Editor's Note: This is the eleventh in our 2007 series of The Business Owner Toolbox written by our regular columnist, George Hedley. Each article is written to provide you with practical, immediately applicable business management tools to assist you on your path to building a successful, growing business. To read the previous article, click here. To read the next article in the series, click here.
I graduated from the University Of Southern California (Go Trojans!) with a degree in civil-structural engineering. My first job after college was as a structural engineer (in training) at Bechtel Corp. for nine months. Next, I was hired as a project engineer for a commercial builder headquartered in Southern California. (Project engineer is another title for someone with potential but doesn’t know much or have any authority.) As a rookie employee, I got to wear a lot of hats. I worked with the estimators, project managers, foreman, subcontractors, customers and spent lots of time out in the field.
My job was to fix everyone else’s screw-ups and fill-in where they needed help. I attended several project meetings, listened to the issues and took notes. I processed hundreds of change orders that weren’t well documented or approved in advance. I sat in on many discussions, arguments and disputes between subcontractors, general contractors and project developers over contract issues that should have been handled many months earlier. I watched as foremen filled out their crews’ timecards while driving their trucks a week after their field employees actually did the work. I witnessed subcontractors showing up late, installing the wrong materials and not finishing their work on time. I observed project managers getting behind with paperwork and then asking me to do it nine weeks late. I saw the boss making exceptions for long-time employees and not requiring them to follow the company rules. I watched the twenty field superintendents run their jobs twenty different ways. I sometimes had to go to the hardware store three times a day for the same field foreman on the same job. I got assigned the difficult task of getting subcontractors to come back to do their punch-list work which could have been completed months earlier.
Nothing Works the Way You Want It To!
You get the picture. I saw what didn’t work. And when I started my company four years later, I didn’t want to get into the habit of reacting to every situation and let customers, subcontractors, suppliers and employees run my business the way they wanted to. I wanted my company to run like a machine and produce consistent results, quality, schedule, service and profit. I didn’t want to have to rely on my constant supervision to insure my company worked the way I wanted it to work.
Most construction companies are run by owners who have all their standards, procedures and systems in their head. They never stop working, micro-managing, controlling and telling their people what to do. They’re so busy making sure everything is done exactly the way they want things done, they never have enough time to write down what field or project management systems they want. This keeps them constantly out of control, over-worked, and stressed-out. Company growth is limited because this type of owner is stuck at his level of control (or out of control) and therefore can’t take on more work, bigger projects, new customers or different types of projects that might deliver better bottom-line profits.
Stop for a few moments and identify the most important pro-active field procedures you want done the same way every time on every project by every foreman, superintendent or project manager.
Focus on things that cause you the most stress and cost your company the most. These are what you need to fix. Then sit down and create a system to make sure everyone will do those things exactly the same way you want them done. As a general contractor with several jobs under construction at any one time, plus numerous project managers, field superintendents and foreman, I have a list of my top things I want done the same way on every job. Here’s my list:
Pro-Active Field “Must Do” Systems
1. Write a Systems and Procedures “DO” Manual.
Step No. 1 is to have written standardized field systems or procedures for your field team to follow and use. These systems must be written and not just in your head. I call this our “DO” Manual. How we “DO” business on every project, no exceptions! It’s a simple notebook that has our company standards and systems written out. There are pictures of what we want and how we want things done. It has checklists and guidelines for the field crews and project team members to follow. Each field employee is issued a company “DO” manual to follow and refer to. It is used for training and as a tool to make sure we all do business the same way. Our “DO” Manual has the following sections:
General Information
- Questions
- Problems and issues
- Calls to make
- Calendar
- Business cards and phone numbers
Field Systems
- Job information
- Project administration checklist
- Job start-up checklist
- Job contract
- Job plans
- Job specifications
- Subcontractor list
- Subcontracts
- Job goals and objectives
- Job budget
- Job schedule
- Shop drawing and submittal log
- Job daily activity reports
- Job inspection log
- Job RFI/PCO/CO logs
- Job meeting minutes
- Quality and punch-list reports
- Job close-out checklist
- Company information
- Company standards
- Company systems
- Employee forms
2. Set Pro-Active Targets and Goals.
Can you imagine a college football coach not clearly listing out the overall team goals for the upcoming week or season? Good coaches explain what the game plan is and then what’s expected from every player on the team. In my company, I want every member on our project teams and crews to know exactly what they’re aiming at. It is impossible to work as a team unless every team member knows their expected end result for their area of responsibility. Teams also need a scorecard to keep track of their progress—weekly, monthly and for the overall project. These targets must be written down and presented in a visual format every week for every team player to review and track progress.
Consider what results you want to happen on your projects. Set clear targets in the most important areas for each job under construction in several of the following areas:
- Contract management
- Communications
- Quality
- Overall project schedule
- Weekly project schedule
- Profit
- General conditions
- Budget versus estimate
- Budget versus actual job cost
- Customer relations
- Customer service
- Field productivity
- Safety
- Punch-list
- Job close-out
- Teamwork
- Paperwork
- Change orders
- Payment
3. Engage in Pro-Active Contract Management.
Most field and project management problems can be avoided by a simple system: Read, understand and follow the contract to the letter. Contractors forget that 50 percent of their bottom-line comes from managing projects per their contracts. Don’t follow the contract and all you can do is hope your customer will pay you for what you think you deserve. Install these simple and unbreakable systems to mange your contracts pro-actively.
