing and wire-hiding properties of traditional dropped ceiling but hide from view the distracting grid pattern holding the tiles up. Today’s tiled ceilings also come in a variety of colours and patterns.

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Basement mechanical The electrical service panel, the heating, ventilation and air-conditioning (HVAC) systems are the original occupants of most home basements; however, in many remodeling projects these critical systems are neglected, according to Stewart Rap-

paport, managing director of Quebec-based electrical hardware company Cathelle Inc. “All too frequently you will find that work is not done to Code,” he says. “For instance, renovations often dangerously box-in the furnace, or electrical panels are not provisioned to meet the heavy load

Here are a few pointers: • Furnace rooms need adequate lighting and space to allow service people to do maintenance work and repairs. Most gas codes require at least 30” of space from the front of a furnace for space to remove the water heater or furnace from the room when they are being replaced. • Provide enough space for the extraction of ventilators, humidifiers and filters. • Make sure there are air vents in the wall to allow combustion appliances to operate without producing carbon monoxide. • Make sure there are floor drains to accommodate water overflow from humidifiers and air-conditioners.

Because basements normally do not have much access to natural lighting, Rappaport says it is very important to carefully layout artificial lighting. He suggests installing multiple switches for added flexibility and investing in energy-saving LED lighting, which con-

from an increasing number of appliances and devices.” Rappaport strongly recommends that contractors bone up on applicable codes and requirements, as well as secure all necessary permits before proceeding on any work.

Among the most common mistakes found in many basement renovations are: • Wiring that runs on or through air-ducts or HVAC vents. This can cause a fire as combustible materials such as dust can be set off by an electrical spark. • Wires not properly stapled or that run through drywall without a protector plate. • Installation of non-GFCI (ground fault circuit interrupter) receptacles near a sink or water source. This can cause electrocution. • Too many wires in a box or too many fixtures wired in the same switch. • Device boxes recessed too far into the wall.

sume less energy and gives off less heat but lasts more than 25,000 hours. Another growing trend is the installation of duplex receptacles with USB ports to accommodate the growing number of computers and mobile devices used in the home. The renovation op-

tions for the basement can be almost limitless. The key is to plan ahead and plan carefully to make sure that you have all the bases covered. “As in any home renovation project, you get only as much as you put in,” says Morrison.

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FEATURE

ELECTRONIC

ESTATES Home-automation technology enhances security, comfort and, for Canada’s growing population of seniors, independence, all at a lower cost than ever before. BY STEFAN DUBOWSKI

mart home or home-automation technology used to be exclusive. Only wealthy homeowners could afford to install motorized blinds, motion-detecting lights and other high-tech household accessories. That is no longer the case. Prices for home-automation technology have dropped, making it more accessible for the middle class. In a survey of consumers, marketresearch firm NPD Group found that 37% of home-automation product owners had a household income under $75,000. 38

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“We see a whole new market opening up to younger, middle-class consumers,” said NPD executive director Ben Arnold in a press release. The company went on to explain that equipment prices are lower, so people whose castles are actually terraced towns or compact bungalows can afford some high-tech wizardry for their abodes. These lower prices do not mean the entire home-automation sector has gone down-market. Smart-home systems installers in Canada say they still hear from

CONTRACTOR ADVANTAGE

wealthy people who want complete and expensive automation solutions. Packages often include security features, home theatres and audio systems that can pump music throughout the house. High-end combos can easily cost $10,000 to $200,000 says Mike Langille at smarthome system provider Nextgen in Saint John, N.B. Whether they live in palaces or pied-àterres, people usually choose home-automation technology for three main reasons: comfort, convenience and security.

