As a general contractor a few years ago, I was working on a tenant improvement project. One day I remember starting the demo on a wall. We took off the drywall and found out that there were all kinds of wires and pipes running through it. These did not show up on the drawings. So, I took some photos, wrote an RFI attached the photos to the document and sent it to the architect noting its urgent status. Then I waited, not knowing if he had even received the RFI. So, I called and left a voice message – and waited some more. Eventually I received a response to the RFI, but not without losing time sending and following up on the RFI.

While we don’t always encounter projects that require significant mid-stream alterations, there are nearly always questions, that must be submitted tracked, resolved and ultimately, if everyone agrees, incorporated into the project. And because of the environment we work in, there are procedures to be followed, communication channels to be adhered to and process that has to happen to keep things legal and everyone properly informed. In addition to the initial question, there is usually additional correspondence, drawings, sketches, submittals, email discussions, sub and vendor input, design team input, owner input, pricing and other information, which, can be quite a pile of “stuff” to keep track of. All of these items, whether in an RFI, ASI, or other communication create an issue.

Some issues are easier to resolve than others, but for the ones that are more complex, or involve multiple disciplines or take a while to resolve, it’s important to have an easy way to check on status. A lot of contractors track these issues in an Excel spreadsheet, which is great, but takes time and energy to keep current. Do you have a quick way of finding all of your outstanding issues? Do you have a process for organizing, storing and attaching all supporting documentation for an issue?

Some, if not most issues revolve around document management and project team communication. Without good document management, you may lose emails, plans, sketches, and correspondence related to the issue. Obviously, this can result in costly errors. In an ideal world, you should be able to search for an issue and see all of the supporting documents for that issue, without having to do multiple searches through files, folders and emails. What happens if one sketch or specification change affects multiple issues? How do you track that and how do you make sure that all issues have current information? Lots of questions about a difficult area.

Do you have any tips or tricks for tracking issues? Let me know what your method is by commenting below.

www.dexterchaney.com

I’m pleased to announce that this week’s blog is written by Jim Schug of FMI. Jim is a senior consultant with FMI and specializes in building profits by developing tailored operations strategies for his clients.

During the last upturn of the mid 2000’s (remember the glory days?), leadership decisions were relatively easy – who to hire, where to grow, which jobs to bid and how much margin to put on them. If leadership success was measured only on profitability, then there were certainly many “great leaders” sitting in the CEO position of many contracting companies.

During the difficult downturn of the past three years, leadership decisions for companies in distress were simple, yet relatively limited and certainly not pleasant to make – decisions that boiled down to who and how much to cut back. For these companies, staying afloat depended in large part on how successful the company was when the “easy” decisions were made during better times.

Companies I’ve encountered who are doing better than getting by in what has been called our “muddle through” economy are those whose leaders accept that change and transformation are inevitable, but also that a stabilizing vision is key. I’ve created some questions to ask yourself and your staff that may help develop your company avoid a “muddle through” mentality.

How do you create a strong relationship with your employees while transforming the company?

Difficult times are engines for change, yet many organizations are unfamiliar with how to effect change at the organizational level. New best practices, new strategies, and new productivity programs are necessary in order to cut costs and create efficiencies, but even when the upper management embraces the need for change, the transition can be difficult. Mid-level managers are often the pivotal leaders within an organization, and they are the ones most likely to struggle with incorporating new guidance from above while still managing day-to-day operations, often with fewer resources than ever. Consider how you can help the key “field leaders” in your organization effect necessary changes while still holding them accountable for results.

How do we pull legacy values through these tough times?

“We take care of our people” is a common and heartfelt sentiment among most every contractor. Yet, during the downturn, many companies have had to cut 401k contributions, have gone through several rounds of layoffs, and have not been in a position to pay bonuses for perhaps three years. While it would be great to reinstate everyone and everything in the name of leadership, it isn’t feasible. Yet it is vital to future success that employees do feel that their interests are at least part of the hard calculations that need to be made to get through difficult times. Consider how you can maintain motivation and stay true to core company values in the face of the financial rationing we’re all experiencing.

How do we create a vision for the company in this volatile market?

