| Spring
2003 |
Construction Advisor
|
 |
Improving Productivity In Your
Construction Company
The construction industry lends itself by nature to a
number of inefficiencies. These are a result of many factors including the
varying relationships on construction projects (owners vs. designers vs.
general contractors vs. subcontractors vs. suppliers), the decrease in
qualified labor in the various trades and uncontrollables like weather,
the economy, etc. However, in spite of these, today more than ever, the
buyers of construction services demand quality work within tighter
budgetary and time schedules. Therefore, it is imperative that a
construction contractor implement methods to improve productivity as much
as possible.
The key drivers in increasing productivity in the
construction environment are:
- Planning process
- Communication process
- Reassurance and feedback process
- Employee involvement process
The planning process starts at the bidding phase. Too
many contractors chase volume rather than focusing on what they do best,
and then improving these gross profit margins on their jobs by playing to
their strengths. In analyzing the ten most common causes of construction
contractor failures, four of these relate directly to volume. These are:
1) growing too fast; 2) obtaining work in a new geographic area; 3)
dramatic increase in single job size; and 4) obtaining new types of work.
The best way to combat this is to create a company historical data
spreadsheet to capture all historical job profitability and determine what
it is that you do best. You may also want to create a pre-bid evaluation
chart like below to determine, based on a point system, how you rank a job
before you bid it.
| Criteria |
Extremely
Undesirable |
Undesirable |
Desirable |
Highly Desirable |
| Cash flow implications |
1 |
2 |
3 |
4 |
| Manpower availability |
1 |
2 |
3 |
4 |
| Competition likely to bid |
1 |
2 |
3 |
4 |
| Number of bidders |
1 |
2 |
3 |
4 |
| Engineer and/or architect |
1 |
2 |
3 |
4 |
| Reputation of owner |
1 |
2 |
3 |
4 |
| Size |
1 |
2 |
3 |
4 |
| Review of site conditions |
1 |
2 |
3 |
4 |
| Difficulty |
1 |
2 |
3 |
4 |
| Type of work |
1 |
2 |
3 |
4 |
| Job duration |
1 |
2 |
3 |
4 |
| Special tools or equipment needed |
1 |
2 |
3 |
4 |
| Seasonal factors |
1 |
2 |
3 |
4 |
| Code/Inspection requirements |
1 |
2 |
3 |
4 |
| Historical performance on this
type of job |
1 |
2 |
3 |
4 |
The communication process is the next key step. The key
individuals in this process are the estimator, project manager and field
manager. These individuals should have a project planning meeting that
includes covering the scope of work, project team issues, material issues,
tool and equipment issues, mobilization issues, administration issues, and
scheduling related issues. Short-term weekly plans and daily planning
huddles between the foreman and crews are critical to communicating and
implementing the strategy.
As the job progresses, weekly and monthly job cost
feedback must be provided by the administrative arm to the field. This
feedback is critical to the field personnel in order for them to determine
if they are achieving the plan results. Graphing of certain key indicators
like labor will assist them in understanding where they are at in a given
project.
Sharing this information with the employees and getting
their involvement in feedback will help identify any problems and
hopefully circumvent a larger problem in the future.
In summary, by implementing these processes, we believe
the chance of increasing productivity is greatly enhanced.
The Construction Advisor is produced
quarterly by Bober, Markey, Fedorovich
& Company's Construction
Team. If you would like additional information about the services that
we can provide to construction companies and contractors, please call or
email our team leader, Dale A. Ruther, CPA, CIT at (330) 762-9785 or dale@bobermarkey.com.
|
