How many out there have had people working for them and things going along well when that person leaves your company for whatever reason?  Did you panic?  Did that person take a lot of knowledge with them?  Or did you have proper documentation in place to not “miss a beat” with you processes?  We have been preparing and gathering knowledge about systems and contacts for a few years now.  And when someone recently left, we were prepared to continue operating and a very high level.  Was it a hit to our normal flow, absolutely, but it did not stop progress.  Additionally, it did not take months to get back into moving smoothly.  Our journey began with us hiring a consultant to help us understand process flow and documentation.  The cost of that consultant was insignificant when compared to the potential loss of efficiency that we could have experienced.

So ask yourself, if person ”X” left tomorrow, would I know exactly what their job entailed and could I (or someone else) perform it?

Let’s Discuss.   

Let me start by saying that I am a dyed-in-the-wool believer in our version of capitalism.  All the good, the bad, the ugly, I firmly believe it is the most efficient and fair system yet devised.  I hesitated discussing this topic on a short blog post, but I firmly believe that healthcare is a distinct problem for us as an industry.  I don’t have the answers, but I do know that the costs of the current system make providing health coverage to our employees increasingly difficult, if not impossible, to maintain. 

Normally, when costs rise beyond a standard rate of inflation,  the market generally sees an opportunity to earn money and fills that need with hospitals, outpatient care facilities, etc.   Young people train as doctors, nurses and anesthesitists because the demand is so great.  In essence, the void is filled by competitive forces and costs normalize over a period of time.  If they don’t, and the cost of service outstrips the consumer’s ability to pay it, we have a healthcare version of a bubble bursting.  This is how it should work.  But something in the system is not functioning, costs rise annually well beyond inflation, and the losers are the business that pays all or a portion of healthcare coverage costs for their employees and the employees themselves.

Now that we have determined that I can see a giant brick wall crashing down around me, what is the solution?  What have some of you done to lessen your healthcare coverage costs, or at least ease the insatiable rate increases?  A construction company, billing $45/hr. or so for skilled tradesman does not have the additional revenue to absorb double digit percentage increases yearly.  In this market of declining revenue, the simple solution is to drop coverage for your employees.  This can cause a downward spiral effect as quality employees leave for locales that offer health coverage.  Not a pretty picture from any vantage point.

Some firms are exploring  Health Savings Accounts (HSA’s) and Health Reimbursement Accounts (HRA’s).  In effect, these are high deductible plans with a fairly substantial co-pay.  In the HSA, the employee keeps the funds in the account at the end of the year, in the HRA the employer keeps them.  Folks in our industry have told me that these work well for construction firms where the majority of workers are under the age of 35 and in relatively strong health.

Other firms I have spoke with have joined forces with groups in order to leverage purchasing power.  Perhaps the local Home Builder’s Association has an option availabe.  In any regard, providing coverage is increasingly expensive, and many of our brethren in the industry, through no real choice of their own, have to opt out of providing coverage to their employees.  We all lose in this instance.  Our best and brightest will not stay with us for long without a competitive benefit package. 

In short, please explore all available options (Group plans; HMO’s; increase co-pay; HSA’s or HRA’s) before eliminating the benefit altogether.  Keep open lines of communication with your staff.  Examine your plan yearly and shop it competitively.  Some employees may be willing to fore go a raise in order to keep their premiums affordable.  Our national healthcare system is in trouble.  Our ability to stay a worthy competitor for bright young talent hangs on our industry’s ability to provide good pay and benefits, along with quality of life issues.  I personally don’t believe a socialized medical system is the solution.  But I also know that high single digit or double digit annual cost increases are simply not sustainable and will cripple our industry.

What have some of you done to provide this benefit affordably to your staffs?  I, and many others I will assume, would love to hear any and all options available to us.

Maintaining a high-level of jobsite productivity is one of the most important activities for any foreman, superintendent, or project manager. The first step to increasing—and maintaining—jobsite productivity levels is to understand what all the fuss is about.

When production rates drop, a project can lose money. Without proper documentation, these losses cannot be recovered. Worse yet, if production rates are left at a lower level, and a company adjusts their estimating to match their production rates, the company will become uncompetitive in the marketplace.

On the other side of the coin, if production rates are monitored closely, and improved upon constantly, then the company will gain a competitive advantage in the market, and any impacts will be seen immediately, when they can be dealt with. Many factors affecting productivity are well within our control, but many more factors are generally out of our control.

Here, we’re going to explore what productivity is and how it is measured.

What is Productivity?

Quite simply, productivity is a measure of how much of something is produced for a given amount of resources.

Productivity is related to job costing, but is typically more detailed in that it captures both the quantity of installation AND costs for a specific period of time.

Job costing systems typically capture costs at such a “big picture” level that it is impossible to get accurate production numbers out of them.

Job costing systems also typically run a minimum of one week behind, so by the time you could get any useful productivity information out of them—it is likely too late.

How Productivity is Measured

Productivity is expressed as a ratio between units produced or installed and
resources used.

