Once again it has been a long time since my last post.  The biggest thing still taking up our time is helping our clients deal with the economy.  Our clients along with most of the solid companies in the industry have already made all the cuts they make.  They have stabilized their businesses by sizing their cost structure to deal with the realities of their revenue streams. 

So what’s next?  The smart contractors are preparing for the future.  Economies cycle - it’s a fact.  Truly strong businesses are built to survive in a downturn and have the systems to really thrive and grow when the market is growing. 

One of the key systems a contractor relies on is their accounting, job costing and project management software.  Today these are often found in integrated packages that minimize duplicate data entry and speed up data flow from one department to the next. 

While we find these systems extremely valuable we are also know they are very difficult to implement and create a huge disruption to the business.  We often caution our clients against the implementation of these systems unless there is a very strong business case and their team is truly ready for the challenge. 

There are hidden challenges everywhere that typically surface within the first year.  There are also tons of hidden opportunities but those don’t usually present themselves or provide any substantial return until year two or three.  When it comes to big investments that have delayed gratification system conversions have to be near the top of the list! 

One of my biggest personal frustrations with system conversions is the loss of relevant historical data to run analysis on.  Typically one of the key drivers for a business to upgrade their software systems is that the current system lacks the management reporting required to support decisions effectively. 

When you buy a new piece of software it should come with all kinds of detailed analysis tools and a great database structure.  The rub is that without the historical data being there many of these tools are relatively useless for the first couple years until you really get comparative historical data. 

Our financial and technical teams have been working hard during each conversion we manage to preserve as much historical data as possible.  The focus is not just preservation but also having that data ‘Cleaned & Organized’ to reflect the current business model the contractor is working with. 

This is a time consuming process and requires a lot of commitment up front but it absolutely can be done.  The additional commitment up front definitely shortens the implementation timeline as well as providing a higher-quality conversion.  There should be two primary focuses during a conversion:

• 1. No Data Left Behind: Including all the details from the prior system(s) and as much of the data that is stored in various little databases and spreadsheets throughout the company.
• 2. Minimal Disruption: Ideally this conversion process should provide an absolute minimum of business disruption. The learning curve for a new system is difficult enough to go through for the team. The faster the actual conversion happens the faster the learning curve can start.

When we see most conversions the data portion is OK at best.  The historical data is usually brought over in summary and many times the structure remains the same even if the new system works completely differently.  Why?  There are two general reasons - (1) bringing over all data in detail that is cleaned and completely re-organized to match the current business model is VERY difficult.  It requires a ton of up front planning; a lot of skill and a lot of desire.  The second reason is also just as simple - many of the conversion consultants and the teams leading the conversion are accountants.  Accountants typically works at a much higher level of summary than operations does.  The data that is appropriate for accounting to be able to do their jobs effectively often leaves operations a little short.   

We are by no means perfect at this however our technical and financial teams just managed our first conversion that was done ‘database-to-database’ where they cross-referenced all of the client’s data back 8 years enforcing their new business model on the historical data.  During the process they combined data from two companies; two separate systems and a variety of spreadsheet data. 

The point of ‘database-to-database’ is critical so let me describe briefly - the data was extracted live from the multiple databases.  It was then run through a central database that ran a variety of the conversions and cleaning functions on the data.  From there it was pushed into the new system in detail.  Because the data never left a database we were able to work with it live and test right up to the last minute. 

This allowed the conversion to happen quickly over a weekend with the contractor being able to leave their business for the weekend and come back on Monday morning dispatching service, writing POs and running their jobs from the new system. 

The lessons learned were valuable for anyone involved in the system conversion process.  We will be touching on more of the lessons learned in future posts but please don’t hesitate to ask any questions.  We will post responses in the comments section of this post.

Maintaining a high-level of jobsite productivity is one of the most important activities for any foreman, superintendent, or project manager. By using the four pillars of productivity, the productivity levels of any construction crew, on every construction project can be increased.   

When production rates drop on a construction jobsite, money is lost, and often cannot be recovered. On the other hand, when production rates are monitored closely, and improved upon constantly, profits are earned and a company will gain a competitive advantage. How can jobsite productivity be enhanced? One ways is by utilizing the four pillars of productivity.

Getting productivity out of a crew breaks down into four key areas: materials, tools and equipment, information, and goals. How well you execute all four of these will determine the overall productivity of your crew. The systems you set up in your company to guarantee these four areas are managed effectively will determine the success of your company.

