Monday 2 March 2015

Is Your Construction Division Just Too Much To Handle?

Posted by at 3:31 PM in

As a business coach I talk to restoration contractors every day. Many of them want to talk to me about two things; how to increase their revenue and how to improve their profits.

Achieving each of these bedrock goals comes down to how you run the construction side of your business. Either you love it, or you hate it! Many contractors tell me they really don’t enjoy the construction side of their business. For many the work is filled with way too many problems for their liking.

They oftentimes share there are too many customer complaints, too many unreliable subs, too many materials to buy, and too little profit made. Some conclude it is all just too much trouble! I felt that way too at one point in my ownership. So I decided to try and do something about all the many problems I was experiencing.

I did an internal survey and listed all the things I really didn’t like about construction. It was a huge list. I began to distill the many issues into categories and then ranked the categories in terms of the pain and problems each caused me. Then I tackled the list. One by one, I found solutions to my major problems.

One by one, my company began to change and that led to a turnaround for my work, and in my personal satisfaction.

Here is a partial list of steps I took to take charge of my business and grow construction company early on:

  • I took charge of my relationship with subcontractors.

In my business I learned to never accept bids for work from subs. Instead, I used several key internal features of Xactimate that helped me determine labor numbers that I would give to subs for the work I needed them to do. They would say, “BUT I charge by the square foot for this or that.” I would reply, “I don’t even want to know your numbers. I know exactly what I am being paid for this work, and I know exactly what I can pay you to do it.” 98% of the time the number was happily received. No longer fighting with my subs over labor costs was a huge relief to my emotional energy and personal satisfaction.

  • I began providing a materials list to every subcontractor or employee for the scope of work assigned to them to be done.

No more buying 15 sheets of drywall when the estimate calls for only 10. No more buying $38 a gallon paint when I was paid only $32. No more $260 sinks when I was paid $90. No more! No more! Every scope had a materials list and my construction managers monitored carefully what was bought, how many, and at what unit cost our materials were purchased. Now I actually started making money on each job. Life was slowly getting better,

  • I found wholesale distributors for every kind of flooring, and other major materials such as roofing materials, cabinetry, and material sundries.

When I bought from local retailers they charged me nearly every nickel I was being paid by the insurance carrier. I sometimes thought those retailers must have the same price list I was working from since their charges were nearly identical to what I was being paid according to Xactimate. So I searched and found their wholesalers, and other wholesalers, and I began buying materials discounted by 35% - 50% below Xactimate pricing. By now the train was definitely moving on the right tracks and in the right direction. I was becoming happier by the day!

  • I invested more money into site supervision through hiring project managers responsible for this. I required certain behaviors from them.

I required them to conduct a pre-construction conference with the customer that accomplished a lot to set realistic expectations for both customer and contractor. I required the PM to be present on site the first day of work with every subcontractor. They talked about the project, job site cleanliness, clarified any issues regarding materials or scope, and set expectations for accountability and communication. The PM was to inspect the site at least every other day checking the scope against the work being performed, inspecting the quality of work, communicating with the customer, and checking on job site cleanliness.

Each time the PM was on site they were to call the customer while standing right there in the house. They typically got the customer’s voicemail and that was fine. The PM would leave a message something like, “Hi Mr. Jones, this is Jack Dennison, the Project Manager for your rebuild. I’m standing in your living room inspecting our work. Everything is on schedule and the drywall repair looks great. If you have any questions or concerns please feel free to call me. Have a great day!” This went a long way in maintaining open communications and customer confidence in our efforts to do a good job.

  • My wife and partner became an activist for job costing.

It was job costing that helped us identify problem employees, problem subs, poor practices, and profit killers. But once I knew where the problems lay I could do something about them, and did. You see, the reason construction services are just too much trouble and is so hard for so many contractors is because it's out of control.

Too often construction services is allowed to develop an unruly life of its own. Taking control of many of these issues through good assessment, problem solving, and consistent discipline will reshape how you do what you do and that can finally bring you a level of confidence and satisfaction that may have been absent for way too long.

Don’t let an unruly construction division steal your well-being, or your profit. You can tame the beast, by taking control!

Reference: 6-Month Coaching Plan - The Profit Maker -- Make More Money Than Ever Before Managing Your Business Like A Pro!