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Clog the Drain that is Sucking Your Profits

Clog the Drain that is Sucking Your Profits

I attended a lunch box meeting at an American Subcontractors Association chapter in central Pennsylvania in the late Fall. The ASA chapter had a prominent regional general contractor come in and discuss their company, their opinion of the local economic outlook, and what they want in a relationship with a subcontractor. During the course of their presentation, one of the specialty trade members asked the GC if they experience any common problems with subcontractors, and I believe that many of the attendees were somewhat surprised with their answer.

According to this GC, the #1 common subcontractor problem that they observe time and time again is that the Superintendents/Foremen struggle with LACK OF PROPER SUPPORT FROM THE OFFICE. We, Management Consultants for Contractors, conduct confidential employee relations’ assessments (employee surveys), and responses from the field employees affirm this GC’s answer. Lack of appropriate office support is a serious issue that is draining profits from contractors. And by office, I mean the project management team.

Let me share a real-life example from my past that really illustrates this problem. I was a Construction Manager for a division of a national, publicly traded, contractor. Our division was very successful-we consistently made the corporation a lot of money. My project management team operated under the philosophy that I advocate today. (I have to admit that we didn’t do it purposefully. It just kind of happened as we focused on meeting our contract obligations and maximizing the profits to the corporation.)

Most of our customer base was heavy industry, such as, power plants, refineries, and manufacturers, and our area of specialty required plant outages or shutdowns to perform our work. We had definite time frames to complete the work. Asking for an outage extension wasn’t done. Preplanning each project was paramount. We wanted our crews to focus on the task at hand and not worry about the logistics part of the project. That was our (project management) job.
We knew that time was money-in fact we knew exactly how much a lost manhour, man day, or crew day, cost the company. This focus on “time is money” created a sense of urgency throughout our group. Not having the materials, equipment, or people when needed was not an option. We, the office, were setting the tone. We made sure that the Foreman and crew had what they needed when they needed it. We were making the Foreman’s jobs as easy as we could as we all worked together and shared in the pressures of meeting these outage dates while making the corporation a profit. If the project management team continually fails to do their job, can you expect the field workers to act with a sense of urgency?

I eventually had the opportunity to move the West Coast and open a sales office. Unfortunately, the replacement Construction Manager didn’t share my same philosophies. He got caught up with being the “boss”. He must have felt that the project managers and field employees were there to serve him, instead of him serving them. Within one year, our reputation in the marketplace began to deteriorate as outage dates were missed due to poor preplanning, failure to get materials, equipment, and people to the jobs when needed, etc. Poor field morale and demotivated work crews that resulted from this lack of office support also contributed to the problem. We went from being a very successful division in the company to losing a lot of money by his second year.

What changed in those two years? The field people were mostly the same. The philosophy of project management changed. Project management was no longer supporting the success of the field-they were hindering it. Profits that were once counted on were sucked out of the corporation. By this time, the project management team of our division was the perfect example of what that GC at the ASA meeting was talking about.

Just what is the role of the project management team in a specialty trade contractor’s organization? I could list all the duties and tasks associated with being a project manager, but they broadly boil down to the following bullets:

The PM’s actions set the tone for the job:

  • Provides the resources when needed-materials, equipment, and personnel
  • Addresses 1 problem with a sense of urgency
  • Creates a forward-thinking environment by evaluating the impact of today’s decisions on future progress
  • Follows through-does what he/she says he/she is going to do

The PM is to make the superintendent’s/ foreman’s job as easy as possible by:

  • Preplanning the project
  • Conducting a thorough kick-off meeting with the Foreman and providing a complete work packet
  • Anticipating future potential problems as the job progresses
  • Working together to determine corrective action plans when needed
  • Handling difficult customer relation issues

The PM facilitates the flow of communication and information by:

  • Making sure that performance expectations are clearly understood
  • Maintaining consistent contact with the Foreman
  • Listening and following-up on issues in a timely manner
  • Keeping the Foreman informed of any promises made to the customer
  • Recognizing achievements with praise when appropriate

Obviously, the Project Managers’ responsibilities are much more involved than just these bullets. We purposely didn’t mention contract administration tasks, like billing and change orders. These bullets focus on the “big picture” of providing support to the field. It’s easy for a Project Manager to get lost in all the tasks and duties of the position and lose sight of the overall responsibility, which is to SUPPORT the success of the field operations. This newsletter can serve as a reminder.
How is your project management team doing? Do they tend to blame everyone else, like the field or the estimating department, for productivity issues? Are they so busy putting out fires that they don’t have time to plan? Is there a cooperative spirit between the project management team and the field? Do your Project Managers know the cost status of the projects that they manage? Can they tell you the projected final costs of their projects? Do they know what is going on at their jobs? Can they recognize when a job is not going well in time to take corrective action? Do you feel that you have to be a detective to find out the real answers to your questions?

Are your project management team and field operations your competitive edge?

If your company is not making as much money as it should, it is time to examine your internal operations. Management Consultants for Contractors’ confidential employee relations’ assessment is an excellent source to identify the profit drains in your company.