Episode 75: The SORCI 2023 Report Insights With Russ, Sky & Andy

Professional Builders Secrets brings you an exclusive episode with Co-founders of the Association of Professional Builders Russ Stephens and Sky Stephens, along with APB’s Head Coach, Andy Skarda. Throughout this episode, the trio discuss the SORCI (State of the Residential Construction Industry) report for 2023, which gives insights into the trends and challenges faced by the building industry.

 

Inside episode 75 you will discover

• The SORCI reports importance for builders looking to stay ahead of the curve
• The extensive research process that goes into making the SORCI report
• Key areas builders need to focus on throughout 2023 
• How to use the SORCI report as a business assessment tool
• And much, much more.

 

Listen to the full episode to understand the reports actionable insights so you can stay informed and competitive in the ever-evolving building industry.

 

Russ Stephens - Co-founder

Russ Stephens is a Co-founder of the Association of Professional Builders, a business coaching company dedicated to improving the residential construction industry for both builders and consumers. Russ is a data analysis expert who has introduced data-driven decision making to the residential construction industry. Russ is also a proud member of the Forbes Business Development Council.

Connect with Russ

 

Sky Stephens - Co-founder

Sky Stephens is a Co-founder of the Association of Professional Builders, a business coaching company dedicated to improving the residential construction industry for both builders and consumers. Sky is a proud member of The National Association of Women in Construction and she was also recognised as one of 2021’s Top 100 Women. 

Connect with Sky

 

Andy Skarda - Head Coach 

Andy Skarda has owned and led businesses in South Africa, the United States, South-East Asia, and for the last decade, Australia. With 30+ years of business experience, Andy heads up the coaching team at the Association of Professional Builders (APB), helping business owners in the building industry identify and implement the skills and systems they need to be successful, without needing to go back to school or more importantly, without going bust.

Connect with Andy

 

Timeline

1:53 What the SORCI report is

11:01 The key areas builders need to focus on

14:01 The biggest hurdles that builders will need to overcome

18:04 Using SORCI as a business assessment tool

19:35 How can builders use the report as a benchmarking framework

34:16 How to use the report for your businesses

 

Links, Resources & More

Download the SORCI Report 2023 for FREE!

APB Website

APB on Instagram

APB on Facebook

APB on YouTube

Join the Professional Builders Secrets Facebook group for builders & connect with professional builders world-wide.

Sky Stephens:

This is actually one of the biggest projects we have to do every year.

Russ Stephens:

In this year's report, over 1,000 building companies took part.

Sky Stephens:

You can actually see if you're above standard, if you're in the majority or the minority.

Andy Skarda:

Things like marketing and advertising have definitely suffered. What that's going to create is a hole in their construction scheduling down the line.

Sky Stephens:

We can be quite insular. We can always start thinking, "I think it's just being that my area's different or this is what it's like in Australia." And what’s proven time and time again is it’s actually not.

Russ Stephens:

It’s not what you know you don't know that hurts you. It's what you don't know that you don't know. That's what really hurts you.

Bosco Anthony:

Hello and welcome to the Professional Builders Secrets podcast, a podcast by the Association of Professional Builders (APB) for building company owners, general managers, VPs and emerging leaders. Here, we discuss all things running a professional building company, from sales processes to financials, operations and marketing. Joining us today is Sky Stephens, Co-founder of APB. Lovely to have you, Sky.

Sky Stephens:

Thanks, Bosco. How are you doing?

Bosco Anthony:

I’m doing well. Russ Stephens, Co-founder of APB as well. It’s great to have you again, Russ.

Russ Stephens:

Good to see you, Bosco.

Bosco Anthony:

And my main man, Andy Skarda, Head Coach at APB. Thank you for joining us today as well.

Andy Skarda:

You're very welcome, Bosco. I didn't have anything else planned.

Bosco Anthony:

I look forward to having you all on another exciting conversation. This time, we're going to be talking about the SORCI report, the State of the Residential Construction Industry report. For our new listeners out there, what is the SORCI report?