PHOTO: HONEYWELL, THINKSTOCK IMAGES

FEATURE

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PHOTO: GE

Push-button comfort High-tech thermostats exemplify the latest in smart-home innovation. These devices enable homeowners to adjust the temperatures of their houses via the Web. Users can turn up the heat or air conditioning before they leave work, so their homes are comfortable when they arrive. Some advanced thermostats even learn homeowners’ daily patterns such that the furnace or air conditioner turns on only when required. Users waste less energy and reduce their utility costs. Some smart thermostats have scheduling features. The devices ask users simple questions like “What time does the last person leave home?” and “When does the first person return?” The thermostats use the answers to create heating and cooling schedules, so homes are comfortable when people are in, and furnaces and air conditioners operate more cost-efficiently when everyone is away. It takes only a few minutes for a user to program a smart thermostat, says Mike Bruce from Honeywell. “Our Prestige Comfort System thermostat allows for days to be blocked together if the homeowner has a similar schedule each day, or each day can be set to its own individual schedule if the homeowner has varied daily routines.” Smart-home technology is making its way into appliances, too. GE’s Brillion system, for instance, lets a homeowner preheat his GE oven via smartphone, so the appliance is ready to bake when he gets home. He can also schedule bake times and temperatures. The Brillion product line includes only high-end wall ovens for now, but GE plans to expand the portfolio soon. Although many smart-home technolo-

gies stand alone, some can be linked together. Sophisticated remote controllers for an entire home or building enable customers to connect numerous systems, so heating, cooling, lighting and other elements work in concert. Honeywell’s Tuxedo Touch is one option. Using a wireless networking technology called Z-Wave, it can be programmed to do many things at once with a single tap on its 7” touchscreen. “Tuxedo can be programmed to turn off all Z-Wave lights, close the shades and lower the thermostat when a home or business owner arms the security system upon leaving for the day,” explains Honeywell spokesman Jean-Pierre Lapointe.

Lock down Wi-Fi in smart homes

Most homeowners nowadays know that if they want to keep hackers from latching onto their wireless home networks, they need to follow certain basic security measures. Security is all the more important when the home wireless network also connects to household systems like lighting, HVAC and appliances. GE, which offers the Brillion brand of smart appliances, reminds customers to employ these three important network-security practices: Choose a unique network name. Also known as the service-set identification (SSID), the network name shouldn’t match that of a neighbour’s network. Otherwise, your neighbour may (inadvertently or otherwise) use your network. As GE points out, you may also have trouble connecting your appliances to your network. Change the default administrator password on the router, or else a hacker may find it relatively easy to latch onto your network and use your Internet connection or, even worse, control your network-connected household items and systems. Use data encryption on your home network. Wi-Fi protected access II (WPA2) is the toughest encryption available in most cases. It will keep the vast majority of hackers from infiltrating and monitoring your home-network communications. CONTRACTOR ADVANTAGE

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Digital security team Some home-automation shoppers prioritize security over comfort. For these customers, installers may highlight the fact that smart-home solutions can be programmed to link the security system, motion sensors and lights in and around the house. If a potential intruder lurks in the yard, exterior spotlights can turn on to expose the trespasser, ground-floor fixtures can light up to make it look as if someone is in, and the security system can contact the security service provider. Along the same lines, if the homeowner is away, she can have different interior lights turn on each night and different blinds rise and descend to make wouldbe burglars think the house is occupied. Some home-automation systems connect security cameras with smartphones, so if someone passes before the camera stationed at the front door, for instance, the homeowner receives a photo of that person by text or email.

A wise move for the elderly

PHOTO: IROBOT, GATEFEEDER

An increasing number of customers considering smart-home systems are concerned with elder care. Doug Barclay, owner of HomePlus Automation in Ottawa, remembers a recent call from a prospective client: she wanted her senior parents-in-law to be able to turn on the bathroom light from the bed so they wouldn’t have to fumble and risk a fall in the dark of night. Barclay recommended a portable whole-home remote controller so the user can control lighting from any location. Barclay would program the system so the user can turn on the bathroom light by touching a button on the screen. He would also program a button that lights the hall leading to the kitchen, or any other pathway for safety and convenience. “I have my home set up so I can push one button on the remote and all the lights in the house go on,” Barclay points out.

