fbpx

Category: The Business of Construction

Posted on

The Most Important Thing About Training Estimators in 2020

2020 has thrown us a curveball with the pandemic, changing the way we manage our construction projects and businesses. Any change mandated by OSHA (like social distancing on the job site, Covid19 daily checks, etc…) that define daily requirements and the way crews work will change productivity. How do you know how much that’s costing? “If you can’t measure it, you can’t manage it”, it seems simple but Peter Drucker is saying you cannot determine or predict success if you do not have the tools and the means to measure what it is that you are doing. And now more than ever construction companies need to be nimble. You need to react in near real time to those changes and challenges that affect the profitability of your job.  With so much uncertainty pitfalls abound and new techniques need to be adopted to avoid being one of the 100,000 businesses that are predicted to go out of business this year

Now more than ever it’s critical to compare actual project costs to your original estimate, put another way comparing Actual to Plan. Those companies that do compare Actual to Plan often use Excel to manually aggregate information to compare them on an ongoing basis. Aside from there being a ton of copy and paste (double entry), there are timing issues with some financial reports. Most are fortunate to get a project cost report every month, but even then that’s a long time to wait to see if something financially  on a project has gone South. The best thing to do is to automate cost tracking as much as possible to help with the timeliness of reporting. 

Changes in project and job site productivity caused by the pandemic are widely unknown and likely differ between regions and trades. The most important thing to do in these pandemic times is to create a timely feedback loop for estimators to learn from. Constantly comparing Actual to Plan is the simplest way to improve estimator experience and accuracy. A learning feedback loop between Estimators and Project Managers opens discussions of the accuracy of assumptions and expectations that can foster teamwork and more accurate bidding. 

CrewBuilder is a tool used to measure project costing and automates the comparison of Actual to Plan. I invite you to take a look at CrewBuilder to see how this digital tool can help your company.

Check Out CrewBuilder

Get Your Free Demo of CrewBuilder

Posted on

How Do You Win More Bids?

I love the adage “If  you can’t measure it, you can’t manage it” by Peter Drucker. It’s an important message about defining what success means for your company. What is the difference between a winning and a losing bid? I wish the answer were as simple as just “pricing”. The truth is more complicated. Let’s discuss some of the areas to look at and measure. 

Categories

Do you track the types of bids you win and lose? More importantly, how do you categorize your business: Service, new construction, remodel, commercial, or residential?  And do you bid outside your area of expertise, and if you do-do you know your win loss percentages? Tracking where you win and lose customer bids is important to understand customer losses. Do you win more public projects but lose more private ones? The expertise of your estimator may have to do with where you find success and more importantly where you are losing. Tracking the types of bids your company responds to and where you are succeeding is a good indicator your company understands that part of the market. And if you are a subcontractor it is a telling way to understand what your generals perceive your expertise to be.


Let’s look at a possible scenario of where to increase your win/loss bid ration. If you are a remodeler and you are winning commercial TI bids but losing on residential kitchen and bathroom remodels, do you know why? Start by tracking the types (categories) of bids you win and lose. This will give you areas to do a deep dive to find out why you are losing some types of bids. Maybe your estimators have a great understanding of commercial projects but don’t have detailed understanding of residential projects and over bid out of an abundance of caution. You don’t know until you start measuring and tracking your bids.

Get CrewBuilder

Win More Bids, Save More Money

Win/Loss Rate, Speed Is Of The Essence 

Many contractors have around a 10% win rate, meaning that of all the bids they respond and submit a bid/quote they win roughly 10% of the work on those bids. In one way the more bids a construction company responds to the more work they will likely get. For every 100 bids/estimates they submit, they will win 10. That’s a lot of estimating and pricing work. The most common digital tool companies use is Excel; a wildly flexible business digital tool used by nearly everyone. You can reduce the time it takes to create a customer bid in Excel by using templates like everyone else , however it’s easy to make formula mistakes that could end up costing you a bid or under estimating the work required. And if first impressions through your estimator count then it’s much harder to differentiate your company using everyone else’s template. But speed is important, the faster you can create an estimate the more bids you can respond to. Focus is important as well, if you’re winning bids in some areas and losing them in others, you may want to look at focusing on the areas you are winning in or increase your understanding in the areas you’re losing at. 

Experience

What’s more important, accuracy or speed? If we are talking about service work, speed may be more important than accuracy because of how small the jobs are and the flexibility of defining hourly work in a customer estimate. Even then, accuracy is king for setting customer expectations and accurate scheduling. More importantly accuracy in your bidding process is the only way to make more money both in the bid and in the project work. The real need in today’s crazy pandemic environment is improving accuracy, something that only comes with experience. 


