Editor's Note: This is the fourth in our 2009 series, "Earn More, Work Less." To read the previous article, click here. To read the next article in the series, click here.
In the good old days, construction companies were owned and run by builders. These proud, tough, hard working men and women learned their trade in the field, had years of practical experience and knew what it took to get their projects finished on time. If they didn't produce quality workmanship, they didn't last long.
Back then, it was all about getting the work done no matter what it took to meet obligations. It was about delivering solid structures with unsurpassed craftsmanship. The contracts were negotiated face to face and enacted with handshakes based on integrity, reputation, trust and doing what's right. It was all about building a project the contractor could remember and be proud of, then rely on customers for recommendations and new work.
Fast forward to today: Successful construction companies are now run by professional managers, engineers and accountants. These business leaders are focused on the bottom-line and following what is required by the contract. These managers have college degrees and little or no construction field experience. Business is about paperwork, documentation, notices, claims and tracking systems. Building the project isn't as important as getting the work, doing the paperwork and getting paid, even if it involves litigation.
Years ago, there were not enough qualified construction companies to handle all the work available in the marketplace. Under that business climate, contractors could afford to always do a little extra to insure a perfect project and still make a good profit.
More Demands = Less Profits!
Over the last forty years, the number of contractors has tripled, while the total amount of construction has stayed relatively flat (adjusted for inflation). Therefore, there are now more contractors than needed to do all the work required by the market. A price squeeze resulted and the contractor's ability to do more than the minimum required by their contract has been reduced. In addition, with increasing competition, construction customers are now demanding more than ever before. They now demand faster schedules, safer projects, better quality, more communications and better technology, all at much lower prices.
These added customer demands on contractors, who are willing to sign contracts for less than they should, have killed the construction business as it once was. Add to these demands poor architectural plans, problematic engineering, incomplete specifications, conflicting contract documents, material shortages, price fluxuations, more regulations, added paperwork, lender's requirements, third-party inspections, construction managers and red tape, all but eliminated a fair profit for the risk contractors take.
It's time to refocus on the field!
These issues have put pressure on contractors to save more money in the field. The average crew size has increased, while the number of experienced field workers on the crews have decreased. Training is a thing of the past as most employers have eliminated it as an unnecessary expense. Superintendents and foremen are younger than ever, translating into less experienced field leadership and less efficient crews. Resulting in poor or flat field productivity improvements over the last twenty years. Consider your challenges of fighting against competitors who charge less than they should, employ inexperienced, untrained field crews and build projects requiring more paperwork and increased risk. A need emerges for contractors to refocus on improving field productivity as the only viable solution to compete and improve profit margins.
Construction profitability is about reducing risk. Contracts require contractors to assume more risk than ever today. Have you considered what's at stake? Take a look at the sidebar listing types of risk.
Types of Risk 
So how do you reduce risk and increase your bottom line? Your choices are many. But consider what will give you the biggest return on your time, energy and money. In other words, where can your company gain the