Russ Stephens:

Well, it's a very comprehensive survey of the industry where data is collected from the owners and directors of residential building companies in Australia, New Zealand, Canada and the United States. When I say comprehensive, these builders, or I should probably say businessmen, answer over 100 questions regarding marketing, advertising, sales process, construction financials, operations and, of course, their team. 

Russ Stephens:

That is a big commitment, and it does take a lot of time on their behalf. In this year's report, over 1,000 building companies took part, thanks to our industry partners, which include software companies like Buildertrend, Buildxact and Builda Price, as well as other industry giants, such as Pro Builder magazine in the US. Once we collect the data, we then analyse it in a number of different ways in order to compile an annual report, which is then shared with the industry.

Bosco Anthony:

Russ, this sounds like a mammoth project, and every year, it seems to be getting bigger and bigger and more insights are collected. What went into this year’s production of the SORCI report?

Sky Stephens:

With everything and anything we do here at APB, every new version or every new release, anything new that we do, it has to be better than the last. That’s our main criteria. So, we always need to beat what we have previously done. Like you said, this is actually one of the biggest projects we have to do every year. It might give some team members a little bit of PTSD, because it is that huge. It takes so much.

Sky Stephens:

If I can break it down, what we do is we have a period where the survey is open. Like Russ has just mentioned, we’ve got over 1,000 builders who go in and complete this survey. It takes a lot of preparation to even open up this survey. We look at everything we did last year. As we’re even building last year’s report and going through that survey, we are constantly writing notes back and forth on what we need to change, what we should update next year, what would be better, how’s it being received. Are people asking questions? Are there any grey areas that maybe we should add more questions to?

Sky Stephens:

It’s a constant work in progress, but then, we go into all of this work to actually set up the survey, and this is how we can get as many professional builders in the industry as possible to take and complete this survey, because it’s not short. As Russ has mentioned, it’s comprehensive. There’s a lot of questions here. It doesn’t take two minutes, tick and flick. These are quite a few questions that you can go in and answer for your building company, so that actually can create a comprehensive report.

Sky Stephens:

Stage one is the survey, and that can stay open for a few months while we collate our responses. But we have a very hard survey closing time, because as soon as that survey is closed and we are not taking any more responses, that is when the real work starts internally, because we have to do so much data cleansing. We need to validate every bit of data so that there are no rubbish answers in there. If we’ve asked profile questions at the beginning to understand their building company and how big they are in terms of projects, we want to validate that later on based on the other answers that they’ve given us, so that every bit of data is accurate. So, there’s a lot of cleansing that goes into it.

Sky Stephens:

Essentially then, we’re able to create reports and graphs. We can compare different countries based on different questions, and then, internally, it’s a whole review and we need to write a commentary. We can have all of these bits of data, but I think that’s really useless to a lot of builders just to read reports and read numbers. I think the value that comes out of SORCI every single year is the commentary behind it. That’s a whole big process of getting the writing done, actually making valid, interesting and thoughtful commentary on what we are seeing in those numbers, and we’re asking more questions: “Okay. What’s the subset of this group doing?” This is how we were able to establish that margins are linked to marketing. It really is where we can get all of that information.

Russ Stephens:

I think we should say a special shout-out to one of our team members, Peta, at this point, because when Sky talks about data cleansing, Peta is fanatical about the data being accurate, which makes this report so valuable and the lengths that she goes to, to ensure that, is just phenomenal.

Sky Stephens:

Yes, 100%. That’s what I mean by PTSD as well. It’s a huge initiative with this survey, and then, of course, the report. But then, what also goes into this behind the scenes is how many sponsors we have, and the number of sponsors we’ve had for our SORCI report has grown year on year. We’re partnering with companies like Buildertrend and like CBUSA to bring this report to as many building companies as possible throughout all these different countries. There’s a lot more effort that goes into partnering with our partners to get this report out there, so they’re also getting their builders to complete this survey and actually read and understand the findings inside this report. It’s not really just internal anymore, because it’s involving so many stakeholders to make it as valuable as possible for the industry.

Bosco Anthony:

It’s amazing because it sounds like there are so many moving pieces that are happening all at the same time to get this piece of information to the builders out there. I’m just curious, are builders making data-driven decisions today? And is the SORCI report a great way to validate those data decision making choices?