Robot invasion

Alongside advancements such as network-connected stoves and smart security systems, companies have been developing novel robotics to help homeowners tackle various household tasks. A few notable examples: iRobot’s Roomba vacuum cleaner automatically makes its way around furniture as it scoops up dirt and debris. This device can be scheduled to clean when it is convenient. Irobot.com. Looj, also by iRobot, cleans gutters. Just put your ladder in one spot and let the robot do the work of blasting away leaves, dirt, clogs and sludge all on its own. Robomow has a range of self-directed lawn mowers that quickly and evenly cut lawns of various sizes. Users install a perimeter wire around the area to be mowed and the robot stays in those boundaries, identifying and avoiding trees, shrubs and garden beds along the way. Many of the features preferred by security-minded customers also interest clients concerned with helping older family members. For instance, installers can program remote controllers so the user can access security cameras and see who is at the door before opening it. As well, some smart-home systems provide remote management, so adult children of a senior user can log in to make sure mom or dad remembered to lock the doors at night. Barclay says smart-home solutions for older users are becoming popular. “I

would not be surprised to see the government start to promote it with rebates to help people stay in their homes longer as they age.” Home automation is not for everyone, but clearly it is becoming more common among individuals for whom this technology used to be too complicated or too expensive. Contractors on the leading edge of the smart-home industry may find themselves discussing home-automation solutions with a wider range of potential clients who are eyeing the technology for an array of uses.

Home automation gets pet friendly

When homeowners are away, the pets will crave… food, that is. A number of automatic pet feeders on the market now enable customers who are not at home ensure Fido and Fluffy do not go hungry. Auto pet feeders can be programmed to allow the pet access to the food at certain times of the day, which helps keep the pet from overeating. Some of these feeders have sensors that detect a special tag attached to the pet’s collar, so when the pet approaches the feeder, the device opens up to let the pet eat. The Gatefeeder GF 100 has particular feeding compartments that open only when they connect to specific collar-tags, so only the pet wearing that tag gets to eat the food in one of the compartments. This feature is handy for people whose pets have different diets.

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FEATURE

SEPTEMBER/OCTOBER 2014

CONTRACTOR ADVANTAGE

FEATURE

Energy Alternative Options

SOLAR POWER IS STILL THE KING IN RESIDENTIAL AREAS. BY DAVID CHILTON SAGGERS

PHOTO: THINKSTOCK IMAGES

anada’s supply of fossil fuels is finite. Canada’s ability to absorb the harmful effects of burning fossil fuels is finite. That means Canada’s probable energy future will depend on ever increasing inputs from renewable sources such as solar, wind, biomass and geothermal. Hydroelectric power is, of course, a renewable source and Canada generates more than half of its electricity from the harnessing of moving water, some 59% in 2006. At this level, where electricity is put unseen on this grid so we can fire up the coffeemaker in the morning, matters seem well in hand, but what about dropping down from macro to micro view? In other words, how can savvy householders choose and use a clean, renewable energy source for their own residential property? Fortunately, the choice is a pretty simple one for, as Kevin Pegg, president of EA Energy Alternatives in Telkwa, B.C. and Ben Thibault of the Pembina Institute in Calgary say, biomass, geothermal and wind all have potential, but are hemmed in by certain constraints. For example, says Pegg, small-scale wind farms have not caught on yet and it is a simple matter of cost that explains why turbines are not springing up in, say, subdivisions. As well as the higher costs, Thibault says it should be remembered that when turbines spin they are quite loud, so placing them in a more urban environment where there are neighbours to annoy means their appeal is limited. Micro hydroelectric energy, another alternative source that is barely on the radar of the average homeowner, are technically feasible, says Pegg, but of course need a waterway with an appreciable drop to work. Biomass energy derived from burning unwanted wood chips, manure and certain other waste products, and geothermal power, obtained by drilling into the earth and exploiting its natural ability to absorb and give off energy via a series of pipes, remain essentially rural choices. In the case of the latter source, Chad Brezynskie, vice-president at Geosmart Energy in Cambridge, Ont., says heating and cooling are geothermal’s main selling points at the moment. CONTRACTOR ADVANTAGE