The military acronym VUCA (Volatility, Uncertainty, Complexity and Ambiguity) defines the conditions you find in modern urban warfare (those of you who know me are likely not surprised I weaved a military example in the blog!). While our economy and the construction market certainly aren’t comparable to complex and dangerous military operations, there is no denying that they share many “VUCA-like” characteristics. In these conditions, true leaders can shine and they do so by shining a light of vision and direction. When people know the objective and their role in achieving it, they are fortified against a difficult present and an uncertain future. Consider what you are doing to create and share a vision for success with your staff.

I realize that I’ve posed questions here, not specific answers. But the first step to transforming your business is asking the right questions, so I hope this has stimulated some forward thinking. What are some things YOU are doing to lead your company through this ‘muddle through’ economy?

www.dexterchaney.com

I just saw a great movie! (Yes, I know this is a lame conversation starter, but bear with me.)

“Moneyball is a film based on the true story of Oakland A’s general manager Billy Beane’s successful attempt to put together a baseball team on a tight budget.

I can see why this movie and book have become so inspiring. We’re all trying to make our dollars stretch, especially during this economy. In fact, I often wonder how smaller construction businesses with tighter margins can compete with the gigantic firms who have unlimited resources.

Beane didn’t achieve success by drafting players based on his emotional judgments or media-based hype. With the help of a Harvard number cruncher, he developed “sabermetrics,” a method of judging players by on-base percentages. Though many scouts and baseball experts doubted his technique, Beane had the last laugh. His 2002 team successfully competed with powerhouses, and even though they lost in the playoffs, the team won 20 consecutive games that year.

In the February issue of CBO, FMI consultant Gregg Schoppman points out some important lessons every construction business owner can learn from Beane’s story. When evaluating estimators, he says, “Business owners should not base estimating success simply on jobs awarded. In the end, jobs must translate to bottom-line profitability.” In this article, Schoppman explains how business owners should evaluate construction professionals on specific criteria to enhance margin, improve productivity and hedge construction risks.

What do you use to evaluate your team? With the state of the construction industry predicted to remain relatively flat in 2012, it may be time to play “moneyball.”

Building a business takes a lot of work, and ideally, you build a business that you can be proud of.  As a construction business owner, you want customers (both current and potential) to see your business in a specific way.  So what do you do?

Sure, you work hard and get the job done right.  You conduct business fairly and treat people with respect.  But you also have to actively create your company’s corporate image.

While some of your company’s corporate image will come about naturally based on the work that you do and the manner in which you do it, companies that have a specific plan in place to create a corporate image have much more control over how they are perceived.  They also have more opportunities to highlight the strengths of their business and their culture.

Once you build your corporate image, you can showcase it.  For instance, my company has a very strong culture and we’ve been operating on the same values since our inception in 1985.  So this year, we are running ad campaigns that highlight these strengths.  The one below features my father and me, and definitely represents our corporate image.

So think about how you want the world to see your business, and then make the most of it.  Use it in marketing, in sales, and in conversation.  You’ll be surprised what a pride in your company and a strong image will do for your business.

I mentioned last week that I was busy preparing for the World of Concrete trade show in Las Vegas. Well, I’m now in Vegas, and as some of you may already know, Dexter + Chaney has a new product line! I don’t usually discuss Dexter + Chaney’s products, but I am too excited after the many months of hard work and interviewing industry experts not to introduce Venture Project Collaboration Software. So bear with me while I crow a bit about our new addition!

Venture Basics

Venture is web-based project collaboration software built around the needs of construction project teams, not individuals. Most of the construction operations software available today is designed for individual use and focused one specific function. Venture is designed for the entire project team and provides tools that help folks work together throughout the entire lifecycle of a project. Venture tools are built to give contractors visibility and control over three key areas of construction operations:

• Documentation
• People
• Communication

Document Management

It’s no secret that documents play a vital role in the construction process from beginning to end. But all of those documents and versions of documents are difficult to keep track of, not to mention expensive to print and distribute. Venture allows users to control document distribution, usage, and versioning from within one application.

Build the Best Team

When I played basketball, my coaches routinely told us “There’s no ‘i’ in team.” Similarly, construction projects aren’t completed by individuals. From start to finish, it takes a team working together to complete a job. Venture helps you manage your contacts using construction specific criteria, invite potential partners to bid on work, and even prequalify subcontractors, so you create the best team for the job.

Project Communication

I remember the amount of time I used to spend as a general contractor following up on project notifications and issues. Venture connects project participants inside and outside your company with the latest project information. When you send a notification, you can see who has opened and responded to it. With the ability to access information from anywhere, at any time, and track responses to notifications, your project teams will be able to communicate more efficiently on projects, saving time and money.