Andy Skarda:

All right, Bosco, strap yourself in. Here we go. My favourite mantra is “words create worlds.” Builders, probably not. Professional builders, improving. That would be the distinction that I would make, that we are finding professional builders are not only making data-driven decisions generally, but they are finding things like the SORCI report incredibly helpful in terms of seeing how they fit into the overall picture globally, nationally, et cetera. So, amongst the professional builder population, there’s certainly a far greater emphasis now being placed on data and accurate up-to-date data, not just a kind of thumb suck and hope, but getting the real numbers and then making decisions based on that. It’s definitely improving.

Bosco Anthony:

Okay. Now, let’s get into the report itself and the findings around it. What was the biggest find in this year’s report, without trying to give away too much? What was the biggest find, and if anything, was there anything there that surprised you from the survey?

Russ Stephens:

One of the biggest things that came out of the 2022 data was that 58% of jobs were actually completed on time. I think that is an extraordinary achievement by the industry, given all the challenges that were put in front of builders throughout the year with these supply chain issues, lockdowns and labour shortages. They were incredible challenges that they faced, and yet, the majority of projects were still finished on time. That’s extraordinary tenacity being shown by builders there.

Russ Stephens:

But another thing that I guess maybe surprised us a little bit was that the number one challenge in terms of marketing for builders was generating quality leads. It’s been that way for a number of years, but the number one challenge in terms of sales was dealing with quality leads. Although those two things in themselves weren’t a major surprise, what was a surprise was that 60% of the builders didn’t email their database at all during 2022, 68% didn’t create a single blog post, and social media activity was actually down in 2022 compared to 2021.

Russ Stephens:

So, I think all those things are understandable when you look at the challenges builders faced during the year, the amount of time they had to spend rescheduling jobs time and time again to account for these delays and these no-shows on site. It’s understandable that marketing took a back seat, especially when sales were quite easy to come by. However, what is surprising is that quality leads were then mentioned as the number one challenge in both marketing and sales, and these things that lead to quality leads weren’t being done.

Russ Stephens:

I guess it’s good in a way because the number one challenge that builders are facing can easily be solved. It’s quite a straightforward process to solve that. But that was probably the most interesting and surprising thing that came out of the data.

Bosco Anthony:

What are some of the key areas of focus from the builders surveyed and from all the partners out there? What are we preparing for, and what are they focusing on in the future?

Sky Stephens:

Well, we’ve got over 100 questions. I think the most interesting thing about SORCI is a lot of builders, if not all builders, have a focus. They are thinking, “I need to focus on my sales or my marketing,” or “his is a certain challenge.” They think they know where a lot of the problem is. Really, if you were to ask, that’s all they would talk about. But what’s amazing with SORCI is that we get to survey any builder who takes the survey on all of the different areas of their building company. We go from sales to marketing, their whole company profile, to advertising, projects, technology, financials, planning, team, even training. You can actually get a very holistic view of your building company, but then you also get a view of your building company compared to other building companies.

Sky Stephens:

That’s where you can actually see: Where is the trend? Is the whole industry struggling with this or that? Is it marketing? Is it generating quality leads, like Russ just mentioned? You can actually see where you sit within the rest of the industry that has taken the survey. I think that is what makes SORCI so valuable, because you get to go through everything yourself and then you get to see where everyone else is sitting, and then you get to break it down by country. So then, you can establish, “Is this just an Australia thing, a Canada thing?”

Sky Stephens:

I think we can be quite insular. We can always start thinking, “I think it’s just me; my area’s different,” or, “This is what it’s like in Australia,” or, “This is what it’s like in New Zealand,” or wherever, and what’s proven time and time again is it’s actually not. It’s an anomaly; it’s an exception to the rule when you see certain countries spike with a particular problem, and that’s where our commentary comes in. I think that’s what makes it really cool. You can see everything, and then you can really spot the outliers in this whole report.

Russ Stephens:

I think at this point we should give a big shout-out to Canadian builders who really did lead the way in a lot of the data in terms of what they’re doing in terms of marketing, advertising and sales processes, and in technology. They really are head and shoulders above the US, Australia and New Zealand.

