The aim of the game when starting a construction business might be to build houses and offices, but often you might end up building the barriers to your very own success, too. Even skilled workers with an experienced manager can build these barriers, through neglect or bad habits in practice, that can make a big impact on what kind of profits you can expect. Here, we’re going to look at the barriers you might be throwing up and what you can do to make sure you stop.
In the past, spreading the word through your contacts might have been enough to attract your clientele, and networking still has a big role to play in the construction industry. However, you could be missing a much bigger pool of leads that could make a real difference. You have less access to a diversity of clients, short-term and long-term, to minimise the risk of work drying up. Online methods of marketing have a huge role to play in lead generation nowadays. A great website and social media presence communicates in advance the professionalism of the team, the services you specialise in, and the importance of communication with the client. If you’re not marketing, you’re not on the same level as your competitors.
Not doing your math
If you take a casual, non-committal approach to how you estimate the projects you take on, you’re doing both your client and your business a disservice. With the widespread availability of tools like Buildsoft construction estimating software, keeping it transparent, accurate, and clear is easier than ever before. It benefits the client because, obviously, they have a real idea of how much it’s going to cost. This helps you because it shows you as one of the more trustworthy teams in the business. But it’s important to estimate effectively because it will also help you gauge the profitability of different jobs. If you keep taking on projects that offer a lot of work but little profitability, the business will continue to suffer for a long time.
Keeping your clients out of loop
Of course, estimates are not fixed. The majority of clients will understand that when they hire you (and you should be clear about that fact, too). As the project is in progress, you should ensure you’re informing clients about these changes as well as with general progress reports. It’s going to help you forge a much better construction client relationship. That, in turn, will lead to developing a better reputation in the industry and will open up the path to more leads in the future. Keeping a client out of the loop, unintentional as it often is, will also make you much slower to react to changes in the plan at their direction, meaning you waste man-hours and money on work that might have to be reversed or scrapped.
Never questioning the method
If you’re experienced and you use only the most qualified, skilled workers, then it’s all too easy to assume that a job is going according to plan. However, efficiency is one of those aspects of the business that can always use some improvement. Take a closer look at the different processes in place with the specific aim of improving productivity. Sometimes, a fix can be as simple as moving your waste area so that it’s closer to the part of the project producing more waste, reducing time lost due to transporting said waste. Measure construction performance in real time and focus on pre-construction documentation when you have the results. Systematize the processes that prove most effective and plan in advance so the team on-the-day isn’t dealing with too many unknown variables.
— Construct-Ed (@Construct_Ed) 6 November 2017
Failing to keep count
Back to the money side of the job, an accurate estimate isn’t enough. You have to keep your finger on the pulse when it comes to costs. Construction accounting software is crucial to figuring out how much revenue you stand to gain if you’re working a short-term job with an agreed revenue. You can spot the costliest aspects of the project and collect data that allows you to make more cost-effective choices in future. The data allows you to update how you estimate in future, too. You can be even more transparent in your estimates and if you find those savings, then you can make even more competitive bids without resorting to dishonesty.
Spending on accidents
Accidents are a fact of life when working in construction, but there are too many teams that allow them to play a much larger role than they should. There are plenty of safety training courses you and your team can take to highlight risks you might be ignoring and ways to keep you and the team safe on the job. From there, inform a policy of training, accountability, and risk investigation. Invest in safety gear and signage and monitor your team. Safety on a construction site might sound complicated, but the majority of them are preventable through thorough risk assessment and preventative measures.
You have to invest in the team to succeed. Mandatory investments should include safety training and the right gear. But with your gear, are you always investing in the right way? When it comes to machinery, you should make a cost/return on investment analysis. Do you have to buy all the equipment you use? If you use a piece of machinery very rarely, it could be a huge cost sunk into something that gets used rarely, so leasing might be more appropriate. If you’re buying, could you find more economically sensible Franna cranes sales on the used market? Moreover, are you protecting your investment by allocating enough resources and man hours into equipment maintenance and preemptive repairs? You have to ensure your investments have the best possible chance of paying off.
Leaving investments unprotected
Maintenance is only one of the ways that your investments need to be protected, as well. One way to improve the lifespan of your equipment is to make on-the-job maintenance a regular duty of those who are actually using the equipment. But crime plays a serious risk in business, especially those that use a lot of high-value equipment like the construction industry does. There are a lot of ways to protect that equipment. You can invest in better fencing or paid security that deters or disrupts any criminal activity. Nowadays, it might be more cost-effective, however, to invest in things like Telogis GPS trackers for your equipment. Not only do they work as a security measure, but they can provide much of the data that allows you to make the changes in productivity mentioned further up in the article.
Not spotting what went wrong
Just as pre-construction analysis is a great way to systemize a plan and create a more efficient process, post-construction analysis is just as important. Take your time looking at the data and spend time working out what downtime there was, what accidents or near-misses occurred, what moments the project went beyond budget, and so on. Take the time to figure out what you can do to fix those problems for next time. Could you change the work order to become more efficient, improve crew motivation to improve productivity, or put in place new safety measures to make those risks much less of a threat in future? You’re not going to find out if you leave the issues unaddressed.
Giving your team no incentive to care
The logistics, safety and accounting have huge roles to play in improving the profitability of each project the team takes on, but you can’t afford to miss the role of the human element, either. Employee performance is inextricably linked to employee morale, and not actively attempting to improve that is opting to let it stagnate. One way to improve morale is to rethink how you reward employees. Instead of after-the-fact rewards, take a proactive stance with incentivizing plans that outlay specific goals and objectives that can lead to rewards. It sets a clear aim for employees, making them all the more likely to pursue it and to be more productive in doing so.
Going it alone
As mentioned, networking in the construction industry has an important role to play in finding leads. But it’s also one of the best ways to find potential partners that can help you avoid the higher costs of searching without an effective filter as to whom you chose. Suppliers, subcontractors, and service providers are just some of the partners you can end up with by spending more time, both online and in the real world, in construction networking circles. You’re likely to get better deals from more professional partners, as well as the referrals and lead generation help that can directly lead you to more profit.
Running a construction crew is a lot of work and it’s not all about making sure you do quality work on schedule and in-budget. If you’re not willing to work with the specific details leading to profitability, you’re making it that much harder to reach it.