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PHOTO: THINKSTOCK IMAGES

The cost and the topography necessary to install and maintain these energy sources can only lead to one conclusion: solar power is king, even if its kingdom is not yet as extensive or as influential as its courtiers would like. “Photo-voltaic is definitely the most common, because generally speaking the sun is accessible and available to everyone,” says Pegg. “There is quite a bit of interest in wind systems, but wind is a very, very tricky technology. You need the right site, whereas a south-facing roof, which is the most common installation in a residential area, is fairly easy to obtain. There are no regulatory barriers to putting photo-voltaics on one’s roof.” One of the advantages of solar power is that it requires no moving parts. The panels themselves are very reliable, will last 20 to 25 years, and all a householder has to do is keep them clean. However, buying the panels is not cheap. Pegg says perhaps 60% to 70% of the cost of using solar power is an upfront expense: purchasing the panels themselves. The 250-watt panels, which are typical of residential installations, measure 40” by 60” and are fragile; installation is best left to accredited installers who can do the job in a day or two. Pegg suggests $20,000 as the initial cost of a “good size” array of panels. As for how much of a homeowner’s electricity needs they will produce, he cautions that the unknown variable is consumption. Pegg says a retrofit solar energy job can produce 25% to 50% of a household’s usage; a new build is much more efficient and can produce 100%. That is what solar or photovoltaic power (the two terms are used interchangeably) is; but how does it work? Solar energy excites electrons, knocking them loose from their atoms and allowing them to flow through the photovoltaic material and turning them into direct current electricity. The direct current then goes through an inverter that turns DC into the 120-volt alternating current most Canadian appliances need. This is Canada, though, so what happens if the sun does not shine long enough for days or weeks at a time and the electricity generated is minimal? The householder draws his energy from the grid. On those days when his panel array provides

Design Talk Ben Thibault is the program director for electricity at the Pembina Institute in Calgary. Q: What are the most common alternative energy options to generate electricity and how developed is their broader acceptance? A: Solar energy is the most readily available, and a couple of things about solar: it is very urban appropriate; it does not make much noise at all. If your roof already has a good slope to it you can often install it without much in the way of racking mechanisms. Another thing is that its costs have come down really substantially, compared to five or 10 years ago. Now we are seeing a significant portion of the costs are from the installation rather than the panels themselves. If those costs come down, solar will clearly be competitive. Q: Is there something for the residential market that might be considered in second place behind solar panels? A: It depends on where you live, but if you have a decent wind resource, enough space around you, such as people living on acreages or farms, and you are not surrounded by trees that cut down on the wind resource, there are small-scale wind options available. They are turnkey installations that can be put up quite simply at relatively low cost. One disadvantage to small-scale wind is that the turbines spin so quickly that they create quite a buzzing noise. Overall you are likely to get better value for your money, at this point, with solar. Q: Are there any other choices for the householder? A: Biomass and geothermal are interesting options going forward. As we know, the wind does not always blow and the sun does not always shine. With either of those options you CONTRACTOR ADVANTAGE

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most of what he needs and there is a surplus where does it go? For those who live off the grid, it goes into household battery storage, but in residential areas that surplus is uploaded to the grid and, in Ontario, makes money for the homeowner. “The upfront costs are significant, and that is the primary barrier to entry into the solar market for most folks. The return on (that) investment today is around 20 years in terms of payback,” says Pegg, mentioning Ontario’s feed-in tariff (FIT) of between 28.8 cents and 34.5 cents a kilowatt generated by solar power. John Cannella, a spokesman for the Ontario Power Authority in Toronto, says there are two streams in the feed-in tariff initiative. FIT itself is for projects that generate more than 10 kilowatts of electricity; microFIT is for small renewable energy installations of 10 kilowatts or less. The OPA continuously accepts applications and is authorized to issue contracts for the generation of up to 65.3 megawatts of electricity this year. Applicants first apply to the OPA and then check with their local electric utility to ensure that there is the capacity to have their project connected to the grid in their location. Once it is built and inspected participants are offered a 20-year contract. The vast majority of microFIT projects are solar, and since the launch of the program in 2009 more than 18,000 microFIT contracts have been signed representing about 160 megawatts of capacity. Some 18,000 microFIT installations may seem like a lot, but in a province as large and as populous as Ontario it is really not. Nevertheless, they do indicate where increasing amounts of our electricity will come from and some day solar panels on roofs will be as common as satellite dishes are now.