Let’s take a closer look at these four areas, and what you can do today to start increasing your productivity tomorrow.

Defining the Four Pillars

1.  Materials: This is priority number one, but luckily, materials are also relatively easy to manage and set up systems for. If the crews do not have materials, they cannot install anything. Making sure all materials are on the jobsite and that they are getting to the work areas for the crews to install in an efficient manner are what should be focused on.

2.  Tools and Equipment: This is a simple enough concept, as no tools equals no production. This is not a place any construction crew wants to find themselves at! Therefore, ascertain that the crews have all the tools they need and that the tools are easily accessible. Do a quick analysis to see if the higher cost of the tool will offset the savings in labor.

3.  Information: If people have materials and tools, then the only thing they need to get started with installation is the information about what, where, and how they will be doing the installation. This is the area where pre-planning comes in as a critical tool. You will never be able to achieve 100 percent in this area, which is why you need to be constantly working on improving what information you have, and how you communicate it to the crews.

4.  Goals: If your crew has the proper materials, tools, and information, you might wonder what’s left. Adding in goals can improve production by 10 percent or more on a consistent basis, so this pillar should not be overlooked. Don’t underestimate the power of setting goals for the crew on a daily and weekly basis. Look at tying small rewards to meeting certain production goals throughout the entire work process. If an activity is budgeted to take a crew three days of work, offer them all a steak dinner if they finish in two. You will be amazed at how many times they will earn that steak dinner.

Good jobsite productivity really is that simple! There is no reason to make it more complicated. Every project management process in your company, every activity that you do every day should be able to be categorized into one of these four pillars. If they aren’t, you need to ask yourself whether it is really necessary.

Remember that good productivity means a competitive advantage, more work, good profitability, and more opportunities for everyone in the company. It’s a win/win situation!

DAVID BROWN is the Founder and President of D. Brown Management, a consulting and management firm that helps construction companies improve profitability. See www.dbrownmanagement.com for more information and to sign up for a free newsletter. 

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.

By recognizing and solving conflicts quickly, an organization can save thousands upon thousands of dollars annually. The key is to focus on efficiency in the pre-planning stage, and then to follow through until project completion.  

Identifying and solving problems expediently within any business should be of the utmost importance for all levels within a company. After all, the quicker a problem is solved, the less time and money is lost. Beyond the monetary benefits, a workplace that runs smoothly and stomps out issues quickly tends to have happier employees and far more satisfied customers and/or clients overall.  

This is true across all industries, but construction is one of the most challenging because we work in essentially an “un-controlled” environment that is constantly changing. Establishing processes, inserting controls, and creating standards is much easier in the relatively controlled environment of manufacturing, where the facility can be designed around efficiency. When the same or similar things are built over and over, unexpected problems are less likely to arise.

With construction each jobsite, the manufacturing environment, is created from scratch for each project. Because of this, the possibility of problems emerging within the jobsite that will affect the cost of the project is magnified exponentially.

The big opportunity in construction to save money on a project is to very efficiently plan the work. Not only will efficiently planning the work save time, it will reduce the possibility of common problems emerging, and that will save money over the course of the project.

Focusing on pre-planning projects and improving efficiency for a subcontractor is critical to the overall success of any construction project. Understanding the cost of problems within the construction industry, and on the jobsite in particular, is the first step. Learning how to recognize these problems at the earliest possible stage, and correct them, will save valuable dollars per project, and over the course of a year, these savings can add up big.

The Cost of Problems

Prolems are not usually recognized until you are right in the middle of them.  At this point, the problem will cost about 30 percent of the original cost to fix, so if you are in the middle of a $1,000 piece of work, and discover a problem, it will cost about $1,300 before you are done.  In the worst case, when problems are discovered after the work is complete, it will cost up to 80 percent to fix. This is lost money, and at this point, there is no way to recover it.  Think about something as simple as a beam that conficts with the HVAC ducting above the ceiling.  Finding it on the drawings and making corrections to either the structural or the HVAC fabrication or both will cost a lot less than finding the problem out when you are installing the HVAC ducting. 

Therefore, it’s easy to see that the focus needs to be on spending whatever resources are necessary to identify and solve problems before the middle of construction. 

Construction and Problems

Constructing a project is challenging; it is very messy. The number one thing to remember is that there will always be problems. Problems are a fact and they need to be factored into your plans far before day one on the jobsite.

