Business Building: Does Busy Make You Money?

Words: George Hedley

Almost every contractor’s goal is to win more profitable work than they currently have. When the economy was slow, they worked hard to keep crews busy and breakeven. And as the economy heated up, contractors began to take on more work than they could handle with their current staff of project managers, supervisors, foreman, and field crews. On paper, they figured they’d make more money as their overhead remained constant while their revenues grew. And for many, with increased workloads and higher levels of retention money outstanding; cash became scarce, cash flow tightened, and their ability to pay bills and payroll was difficult. The reality of busy and broke is challenging as many stressed out contractors struggled to figure out what they should do.

More work = more profit, right?

A busy and busier construction business keeps you running faster and faster on an uphill treadmill going nowhere quickly. Busy keeps your key people overworked without time to plan, prepare, think, mange professionally, or get change orders approved before they do the work. Busy overloads project managers who then don’t have enough time to document projects issues properly or eliminate problems before they happen. Busy doesn’t allow time to sit down with foreman to review their job cost production reports weekly and make adjustments to improve crew results. Busy doesn’t allow you time to go out and find better customers or projects with less competition or higher margins. Busy doesn’t allow your estimators to stop and review past job cost results to make sure their current production bid rates are accurate. Busy forces quick decisions without proper research or due diligence, like hiring the wrong person or saying yes to demanding customers. Busy doesn’t allow staff to properly review and process invoices, make sure they’re correct, and not higher than they should be. Busy doesn’t allow you to bill customers on a timely basis or chase money due your company. Busy keeps you stressed-out and takes away from doing what gives you the highest return for the effort. And busy doesn’t 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 should be or could make if you had time to plan, organize, systemize, and track your jobs properly? Doing more work with the same managers and staff doesn’t make you more profitable, efficient, or get more accomplished. In fact, it reduces people’s ability of take care of everything needed to perform at their highest level and leave nothing unfinished. More field construction problems and profit shrinkage also occur when estimators don’t have time to get another quote or make sure they have everything covered in their estimates. Project managers don’t have enough time to visit jobsites often enough to fend off potential problems or document and maximize change order opportunities. When general superintendents are too busy, they don’t make sure crews are the right size with the right people, and don’t get around to training. Crew leaders don’t have time to replace poor performing workers which also causes jobs to take longer and cost more money. When crews move off too early to the next job, this leaves jobs unfinished with big punch-lists and call-back items to fix later. All of these challenges cost you cash. 

Make more versus spend less!

When you’re too busy and don’t have enough help to run your company, you react all day and put out fires. This causes you to run in circles and won’t allow you to make more money, get in-control, improve your bid-hit ratio, or fix the problems that cost you the big bucks. The key to making more money is dedicating time to get more organized and systemized. This will allow everyone to do things the standardized company way and eliminate fire drills. For example, holding structured field crew meetings to track production performance, train, and organize your field will make you more efficient. And taking time to plan projects properly reduces downtime, poor performance, and mistakes. To help you think through this process, email GH@HardhatPresentations.com to get your ‘Sneak Peak’ copy of the first two chapters of George’s new book “Get Your Construction Business To Always Make A Profit!

8 Steps To Make More Money When You’re Busy!

When you’re super busy, implement these ideas, systems, structures, procedures, and programs to increase your bottom-line:

1. Admit it. You need more help to get all the work done perfect and professionally. As workload increases, most construction company owners tend to keep adding more tasks onto themselves and their people, expect everything to work out, 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 have. You can’t do more work efficiently with the same number of team members. More work requires more people to get the work done right and deliver profitable results.
3. Take a hard look at your organizational chart and determine what is not getting done. Who is overworked with too many tasks or projects to manage properly? Many growing companies need more people and help with project management, estimating, construction administration, accounting, field supervision, job cost tracking, office management, hiring, training, and equipment management. Also commit to not hire cheap versus what you really need.  
4. Develop a scorecard to track workload per key manager or supervisor. Remember, managers and supervisors shouldn’t have more than 5 to 8 people under their area of responsibility. to do an effective job. Determine the positions you need to add and hire for your current needs and also will allow your company to move to the next level. Assign someone to be the hiring coordinator to manage your hiring program, place ads for people, set up interviews, and coordinate the process to add the additional people you need to do a better and complete job. 
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 the future bid opportunities, projects currently bidding, and those you’ve already bid which need follow-up. 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. Don’t get tempted to offer bids on projects or customers you don’t want or can’t win unless you lower your prices to unprofitable levels.
6. Make pre-project planning part of your companywide standards. Implement and require and a pre-project turn-over meeting before you start any new project. Have the estimator, project manager, superintendent, and foreman attend well before you start work on projects. Allow them enough time to review the bid, estimate, contract, scope, schedule, proposed subcontractors and suppliers, and requirements to achieve the project goals and objectives. Then allow time to adequately discuss and prepare the construction work plan, schedule, proposed crew and manpower requirements, equipment needed, and develop a working budget with goals for milestones and completion.
7. Stop the overtime money drain. Working more than fifty hours a week reduces productivity, performance, morale, attitude, and results. Not only does overtime cost you more money to do the same tasks, it reduces the output per hour for an overworked crew. Plus, overtime which wasn’t figured in your bid estimate comes right out of your profit margin. Instead, hire the right number of people required to get all the work done on-time at the production rates it should take a fresh and motivated team to complete.
8. Set aside time to hold a monthly management strategy meeting to analyze overall company financial performance, construction project results, and needs in the area of people, processes, customers, profits, sales, projects, workload, field logistics, equipment, and profitability. When you are too busy to look at what you’re doing, you find out too late to make adjustments to improve performance. Also take time to review what’s 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 profit for the effort you take. Plan for growth. Build a team that can perform the work you want to do. And don’t sacrifice doing what you know you should do to perform with quality, efficiency, professionalism, and competence.

About The Author

George Hedley CSP CPBC is a certified professional construction BIZCOACH and popular industry speaker. He helps contractors grow, make more profit, build management teams, improve field production, and get their businesses to work for them.  He is the best-selling author of “Get Your Construction Business To Always Make A Profit!” available on Amazon.com.  E-mail GH@HardhatPresentations.com to sign-up for his free e-newsletter, start a personalized BIZCOACH program, attend a 2 day BIZ-BUILDER Boot Camp, or get a discount at www.HardhatBIZSCHOOL.com online university for contractors.  

George Hedley CSP CPBC
HARDHAT Presentations BIZCOACH BIZSCHOOL
Email: GH@HardhatPresentations.com    
Website: www.hardhatbizschool.com ; www.hardhatpresentations.com