Sky Stephens:

I think this goes back to what we were talking about before: what goes into this? We are constantly trying to improve it. While we are surveying builders in multiple different countries on all of these topics, we’ve added some new questions in the 2022 survey, ready for the 2023 report. We had new questions about how their mental health has been in 2022 compared to last year. 

Sky Stephens:

We brought in a question like, “Is your carpentry work completed by subcontractors or in-house employees?”, because it will enable us to write a better commentary based on those previous years. That’s why the reports are just getting more and more refined, and we can really pick into how different countries are operating. Why is it different? Why could they potentially be doing better?, because we’re just getting more and more data and we’re getting more answers.

Bosco Anthony:

What are some of the biggest hurdles that builders will need to overcome for a sustainable future, looking at this report?

Andy Skarda:

That’s a little bit of a how-long-is-a-piece-of-string question, because I don’t think that it necessarily gave us any new problems that we didn’t know existed in the industry. What the report has done for us though, is that it has given us some ways of quantifying that year-on-year, to see if it is getting better or if it is getting worse. 

Andy Skarda:

Russ has already touched on the fact that because of the pressure on builders last year to get through the work that was in front of them, things like marketing and advertising have definitely suffered. What that’s going to create is a hole in their construction scheduling down the line when they get to the end of all the current work. So, that’s going to be something they’re going to need to look at. I was quite interested to see that only 50% of builders actually have a documented sales process.

Andy Skarda:

I always say to our clients when they say I don’t have a sales process, I ask them whether they’re married. And if they’re married, then they have a sales process. There’s no question that they have a sales process. Well, if they’re still married, maybe that’s a better way of putting it. The point here being, in a lot of cases, the emphasis needs to go on the word ‘documented.’ In other words, have they got a proven system that works and then they’re going to keep repeating those things that work? Sales, obviously, on the back of that marketing, once that marketing activity starts to pick up again, that’s obviously going to expose any sort of shortcomings that they’ve got in that area.

Andy Skarda:

I think Russ has said operations generally were great, and the fact that such a high percentage of jobs was delivered on time was really fantastic. But what Russ didn’t mention was that we’ve got just under 40% of the jobs that were delivered were over budget, and that means that builders have had their margins eroded by really having to take the bullet in a lot of cases for circumstances that were completely beyond their control. 

Andy Skarda:

There’s going to be some work that needs to be done there in order to recover those kinds of jobs. It’s not that there’s really anything new in there, but what’s happened from what we can see is that the focus on where builders, professional builders again, are going to have to put their attention to get back to where they want to be has now been highlighted very much in that marketing/selling, and then making sure that margins come back to where they need to be so that builders can grow safely and securely.

Bosco Anthony:

Well, for the builders who are busy and time poor and have all these different obligations, what’s the incentive for those builders that take part to give up their time and take part in this survey? What can they expect from this process?

Russ Stephens:

I think that’s a question we asked ourselves before we launched the very first survey three years ago. Why will builders actually invest all this time, because we were asking them a lot of questions. But I think the answer has really jumped out to us quite quickly and has been very apparent. It’s effectively a self-diagnostic tool and a very, very powerful self-diagnostic tool as well. As Andy always says to us, it’s not what you know don’t know that hurts you, it’s what you don’t know that you don’t know. That’s what really hurts you. These questions that we ask are thought-provoking and they lead to a lot of self-improvement.

Russ Stephens:

I think it’s incredibly beneficial for every single builder that has ever taken part in one of these annual surveys, because these questions would trigger a thought process about their own business. Of course, it’s something that you can do every year, because your business moves on, so you do this self-diagnostic. It generates ideas as to where the gaps might be in your business, in your building company, and you work on those, and then you revisit the next year and you find there’s an extra couple of questions that provoke even more thought. That would be the incentive for builders and it’s why I would urge builders to be putting it on their calendar for 2023 for when we start collating the 2024 data.

Bosco Anthony:

It sounds like a business assessment tool as well from what you’re saying, Russ, that they’re also assessing what they’re doing in their own business too.