Problems are often amplified on construction projects because of the separation of the design functions from the construction functions.

Architects, engineers, and design consultants are often forced into “low-bid” contracts, and the pressure to constantly deliver lower prices means cutting out on coordination between engineering disciplines, eliminating detail drawings, cutting down on elevations, minimizing plan-checking, peer reviews, etc.

All of the cost-cutting on the design side means that fewer and fewer conflicts are caught at the design stage, and are then left for the contractors to figure out. While problems cannot be eliminated, by focusing on pre-planning, they can be reduced.

The quicker conflicts are recognized and overcome, the more successful your project will be. By focusing first on pre-planning, then on efficiency, and then on quickly identifying and solving problems, your organization will save, at a minimum, thousands of dollars annually.

DAVID BROWN is the Founder and President of D. Brown Management, a consulting and management firm that helps construction companies improve profitability. See www.dbrownmanagement.com for more information and to sign up for a free newsletter. 

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.

It has been a while since our last post and I apologize. During these economic times we have been working almost around the clock to help our clients through. Some of this has involved financial planning, cash flow projections and helping develop workforce reduction plans.

These measures are necessary but mostly reactive in nature. As mentioned previously we have been pushing aggressive business development in these times. Clients who have embraced this and executed well are doing well. The construction market has been impacted as a whole but that impact is not spread evenly across all construction companies. Depending on the study you ready construction starts are down by 13% - any construction company could withstand a 13% reduction of revenue. The problem is that the impact is not equal across all markets and all contractors. We have some clients who are in markets that are still growing like healthcare or industrial plant environmental renovation who are doing quite well. We have some clients who do “plain vanilla” work on commercial buildings who are posting their best quarter ever in Q1 due simply to being good with their marketing efforts. Along with that we have several clients who are posting their worst Q1 in a while.

One thing we have stressed a lot is that satisfied customers are profitable customers. This is something I have known in my gut for a long time. Recently as we have started doing customer satisfaction surveys for some of our clients as part of our marketing services we found a much stronger link that I’d like to share with you.

The “Ultimate Question”

We based our customer satisfaction surveys on research from Fred Reicheld and his book “The Ultimate Question”

The book is well worth reading just for the background but the basics are that Fred and his team at Bain & Company set out to find the customer survey question that had the most direct relationship to profitability and growth. That they determined was “The Ultimate Question” and therefore there wasn’t much need to create a burdensome survey with 20 questions when one would suffice.

The Two Question Survey for Contractors

Phrased for a contractor this “Ultimate Question” turned out to be:

We found that we got a very high response rate from people by telling them that the survey just had two quick questions and would only take a couple minutes.

We actually made the phone calls instead of trying to use some other survey tool such as an online survey or mailer because we really wanted to communicate with them and enter into a true discussion about “ABC Construction.”

Survey Result Quantification

The next part of the survey was to quantify the results. The scoring system used compiles everything down to one number called the “Net Promoter Score” or NPS. Based on the scoring each customer fell into one of three categories:

• Promoter:Those who would be likely to proactively promote ABC Construction (score 9-10)
• Passive:Those who would likely not say anything positive or negative about ABC Construction (score 7-8)
• Detractor:Those who would likely say negative things about ABC Construction if asked and possibly are proactive in saying negative things about ABC Construction to others. (score 6 or less)

The NPS score is a decimal taking the total percentage of Promoters and subtracting the total percentage of Detractors.

The Financial Link between Profits and Customer Satisfaction

Now the interesting part – we correlated the results of the survey against a 24 month financial analysis of projects. One of those was to categorize margin gain and margin fade by group of Promoter, Passive and Detractor.

• Margin Gain: Additional gross margin dollars over and above what was estimated or budgeted.
• Margin Fade: Gross margin dollars less than what was estimated or budgeted.

The chart below is typical of what we have found. There are always jobs that will do better or worse than planned but in the group of customers with lower scores (Detractors) the incident of margin fade is much higher.

Put another way if you take the difference between the gain and fade for ‘Promoters’ and add it to the difference between fade and gain for ‘Detractors’ you will have a dollar figure for what customer service is worth over the prior 24 months.

Even for the smallest contractor we did this survey for ($1.5M per year in revenue) this difference was over $200K!

Driving Results!

