Metal Construction News, November 2018

Does Busy Make You More Money By George Hedley PROFIT BUILDING Almost every contractors goal is to win more profi table work than they currently have When the economy was slow they worked hard to keep crews busy and break even As the economy heated up contractors began to take on more work than they could handle On paper they fi gured theyd make more money as their overhead remained constant while revenues grew And for many with increased workloads and higher levels of retention money outstanding cash became scarce and their ability to pay bills was diffi cult The reality of busy and broke is challenging as many contractors struggle to fi gure out what they should do More Work More Profi t Right A busier business keeps you running faster on an uphill treadmill going nowhere quickly Busy keeps your key people overworked without time to plan prepare mange or get change orders approved Busy overloads project managers who then dont have enough time to document projects issues or eliminate problems before they happen Busy doesnt allow time to sit down with foremen to review job cost production reports weekly and make adjustments Busy doesnt allow you time to fi nd better customers or projects with less competition or higher margins Busy forces quick decisions without due diligence Busy doesnt allow staff to properly review and process invoices Busy doesnt allow you to bill customers on a timely basis Busy keeps you stressed out and takes away from doing what gives you the highest return for the effort And busy doesnt make you more money Right What Can You Do to Make More Money Even though you are super busy are you making the money you could if you had time to plan organize and track your jobs properly Doing more work with the same staff doesnt make you more profi table It reduces peoples ability of take care of everything Field construction problems and profi t shrinkage occur when estimators dont have time to get another quote or make sure they have everything covered in their estimates Project managers dont have enough time to visit job sites to fend off potential problems or maximize change order opportunities When general superintendents are too busy they dont make sure crews are the right size with the right people and dont get around to training Crew leaders dont have time to replace poor performing workers When crews move too early to the next job this leaves jobs unfi nished with big punch lists All of these challenges cost you cash Make More Versus Spend Less When youre too busy and dont have enough help to run your company you react all day and put out fi res This causes you to run in circles and wont allow you to make more money The key is dedicating time to get organized This will allow everyone to do things the standardized company way For example holding structured fi eld crew meetings to track production performance train and organize will make you more effi cient Taking time to plan projects properly reduces downtime poor performance and mistakes 8 Steps to Make More Money When Youre Busy When youre super busy implement these systems and procedures to increase your bottom line 1 Admit it you need more help to get all the work done As workload increases most construction company owners keep adding more tasks onto themselves and their people and deliver the same bottom line results 2 Stop asking employees to do more Take a realistic look at your overhead budget and management staff to determine if your overhead expenses have grown at the same pace as your sales revenue More work requires more people to get the work done right and deliver profi table results 3 Take a hard look at your organizational chart and determine what is not getting done Who is overworked with too many projects Many growing companies need more people and help Commit to not hiring cheap versus what you really need 4 Develop a scorecard to track workload per key manager or supervisor Managers and supervisors shouldnt have more than fi ve to eight people under their responsibility Determine the positions you need to add and hire for your current needs Assign a hiring coordinator to manage your hiring program place ads set up interviews and coordinate the process 5 Stop bidding every job opportunity that comes along The goal is to grow with higher margin customers and better projects versus doing more work at low margins Develop a stringent bid no or no bid criteria that works for your company Meet with the estimating staff weekly to review future bid opportunities projects currently bidding and those youve already bid Develop a bid grid sieve of the right kind of projects you want for the right customers against competitors you are willing to compete with 6 Make pre project planning part of your companywide standards Require a pre project turnover meeting before you start any new project Have the estimator project manager superintendent and foreman attend Allow them enough time to review the bid estimate contract scope schedule proposed subcontractors and suppliers and requirements Then allow time to adequately discuss and prepare the construction work plan schedule proposed crew and manpower requirements equipment needs and develop a working budget 7 Stop the overtime money drain Working more than 50 hours a week reduces productivity performance and results Not only does overtime cost you more money it reduces the output per hour for an overworked crew Plus overtime that wasnt fi gured in your bid estimate comes right out of your profi t margin Instead hire the right number of people required to fi nish work on time 8 Set aside time to hold a monthly management strategy meeting When youre too busy to look at what youre doing you fi nd out too late to make adjustments to improve performance Also take time to review whats working and not working and what changes are required to improve your company Stop taking on more work than you can handle Busy makes you work harder without much additional profi t Plan for growth Build a team that can perform the work And dont sacrifi ce doing what you know you should do to perform with quality effi ciency professionalism and competence George Hedley CSP CPBC helps contractors grow and profi t as a professional business coach popular speaker and peer group leader He is the author of Get Your Construction Business to Always Make a Profi t and Hardhat BIZSCHOOL Online University available on his website Visit www hardhatbizschool com for more information November 2018 METAL CONSTRUCTION NEWS 9 www metalconstruct ionnews com