So now that I’ve done a little bragging, I’d like to know what you think. Please let me know your thoughts on Venture by commenting below.

Hello from Las Vegas! It’s been an exciting week here at World of Concrete, and I’m proud to announce that the latest version of our construction management software, Spectrum Construction Software v14, was launched this week. I don’t usually talk about Dexter + Chaney’s products, but given that this new version drastically changes the way users operate and interact with the software, I couldn’t help myself.

What’s New in Spectrum version 14?

In the last year or so, there’s been a lot of talk about “The Cloud,” and how it is going to change software. We’ve also seen increased use in mobile devices, such as smart phones and tablet computers, with easy to use interfaces and applications. With all of this in mind, we’ve designed Spectrum version 14 to be easy to use and access.

Accessibility

Our customers told us they wanted to be able to access Spectrum anywhere – whether they were in the field, the office, or snowed in at home. Because version 14 is web-based, there is no software to install, upgrade, or maintain. The user simply needs to login on an Internet connected device.

Information a Click Away

Spectrum’s user interface has been completely redesigned to give it the look, feel, and usability of other web applications. Simply put, all the information you need is one click away. In Spectrum v14, you start with a dashboard that you can customize with the apps you need to do your work. Once you pull up a job screen, you’ll instantly see all of the links related to that particular screen, such as vendors, subcontracts, and cost projections. Just as you can open web links in tabs, Spectrum v14 allows you to open multiple tabs or screens so all the information you need is in front of you.

Affordability

Perhaps one of my favorite aspects of Spectrum v14 is that it’s more affordable than ever. Because Spectrum v14 is web-based, users don’t need to purchase, maintain, and constantly update hardware, operating systems, and databases just to use our product. With v14, users don’t need to install software and maintain the software on every user’s computer, because it’s all accessed from the web.

I hope you find this dramatic change in construction software as exciting as I do. We also happened to launch a new product for construction operations at the World of Concrete, but I’ll let my colleague Mark Reich explain this new addition.

Anyway, enough about me – what do you think about the changes we’ve made?

Mid-January is a time of reflection for many contractors.  They’re starting a fresh new year, and wrapping up their year-end which is a task in itself:

• Preparing W2s & 1099s
• Creating year-end financial reports
• Closing your general ledger
• Rushing to get that last payroll out in December because you are unable to work between two fiscal years
• Looking at Over/Under Billing and posting the adjustment to the year-end financials
• Preparing Sales & Use tax reports for sales tax authorities
• Querying different type of jobs in job costing to look at profitability by type

If you have had trouble with any of these items in past year-ends, ask yourself, “Am I willing to go through that again next year?”

If the answer is no, then now may be the time to start looking into new tools and software programs that can make your job—and your life—easier.  There are plenty of construction-specific accounting packages that work the way construction does and can efficiently prepare W2s and 1099s and year-end financial reports.  Some systems are even date-sensitive and allow you process payroll over different periods, and even years, so you don’t have to rush to get that last payroll done.

What I’m getting at is this—year-end doesn’t have to be this painful.  Do some research and check out some of the resources, tools, and software programs available to you.  It can make your next year-end, your job, and your life easier.

The owner of our company conducts quarterly meetings with the entire Cahaba Media staff where he and each of the managers have an opportunity to give everyone in the company an update on each area of the business.

In one of our recent quarterly meetings (in the fall of 2011), he had a special surprise for us. During the first part of the meeting, he presented us with a video of Nick Saban, the University of Alabama’s football coach, giving a speech to a group of 1,000 8- to 13-year-old boys attending Coach Saban’s football camp in June 2011. My boss said this speech by Coach Saban could just as well have been given to a group of business people, so he decided to share it with us.

My boss brought out many lessons we could learn from that video. Some of the ones that especially stuck out in my mind include the following:

-Character and attitude do not require ability. Working hard is about putting forth effort, having mental toughness and being responsible for your own execution. It doesn’t take ability to give effort. And you have to take accountability for your own performance.

-Success involves consistent performance, established goals and a commitment and passion about what you do.

-You must invest time, not just spend it. You only get out of something what you put into it. Remember that the things worth accomplishing can be difficult to accomplish, but you’ll be glad you persevered in the end.

-Always learn from the mistakes you make along the way. And listen to constructive criticism and feedback from others.  