The best part of the survey is that through the second question your customers will actually provide you a roadmap for fixing things. If the comments are condensed down and summarized to their core elements there are usually 3-4 key things the contractor needs to focus on and an additional 3-4 minor items.

What is important if you are going to do such a survey yourself is:

1. DON’t let emotions get involved! We have an advantage as a third party because we weren’t the ones dealing with the customer on a day-to-day basis. If you do the survey in-house you should assign it to someone who will be able to get to the bottom of the issue with the customer but who won’t try to dispute what the customer is saying. They may have been absolutely horrible with their bid package and scheduling but in their minds they thought you were the one with the problem. Customer satisfaction is about perception – and perception is reality. Arguing about the validity of the customers comments won’t help anything.
2. CALL everyone that you have done work with in a particular market segment – being selective isn’t a good strategy for getting truly good feedback.
3. LISTEN hardest to those with the most complaints – those are the comments that can make you better.
4. FOLLOW-UP on the comments. Whatever you hear create an action plan internally to address them and then follow-up with the customer thanking them for the survey, summarizing their core concern and then presenting some actions that you are taking to correct this internally.

Just the process of the customer survey has generated work from existing customers for the clients we have done the survey for. I would expect that almost any contractor doing such a survey would get similar results.

Beyond that this will give you a lot of feedback on how to improve your organization as well as providing some guidance on where to market.

	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.

First of all I apologize that it has been a long time since the last post.  The holiday season this year has been more challenging than most. 

The winter months have always been difficult for most contracting businesses because of weather-related work delays.  During these months contractors basically live off their savings that they built up during the peak summer months. 

November and December add additional challenges because with the holidays we typically can only work about 70% of the time on “revenue generating” field activities while maintaining most of our overhead costs. 

With the economy having depleted most of the profits that contractors made during the summer and also making 2009 backlogs weak the months of November and December have been especially trying. 

We have been working with our clients relentlessly during the last couple months helping them get through these months.  The basics are simple - the execution is very, very hard:

1. Shed ALL costs that don’t generate profits and cash
2. Be relentless about selection of revenue

Regarding item #1 when we say ‘ALL’ we mean ‘ALL’.  Literally you should run a report from your accounting system listing out every expense for the last three months and go through it line-by-line.  Every expense should be looked at and ranked in descending order about how it is linked to profitability and cash generation. 

Don’t try to make too many stretches here - if there doesn’t seem to be a direct link between an expense and profitability or cash then there probably isn’t!  For some more ideas on cutting costs there is an article by our LeAnn Evoniuk, our Financial Solutions manager: 

Cut the Fat, Thriving During an Economic Downturn

(http://www.dbrownmanagement.com/docs/article_cut_the_fat.pdf)

Regarding item #2 - this is just as critical.  Cutting costs is a huge first step but you usually can’t cost-cut your way to profitability.  The other side of the equation is that you need to bring in high-quality revenue. 

This sounds like common sense but typically when we end up doing a revenue analysis with a company we find a lot of inefficiency in the use of resources.  Here’s where to start:

1. Going back 24 months make a list that contains all projects with revenue, direct job costs, margin and completion date
2. Add in fields for customer and type of work (service, commercial, healthcare, industrial, etc.)
3. Summarize the list by customer listing the quantity of projects, last completion date, totals for revenue and profit and then add two columns showing the percentage of total revenue and percentage of total margin - Microsoft Excel has a feature called ‘Pivot Table’ that is perfect for this analysis
4. Sort the list in descending order by percentage of percentage of total margin
5. Sort another list in descending order by percentage of total revenue
6. Sort one more list in descending order by the last completion date

Now is time to sit down with your top team and start asking some hard questions.  Don’t stop with the surface level answers - dig down peeling back the layers of the onion on every one of these:

1. Review the list sorted by margin and look at the sources near the top.  Hopefully none of your customers make up more than 15% of your margin - if they do you may have too much concentration with one customer leaving you exposed if they run into problems.  If this is the case you should be looking hard at how to diversify a little more. 
2. Start adding up the percentages of total margin on the list and find those that create 80% of your total margin.  Most likely this list is relatively short compared to the total customers served.  Start brainstorming the ways to develop new customers that fit the profile of these “Top Producers”
3. Review the list sorted by “Last Date” and see if there are any opportunities there to recapture revenue from past customers.  If there are customers on this list that fall within your “Top Producer” category that you haven’t done work for in a while it is probably worth starting there from a business development perspective.
4. Look at the bottom of the list sorted by margin and start at the bottom having a very thorough discussion about each starting at the bottom and working your way up - the key question:  “What value does this customer truly add to our business?”  Like the expenses now is not the time to mince words - be relentless.  If you can’t clearly articulate the value the customer adds to your company then start looking for ways to shed these “Bad Customers” in a way that won’t hurt your reputation.