People Factor

It’s harsh but true, some people play favorites and don’t like you. I have heard this one before: “Whenever we give Joe a bid we always lose, it seems like he uses our bid to shop around to his favorites”. If this has happened to you, you’re not alone. It makes sense to track your wins and losses with your customers. If you keep giving ‘Joe’ bids you will most likely lose, why waste the time. If you can focus your efforts on customers you are more likely to win, you can improve your win/loss ratio. 

Reviewing Customer Bids

Are all customer bids/estimates reviewed by at least one other person? If not, they should be. Your customer bid is the beginning of a contractual agreement, one that binds your company to the customer. Reviews are essential for improving accuracy and serve as an ongoing training tool. Some review requirements may include:

  • New estimators that need training
  • Tiered bid value amount, larger bids require multiple reviews to ensure accuracy
  • New resources (people or equipment) that may need additional reviews for accuracy
  • New types of work, if your company traditionally bids on commercial but are now bidding residential projects, you may need additional reviews for accuracy
  • Tight schedule, some bids may be required tight deadlines that include penalties for schedule delays


Bottom Line

Improving your win/loss ratio with customer bids/estimates can make a huge difference in the work you win. For example, if you are bidding on 400 projects a month (100 per week) and  you are able to increase your win ratio from 10% to 12% (a 2% difference), that’s an additional 8 projects per month or close to 100 projects more per year. If you average $50,000 per project (keep the math simple) that’s close to a $5 Million increase in annual revenue. That simple increase is worth investing time and effort into. 

Get CrewBuilder

Win More Bids, Save More Money

Posted on

How are we going to get through 2020?

The pandemic continues to change the construction economy in ways economists will be studying for decades. There is no silver bullet to solve worksite issues, all we have are people, process, and tools to solve the challenges of social distancing, supplier slowdowns, uncertain project schedules, a workforce susceptible to the pandemic, and a global economic slowdown. 


What do we need to make it through the economic pandemic? In a word, innovation. Our industry has been slowly adopting a digitalized workflow process by strategically implementing software and new technologies to improve productivity, safety, and lower costs. In addition, the construction industry is dealing with a historic labor and expertise shortage. There are still a significant number of companies that use a paper process for managing timecards and schedules. Surprisingly, this is part of the pandemic issue. I met with one company who’s bookkeeper refused to touch the paper timecards crews turned in. Migrating to a digital workflow in part or entirely will help with issues like this. A digital process allows your team to work and view project health from anywhere, even if they are home on self quarantine. 

The momentum of any construction project moves forward like a micro-economy with its constituents working together in coordinated lurches in productivity. A large part of ‘moving the ball forward one yard at a time’ in construction is balancing schedules and compromise. With Covid19, there are and will continue to be unexpected areas that will require compromise. Some of these compromises on the job site are mandated by OSHA and social distancing. Others will be in schedules where workers testing positive for Covid can cause delays and safety issues. Any successful project has always required some degree of compromise working together with contractors, suppliers, subcontractors, service providers, and workers. Figuring out how to keep project and job momentum moving forward requires additional tools to measure and manage resources in a detailed way, all the way down to the individual crew or worker. 

A digital process also helps keep track of the financial health of a project. Near real time reporting and timecard/daily integration give you the benefit of knowing exactly how your projects are doing. Proactively managing projects gives you a degree of flexibility to proactively work with customers on change orders and schedule changes. 

Get CrewBuilder

Manage Project Health From Anywhere

2020 is also an election year and November is sure to provide more uncertainty than confidence that our newly elected officials will break with tradition and actually work together. I sure do miss the days when contentious government still got work done for the benefit of the people. 

The economy overall faces a bumpy ride headed into the healing stage left from the initial shock of the Covid19, according to Michelle Meyer, head of US economics at Bank of America. The consensus among economists seems to be that the US economy has entered the healing phase. No doubt it’s a ‘bumpy’ road through the end of 2020. You need to look at how to survive or thrive in these rocky market conditions. 

We get through 2020 with two concepts that are somewhat foreign to construction; innovation and compromise. The new pandemic normal requires compromises on field and office practices. The faster you can identify and measure job site related changes give you greater flexibility in how to safely and effectively respond. Innovation as noted above,  in digital tools across the construction industry are making a difference. One of our customers is saving over $16,000 in a single month just on labor time savings. Automating processes, such as timecards and project costs enable you detailed insight for decision making and proactively managing customers and expectations.

