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Construction Programs & Results Inc

We Like to See The Good Guys Win!

Profit Leaks

by Michael Stone

This week I want to discuss a few topics that often get neglected when we get busy building jobs. These aren't earthshaking topics, but they are the things that cause problems on jobs, leading to disgruntled clients, lost referrals, and lower profit margins.Money Down the Drain

Ordering Materials
Immediately after your pre-job conference or layout, every project should be reviewed to see what materials need to be ordered and when. This should be done by both the person who will run the job and the person who sold the job.

This task requires the level of concentration that's necessary when you create an estimate. You have to have your head in the game. That means being in a quiet area with your phones unplugged or turned off, and potty stops and lunch taken care of. You need to focus on the task at hand with no distractions so you don't make mistakes.

Review the job in detail. It helps if you have a Gantt chart for the job as a reference point. (If you aren't familiar with Gantt charts, you can see one here.) Every material or product is considered and a determination made as to when it will be needed on the job; from that, an order date is set. Those order dates are then entered on the Gantt chart. Now it's simply a matter of following the Gantt chart every day.

I've had job forepersons or supers tell me they don't have the time to do all that monkey motion. Would you rather make time to deal with the problems that arise when windows, doors, appliances, specialized exhaust fans, countertops, light fixtures and such aren't ordered on time and show up late for the job? It's easier to make the time before the job starts than to deal with disgruntled clients because of a job delay. You'll avoid aggravation, and you'll save the expense of expedited shipping or delivery fees.

Change Work Orders
Several times in recent weeks I've had clients send me a copy of their contracts. Not one of them has had a good explanation of how change work orders or punch lists will be handled. Using change work orders wrong, or not using them at all, is one of the major reasons construction-related businesses fail. You need to have a very clear understanding with your client of what a change work order is, and why, when and how it will be used. Your client also needs to understand the payment schedule for change work orders. Your employees need to know how to handle any request for a change.

Punch Lists
Punch lists, like change work orders, are another common problem. Every been hit by the blue-tape blizzard? Prevent it by having a punch list procedure in your contract, then sticking to that procedure like glue. We've defined a punch list procedure you could use in your contracts in Chapter 7 of Markup and Profit Revisited. This procedure maintains control of the punch list, which eliminates the blue-tape blizzard and the related reasons to not pay you when the job is complete.

Borrowing Tools
There should be a blanket rule in your company that prohibits any employees or subs from borrowing the building owner's tools or equipment. You'd be amazed how often this happens, and it often leads to disagreements and hard feelings, especially if the tool is broken or damaged. Everyone should have their own hand and small power tools. Larger power tools and equipment should be furnished by the company. Those tools that belong to the company should be assigned to individuals for care and maintenance.

Resolve Issues
News flash: Stuff happens in this business, and stuff can be spelled all kinds of ways. When it happens, the number one priority in your company is to get it fixed. Immediately. I've often seen fights that grew from a simple complaint or perceived problem that was ignored by the contractor. Almost always, the fight could have been prevented if the issue had been addressed when it first arose. Instead, the contractor either stuck their head in the sand and ignored it, or ran the other way when they knew something had gone wrong.

If you or someone representing your company screws up, face the music. Apologize, get things right with the customer and get back to getting the job done, and do it as soon as possible. When you finish the job, even with gripes or complaints, you should still be able to ask for and get referrals if you've shown that you're willing to admit your mistakes and make the wrongs right.

 

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