How many of your expenses have gone into supporting “Bad Customers?”  You may want to go back to your review of expenses and take another look.

This exercise should give you a much clearer idea about where your money and profits are truly coming from.  There are additional elements that we will discuss more in the future but this will get you started improving both the quality and quantity of your revenue.

The basics - you need to be relentless in your focus on high-quality revenue. 

My six year old daughter is just learning about money and already has the basics mastered.  For the last few years she has really liked the spare change - it is shiny, heavy and fun to play with.  Now that she is getting old enough to want important things like dolls and such from the store she has realized that pennies, nickels, dimes and even quarters don’t go that far!  Starting appropriately on January 1, 2009 she woke up and simply stated

“I don’t want to get paid in quarters - I need DOLLARS!“ 

I can’t think of any simpler of a way to describe the revenue strategies that we need to focus on to work our way through the current economy. 

Closing on a positive note EVERY one of our clients who has been relentless about business development during the last few months has actually increased revenue even during the downturn.  I cannot reiterate how critical aggressive business development is during these times.

QUESTION:  I’m working as a Technician and would like to move into Project Management.  What can I do? 

In the first post on this subject (From Technician to Project Manager:  The Technical Side) we covered things that should be done during the first 18 months of wanting to make a transition from technician to project manager. 

Below we explore the second phase where you start to hone your management abilities.  Also included are some basic skills needed at the project management level that you may or may-not already be good at. 

Depending on your time availability and learning curve you may be able to start some of these things at the same time as the technical phase. 

• General Management Library:  As with your technical library start building your management library investing time each day to read.  Books like “Execution” by Larry Bossidy, “Winning” by Jack Welch and “The Toyota Way” should be in your library along with others you find interesting.  If your construction career is anything like mine and you drive a lot then invest in audio books.  I can typically listen to about 1 business book per week - that’s the equivalent of an MBA in a couple years.  In addition to Amazon.com and the local bookstore I recommend two additional resources - www.audible.com and www.audio-tech.com. 
• Project Management Library:  Augmenting your technical library find some good books; specific to your trade if possible on estimating, scheduling, change orders, construction claims and general project management.  Don’t go overboard here - the basics of being a PM are pretty simple - most PMs fail due to lack of attention to the basics. 
• Local Seminars & Classes:  There are usually dozens of classes taught each year by industry professionals through local trade associations and colleges.  Look around and see what is out there.  Some internet search time will go a long ways.  Set yourself up for a series of classes that include technical, management, legal (contract / lien law) and financial management classes.  Your employer may or may not pay for these.  Set your own budget and trust me that the money will come. 
• Money:  As a Project Manager a major aspect of how you are judged has to do with your ability to manage the profitability and cash flow of the project.  We have NEVER seen a PM who was good at both of those things lose their job - and conversely a major aspect of every decision to let a PM go was that they weren’t that good at managing the money regardless of the “Official” reasons given.  Build your library of books to teach yourself about money including books like “What the CEO Wants You to Know” and books specific to budgeting for construction projects. 
• Typing:  As simple as this sounds being able to type fast is a huge benefit.  There are dozens of programs out there that can help you learn to type - strive for 60 words per minute.  As with the reading set aside some time to practice a few times per week and you will achieve your goals. 
• Writing:  The ability to clearly articulate your thoughts is another big deal for a project manager.  If this is a strong point for you then great - if not you should work on it by taking classes at your local college and by practicing.  Those lists of questions that you were making when you were reviewing plans - turn those all into individual RFIs written as if you were running the job.  When a situation arises while you are on the project that requires a letter to be written try writing the draft yourself and comparing it to the one your PM wrote. 
• Computer / Microsoft Office:  If you don’t have a computer at home invest in one that runs the same software you would have in a business - Windows XP or Vista Business + Microsoft Office.  You need to be excellent with your use of Word and Excel.  Take classes and practice, practice, practice.  Learn to make forms and lists in both Work and Excel.  Going back to your plans start making your lists directly in Excel.  Learn your formulas and how to make simple spreadsheets.  I learned all my computer skills starting with basic to-do lists in Excel for the project.  Learn to not only make your documents look good but also make them functional. 
• Microsoft Project:  Learn to make your own schedules.  In the latter part of your training after mastering the basics of Word and Excel invest in MS Project and learn how to build schedules.  There are only a few other pieces of software out there for scheduling but the basics of Critical Path Method (CPM) scheduling are the same for all of them.
• Accounting, Estimating & PM Software:  Once you get into the role of a PM it is likely that your company will have some sort of system in place for job cost reporting, purchasing and project management.  Strive to learn as much about this as you can and use it - remember that your company paid a ton of money for the system and if you can show that you can effectively use the system it will not only help you do your job better but will get you noticed. 
• Contacts:  The people you meet during this process will be key to helping you both now and throughout your career including those “Field Friends” you worked with on the jobsite who helped you learn the other trades, the suppliers you bummed catalogs from and the consultants / teachers you took classes from.  Start assembling these all into one contact management location like Outlook.  Stay in contact with them regularly. 

