Getting Ahead of Delays to Help Construction Business Profitability*
It can be challenging to run a profitable construction business, especially for solo operators who do it all: labor, client relations and administration.
The Bureau of Labor Statistics reported that fewer than half of construction businesses on record were around 10 years after startup. Around two of 10 operations were noted as insolvent after their first year of business.
According to the Contractor Financial Management Association, an average contractor might expect mid-single-digit earnings before paying taxes. That means that for every $1 million billed annually, an average business could wind up with $50,000 in the bank.
I wouldn’t blame contractors for profit challenges, but I would encourage them to consider doable actions that can offset the impact of financial headwinds.
McKinsey Global Institute noted productivity as an ongoing issue in construction with historic labor-productivity growth of only 1 percent a year.
Time is precious. Money saved is money earned. If productivity is profitable work done over time, then spending time and profits on improving it may not make sense. I would suggest that contractors first consider ways to save time by getting ahead of common occurrences that may contribute to delays. (Anyone who has had to use a hole saw to enlarge an existing hole cleanly, or who has had to replace a pilot bit in an old arbor, knows how onsite workarounds and repairs can unexpectedly delay a job.)
So, I suggest focusing on time as it relates to productivity.
To follow are some ideas that construction business owners and practitioners might consider, or revisit, to maximize productivity. These are merely ideas for a reader to consider.
1. Standardizing storage systems for loadouts
An organized work vehicle may be more efficient and safer than a disorganized vehicle. Productivity could be improved with storage system tweaks that make common tools and accessories, consumables and administrative supplies easy to find and handle. Large totes and containers from a discount store could be fine as long as they serve their purposes. Clearly labeling what’s in what might be a good idea.
2. Standardizing job specific tools and materials in loadouts
Pros know what they need to bring to jobs. It could be useful to have a durable list of that stuff that gets checked off before and after job site work. Consider keeping a standard assortment of tools and consumables always available, organized, labeled and in good service.
3. Plan ahead for tool malfunctions, workarounds and accidents with basic tools and specialty accessories like these…
- Extra gloves, eye protection and ear protection
- Allen wrenches, box wrenches, adjustable wrenches, a ratcheting socket set, wire cutters and a screwdriver set
- Hole Troll® guides if you’re using hole saws, or extra arbors, pilot bits and a vice
- Heavy duty double-sided (mounting) tape and electrical tape
- Flexible magnetic pickup tool and magnetic work tray
- Portable wet/dry vacuum
- Paper towels, shop rags, buckets, funnels, water hose, cleaning supplies, a dustpan and broom
- A flashlight, extra batteries for any portables, and chargers
- Your phone charger and battery backup
- First-aid kit for minor scrapes.
4. Standardize a playbook for every job with important information that workers can easily reference, including at least the following (example below).
- Worksite address with basic directions
- Work start date and projected end date
- GC’s name and contact info
- Language translator contact info if needed
- Worksite weather conditions (high and low temp, rain/sunny/cloudy)
- Parking instructions
- The address for one or another nearby offsite location for food, restroom breaks, meetings, etc.
- Adding online map links and rough distances to key locations could be a good idea
- List the worker names, contact info, call dates and work hours
- Locations of nearby hardware and/or materials dealers
Regardless of how a business is doing, I would suggest that regular operational improvement is a worthy goal. Look at how People, Processes and Technology resources are contributing to productivity. If something is working well, consider investing in ways to increase the capacity of that resource to do more of the same. If a resource is not working as efficiently as it should, perhaps consider simple ways to cost-effectively improve performance.
If you're interested in construction industry research and insights, here are some websites you may like:
The information provided by any and all authors (“me,” “I,” “we,” “us” or “our”) on TheHoleTroll.com (the “Site”) is for general informational purposes only. All information on the Site is provided to Site users ("you," "your" or "anyone") in good faith; however, we make no express or implied representation of any kind regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information on the Site. We do not guaranty positive results (i.e., more revenue, more profitability, fewer injuries or more discretionary time) for anyone acting on the information or related advice herein.
Under no circumstance shall we have any liability to anyone for any loss or damage of any kind incurred as a result of the use of the Site or reliance on any information provided on the Site. The use of the Site and reliance on any information on the Site is solely at your own risk.
The Site may contain links to other websites or content belonging to or originating from third parties or links to websites and features in banners or other advertising. Such external links are not investigated, monitored, or checked for accuracy, adequacy, validity, reliability, availability or completeness by us.
We do not warrant, endorse, guarantee, or assume responsibility for the accuracy or reliability of any information offered by third-party websites linked through the site or any website or feature linked in any banner or other advertising. We will not be a party to or in any way be responsible for monitoring any transaction between you and third-party providers of products or services.
The Site cannot and does not contain construction, medical, tax or legal advice. The operational advice and references are provided for general informational and educational purposes only and are not a substitute for professional advice, product manufacturer instructions and cautions, relevant industry best practices, or commonsense safety.
Accordingly, before taking any actions based upon such information, we encourage you to consult with the appropriate professionals and/or references. We do not provide any kind of construction, medical, tax or legal advice. The use or reliance of any information contained on this site is solely at your own risk.
The Site may contain links to affiliate websites, and we may receive an affiliate commission for any purchases made by you on the affiliate website using such links. We do not have affiliates at the time of this publication.
The Site may contain testimonials by users of our products and/or services. These testimonials are reflections of real-life experiences and opinions of such users. However, the experiences are personal to those particular users, and may not necessarily be representative of all users of our products and/or services. We do not claim, and you should not assume, that all users will have the same experiences. Your individual results may vary.
The testimonials on the Site may be disposed to us in various forms such as text, audio and/or video, or verbally in conversation, subject to review by us before being posted. They will appear on the Site verbatim as given in writing by the users, except for the correction of grammar or typing errors, and in paraphrased form if provided in conversation, reserving the right to modify diction for clarity. Testimonials may have been shortened for the sake of brevity where the full testimonial contained extraneous information not relevant to the general public.
The views and opinions contained in the testimonials belong solely to the individual users and do not reflect our views and opinions. We are not professionally affiliated with users who provide testimonials, except to the extent that they may have purchased product on this Site for their use, and users are not paid or otherwise compensated for their testimonials.
The testimonials on the Site are not intended, nor should they be construed, as claims that our products and/or services can be used successfully to fix, mitigate, cure, prevent or otherwise help with construction or construction business problems of any individual or business, or problems of any kind. No testimonials have been proven or evaluated.
(This disclaimer was created based on Termly's downloadable example template.)
© 2022 Vista Tools LLC. All rights reserved.