In baseball, achieving excellence means hitting over .300. In golf, it means shooting par. In the construction business, it means winning more than 33% of your bids and making a minimum of 5% to 10% net profit. Are you achieving excellence in your business?
To achieve excellence in the construction business, companies need a written business plan that focuses on hitting goals and implementing strategies to continually improve, innovate and move to a higher level of success.
When I ask contractors what their typical bid profit margin is, they might estimate 10%. But their income statements often indicate they’ve only made 3% net profit. When asked why their margin has declined, they say things “just seem to always happen.”
It’s like they expect to make less money and miss their goals. The same contractors refuse to accept responsibility for these poor profits and are unwilling to take measures to improve.
In order to achieve excellence and get what they want, business owners must:
- Get unstuck, get organized and systemized, and gain back control.
- Scale up and move to a higher level of leadership, sales and professionalism.
- Become recognized as the best provider of construction services in their market or niche.
- Implement a business plan to build a highly profitable business.
- Develop a strong management team accountable to run their company and achieve results.
- Implement a process to win high-margin contracts with loyal customers against less competition.
- Build a great place to work that attracts and retains the best talent available.
- Create an accurate estimating system with no missed items.
- Stop profit margin fade and projects finishing late or over budget.
- Start building a portfolio of investments.
Start Expecting Excellence
If you accept results and performances that are less than excellent, you will never build a business to deliver the results you want to achieve. Many owners and managers tolerate poor performance and poor performers as the norm. Rather than deal with issues, they avoid conflict with their employees and hope things will get better. Last week, I coached a construction client who told me his employees were terrible, even though most of them had been with him for five years or more. They were not hitting their goals, getting work done on time or doing quality work. They always blamed their issues on others, including bad bids, poor subcontractors, lack of supervision or nasty customers. He didn’t know how to solve this issue, hold his employees accountable or fix the problem.
Hold People Accountable & Demand Excellence
Perhaps you think your people don’t care or don’t want to work any harder. The real reason is their boss — perhaps you don’t demand and expect excellence. Performance is the result of the leader’s and manager’s input. Your input equals their output. Most employees want to do a good job and take on more responsibility. But in many cases, overworked managers who are understaffed or unorganized are afraid employees might quit, so they tend to tolerate poor performers rather than deal with them.
As I probed deeper with my client, I discovered he made all the important decisions for his crews, ordered the material, didn’t have field meetings with them and didn’t share job targets or results with the foreman. No wonder his crews weren’t accountable achieving results. They didn’t know their goals, weren’t making any decisions and weren’t in charge of their own work plan.
What Is Excellence to You?
When I help contractors improve their companies, we first identify the issues to be fixed. Then we define what an excellent result would look like. Then we design a system to ensure excellent results will happen on a regular basis. The top indicator of achieving excellent results is a clear understanding of what’s expected. Excellent contractors require implementation of must-have systems, such as the following, to achieve results:
- Accurate estimates with no missed items.
- Estimators review every completed job and then update their cost history based on actual performance.
- No callbacks, extra mobilizations or punch lists.
- Crew foremen know their labor hour budget and get an update weekly to stay on budget.
- Field labor budget versus actual finishes within 2% of the budget.
- Change orders are approved in writing prior to starting extra work.
- Crews are not sent to jobsites without a supervisor ensuring it’s ready.
- All subcontracts and major material orders are awarded within the first three weeks of jobs starting.
- All shop drawings, selections and approvals are submitted within the first month of jobs starting.
- Contractors walk jobsites with subcontractors one to two weeks prior to when they are needed to make sure they’re ready and have the crew and materials scheduled.
What Are Your Standards of Excellence?
There’s never an excuse for a crew to run out of materials or supplies on their job. But it happens. So, how can this problem be fixed? The solution is to require crew foremen to draft two-week look-ahead schedules every Friday and have their supervisor or project manager walk the job with them early next week to make sure nothing is forgotten. The bad news is that most contractors don’t want to invest the time required to make this simple solution a priority, therefore causing many jobs to finish late. To maintain excellence, the boss must hold their foremen accountable.
When bad bosses give someone a task to accomplish, they typically don’t let go of every decision required to accomplish the job. This bad boss delegates and then tells the employee to check with them first before making any decisions or spending any money. How can the employee be accountable for something they aren’t responsible for? People know when they make decisions, you’ll second-guess and overrule them. So, people stop making decisions or accepting responsibility. Trusting people is the key to improving performance and achieving excellence.
Low Control, High Performance
Leading your company is not about being in control of every aspect of the operation: It’s about getting results through people. Low control guarantees high performance from people. People want to follow leaders who trust them. So, your role as a leader is less about what you do, and more about what your people do.
Excellent managers encourage employees to take on more responsibility by delegating the entire task. Start by explaining the job and outlining the desired result. This will teach employees how you want things done and what’s expected. Next, make sure they know their boundaries and standard systems, offer training, set interim check-in times and schedule a review of the results after the task is completed. When employees are responsible for results and know exactly what’s expected, you can make them accountable.
When you have written company systems and standards, you can make employees accountable to complete tasks the same way every time. When your procedures are only in your head, you can’t expect employees to read your mind and get it right every time. And to make things worse, when you ask people to do something and then get upset when they do it wrong (without clear understanding of what was expected), they shy away from taking on more responsibility.
The More You Do, the Less You Make
So, what’s holding your company back from achieving excellence? Perhaps you’re the real problem if you tolerate poor performers and results, and you don’t hold people accountable for their actions. Decide to achieve excellence by holding people accountable, demanding performance and expecting results.