Measure, Measure, Measure!
Contractor tip of the month
By Damian Lang
Tough competition, tight bids, fewer jobs…and the mason contractors we are competing against are idiots. Did I miss anything?
With the competition bidding work so cheap right now, if you do get some work, there is most likely at a thin margin, so you can’t afford to miss a thing. Therefore, measuring jobsite production cannot be put off until the job ends, the month ends or even the week ends. It needs to be done daily! With the information gained by measuring daily, you know immediately if the project is losing or making money, and you can make changes accordingly.
If you are one of my competitors reading this article, please don’t take it personally when I called contractors “idiots.” Let me tell you a true story about an idiot contractor doing steel erection. This company started five years ago when the economy was good, and in its second and third years, earned around 10 percent net profit on nearly $3 million in sales. The owner knew nothing about setting steel, but did know that he needed measurement systems that required his people to measure daily production.
However, how do you argue with performance resulting in 10 percent net profit? So, he did not enforce that his people measure daily on a perpiece basis and only looked at profits or losses at the end of each job. Last year, this company lost several-hundred-thousand dollars, and I am convinced it was due to an improper measurement system. To use a phrase from my financial advisor, “When the tide goes down (the economy dropped), we find out who is swimming without their clothes on.”
Can you guess who the owner of this company is? It’s me, the guy who wrote the book on incentives. Well, I didn’t shut the company down, but I did make drastic changes, including moving their management back to my headquarters where we meet every morning. And, I get daily progress reports on all projects like we get in our masonry company. By having people measure daily, we know each day if we are making money and on what projects. With this information, I know if a job is in trouble early, and I can address problems immediately.
Measuring is easily done, once the estimate is finished, by breaking down the parts of the job and figuring the costs to install each piece. Our masonry company knows, by watching the cost per piece and the number of pieces installed each day, whether the P&L at month’s end will be in the black. On work that can’t be measured per piece, such as concrete or restoration work, we measure per lineal foot, square foot or even pounds when it comes to laying stone. In the steel business, we now measure per joist or beam set, square foot of decking installed, and etc. I sincerely believe this will turn the steel company back to profits again.
Let’s say you are building a building that will take six months to build. If you know your cost daily, and your people aren’t doing enough production to cover it, you can go to the jobsite and lay off one or two workers each week until the numbers get right. This may sound tough, but may be the only way of surviving. Knowing daily gives you the ability to make changes now. If you set up a system that tells you daily how each of your jobs are going, I can assure you that you will sleep better at night.
About the Author
Damian Lang is a mason contractor in southeast Ohio and inventor of many labor saving masonry systems and products. Lang has served as the Marketing Committee Chairman for the Mason Contractors Association of America. He is also author of the book Rewarding and Challenging Employees for Profits in Masonry. To network with Damian on contractor tips or tips you have and would like published, contact him at email@example.com or 740-749-3512.