While visiting with a contractor the other day, he mentioned sharing one of our recommendations for improving field performance to a friend and fellow contractor.

His friend shook his head and replied “I would never do that. Share the budgeted time with the crews? I’d never do that. If they realize they’re moving faster than the allowed time, they’ll slow down. I want them working as hard as they can.”

Wow.

I had forgotten how common that belief was among owners and project managers.

These people simply do not understand human behavior. A worker is FAR more likely to miss a deadline or budget because he was left in the dark than he is to dial it back when he’s ahead of the budget.

Heck, which hurts worse? Hitting the budget when we MIGHT have beat it by 10% or running 10% over budget?

If you only take one piece of advice from Guy and I make it this:

Tell your employees EXACTLY
what their performance targets are.

That one action alone will reduce costs, improve on-time performance, increase customer satisfaction and – believe it or not – improve employee satisfaction.

Never, ever keep your employees in the dark about the outcomes you need them to deliver.

We hope the new year has brought you new energy and a commitment to get after it.

To someone like me who is little bit of a history buff when it comes to macroeconomic events and our government’s responses to them, the most obvious upcoming opportunity for contractors is federal work.  Have you thought about that and started preparing to take advantage of it?

Ever since the Great Depression, our federal government has used federal construction projects to re-ignite a slumping economy. If my memory servers correct, incoming President Obama has mentioned this as part of his economic plan.

Why focus on federal work?

Because only the federal government  has the ability to create money to inject into the economy.

State’s don’t have that ability, not directly. They have to borrow which isn’t going to be overly viable in the current bond market.

You will note that the money that was injected into the Wall Street hasn’t exactly stimulated the economy. Banks aren’t lending money. Without lending, residential and commercial construction grinds to a halt.

The feds surely haven’t missed that. They’ll go back to their proven remedy: federal construction projects.

So what should you do?

Get your production management systems in order. Get ready for prevailing wage work. Adjust your estimating parameters to account for the higher wage rates.

Start building relationships with General Contractors and primes who have a long history of doing federal projects. Develop design/build relationships. Design / build is a rapidly growing trend for contractor selection on public jobs. Get up to speed on LEED certification.

Basically, get ready to play in the big leagues. That’s where the greatest near term opportunity is going to be.

Wishing you the best.

Your friends,

Ron & Guy

Gas Prices Drop – For How Long?

Would you be interested hearing about something that might significantly improve the fuel mileage of your trucks? If so, keep reading.

Being the son of a petroleum geologist, who hung with and took classes with several petroleum engineers at one of nation’s leading petroleum engineering colleges, suffice it to say that I follow the oil industry with great interest.

Here’s my take for what it’s worth: the Peak Oil theory that came out in the early ’70s is being validated. My understanding is that Peak Oil predicted the world’s daily oil production would max out shortly after the turn of the century. Apparently, it has. World production is dropping

What’s that mean to you?

Forget about seeing $30 oil and $2 gasoline again. High prices are here to stay.

Being a mechanical engineer who suffered through numerous physics, thermodynamics, heat transfer, and internal combustion classes, suffice it to say I am VERY skeptical of wild claims of breakthrough fuel mileage. Motor friction, vehicle weight, and aerodynamics impose limits on the fuel efficiency of cars.

One of the factors that can be improved is the efficiency of the burn inside the cylinder. Over the years, multiple products have hit the market claiming to do just that. I would like to share a relatively new one with you for your consideration.

Due your own due diligence. The results you receive may differ, and be less than, those presented.

A gas additive is available that should boost your mileage anywhere from 10% to 30%. It works on both diesel and standard engines. My order hasn’t arrived yet but am eagerly awaiting its arrival.

Not to bore you with the details, but the producer claims the additive burns the fuel in the cylinder more completely. From a scientific/engineering standpoint, that makes perfect sense. Note: your engine may run a little hotter due to the more efficient burning.