A very simple calculation example is a trenching operation where production could be expressed in feet per day. Typically one of the numbers, either resources or units, is set to “1,” and that is typically expressed as the second part of the equation, as in the different examples below:

• 310 Feet Per Day

• $4.62 Per Foot

• 32 Fixtures Per Day

• 0.25 Hours Per Fixture

• $12.76 Per Fixture

The following table shows some typical Units and Resources used in productivity measurements:

PRODUCTION UNITS	RESOURCES
• Each • Linear Feet • Square Feet • Cubic Feet • Cubic Yards • Tons	• Schedule - Weeks, Days, Hours • Manpower - Hours, Crew Days • Equipment - Weeks, Days, Hours • Cost - Total, Variable

Production Rates at Extreme Detail

A great example of production rates are the labor units used in the bidding of construction projects. These rates have been determined through very detailed cost accounting on a variety of construction projects.

There are several companies that assemble this type of cost data. Some are industry specific such as NECA (www.necanet.org), while others hit the broad construction market such as RS Means (www.rsmeans.com).

While this level of detail is required for accurate bidding, it is impractical to track job costs or production in the field at this level of detail.

Measuring Production in the Real World

You have to find a balance between labor units used for estimating, which are too detailed, and the job costing system, which is too broad and provides information that is too late.

A realistic production measurement timeframe needs to happen on a daily basis, at a maximum, in order to provide actionable feedback. These should also be summarized by the week to even out high-production and low-production days, as well as taking into account when setup and pre-fabrication is done to support higher production over the following days.

Production Rates are Relative

Production rates are relative. They mean nothing if they are not compared to something else.

The typical comparisons are:

• Estimated: If your production rate exceeds the rates you estimated the project by, you are making money. If not, then you are losing money. It is critical to know this on a daily basis so you can make corrections. If you are unable to attain the estimated productivity rates, then the feedback needs to get back to the estimators so they can adjust the production rates they estimate jobs at. Overestimating productivity on a bid CANNOT be made up for with more volume!

• Past Production: Comparing your current production rates to your past production rates on the same or other projects is the best way to determine if you are being impacted or if the new installation method is working.

• Industry Standards: This information is hard to attain, but with a little work, you can gain a lot of information and set benchmarks for your production. The importance of comparing your production with the rest of the industry is that if you can exceed that production, you will gain a competitive advantage, which equals more work, more profits, and more opportunity for everyone. The opposite is also true.

One other area you can compare production rates is between crews and even crew members. This will clearly show the wide variation between a top producer, an average producer, and a bottom producer. You can use this information to help share ideas about production, and in turn, raise the overall average. Having this data widely available takes care of a lot of people management problems because it makes it obvious where people really rank.

By understanding what productivity is, how it is measured, and by monitoring production rates closely, a company can increase their jobsite productivity level, and therefore, create a strong competitive advantage in the marketplace. It’s worth the effort!

	DAVID BROWN is the Founder and President of D. Brown Management, a consulting and management firm that helps construction companies improve profitability. Headquartered in Northern California, the company provides a full scope of general management solutions to construction clients nationwide, including strategy, planning, operations, field productivity, workflow, financial management, technology, and marketing.
As always, ask any questions and comments are always welcome. You can post them here or send an email to david@dbrownmanagement.com. Reader comments and questions will become future posts.

It is very easy to spend too much time working on small problems and not enough time forecasting icebergs and scouting opportunities.  In my organization, I swear we will spend hours debating the font size and attached clip art of a particular memo and only a few minutes discussing the content!  We’ve even gotten bogged down on what brand of glue works best for interior miter joints.  Every once in a while it becomes necessary to close the notepad and start over with a fresh page and perspective.  It is all about getting back to basics.

Simplicity in thinking is not necessarily about behaving like a simpleton.  (Although some might call me this!)  It is about organizing priorities in such a way that no one issue takes more of our valuable time than it should.  Breaking a large problem into smaller, more manageable pieces so that segments can be solved and the remaining issues challenged.  It means delegating issues to capable subordinates and allowing them the opportunity and the space to grow into leaders.  It is too easy to get overwhelmed in minutiae while opportunity passes us by.  It also means maintaining focus on the simple issues that impact our organizations and not worrying about those that we cannot alter despite our best efforts.

While I was working on a project in business school, I came up with an acronym that attempts to convey my thoughts on business leadership into a simple phrase that I can repeat to myself when I begin to feel overwhelmed.  Yes, it is an oversimplification of difficult processes - but I am a huge devotee of thinking as simple as possible.

Get back to BASICS:

·         Believe in the product, service and organization

o   If you don’t believe in what you do, no one else will, either.

·         Actions, not words

o   Words are what clients read.  Your actions are what they remember and pass on.

·         Simplicity in thinking

o   The keystone concept of my approach – Keep it as Simple as possible!  Simplicity allows for a checklist to make certain we are being thorough in our judgments.

·         Initiate ideas

o   Be an idea generator.  Bring solutions to problems (both your clients and your own) Think beyond the canned response.  Above all, think proactively.

·         Communicate

o   Without communication, even simplicity becomes unruly.

·         Service above all

Business leadership can’t be broken down into an acronym alone.  However; the cleaner and more simple we can make our approach, the more efficient it becomes.  The more efficient an organization becomes, the more time can be spent on scouting for work, earning profit or, heaven forbid – relaxing.

The current environment holds numerous challenges.  I have no idea when the tide will turn or when/what/where the next big thing will be.  But the message I preach over and over is timeless.  Simple thinking approached with clarity and focus, a tight control of spending, and a willingness to bring new tools, ideas and analytics into your organization while providing exemplary service will win in every environment.  Whether winning is defined as simply staying alive or actually thriving is a point for debate.  The key point here is to get back to BASICS and focus on what will make your organization successful.