Accountability And Today’s Construction Environment!

Dec. 1, 2010 - PRLog -- For more than two decades I have had the opportunity to work with a great many small to medium sized construction firms of all types. This includes any firm involved in the construction industry from general contractors, engineering firms, landscape contractors and all of the trades. There has been one common thread that runs through them all; the need for accountability.

The dictionary defines accountability this way: Accountability: the quality or state of being accountable; especially: an obligation or willingness to accept responsibility. In business this means for employees to do the job that is expected of them. In construction it means running the job the way it was bid so that there is little or no variance between the bid and completion.

Now we all know that in a perfect world all jobs would come in as bid with little or no variance, but we don’t live in a perfect world. There will always be something that was over looked in the bid or an unforeseen problem that wasn’t expected. The question is, what’s acceptable and how are you preventing the same mistakes from happening again?

Prior to the melt down in 2008 there was an attitude that mistakes on one project would be offset with the next project. There were a lot of projects so that mistakes were not as critical as they are today. In today’s construction environment you can’t afford mistakes because there aren’t that many projects to offset mistakes. Add to that the fact that contractors have to bid their projects so low, just to get the job, that there is no room for mistakes.

There are really four areas of concern when it comes to making a profit on the job:

1.   The bid – Obviously profit starts with the bid. Making sure that the take offs are done correctly and that all costs associated with the bid are correct. Having a complete understanding of your costs including labor burden, overhead allocation, etc. are critical in the bid. Knowing what your break-even point is and how much flexibility you have to work with is important.

2.   The hand-off – This a very important area and yet one that is often done poorly. Making sure that the field understands how the job was bid and what the expectations are is very important. I have had superintendents tell me that it doesn’t matter how the job was bid, they will do it the way they think it should be done.

3.   Measuring work in process – Being able to measure work in process so that you catch mistakes before they get too large is critical. Finding out at the end of the project that you had cost overruns is a little too late. You should be able to tell whether a project is on track at close enough intervals to minimize losses.

4.   Close out – After completion you should do a complete job cost to see how the job ran compared to the bid. This should include the estimator, the superintendent or project manager and the owner. Variances should be dissected and discussed with a solution to prevent another occurrence. You don’t want to repeat the same mistake over and over.

Now I realize you might be thinking, “Well duh.” Those points are obvious; nothing new there. It may come as a surprise to you that I find these problems in 90% of the firms I work with. This includes firms that have been in business for 25-30 years. In fact, my average client has been in business for more than 20 years so experience doesn’t eliminate these issues.

The problem is that firms become complacent and don’t pay as much attention to detail as they should. A lack of communication and follow through is one of the areas that I find in most firms. It isn’t that management doesn’t know their business; it’s just that they now have to spend most of their time working IN their business instead of working ON their business. Many owners are so busy in the day to day activities that things are falling through the crack.

As a business coach/consultant I have been able to help owners get an objective look at their business that my clients tell me has been a very valuable business tool. Having another set of eyes, that can be objective, is a very valuable business tool. Many times a tweak here and there can stop profit leaks that may have otherwise gone unnoticed. Are you catching everything?

Although budgets are tight today, having an independent business analysis could be the best investment you’ve made in a while. Certainly my clients would tell you that.

# # #

For more than 20 years I have been a consultant/coach for business owners helping them improve their business. For more information visit: http://www.businesscoachsandiego.com