Russ Stephens:

Yeah, absolutely. Yeah, it really does. It highlights the gaps that they didn’t know existed.

Sky Stephens:

I think that’s why we’ve got so many participants as well, because it’s not a survey that’s just looking for good news. We’re trying to get data from all kinds of building companies. We’ll scrub the data if they’re too small, we don’t publish them in the report. We have criteria for whose data we publish, so it’s very specific to a particular niche of building company owners. You’re a custom home builder, you’re a modeller, you’re doing over a million dollars in revenue. These are all criteria so that you’re looking at building companies of a similar calibre. 

Sky Stephens:

This is what makes the report valuable, because if you’re only sharing and doing a survey when you can tick all the boxes and everything’s good, that report is completely worthless. This is a real survey of every building company as it stands in the industry that year. As it gets bigger and bigger, you’ve got more data to work with and you’re going to see trends and where the average is and where it’s all sitting, but it’s actually going to be reflecting reality, which I think is so important.

Russ Stephens:

Yeah. Keeping it niche is, like Sky says, what makes it valuable. If you had a commercial builder doing $100 million who had their data thrown in there, it’s absolutely meaningless and it is why we do clean the data. Obviously, we have a lot of different tests in place that help us to identify data that isn’t really part of what we’re looking to achieve here.

Bosco Anthony:

Now speaking of data, how can builders use the report as a benchmarking framework?

Sky Stephens:

Well, I think it’s when they actually get to downloading the report. If you were to download the 2023 SORCI report, and we’ll just keep calling it SORCI, you’ll actually be able to see there’s the commentary. Every new section that I just mentioned, whether it’s sales or advertising or team or planning, each section starts with a commentary. It’s a small bit of writing that actually summarises the next few stats that you’re going to see, and it pulls out for you the most groundbreaking stats. Sometimes in the commentary as well, we compare it to the previous year. “Well, what did that question have as an answer in last year’s report? How does that compare? Is the industry improving? Is it going backwards?”

Sky Stephens:

Each of those sections starts with a commentary, and then you get the questions that were actually asked and you can see the breakdown between who answered yes, who answered no. But then, on some of those questions, you also get tables, and we break down those answers into what percentage of builders who voted yes were in Australia, how many were in the United States and how many were in Canada.

Sky Stephens:

There are a few different layers of benchmarking. You can read the commentary and see where the industry is going and what’s been said. You get to go through each individual question knowing what you would answer. “Do you have a documented sales process?” It’s a yes or no. There is an “I don’t know” option there if you’re not quite privy to that information, but it’s yes or no to that question, and you know if you fall into the yes camp or the no camp.

Sky Stephens:

You get to see where you fit, but then below that, you can see, “Well, you know what? I’m in Canada. How many builders in Canada said yes? Oh, it was only X amount, or it was this amount.” You can actually see if you are above standard, if you’re in the majority or the minority. I think that’s really cool when you get to break it down by country. Because let’s be honest, there are more reports. There are reports of course in an industry, but they’re all country specific. The ability where you get to see, “How do I compare to builders across the pond?”, that’s incredible. That’s the value.

Russ Stephens:

As well, a lot of times the data is quite similar from country to country, but we do get a few exceptions, and one of them that really jumped out was cost escalation clauses. Two-thirds of builders in the US have cost escalation clauses included in their contracts, but in Australia, it was less than a third. We didn’t ask that question 12 months ago, but I’m sure that figure was massively up from what it would’ve been had we asked it 12 months earlier. But it’s all good intel and good data to compare to see, for example, “I’m not the only one who’s put in cost escalation clauses in my contracts.”

Sky Stephens:

This is where you can see the report is maturing year on year on year with where the trends and themes are going in the whole industry. This was a huge topic, so we had to put it into the survey to ask. It’s almost like proving the point: if this is standard over here but it’s not over here, and on the other side if it’s not standard, these are all the problems that are getting caused. Well, okay, let’s try and analyse that a little bit more.

Bosco Anthony:

You talked about the industry. Is the industry evolving? Is it maturing? Because when you look at the report, you talked a little bit about coming up with narratives and that’s where the interest is: that storytelling of the data, otherwise the data would just be boring on its own. I’m curious, what are some of the behaviours revealed from the builders you’ve interviewed from this report and what have you learnt about them as well?