need to be connected to the grid and export your energy when you do not need it. Particularly with geothermal there are some options that are coming together, but they are relatively expensive as yet. It is also relatively large, so I would not think about a single-family dwelling as something that would be doing geothermal electricity right now. As for biomass, no one has really instituted small-scale biomass technology at this point to generate electricity down around the five to 10 kilowatts scale. Q: We have gone from coal to oil to natural gas, but there seems to be reluctance with other energy sources. Is this reluctance being overcome? A: If we look at how people adopt technology it looks a lot like a bell curve. At one end you have technology leaders, then you get into the group of people who are really progressive. Next, you have those who are really concerned if a new energy source makes economic sense. At the end of the curve there are those people who are never going to accept the new technology. With solar there has been a decent amount of deployment, especially in some provinces. What we are moving into now is that group of people who want to make sure that solar makes sense for them and is the next thing they want to jump into. I would say solar is approaching a tipping point where it is going to become much more mainstream. This interview has been edited for length and clarity.

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very layer of a building envelope has a role to play when creating a liveable space. The all-important shell that includes the foundation, walls and roof is the only thing that protects the people inside from air, water and noise. It is also only as effective as its weakest component, meaning that installers need to pay attention to all the underlying building materials. Enhancing the envelope is not always a matter of choice, either. Provincial building codes are driving minimum insulating values ever higher, while select municipalities have unveiled tighter standards of their own. Builders looking for a stamp of approval from programs such as Quebec’s Novaclimat or Energy Star are expected to take further steps. Quebec’s recent focus on thermal bridges offers just one example. Since changes were introduced two years ago, studs must be covered with an R-4 insulating material. Overall structures are also limited to 2.5 air changes per hour, proven with a blower door test. Ontario will tighten its own standards as early as 2017, and is expected to require as much as 25% of a wall’s R value to be mounted outside the studs rather than inside the wall cavity. “There is more insulation in the wall cavity, which is a huge challenge right now for builders,” says Pascale Savard, wood fibre product manager at Building Products of Canada. “They have this huge product offering in front of them, and each is asking for different application instructions. You need to change your way of building a house to adapt.” The focus on blocking the passing air is about more than controlling temperatures alone. “When you are controlling air, you are controlling moisture as well,” says Gary Romes, director of business development for Guardian Building Products. “We have all realized that air infiltration is a critical part of the total insulation package.” Product lines are evolving to meet the higher performance demands. Romes refers to one option in the form of 5.5”-thick, high-density insulating batts which deliver R-22 and R-24 values when tucked between 2x6s. Increasingly products are even being combined, through choices such as flash and batt systems which

building’s thermal mass. Better window designs and glazing can slash energy requirements by as much as half, the Center for Climate and Energy Solutions notes. A well-sealed and properly insulated basement helps to avoid the potential for issues like mold, too. The focus is not on the walls alone, either. “We have certainly seen a move toward higher R values both in the walls and the ceilings,” Romes says. Still, none of these materials should be seen in isolation.

The entire system

combine traditional fibreglass batts and spray foam, or insulated exterior sheets that cover the fibreglass batts tucked between the studs. A 4x9 sheet of wood fibre that arrives complete with a laminated air barrier, meanwhile, can eliminate the need to wrap a house. “There is no way you can as effectively wrap a house on site, up on a scaffolding, with the mason coming up behind you,” insists Simon Johnson of Building Products of Canada’s architect and builder program. The final step with the combined material simply involves taping the joints. Not only that, but the sheet will weigh half as much as a panel of Oriented Strand Board (OSB). Every selected material influences a