Contracting is about contracts and doing the required paperwork. Start every project by reading the contract. Make a list of all the requirements it details. Review the list before you start and discuss it with your customer to make sure there is a clear understanding of these contract requirements. After you agree, always follow the contract. Don’t be wimpy and avoid conflicts. Put them out on the table as they surface and discuss them with your customer as required. Train your customers and tell them in advance how the project will be run. For example, if the contract calls for approval on change orders before extra work is to be started, make sure you get it in writing. And if they want you to proceed and workout the change order costs later, remind them of what the contract says and it is your intent to follow it to the letter. (Don’t be wimpy!)
Your contract also spells out what notice is required for several issues or actions that occur on every project. For example, note how many days are allowed to submit a written request for change orders, conflicts, disputes, payment, shop drawings and delays. Make sure you invoice per the contract. How long does your customer have to pay you or respond to your written requests? If you follow the contract, you avoid most problems that ruin a good job and customer relationships. Remember, if it’s not in writing, it didn’t happen and you probably won’t get paid what you deserve.
4. Promote Pro-Active Jobsite Management.
Be very pro-active and manage your projects aggressively. The faster that you build, the more money you’ll make. Full time supervision will always provide a positive return on your investment. I see weak contractors run their jobs by sending a foreman or superintendent to the jobsite once or twice a day to manage their crews. This doesn’t work and will cost you more money than you think you’re saving. With full time supervision, jobs will finish 25 percent faster and with better quality.
I see custom home builders in my neighborhood run jobs themselves by making a jobsite visit in the morning and then later in the day. Fourteen months later, they are still finishing the home. While the house next door under construction gets built in six or seven months with a full time superintendent on the job every day. Guess which job costs less to build, makes the contractor more money and keeps the customer happy?
Make sure you give your field superintendents and foreman the authority to make decisions and commit the company. They must be trained, qualified, knowledgeable, professional, accountable, responsible and honest communicators. Give them the tools to get the job done. Every foreman and superintendent must have a fully equipped home office so they can fax or e-mail their daily reports into the office everyday. Supply them with a cell phone with e-mail and a camera, fax machine, computer, digital camera, copier, printer and e-mail access. This will allow them to work on the job all day and then when they get home send in the daily paperwork you want.
5. Take Time for Pro-Active Project Planning.
Most field superintendents and project foreman only think ahead a few hours or days. How many times have your crews run out of materials before the end of the day? Have they ever run out of nails, bolts, screws, mastic, power cords, sand, visqueen, lumber, tools or anything they regularly need? Why does this happen? They don’t have a system to insure they must think ahead.
We use a simple field system to guarantee our field foreman and superintendents think at least two weeks or a month ahead. First, we require every foreman and field superintendent to draft a two or four week “Look-Ahead” schedule every Friday and fax it into the office before Monday morning. This insures they think about what is going to happen on their jobs over the next few weeks. On Monday, they review it with their crews and ask what else they might need to keep their jobs on track. They discuss what tools, equipment, manpower, subcontractors, materials, approvals or inspections will be needed in the upcoming weeks ahead.
6. Schedule Pro-Active “Must DO” Meetings.
It’s next to impossible to communicate to everyone on your project team what you want done, how you want it done and when it must be completed without regular team meetings. Between every football play, the team huddles up and discusses the next play. Between games, football teams meet and talk about what needs to happen to meet the next week goal and what training is required. In order to get everyone on your project team on the same page, require mandatory field meetings. The meetings I recommend include:
- Daily crew team huddle-up
- Monday morning quarterback meeting
- Project start-up meeting
- Weekly coordination meeting
- Monthly project management meeting
7. Demand Pro-Active Quality and Safety.
I don’t understand why an architect ever has to make a final job walk-through to identify the remaining punch-list items required to complete a project. The field foreman or superintendent has supervised the installation of the materials, walked the job a hundred times and still can’t see what needs to be completed to produce a finished project? This is unacceptable to me as a construction company owner. It makes us look bad to our customers and creates an impression we don’t know how to perform quality work—and what about safety issues? Why do I have to constantly remind my foreman to be safe, shore up trenches, wear safety equipment, install required barricades, keep the job clean of debris, fix unsafe conditions and use proper fall protection methods?
In reality, everyone wants to build a quality project and be safe. But they don’t always make it their number one priority on an ongoing basis. So we created a system to insure quality and safety are a mandatory part of their jobs. We require superintendents and foreman to dedicate at least ten to fifteen minutes every day to quality and safety and perform a quality and safety walk-thru inspection. They fill out a report of what they observe, what needs to be fixed, by what date and by whom. Our goal is to fix every problem immediately if urgent, or by no later than by the next week. Don’t wait until the end of the job. It is too hard to get crews back to do the little things. For subcontractors issues, fax them your punch-list weekly and require them to complete their items immediately or at least by the end of next week or you will complete it and back-charge them. Be Pro-Active to Make More ProfitThe choice is yours. Let your field foreman, superintendents, suppliers and subcontractors run your projects. Or you decide how you want your projects managed. Install pro-active “Must-Do” field systems and standards. Get everyone doing business the same way and watch your bottom-line go up while your stress level goes down.
Construction Business Owner, November 2007