Andy Skarda:

Well, obviously, in the space that I work with our private and our elite mentoring clients, we spend a lot of time working on things like planning, for example. I was very interested to see that those stats are improving for professional builders worldwide. They’re not yet taking enough time to plan, but that sort of thing is definitely improving. With a lot of stuff around their recruiting, their team building, you can see that there is a growing understanding of, “I’m surrounding myself with quality people who I don’t rush to hire, but I put them through a process that means they are the right people in the right seat on the bus, and the bus is going to the right place.” That sort of behaviour definitely seems to have improved.

Andy Skarda:

There are some of the normal other issues out there. I was surprised to find how many people are still doing free quotes. When we look at it again from a professional perspective, there isn’t a doctor in the world, there certainly isn’t a surgeon in the world who’ll see you for free and operate for free. It’s not going to happen. There’s still some work to be done in that area. It’s really around building the rest of the business. 

Andy Skarda:

Russ made the point at the beginning of this discussion that we are really talking about businessmen here. Although they happen to own building businesses, the behaviours where we’re starting to see the pickup is in those non-construction things, in the financials, in the recruiting, in the planning, those kinds of things are really where we’re seeing the behaviour changing, which is wonderful to see. It’s very, very positive for the industry.

Russ Stephens:

It’s good to see all aspects improving across the board year-on-year. Now we’re in our third year, we can see that more guys have a sales process, more guys have an org chart for their businesses, and job descriptions. More guys have project management software, which is how they’ve been able to deal with all these challenges. It’s fantastic to see. 

Russ Stephens:

The interesting thing I heard at the International Builders Show in Vegas recently was that the construction industry lags behind all other industries in terms of the adoption of technology, which is a little bit concerning. Apparently, it’s right down there at the bottom, and as if to really force home the point, they said, “We’re even below agriculture.” I do feel when I look at this report, and the way I see adoption and the way I see everything improving, I feel we are catching the farmers up and we’re going to overtake them pretty soon.

Bosco Anthony:

It sounds really promising.

Andy Skarda:

Yeah, yeah. That’s a wonderful analogy. We’re nearly as technologically advanced as the farmers. Nearly. That’s wonderful.

Bosco Anthony:

But it also gives credit to APB’s work as well. I know enough from the podcast episodes that there’s a lot of implementation of the systems that’s come over the last three years. So, the fact that there’s an improvement in numbers also speaks to the efforts and the vision that you’ve all had in mind in the last few years as well.

Russ Stephens:

I think we’d like to take the credit, wouldn’t we? But really, it’s the members. The members have got to take the credit. They’re the ones doing the work and doing the implementation.

Sky Stephens:

Yes, 100%. But even to clarify, the builders who take the survey are not all members, so you really are getting a deep dive into the whole industry. Whether you say that’s good or bad, we’d love them all to be members, but it’s not exclusive for members to complete. So, a lot of members do complete this survey and provide information, but it’s so many other building company owners as well who take part. You are really getting a good overview of the whole industry. It’s not locked; it’s not exclusive.

Andy Skarda:

Yeah. There’s no nepotism in this. It honestly is a broad, global survey of building companies full stop, which I think is part of that, plus the fact that we’re in year three now. We’ve touched on the wonderful trends that we can start to see, because it’s not just, “Gee, that’s interesting.” It’s, “How does that compare to last year, and how does that compare country to country?” That’s what’s starting to come out of it, so it’s really exciting in terms of where it’s going.

Sky Stephens:

Just wait till we get 10 years on and then you’ll get to compare our first report to our 10th report, and you’ll really get to see, “Really? That was a problem back then?” We have this all documented, because we summarised the year that was as well. It’s so easy to forget what the problems were of 2022, what the problems were of 2023. But it’s all there in writing, and you’ve got a beautiful catalogue of how the industry has gone.

Bosco Anthony:

For the record, I did document the year I lost my hair, but that’s a whole different personal problem.

Andy Skarda:

I think we just proved that we’re nerds, Sky. I think we’ve just blurted it out now. The whole world now knows that this is the stuff that gets us goosebumpy.

