Business Building: What’s Your Ongoing Improvement Plan?

Words: George Hedley

George Hedley

Starting a new season for a professional football team without addressing the areas that need to be improved, wouldn’t develop a winning season or a better record. Starting a cross-country trip without a list of needs, a map, specific plans, or enough resources would be a bad idea. Starting the year off right for your construction company without a written list of improvement areas, a specific business plan, measurable goals, or a budget wouldn’t be a good idea either if you want to grow, improve, make more money, or get to the next level. 

To improve your bottom-line profit margin takes a plan to make it happen. You can’t just hope by working harder, you will make more money. To make one or two percent more net profit starts by identifying things you can change, improve, or fix. You might need to hire stronger managers, implement a profit enhancement program, standardize your change order rates, implement a monthly project management review process, develop a job checklist for areas that continually cause mistakes, or upgrade integrated financial and estimating software programs.   

What’s on your ‘Fix-It List’ improvement plan?

So, what are you doing to make next year better than last? What changes are you going to make to improve your projects, people, productivity, profits, systems, structure, or results? What are you doing about training your future workers, foreman, or project managers to become the company leaders you need? What are you going to stop doing and/or start doing different to improve the value of your business, secure better customers, make higher margins, or get a higher return on your investment? 

Make time for improvement!

Successful companies invest time and money to get their management team together on a regular basis. They stop and look at what’s working or not. After reviewing their good and bad results, they analyze what they need to do to improve immediately and over the upcoming year. And then to make sure they achieve the results they want; they meet monthly to update their progress and make the adjustments to keep on track; and continue heading towards meeting their annual goals.

As a contractor business coach, I often facilitate annual company management meetings for clients. As a team, we work together to draft a “FIX-IT LIST” of the things or processes they need or want to fix and improve over the next year. Then we work hard to draft their strategic improvement plan with clear action areas to address. Some contractors can organize and create successful management teams and business plans by investing in workshops or books. And others have better luck hiring a professional consultant or coach to assist with the process. Whatever your method is, it still takes time, money, and a focused dedication to build a better company.

What do you need to work on and improve?

Twelve months from now, what accomplishments, changes, and improvements do you want to achieve? Where do you want your company to be? What will make your next year results better than the past year? What problems do you want to go away and never happen again? What people, processes, procedures, and systems do you need to add, implement, reinstate, eliminate or improve? What problems regularly occur in your company that need to be fixed or eliminated? Start by making a list of things that went wrong, cost you money, shouldn’t have happened, weaknesses in your company, or other areas to improve. 

For example, many companies understand they need to know their field production costs, but don’t have a good job cost tracking system to keep track of their actual costs on a weekly or completed contract basis. This causes them to bid projects guessing or using the wrong labor production rates, and eventually not make the money they should. Other companies might know they should spend more time cultivating and developing loyal customer relationships, but don’t do anything about this reality. As a result, they continue to generate sales by being the low bidder instead of negotiating with loyal customers. And many contractors don’t have clear job descriptions or specific targets outlined for their project managers or superintendents to achieve. Therefore, the owner has to continually be involved in too many details and approve too many things the project manager or superintendent should handle on a regular basis.

My observation, having facilitated many company meetings, is that the same or similar problems and challenges keep ending up on FIX-IT LISTS for construction companies large and small. Take a look at these common FIX-IT LIST items many construction companies have on their list. First, check off each area you would like to fix or improve over the next year. Next rank each area as a top priority to improve (A), medium (B), low (C), or not an area that needs improvement (0).

FIX-IT LIST PRIORITY CHECKLIST

Management Team

  • Set regular meeting schedules
  • Develop a management team
  • Delegate responsibilities to team
  • Develop & track company goals
  • Review financial results monthly

Estimating

  • Develop accurate estimates with no missed items
  • Develop accurate labor production rates
  • Upgrade estimating software
  • Maintain job cost history 
  • Standardize labor burden and equipment rates
  • Standardize change order rates
  • Improve subcontractor & supplier bid 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 pro-active customer contact program
  • Manage referral program
  • Improve proposal & presentations

Project Management

  • Eliminate profit margin shrinkage
  • Develop PM standards and systems
  • Improve turn-over from estimating
  • Create contract writing standards
  • Standardize submittal system
  • Improve scheduling system
  • Improve change order management
  • Develop job close-out system

Field Management & Production

  • Finish projects on-time
  • Eliminate field labor and equipment finishing over-budget
  • Implement weekly job cost tracking system
  • Update scorecards for foreman and supervisors
  • Upgrade weekly scheduling and logistics
  • Eliminate call-backs, re-work, and punch-list
  • Improve safety management
  • Standardize field meeting agendas
  • Set standard job and crew rules
  • Systemize equipment maintenance & utilization

People & Organizational Chart

  • Develop accountable job descriptions
  • Develop clear chain of command and level of authority
  • Hold people accountable for deadlines and performance
  • Eliminate poor performers
  • Hire positions needed for current and future workload
  • Improve staffing responsibilities
  • Develop better hiring system and hiring incentive plan
  • Manage training program
  • Employee onboarding and review system
  • Results based incentive program

Accounting & Administration

  • Upgrade software
  • Provide timely financial results
  • Improve cashflow and reduce debt
  • Improve collections system

Now that you have created a list of your highest priorities to fix or improve over the next year, get your management team together. Whittle the list down to a short list of your top ten ‘must-do’ short-term and long-term priorities. Start with five priorities to fix to keep it simple and achievable. Make a goal to fix only one or two things every month. Too many companies try to fix thirty things at once and fail, instead of creating victories by fixing the main problems first. Assign team captains to work on each of your top five improvement areas. Ask them to gather a team to help them create a solution or standard system to fix their assigned problem. Also, develop a deadline for each area of improvement. When a standard program has been created, then move on to the next top priority to work on next.

Take time now to fix your company!

I get calls all the time from contractors wanting to make more money, get their companies organized and systemized, and do what they need to do to build a better business. The process always starts with identifying what they want and where they want to be in one, three, or five years. Then identifying what needs to be fixed to achieve their goals. To help get the improvement process started, email gh@HardhatBizcoach.com to get a copy of George’s BIZ-BUILDER BLUEPRINT worksheets. Get your team together and take the time to list out what you want and what changes are needed to achieve your goals. 


About the Author

George Hedley CPBC is a certified professional construction BIZCOACH and popular speaker. He helps contractors build profitable companies, grow, get organized, improve field productivity, and get their businesses to work. He is the author of “Get Your Construction Business To Always Make A Profit!” available on Amazon.com.  To start a BIZCOACH program, sign-up for his newsletter, attend a webinar or workshop, or get a discount at HardhatBIZSCHOOL.com online university, visit HardhatBIZCOACH.com or e-mail GH@HardhatBIZCOACH.com.

Email: GH@HardhatBizcoach.com
Website: www.HardhatBizcoach.com

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