Get CrewBuilder

Manage Project Health From Anywhere

One of the few bright spots in the future is the possibility of a Covid19 vaccine speculated to arrive in December with production ramping up in January and February. Thousands of brave souls volunteered to receive the vaccine for FDA stage 3 testing, necessary to determine safety and effectiveness. 

So how do we get from here to there through the 4th quarter of 2020. Like many, I will be glad when 2020 is safely behind us and we can get through to the new normal. Whatever that may be, it will be different than past years. Construction forecasts for the 4th quarter of 2020 look pretty bleak. Some believe it will be the closest thing to a construction economy collapse as we have ever come. Some are more optimistic citing the continued demand for new construction and enough booked work to get through to next year. Construction is very regional, some areas are thriving while others are not. The US economy has officially been in a recession since February 2020. There was some help with the PPP and emergency Covid19 business loan initiatives from the federal government. These programs were well intended but they were a drop in the bucket compared to a thriving economy. I have listed below some of the more useful sites and you work your way through the challenge of 2020 and onto a brighter 2021 

If you haven’t taken a look at CrewBuilder yet, I invite you to spend some time with me to see how CrewBuilder can work for you. 

Stats around the Web:

US Commerce Department

  • The U.S. economy suffered its worst period ever in the second quarter, with GDP falling a historic 32.9%
  • Neither the Great Depression nor the Great Recession nor any other slump over the past two centuries have ever caused such a sharp drain on the economy

Construction Analytics:

  • Even with new construction starts down 10%-15%, cash flow patterns are still indicating nonresidential construction spending will be up in 2020. Greatest strength is in non-building work. A reduction in 2020 new construction starts will show the greatest impact in 2021.
  • Expect 2020 spending declines in Amuse/Rec, Lodging, Offc, Mnfg. Expect increases in CommRtl (it’s all in warehouses, stores are down), and most non-building markets.
  • Highway and Bridge represents almost 40% of non-building markets and starts are up 8% for the 1st half 2020 compared to same period 2019.
Get CrewBuilder

Manage Project Health From Anywhere

Posted on

Why does Artificial Intelligence and Machine Learning Matter in Construction?

Why you should care about Artificial Intelligence and Machine Learning in Construction Technology

Artificial Intelligence (AI) and Machine Learning (ML) technologies are being used to create a wave of smarter construction technology products designed to improve productivity (reduce costs) and reduce risk improving profitability.

The emerging wave of construction technologies using AI and ML fall into two benefit categories, improving productivity and reducing risk. Productivity improvements enable existing office and field workers to get more done, in part by automating processes where possible. Some people have voiced concerns that AI and ML technologies will replace office and field workers. I don’t believe this will be the case. The simple and often used analogy is the evolution of hand tools. Power tools didn’t replace workers, they made them way more productive. AI and ML technologies are used to create new types of tools designed to make your day to day operations easier and more productive. The new class of AI and ML powered software and hardware is the next leap in engineering and construction productivity.

The Basics

What is machine learning (ML)? In short, it’s a field of artificial intelligence that uses statistical techniques to give computer systems the ability to learn from data. These systems improve on a specific task over some amount of time. The key requirement for machine learning is data, and lots of it. For construction, examples of ML range from project schedule optimization to project site image processing for safety and other yet to be thought of things too.

What is artificial intelligence (AI)? AI has a broad definition and is generally defined as any device that perceives its environment and takes actions that maximize its chances of successfully achieving its goals. In short, it could be lots of stuff from smart support bots to self-guided missiles.

What is natural language processing (NLP)? I came across a really good article on VentureBeat by guest author Arthur Coleman the outlines when natural language processing pays off with Artificial Intelligence (A.I.). As the article mentioned, NLP has up until recently been extremely difficult to get right. NLP is a system that listens to someone talk and attempt to interpret what was said. NLP generally identifies the “intent” of the speaker and enable that intent to be used digitally. If I say “I’m hungry”, an NLP would listen and process my language and identify my intent as “hungry”. What’s done with the intent after is entirely up to the system programmers. This is how Google Assistant, Siri, and Alexa work.

More about CrewBuilder

Why use these technologies in construction software?

Simply put, to make your job easier. AI and ML are tools that help with daily operations to reduce errors, save time & money, and reduce risk. The smart folks at McKinsey & Company recently wrote a report, Artificial intelligence: Construction technology’s next frontier.

They are basically saying that AI and ML are tools that can be implemented in software and hardware that will benefit “stakeholders across the project lifecycle—including contractors, operators, owners, and service providers.” We agree. Advances have been made on the job site from autonomous heavy earth moving equipment to robots that monitor safety.