Sky Stephens:

Wait, the whole world doesn’t keep a spreadsheet and document their life year on year and see how it’s improving?

Andy Skarda:

There we go. Apparently not; it’s only us.

Bosco Anthony:

How is APB planning for the future based on the findings of this year’s report? What did you look at this year in the report that made you think, “We should plan for that,” or “We should do something for that,” in particular?

Russ Stephens:

I think Sky already mentioned we're always adding more questions based on what's actually happening in the world and in the industry, and removing some others, and even rephrasing some as well, because when the data comes back, the most powerful thing I think about the data is cross-referencing it with other parts of data. It's how we've been able to prove that margins are linked to marketing, for instance. We've been able to prove that the companies that spend more money advertising do enjoy the highest net margins, not just gross but net, and finding better ways to really represent that data can come from rephrasing questions. 

Russ Stephens:

Times change and different questions need to be asked, and I think it was mentioned as well earlier about mental health. It’s staggering that 22% of builders said their mental health had deteriorated in 2022, which is very concerning, and that is information that needs to be acted on. Obviously, with APB Chapters, that's exactly what we're doing.

Russ Stephens:

I think another thing that we went a little bit deeper into this year was the work in progress calculation, where this year, 50% of builders said they did not know how to do this calculation and that's fair; there’s nothing surprising there. But the bigger concern was that 50% said they did know how to calculate it, but then when we tested them on how they were actually calculating work in progress, 80% of those got it wrong. That's a bigger concern, isn't it?

Russ Stephens:

They think they understand it, but it's in the data, they are doing it wrong, and that represents 90% of construction financial reports being incorrect. That's something we've got to do our utmost to address this year. It's something we are working on, trying to raise it with the authorities to get this fixed up. Because unprofitable building companies are proving a danger to the professionally run profitable building companies and providing unfair competition as well. That's something we really want to address.

Bosco Anthony:

Has the vision for the report changed or evolved in the last three years?

Sky Stephens:

I'll give you my answer and then everyone else can jump in. I don't know about everyone else, but I think maybe we're dreamers at heart. When we wanted to do SORCI, it was always going to be big. It's not as big as we want it to be right now. We envisioned this to be huge. This is the survey, this is the report that every professional building company owner reads every single year. That is the vision. To me, I would say no, it hasn't changed in that respect. If anything, looking at where it is right now, we need to make it bigger and bigger and bigger and literally involve as much of the industry as possible to actually take this survey so we can publish a report, so it's really penetrating every single building company.

Sky Stephens:

What I will say though, and this is from my perspective, has the vision for the report changed or evolved? Probably more so in terms of it actually being a resource for all of our industry partners. I think they're very, very much always focused on how this benefits and helps our builders and the builders in the industry and professional builders most importantly. 

Sky Stephens:

But I think over the last couple of years of doing this, especially having our preferred partners and of course our sponsors for SORCI year on year on year, it's really obvious. It sort of slaps you in the face now that this is such a huge resource for industry partners. They're able to help their own clients tenfold with the information in this report, because again, it's data. You just get to back up why you need systems and software and outsourcing and higher margins and everything. So, I think maybe I underestimated, personally, how much of an industry resource it could be for not just the builders but all the industry partners as well.

Russ Stephens:

Yeah, I think you summed it up beautifully there, Sky. I think it surprised us all just how well received it has been by the industry. Even now, we've had so many new partners coming on board and we’re sharing last year's report with them. The excitement they're showing after receiving the report has been fantastic, and I think it's very beneficial for them. Obviously, we've been analysing software for a few years now, but for this year's survey, we brought on a new partner, HazardCo, that’s very big in New Zealand and quite large in Australia and getting bigger all the time.

Russ Stephens:

Because of that, we asked a couple of questions regarding workplace health and safety as to how many companies have got a system in place. That really did throw up some eye-openers there that I think's been very useful to the partners. Because although New Zealand seems to lead the way, or the builders in New Zealand lead the way with using a system and Australia’s not too far behind, it's very much lagging in North America, particularly in the US. I think part of that is because of a lack of a solution in the US for builders, which really does show the opportunity. Therefore, the safety software companies currently based in Australia or New Zealand have a huge opportunity to really expand into North America.

