Seems the island of choice in topics lately is Guam.  With the volume of construction work anticipated to be procured on the island in the coming decade, everyone seems to be talking about it.  Of course talking about it and actually getting there and doing the work are two different things.  Obtaining labor, shipping material and equipment, and managing such a remote job site surely will post construction issues and potential surety issues.  If you are one of the many looking at this venture, put together a strong plan and team and I would think start slow to work out any bugs in the process.

I was a guest on a local internet radio show – Atlanta Business Radio (www.atlantabusinessradio.com) last week.  I was shocked to actually get a call from a prospect a couple of hours after it aired from a representative of a potential client and scheduled to meet with her after her vacation.  I was left in awe at how technology has changed the name of the game and allowed even the smallest or most obscure companies to get some air time that larger stations wouldn’t touch.  I pursued this avenue to possibly generate leads, but also to get more practice at public speaking, which I have never been fond of but find myself more and more required to do.  The format of an internet radio show also allowed me the chance to hear myself speak afterwards and learn what I can improve on and what important points I wanted to touch that missed.  I need to make my pitch more efficient.  Overall, it was a great learning experience.

Not a day goes by that I am not amazed at the advances technology makes – from concept to design, from sale to final walk-thru.  Technology has made our quotes more accurate, our billings more manageable and has helped to connect our people in ways not imagined even just a few years ago.  If we aren’t on board with technology, we are losing efficiency and opportunity.  I would dare say that statement cannot be argued with.

From a marketing perspective, technology allows us to search for and track leads without effort other than lifting a finger.  It allows us to virtually “meet” potential clients without actually meeting them.  Entire pre-engagement conversations can occur without physical contact.  This is great in many perspectives, but what it does is even more so set apart the face to face meetings that are such an important part of the marketing campaign of our companies.  Technology is the great leveler of our generation.  The system that allows small companies to have a larger presence than they could normally.  It also allows larger firms to break into smaller, more manageable customer focused sub groups without actually fracturing into an uncoordinated mess.

But there is still nothing like face time with clients and potential clients to help set your firm apart.  There is still nothing more effective at maintaining good word of mouth than a busy executive reaching out to past clients and discussing the projects that they have done for them.  There is nothing nicer than a handwritten note during the holidays expressing thanks for work past and hope for more in the future.  There is nothing better than getting to know your client a bit deeper than email allows. 

My point is that as technology allows us to become more efficient and capture more market than we thought possible with less effort, it also allows us to hide behind our desks and not build real relationships with our clients and potential clients.  Let’s not forget to network, talk with and shake hands with our clients, lead generators and prospects and rub elbows with them in more relaxed settings.  I say use technology and leverage it as much as possible as the benefits are amazing.  But the fundamentals of our business are relationships built over time and in person.  An internet radio show provided a lead to me at no out of pocket cost other than some gas and and hour and a half away from the office.  But that lead must be met with good personal follow-up in order to amount to an opportunity.  We should use technology for all its worth – but lets not lose the art of shaking hands.

It seems inevitable that we will be impacted by inflation at some level in the near future.   Considering the small margins some contractors are earning to win construction projects and the potential length of these contracts, it seems inflationary pressures are one more element that may turn small profits into damaging losses.  What are you doing to hedge against inflation and the potential impacts it will have on your long term contracts?

I’m trying to get back on track with my blogging, and I wanted to put out a request for editorial ideas for 2010.  We will be working on the CBO’s print editorial calendar, as well as ideas for our e-newsletter, webinars and web original content.  We will be looking at what relevant and practical topics we need to tackle to enrich our readers and website visitors in the coming year.

I’d love to have your feedback as we work through our ideas.  I just attended an invaluable three days at the Construction Financial Management Association (CFMA) annual meeting last month and, as always, returned with a multitude of editorial ideas. But I’d also like to hear from our readers, print and online, about what you need or want to read more of to help you get through and manage your business during this very difficult time.  What do you have questions about, what are you struggling with, what wonderful new concept, investment or product is helping you or what is driving you crazy?   

Let me know what you think and what research we can do here to get you the advice you can use to maintain and/or grow your business right now—and I’ve heard more than once lately, “maintain” is the new “grow”.  It would be nice, though, to defy the odds and effectively cut expenses and build business just enough to show some growth through this period.

Help us to help you.  I look forward to hearing from you. 

A couple weeks ago we helped a client develop a schedule of rates for labor and equipment to be used on a cost reimbursable project.  The rates needed to “fully loaded” to include direct, indirect and overhead recovery costs.  Their client required substantiated backup for each of these rates. 

This is a relatively common project that we do with clients and is a very important for both cost reimbursable projects and for change orders.

There are several ways to go about this – one is the very simplistic way of taking a huge pool of costs and simply dividing them by the number of field hours and then calling that your “labor burden” or “overhead recovery.”  While this is simple on the accounting side I’ve never seen this stand up too well in a negotiating or claim situation. 

We prefer a much more granular approach where we break things down into much more detail and really look at the drivers of those pools of costs. 

For most companies we see this takes a lot of explaining and a lot more work to put together because there truly isn’t a great understanding about the “flow” of money. 

Too many people simply process transactions without actually thinking about what that transaction means.  This is true for accounting, project management, equipment management and estimating. 

Great software makes the problem worse because it allows someone to simply “enter data” and then the software supposedly takes care of everything else.  People run reports and they seem to have “good information” but when pressed they can’t truly explain how all the numbers got there or how they interrelate which is the critical part. 

One thing we consistently see is that estimators, project managers and accountants who have done the job manually (pencil and paper, graduating to Excel then to software) typically are much more in-tune with how things really work and can spot problems much more quickly. 

This is the reason why when we setup things like field production tracking systems we do them manually at first because the crew leaders learn more that way.  We may migrate them to an electronic system down the road but we always start with a manual system because it helps people learn faster. 

The book “The Toyota Way” talks about this in regards to the lean manufacturing process.  Automation of data is not always the most efficient way to truly share information. 

So, back to this client – the financial oversight was handled by the contractor’s mother who had been doing accounting for over 50 years!  She relied on hand “green sheets” for reconciliation and while that seems like it might be slow I can say that she had more access to relevant information quicker than we have seen with any other client. 

She truly “knew” the numbers and how they related to each other.  She wasn’t just giving us reports out of the system.  This was completely refreshing since it isn’t something we see often. 

Bottom line(s) -

• 1. We got the rate schedule done in about 30% of the time it would normally take
• 2. They were able to understand and articulate well each line item and backup worksheet that went into making up the rates
• 3. They got the job!

We see too many companies who believe that software is the solution and too many people who have “grown up” only using software and don’t truly understand the dynamics of the information they are entering or reporting on. 

Don’t fall into this trap – focus on knowing your data and how it relates to the operations of your business.  If you need to go through the processes manually for a while to learn this it will help you in ways you can’t imagine. 

Demand this from your team – if you ask what is “behind” a particular number you should be able to get quick, concise and detailed answers.  If you hear “I need to look into that” too many times that should be a big red flag.