You can check out the product and order it from:

http://www.myffi.biz/Default.aspx

If you have been thinking about addressing your exploding fuel costs problem, maybe you should give the MPG-CAP a try.

If you try Fuel Freedom’s MPG-CAP, post your results as comments to this blog so others can learn about them.

Thank you for dropping in. Best of luck with your business. Call if you are ready for professional help with your business.

Ron Roberts,
The Contractor’s Business Coach

You can learn a lot about a contractor’s job costing system by looking at the company’s time cards. Those little things are an oft overlooked hurdle blocking effective cost tracking.

The first thing to look for is whether the time card has a place to write down a cost code. Stunningly, most don’t. How in the world is an estimator going to have the cold hard data he needs to build a realistic estimate when the time cards don’t break out the work activities?

The next common mistake I see is having no place to record the amount of material that was installed. A less important item to track, but valuable none the less, is the length of time equipment was run on the job.

The time card is the ideal place to capture all of this data.

Now for the really tricky part. You need to keep it as simple as possible or your crews will record garbage. The total hours will be right, if not overly generous, but the rest of the data will be useless.

Since projects vary in length and scope, the one size fits all time card is hard to find. consider using multiple time card designs. Two or three versions is usually plenty.

It boils down to this: if you don’t collect good information in the field, your estimating, scheduling, project management, and budgeting will all be baseless. Your time card is your one and only tool for getting the right information. Is yours doing the job?

It’s a problem every contractor has to deal with sooner or later – theft.

The common targets are :

1. Tools

2. Fuel (especially with gas prices being what they are).

3. Doing side work with company equipment and materials.

The typical response is to implement new policies and make idle threats. Sometimes they work and sometimes they don’t. Unfortunately, when someone is stealing they have given you a reason to not trust yet you must trust in order for your field crews to be efficient.

What’s an owner to do?

The most effective solution is to establish a culture of mutual accountability. Not easy to do, but well worth the trouble once you succeed.

Before I go further, do you understand what I mean by the term “mutual accountability”?

It means that your field workers keep each other on the straight and narrow. They self-police if you will.

How do you create this type of culture? By consistently sending the message that the company is theirs as much as yours. People take care of their own stuff. They are far less committed to other people’s stuff.

By convincing them that they all share in the success of the company, in other words by giving them an emotional attachment to the company’s success, you have a chance of creating a culture that lives by mutual accountability.

Rigid sign-out procedures and micromanagement will detract from the real goal: maximizing net income. Sure they will reduce theft, but they will kill your productivity and increase turnover. That’s winning the battle and losing the war.

Create a culture of mutual accountability. It’s your best weapon against theft.

Theft stinks. I hope you haven’t had to deal with it recently.

While arguing with a union boilermaker friend of mine the other day, something he and I enjoy doing, our conversation swung over to a serious quality incident we were both aware of. I am not a liberty to share the details but suffice it to say the problem was caused by a crew feeling pressure to work faster. This brought to mind a very important point.

Every task involves three variables: the resulting outcome, the time it takes, and the procedure used. Let me translate that into construction language.

Every construction activity involves quality, speed, and safety. You only get to control two of the three.

In our situation, the construction crew felt they had to work safely and felt they needed to work rapidly, so they skimped on the quality…which created a structural problem.

Why am I bringing this up? Because so many of us pay lip service to safety but our actions scream QUALITY and PRODUCTIVITY. When we stress those two variables over and over again, we de-emphasize safety.

This is one of the reasons I implore my clients to tell their crews “Go at your usual pace. Just hit the production numbers you always do. Just don’t be worse.”

Yes, that is saying productivity, but it’s really whispering it. It leaves room for my clients to scream QUALITY and SAFETY. The same applies to you and your crews. That’s the only way your people will work safely while keeping your customers will be happy with the end result.

To all:

Does anyone have a good resource for CPM scheduling,
ie recomended books, websites, or other?

Thank You

John Vesnaver

P.S. Post your answers as a response to this entry.