This may seem like a lot but if you set some goals you can knock a lot of this out over a three year period of time.  It is a sacrifice but one that is well worth it.  As far as getting a job as a PM - that’s easy if you are taking even some of the steps above you will get noticed by everyone and opportunities will open up right and left. 

Are all these things really necessary to become a Project Manager?  Absolutely not but they are necessary to become a Project Manager in the top percentile of all PMs.  There is a huge difference in pay between Project Managers - it is your choice where on that scale you end up at over the next 10 years. 

As always, ask any questions and comments are always welcome.  You can post them here or send an email to david@dbrownmanagement.com.

QUESTION:  What can I do to market my construction business? 

In a previous post Construction Company Marketing Package we discussed what the elements of a good marketing package for a construction business are. 

Now the question becomes what the heck do we do with all the shiny brochures? 

The tactics below are geared mainly towards contractors that doing project work - marketing service work is different and is covered very well by a fellow consultant, Adams Hudson who has a regular column in both Contractor and Contracting Business magazines.  Each column is a wealth of knowledge about service marketing. 

There are two things we need to do - (1) is to reinforce with our existing customers why they use us and (2) introduce ourselves to new potential customers. 

In this post we are going to focus on getting #1 dialed in creating a foundation to build on for #2. 

The only way I have ever seen projects get sold is with basic, old-fashioned personal sales tactics.  What I’m going to describe below is truly stating the obvious but the problem we see is that few contractors engage in these activities on a regular basis. 

Start with your existing customers because that is the easiest way to get additional work. 

Do you have one centralized list of all your customers setup in a place where you can add in notes about them and keep track of details such as birthdays, spouse names, etc? 

If not then you need to set one up - Outlook is a great tool for this. 

You should be in regular contact with all your current customers at least quarterly just checking in to make sure they are happy with your company’s performance.  This typically isn’t a problem in a small company because the owner is heavily involved in the management but once the company grows this little detail can slip through the cracks on the assumption that other people in the organization are taking care of the relationship. 

For past customers you should communicate with them regularly.  These should be prioritized ranging from ‘1 - would like to do more work with them’ to ‘3 - don’t bother’ or some other system that suits your business.  Often times if you start making calls or visits you will find that there are some reasons why they aren’t doing business with you currently and that can be an opportunity to fix some of your internal problems and win back some work. 

Having new marketing collateral can be a great excuse to drop by and see a current or past customer.  They may not be aware of new people within your organization, new capabilities such as an added service team or of new project experiences. 

Don’t get too caught up in thinking that just because they have or are currently doing business with you that they know the full scope of everything you do.  We have a client who is primarily a glazing contractor but also does doors and hardware.  They have the word ‘Glass’ in their company name and because of that they were overlooked by an existing customer for a large scope of work on the doors and hardware because the customer “didn’t know they provided that service.”

Don’t leave anything to chance.  Make sure that all your current and past customers know the full scope of everything you do. 

Also make sure that this information gets to all levels - it doesn’t do much good if the owner of the company has your information but the estimator does not. 

Your goal should be building tighter relationships at all levels within the customer’s organization.  Everyone from the field foreman to the project manager to the accounting team should know and love your organization. 

Work heavily on building those relationships and getting your new marketing package out. 

While you are there meeting with them ask for referrals. 