-Be disciplined. Discipline is about doing what you are supposed to do, when you are supposed to do it and the way it is supposed to be done.

As a construction business owner, you must be motivated to do the best job you possibly can do, and you need to regularly motivate your staff. In your next staff meeting (which I encourage you to conduct regularly), share this video and advice with your staff. From time to time, employees need to hear words like these from an objective perspective.

 Also, share with me what other methods you use to motivate your employees. We want to hear about what’s worked for you.

You know the old adage that you have to spend money to make money. Nowhere is that more true than the construction industry. Without spending money bidding projects, you can’t get jobs to make money building them. A few years ago, the ramp-up to a new construction season was an exciting time of year. Not so these days. With more people bidding on fewer jobs, the market is much more competitive. Perhaps the toughest part, though, is that even if you bid a job and don’t win, you still incur costs to compete. While many of these costs are easy to identify, some are not, so just what are some things that keep bidding costs up?

Document Management

With the current levels of detail required by industry standards, code compliance and also by the different disciplines, the number of documents required for a project is huge. Obviously to bid a job, you have to access the documents, which can be costly to say the least when you consider the costs of plan room memberships and purchasing and printing documents. Keeping track of what’s current in that huge set of documents and making sure others on your team are using current documents are critical. It can also be very time consuming and expensive.

Team Prequalification

I was in a conference room full of general contractors a couple of years ago, and the presenter asked, “How many of you prequalify your subcontractors?” I was surprised at how few hands were raised. In today’s market, knowing the companies you work with is essential. Do they have the financial resources to complete a job; is their insurance up-to-date; how does their safety record look; what do their references say about their recent work; what experience do others in my company have with them?

Now more than ever prequalification should play an important role in deciding who gets to play on your team. With so many businesses struggling just to keep the doors open, you never know if a team member is going to make it through a project, or if they need a project just to keep the doors open. While it’s simpler (and cheaper) to bypass prequalifying your team members, not doing so could result in your team falling apart in the middle of a job when the pressure to perform is high.

Administrative & Communication Costs

While documentation management and team member prequalification may seem fairly obvious sources of added costs and risks, administrative costs may not seem so obvious. When I was a general contractor, I sent out invitations to bid, but the communication didn’t end there. Every time the plans or specifications changed, I needed to make sure the subs I invited knew about the changes and were using the current documents to prepare their bid. Back in those days, communicating this information required a phone call or a fax followed-up with another phone call. At other times, I wasn’t sure if I had enough subs bidding in order to get competitive numbers for my own bid. So, as bid day approached, I got on the phone and fax machine again to make sure that I didn’t need to invite more subcontractors to bid. No matter who did the calling or faxing, the time spent used up valuable resources, and was very expensive.

Reduce Bidding Costs

Although there is no silver bullet to reduce bidding costs, or even finding more jobs to bid, you can do a few things to limit your bid preparation costs. First, bid on jobs you have the best chance of winning. While a large job is ideal, if you know you can’t compete, bidding is like throwing money out the window. When do you bid, streamline communications so that it’s easy to notify and check on bidding subcontractors and vendors. Use a system to manage the documents you and your subs use to prepare bids. What are your biggest sources of bidding costs?

www.dexterchaney.com

The end of December didn’t just bring about New Year’s resolutions – it brought the end of the yearly accounting cycle. Needless to say, most accounting departments are rather busy right now. While talking to some other accountants, I was surprised to learn how many people still don’t file electronically.

Whether you have a simple accounting application, or a specialized construction accounting system, you should be able to file your taxes and payroll information electronically. Not only will this save you time, you’ll reduce the chances of making a mistake that could cost you later in the way of penalties and fines.

Electronic filing shouldn’t just be limited to your taxes, though. Keeping documents as electronic files reduces paper waste and clutter in your office because you can get rid of the filing cabinets. Electronic filing also gives you the ability to search with simple keyword terms, so you can find documents faster. Are you doing any of the following electronically?

• Archiving documents
• Filing payroll taxes
• Filing W2 forms
• Managing 401Ks

If the answer was no to any one of these, you have an opportunity to make your accounting office operations much easier. So my suggestion as you go through year end is stop and think of how you’re doing things currently, and investigate some tools and practices that will improve your processes. Be sure to make your accounting software work for you, and while you’re at it, reduce the time and resources you and your staff spend filing.

www.dexterchaney.com