A professional football team that starts a new season without addressing areas for improvements probably will not develop a winning season or a better record. A group leaving for a cross-country trip without a plan, a map, a list of needs or the right resources might end up with problems.
At your construction company, starting the year without a written list of improvement areas, a specific business plan, measurable goals or a budget wouldn’t be a good idea either, especially if you want to grow your company and make more money. Improving your profit margin requires a plan to make it happen. Making more net profit starts by identifying what you can fix. You might need to hire stronger managers, implement a profit enhancement program, standardize your change order rates, apply a monthly project management review process, develop a job checklist, or upgrade integrated financial and estimating software programs.
So, what steps are you taking to make this year better than the last? What changes are you going to make to improve your projects, people, productivity, systems or results? What are you doing about training future workers, foreman or project managers to become the company leaders you need? What are you going to stop doing or start doing to improve the value of your business, secure better customers, make higher margins and improve ROI?
Spend Money to Make Money
Successful companies invest time to get their management team together during the first month of every year to review performance during the previous year. After review, they analyze what they need to do to improve over the next 12 months. To make sure they achieve their desired results, they meet monthly to update their progress and make the adjustments to keep on track.
As a business coach, I often facilitate these annual company management meetings. As a team, we work together to draft a “fix-it list” of the processes that these contractors need to improve over the next year. Some contractors are able to organize and create successful management teams and business plans by investing in workshops or books to learn how to develop their own business plans. Others have better luck hiring a professional consultant to assist with the process. Whichever method you select, it takes time, money and dedication to build a better company.
Determine What to Fix
What accomplishments, changes and improvements do you want to achieve? Where do you want your company to be? What will make your next year’s results better than last year’s results? What problems regularly occur that need to be fixed or eliminated? Start by making a list.
For example, many companies understand that they need to know their field production costs, but they don’t have a good job-cost tracking system to keep up with actual costs on a weekly or completed contract basis.
This causes them to bid projects by guessing or using the wrong labor production rates. Other companies might know they should spend more time cultivating and developing loyal customer relationships, but they don’t do anything to make it happen.
As a result, they continue to generate sales by being the lowest bidder, instead of negotiating with loyal customers. My observation is that the same problems and challenges keep ending up on annual lists for companies of all sizes. Take a look at the following common list items from construction companies. Check off each area in which you would like to improve over the next year. Rank each area as a top priority to improve (A), medium priority (B) or low priority (C).
Fix-It Priority Checklist
- Set regular meeting schedules
- Develop a management team
- Delegate responsibilities to team
- Develop and track company goals
- Review financial results monthly
- Develop accurate estimates
- Upgrade estimating software
- Maintain job-cost history
- Standardize burden rates
- Standardize change order time and materials rates
- Eliminate missed items
- Improve subcontractor and supplier coverage
Business Development & Sales
- Improve bid-hit win ratio
- Acquire better customers
- Seek higher margin work
- Bid against less competition
- Manage customer relationship program
- Implement customer contact program
- Manage referral program
- Improve proposal and presentations
- Eliminate profit-margin shrinkage
- Develop PM standards and systems
- Improve turnover from estimating
- Create contract writing standards
- Standardize submittal system
- Improve scheduling system
- Improve change-order management
- Develop job closeout system
Field Management & Production
- Improve time-card system
- Manage job-cost tracking system
- Update scorecards for foremen and supervisors
- Upgrade scheduling and logistics
- Eliminate callbacks and punch-list
- Improve safety management
- Standardize field meeting agendas
- Set standard job and crew rules
- Systemize equipment management
- Develop accountable job descriptions
- Articulate a clear chain of command
- Eliminate poor performers
- Hire positions needed
- Improve staffing responsibilities
- Develop better hiring system
- Implement hiring incentive plan
- Manage training program
- Execute employee review system
- Implement a results-based incentive program
Accounting & Administration
- Upgrade software
- Provide timely financial results
- Improve collections system
Now that you have created a working list of your highest priorities to fix or improve over the next 12 months, get your management team together and whittle the list down to a short list of your top five priorities. Too many companies try to fix 30 things at once and fail.
Assign team captains to work on each of your top five improvement areas. Ask them to gather a team to help them create a standard or system to fix their assigned problem. Develop a deadline for each area of improvement.
When a standard or program has been created for the different areas, you can then move on to the next top priority. Get your team together and take the time to list out what you want and what changes are needed to achieve your goals.