Look at this exercise with existing customers as a way to hone your skills in presenting your company and its capabilities.  It will set you up for phase 2 where you will work on introducing your company to new potential customers. 

As always, ask any questions and comments are always welcome.  You can post them here or send an email to david@dbrownmanagement.com.

QUESTION:  I’m working as a Technician and would like to move into Project Management.  What can I do? 

Having started my career in the field as an electrical apprentice this is a subject that is near and dear to my heart.  Everything I have learned has come from HK University (Hard Knocks U) so the points below are all taken from my real-life experience. 

First of all there were two great pieces of advice I got early in my career from Greg Anderson who is now the VP of Human Resources at Rex Moore electrical contractors.  These two bits of advice have served as guiding principles throughout my career:

1. “When you are on the jobsite learn how everything works - not just the electrical systems.”
2. “When faced with a chance to assume more responsibility ALWAYS take it and don’t worry about the money - it will come in time.”

Well that was almost 20 years ago and that advice has served me very, very well.  Below are a few bullet points about how I put these principles to work.  The advice is broken into two posts.  The first part is on mastering the technical aspect of the job which should take about 18 months and should be done while in the field as a technician: 

• Breaks & Lunches:  Spend those with other trades learning how the whole job goes together.  At any level in construction a knowledge of the whole project will always be beneficial for helping resolve problems and speed things up.  We still see way too many people in the industry who only understand their one little piece of the puzzle and because they don’t see how it fits into the bigger picture they have difficulty solving problems effectively.
• Technical Library:  Set aside a budget of both time and money to purchase and read through technical books about all major trades.  Reading just 10 pages per night will get you through about 10 books per year.  Get some general books such as the Illustrated Construction Dictionary and then get some specifics on the major trades such as excavation, concrete, structural steel, mechanical, electrical, etc.  You are not trying to become a Journeyman level person; just gain a solid understanding of how a complete project goes together.  18 months of this combined with building those break and lunchtime relationships will give you the solid technical background required to be a great Project Manager.
• Trade Publications:  These present a good combination of technical and management articles.  You should definitely subscribe to all those related to your trade and then a few others focused on closely related trades or general industry such as Construction Business Owner.  Read these on a regular basis and don’t hesitate to contact the authors of the articles if you have questions.  Most will bend over backwards to help you out if you are showing enthusiasm for the industry. 
• Material & Product Knowledge:  This is a major part of building your personal library and educating yourself.  Gather as many supplier catalogs as you can get relevant to your trade.  Thumb through them and familiarize yourself with all the products.  Suppliers will fall all over themselves to help you with this if you just ask them.  There is also a ton of this information available online to research as well. 
• Plans:  Start collecting plans from projects you have worked on (or want to work on).  Get the whole set so you can learn to read everything.  The most important tool I’ve found for plan review is (1) a set of colored pencils, (2) highlighters and (3) a notepad.  Go through each page and look at every note, every symbol and every detail.  Make notes of the questions you have.  Check the interactions between the plans (mechanical / structural for instance) and check for possible problems.  Someone in your office should be able to help you out with getting some sets of plans - if not the general contractor on the job should be able to help.  Construction companies typically throw out dozens of sets of plans each month after they have estimated them.  Take your list of questions and look up the answers in your books or ask your growing group of “Field Friends” to help you. 
• Paperwork & Organization:  A significant portion of the job of a PM is about organizing paperwork.  Take a look at the paperwork you currently do and strive to do it better.  Look at the paperwork your boss does and see if there is some of that you can take on to help them out - you will be learning and helping yourself along the way.  Practice doing things like your own RFIs. 
• Lists:  Most of what a PM does can be boiled down to “Makes lists of things to do and gets them done.”  Get good at making thorough lists:  Material lists, questions (RFIs), major materials (submittal log), task lists (schedule), changes, etc.  Get good at this and start building “Lists” into your everyday processes at home and at work.  Be detailed - be consistent. 

Investment:  About $500 in books / supplies and about 6 extra hours per week of your time in the evenings and on weekends. 

Return:  If you don’t get a raise after doing these things consistently for 18 months there is something seriously wrong! 

This is just the beginning.  We’ll post a follow-up to this next month outlining the second phase which is the management portion.  For now focus on building the depth and breadth of your technical knowledge. 

As always, ask any questions and comments are always welcome.  You can post them here or send an email to david@dbrownmanagement.com.