The industry continues to move from a paper process to the digital realm. With that migration comes a learning curve. People have to learn how to use new systems and software. We know this is a challenge, construction companies today don’t have the time to pull people off projects to train them for a week on how to use new software. There’s no wonder why construction companies consistently rate “Ease of Use” as one of the top criteria for selecting software. If the software is too difficult to use, it won’t get used.

CrewBuilder uses AI and ML as tools to lower the learning curve and help people start using the software with little or no required training. We made it super easy to use CrewBuilder by incorporating a natural language processor and AI so all you need to do is simply tell CrewBuilder what you want to do and it does it. It’s kind of like Alexa for construction. The digital assistant continually learns and improves with use. The more it’s used, the better it gets.

We call our digital assistant Bob. We’ve entertained several acronyms for what B.O.B could be (Brain on Board, Building on Business, Best of Breed, Battery Operated Builder, Building Operations Buddy, etc…), honestly we just wanted something simple. Maybe we’ll have a contest for the best BOB definition someday soon.

You can ask Bob in CrewBuilder questions on how to use it, for example, if you are a field worker you can ask “What am I supposed to do today?” and Bob will show you. Part of our goal was to create integrated systems that understands what you want to do, to make sure you never have to go hunting obscure documentation to figure out how to do something in our software. Instead, just ask.

Part of the intent is to reduce the amount of times you have to call in for support. We are happy to help customers use CrewBuilder, but if you’re like me and are impatient at times, I want my questions answered now and don’t want to wait for support.

More about CrewBuilder

In addition to NLP, we use ML for scheduling and capacity management. Scheduling crews can be challenging and time consuming. We talked with one company that had 27 crews and 6 Superintendents to see how they schedule. Every Thursday, the Superintendents take turns filling out a spread sheet starting at 10 am. By the time all the horse trading is done about which Foreman has which crew, and who is working on which project, the schedule often is finalized around 10 pm. That’s a long day.

Scheduling is an area CrewBuilder uses ML to create an initial crew schedule based on experience, skills, and project requirements. We call it Thinking Schedules because we built intelligence tools like conflict checkers (double booking, missing certifications or skills) and capacity planning on a short- and long-term basis.

Scheduling is part art and part science, very few schedules are perfect the first time. With CrewBuilder, the schedule is created based on project requirements, so at least you know you won’t double book anyone or send someone out with the wrong certifications, credentials, or skills. Starting with a known “Good” crew schedule saves a ton of time before the crew swapping starts (because some Superintendents have a favorite crew or two).

There are other areas we are developing AI and ML tools in CrewBuilder that help make projects more successful. We think that AI and ML are mature technologies that enable better tools for construction companies operate more efficient and profitably.

More about CrewBuilder

You might be asking why we use drone images. The images and video produced by construction drones are being used in AI and ML applications by many companies.

Posted on

How To Improve Crew Management In The Field

I get it, it’s tough managing crews and teams in the field. Even with all the new technology available to us, there are still a large number of problems that you have to react to on a daily basis. Every contractor with crews we talked to has some degree of these challenges managing people in the field.

Lets break down why this is a problem: A Distributed Environment

The primary challenge managing crews in the field is the gap between the field and the office. Superintendents and Project Managers are managing crews over a wide area from a central office. This scenario is familiar, a central location and distributed teams that operate in a semi autonomous environment. I proudly served in the US Army, 82nd Airborne in what seems like a lifetime ago. The military operates in a similar environment with centralized command and distributed units (company/platoon/squad) operating in harsh conditions. Communication tools may be different but the challenges are similar: how to communicate to crews exactly what they are supposed to do with the right tools & materials and how and when to do it.

Operating in a distributed environment creates some inherent challenges:

  • Communications: Without the ability to look someone in the eye to discuss an issue, you are at a disadvantage to clarify instructions. Our dependency on mobile phones in the field continues to increase. Mobile phones offer a way to better communicate, but what is said on a call may not be remembered ‘exactly’ and text messages are limited. Even with mobile phones as a tool, phones may or may not work on the job site for any number of reasons. Plan for mobile phones to fail as a real time communications tool.
  • Materials: Most of the time, crews are supposed to pick up parts before they leave for the job site. Too often they don’t have all the parts they need, so someone ends up running parts to the job site. Joy. Another area of wasted time for the crew waiting on site for the parts and the poor soul who end up dropping everything they are doing to pick parts from a vendor and drive across town.
  • Labor Management: Crews in the field need direction. Someone needs to be able to make decisions and be accountable for what happens on the job site. From a management standpoint, a Superintendent or Project Manager depends on a Foreman or Crew Chief to get work done. Having ‘one throat to choke’ or ‘one butt to kick’ is necessary for effective communication from the top down to the newest crew member (don’t really choke or kick anyone). The Military refers to this as the Chain of Command, many successful business management structures are similar because they work.
  • Logistics: Getting the right people with the right tools and the right materials to the right location may seem simple but we all know it’s not. It’s near impossible to keep tabs on who has what certification needed for what project in the back of your head when scheduling people and resources. For any company with more than a couple of crews, the complexity of project work necessitates digital tools to manage, optimize, and deploy crews.

