Finding ways to lower your field costs will allow you to be more competitive and profitable. Material costs are relatively the same for all contractors and typically can’t be reduced. For this reason, contractors must evaluate and address labor—the largest portion of most total job costs—in order to reduce field expenses.
Construction field production labor usually adds up to about one-third to half of the total job cost for most construction trades. The best and easiest method for lowering job costs is to start a productivity improvement program, which consists of small, simple steps toward productivity. Each step or standard in the program will reduce your costs by small percentage points, which will add up to large overall improvements in your business.
Imagine setting a company goal to improve your annual field labor costs by 10 percent, which is the equivalent of six minutes per hour. Could you make a commitment to achieve a six-minute improvement per hour? Would it improve your bottom line enough to make it worthwhile? Let’s look at the numbers:
Total annual sales = $1,000,000
Total annual labor at 33% of total sales = $ 333,000
Improve labor productivity with 10% savings = $ 33,000
Net annual labor savings = 3.3 %
For a small labor productivity improvement of only 10 percent, your company is now 3.3 percent more competitive in the marketplace. By reducing your overall costs by 10 percent, you also may be able to increase your total volume, which will add even more to your net profit. With that in mind, what simple standards can you implement to improve your field labor costs?
Steps to Improved Productivity
The average construction field crew wastes approximately two to four hours per day. Improving field labor costs starts with identifying and fixing areas that are slowing down your crew or holding them back from operating at their maximum capacity. These productivity pressure points are caused by many field project factors including poor planning, lack of supervision, untrained crews, lack of materials, the wrong equipment, waiting for decisions, bad attitudes, mistakes, unordered workflow, missing materials, broken or lack of proper tools or no standard field systems.
To get started making your production fix-it list, first observe your crews for a full day. Get to the jobsite before they arrive, and be the last to leave. Take a look at their start times, end times, break times, if and when the crew meets with their foreman, how they roll out the tools and cords, if they keep the site clean, how they care for tools, if their storage area is organized, how often and how far they have to walk to the restroom, cellphone use, smoking while working, location of power poles and access gates, site layout and logistics, location of trash bins, jobsite congestion, crew production activities versus waiting for their boss to show them what to do, or any other activity that is distractive or disruptive to a productive workflow.
To find simple ways to fix these problems, gather your field crew and ask for their ideas and input for improving productivity. Start by establishing standardized companywide employee job rules. Get everyone to consider and agree on the following rules and questions, and use this list to create simple standards for your firm:
- What is start and finish time?
- What is roll-out and roll-up time?
- Enforce a 30-minute lunch and 15-minute breaks
- No smoking or cellphone use
- Clear drug and alcohol policies
- Policies for use of safety attire, gear and hard hats
- Daily crew meetings and cleanup
- Weekly punch list completion
- Jobsite safety inspection
- Who is in charge when the foreman leaves?
- Equipment operation rules
- Jobsite logistics and layout
- Material storage location to reduce transportation
- Trash bin locations and requirements
- Organized storage and tool bins
The McDonald’s Rule
Many foremen don’t want to deal with a set of standard rules that are often difficult to enforce. In reality, these factors can add up to wasted dollars. When employees know what the rules are, they follow them. I always explain what I call The McDonald’s Rule: If employees at McDonald’s can’t do it, we can’t either. If a McDonald’s employee is late, he doesn’t keep his job for long. McDonald’s employees can’t smoke or use cellphones while working. Long breaks or lunches result in a warning and docked pay. No excuses or exceptions. The same should be true at any construction company.
By implementing these field standards, your productivity will improve by at least 10 percent. Involve your team or start a competition to find ways to save money by being more organized, planning better and setting simple and clear standards for everyone to follow.