“The house needs to operate more as a system,” says Johnson. As important as building products such as a fibreglass blanket, Insulating Concrete Form, spray foam, rigid foam or natural fibres may be, they will still depend on the support of caulk, spray foam and weather stripping to perform as designed. The smallest forgotten opening such as a pot light, electrical box or uncovered joint behind a finished window casing can lead to trouble. “The details around the windows, and doors, and ventilation, and ducts and all that is so critical,” he says. “If you do not have your windows flashed and sealed properly inside the wall cavity, you will not be able to pass a blower door test.” This is bad news for those looking for an Energy Star designation, or who need to meet the demands of a changing building code. As the requirements become tougher, Johnson stresses that contractors will also need to spend more time supervising their crews. He has already come across projects where headers were not insulated, whether by error or haste. New crew members who stuff an insulating batt too

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Every product, of course, will require its own installation tips and tricks. Using a layer of Oriented Strand Board or untreated wood? It might need to be primed before applying a membrane, particularly if the underlying material has been exposed for an extended period of time. One quick way to see if a primer is needed is to apply a small piece of house wrap to the material, and then stick a small piece of tape to that. A well-adhered house wrap should tear when the tape is pulled away. The order that products are installed will make a difference of its own. For example, house wrap should first be applied at the bottom of the wall, with every new layer overlapping the edge of the first layer. The amount the material needs to overlap can also vary depending on product choices, proving the need to check the instructions, while fastener choices such as plastic cap fasteners or 1” crown staples will help to protect against tears. The finishing touch comes as a bead of exterior caulking. Completed panels might need to be attached with nails and washers,

CONTRACTOR ADVANTAGE

PHOTO: GUARDIAN BUILDING PRODUCTS

tightly into a wall cavity, meanwhile, will sacrifice the insulating values that might be required to pass stricter demands. “It is not just about the wall. It is not just about the ceiling or the foundation,” Savard says. “This is really something new for the builders right now, and you need to have more expertise.” Modern home designs can raise another challenge. “Houses are pretty cut up these days with all the weird angles they have. Things are not necessarily a nice 16” on centre, 8’ or 9’ tall anymore,” Romes says. It can help to make the case for his company’s sprayed fibreglass insulation, which combines a water-activated powdered adhesive with fibreglass and water, creating values as high as R-24 in a 2x6 frame. There are no worries about gaps or voids as it surrounds obstructions like the wiring conduits for sound systems. “What is old is new again,” he adds, noting how builders who once dismissed wood fibre in favour of petrochemical products are now returning. “It is 98% recycled. It has vapour diffusion properties which keeps the wall cavity dry.”

protecting fragile insulating layers. Then there is a question of which building wrap is the best choice. A traditional 15-pound felt paper might be shed in favour of a synthetic offering, which allows air to pass through microscopic pores. On top of all this, contractors need to be aware that it is possible to have too much of a good thing. Tighten the envelope too much, particularly during a retrofit project, and the HVAC system could be starved of needed air, or smoke could be drawn out of a fireplace into the living space. Then there is a matter of convincing a homeowner that they should invest in otherwise hidden building products. As politically correct as it may be to suggest that homeowners are more interested in greener products, Johnson says those feelings are often secondary to the price. Despite the fact that insulation might represent a mere 1 to 1.5% of a home’s cost, he believes the need to enhance a building envelope should be discussed in terms of health impacts (such as fighting mold) and lower energy costs, particularly as utility fees continue to rise. Savard suggests the acoustic values of a well insulated home deserves to be discussed, particularly in subdivisions with tighter lot sizes, or in homes constructed next to busy streets. It all helps to make a space more liveable. “The thing that we are shooting for is to improve the total home comfort,” Romes says. There are tools to help. Projects with Energy Star or Leadership in Energy and Environmental Design (LEED) ratings can prove a finished structure performs to a higher standard. Sources such as the Sustainable Housing Foundation and Enbridge, meanwhile, offer online calculators to demonstrate the financial returns made possible through better insulation. “That is a great sales tool,” Johnson says. After all, energy savings already play a role in the resale of a home. Buyers already ask about heating and cooling costs before signing a deal, Romes says. “Long-term energy savings and energy costs continue to go up, and they are going to continue to go up in the future.” “There will come a time when the energy efficient score of your house will be posted,” Johnson adds. “I assure you that because as the cost of energy goes up, it will become more and more of an issue.”

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