Andy Skarda:

You asked, has the vision changed. I don't think our vision has changed, but I think that what we are learning is there are so many other facets to how this data can be used. Everything that Russ and Sky touched on is really saying that. I won't pretend that when we first started talking about the SORCI there was some information we wanted to know, so there was some self-interest in it. But I think where it's getting to now is it's starting to become a major force in terms of improving the industry as a whole, which of course is part of why we exist. So, this is really another string to the bow that I think is going to help us even focus the solutions that we offer on the kinds of problems that builders are expressing and really put us in that proactive space, which is great for the industry as a whole.

Bosco Anthony:

Speaking of usage, how should builders, or especially builders who've not come across this report before, how should they be reading or looking at the data and using this report for their business out there?

Andy Skarda:

Sky said it already, it's the most fantastic benchmarking tool builders are ever going to get their hands on. It's a wonderful way in which to measure how they compare globally, nationally by state, by the part of the industry that they work in. And really, depending on how you want to look at this, benchmarks are sometimes setting the minimum standard, in which case, well, if you’re not yet achieving the minimum, you’d better get your A into G and at least be hitting the minimum standard and then obviously grow from that into the rest. So, it's a wonderful planning tool in terms of a builder being able to plot themselves relative to the rest of the industry.

Bosco Anthony:

My final question to you all is where can our listeners get access to this report? Where can they find it?

Sky Stephens:

If they head to the APB website, they’ll find it there. But we've also popped it in the show notes here. They can get an instant download of the PDF of literally all of the answers of over 1,000 builders that took part in the 2022 survey to get published in the 2023 report. They can get all of that information, all of the answers, all the commentary, everything in a download as a PDF, and the link is in the show notes here. It'll be all over our website as well. 

Sky Stephens:

But I think it'd be a really good opportunity just to make a special shout-out and mention to all of our sponsors that made the 2023 SORCI report possible. We had Pro Builder magazine come on board, Buildertrend, CBUSA, Buildxact, Builder Lead Converter, HazardCo, Builda Price and Builder Nuggets. Without our sponsors, we wouldn't be able to keep producing reports like this and get this information out into the industry. So, we give a huge shout-out for those guys.

Russ Stephens:

It’s also worth mentioning as well that when we initially launched the SORCI report, we actually sold this for a couple of hundred dollars. Now, we give away the PDF free of charge, but there is an opportunity to obtain a hard copy free of charge as well. All we ask is that you cover the postage and packaging. So, that's an opportunity. There is a limited number available, but that is an opportunity when you download the free PDF. You'll get the opportunity, if there's any left, to grab a hard copy free of charge as well.

Sky Stephens:

And I would recommend doing that. These are beautifully printed, beautifully presented, and they are so good. I think I underestimated how good it is. We don’t often get physical things anymore. We think, "Oh, we're all online, we don't need that." But we all have a hard copy of every year's SORCI that we’ve produced. We just have them on our desks, and we are just not referring to it like what is standard here or what is normal. You just pick it up and you just go and read it, and it's such an awesome resource. So if you can and you have that opportunity, definitely try and get your hands on the physical copy. You'll be surprised how much you reference it.

Andy Skarda:

While we're doing shout-outs, I'm going to throw one in as well. To everybody who completed the survey, we really do appreciate it. Without that data, we wouldn't have anything to report on. Thanks, guys. See you all again next year.

Bosco Anthony:

Well, Russ, Andy, Sky, that concludes our conversation today. I look forward to having many more with you guys, but thank you so much for your time and I look forward to diving a little bit deeper into this year's SORCI report.

Sky Stephens:

Thanks, Bosco.

Andy Skarda:

Thanks, Bosco.

Russ Stephens:

Thanks so much, Bosco.

Bosco Anthony:

Thank you for listening. Remember to subscribe to Professional Builders Secrets on your favourite podcast platform and leave a review. To learn more about how the systems at APB can help you grow your building company, visit associationofprofessionalbuilders.com. See you next time.