More about CrewBuilder

What can you do about it?

When —not if— things don’t go according to plan, make sure your crew lead or foreman has enough information to make a decision. There will be times that crews in the field will not be able to call you from their cell phones, so they need clear direction on what they can and can’t do. There is a really good book, even better on Audiobook “Extreme Ownership: How US Navy SEALs Lead and Win” by Jocko Willink and Leif Babin. In the book, the authors discuss the challenges (among other things) of effective communication in a distributed environment where units ‘must’ decide on the fly without the ability to call someone at HQ. One of the big takeaways from the book was that Jacko and Leif developed a process to make sure everyone knew what they were supposed to do and provide an overall “Mission Goal” that everyone could simply understand. The Mission Goal was critical for setting up the clear objective for leaders in the field to make better decisions.

With the current labor shortage, it’s becoming more important to manage crews effectively to increase labor productivity. This means getting more work done with fewer people. You should be doing this whether there’s a labor shortage or not. Part of your emphasis should be in evaluating and using the tools that help improve productivity as well as looking at your management and work process for improvements regularly.

More about CrewBuilder

Posted on

Is Your Construction Company Paying Too Much for Insurance?

WHAT YOU NEED TO KNOW ABOUT PAYING TOO MUCH FOR INSURANCE

One of the things every smart company must have is insurance, it’s simply the cost of doing business. Why do we need it? It’s simply to protect you by reducing the risk to a company if something goes wrong. Most contractors have general liability, worker’ compensation and some commercial auto insurance. When you purchase an insurance policy, the underwriter of the policy will have a range of questions that helps the underwriter understand how risky your organization will be to insure. The underwriter is the company that will guarantee payment in case of some damage or loss, they take on the financial risk for liability to your company.

WHY IS THE UNDERWRITER IMPORTANT?

The underwriter and the insurance broker (if you are using one) determine the cost of your insurance policy. You guessed it, the more risky your organization is, the more your policy will cost.

WHY AM I PAYING TOO MUCH?

There are several reasons you may be paying too much, but two big areas are safety and type of work.

SAFETY CHECKS, NOT JUST FOR OSHA

Having a great safety record pays dividends. It’s not just the safety meeting logs that OSHA wants to see, it’s the daily safety check your underwriter may want to see in an audit as well. If you have a daily safety check that your insurance company can audit, it could reduce your insurance costs. Sometimes it’s hard to keep up the required safety meetings, but it’s worth it. You must have safety meetings and safety checks documented. If you use construction software, the software should provide a place to document safety meetings and daily safety checks. We think its important enough to include in our products.

More about CrewBuilder

THE TYPE OF WORK, IT’S IMPORTANT

The other big area for insurance, especially with subcontractors, is the type of work you do. Was that job commercial or residential? The difference could be thousands of $$$ dollars a year in the cost of your annual insurance policy. It costs more for residential construction contractors insurance than it does for commercial. Why? Because it’s riskier to the underwriter. If you can’t document the split in business between commercial and residential business you do, then you have to pay the higher residential price. If you use construction software, it should include the ability to generate a report that tells your insurance company the split between residential and commercial projects you do.

WHAT’S ALL THIS MEAN?

Save money on your insurance by keeping a good, well documented safety record. Make sure your paperwork clearly defines which projects are residential or commercial. Documenting all of this takes time, many have streamlined the process by using software to keep everything together. When your organization grows, it’s worth examining products like ours that can help you grow for less by enabling fewer people to do more.

Please give our software a try, we think TrenLot can help you save money, run your organization more smoothly and be more profitable.

More about CrewBuilder

Posted on

5 Effective Ways of Managing and Motivating Your Construction Workers

Motivation is the key factor for generating higher production levels. A motivated workforce influences operational efficiency, especially in production-intensive industries like construction. The construction industry is fundamentally labor dependent, it’s essential to keep your team well-managed as well as maintain high levels of employee motivation.

Listed below are 5 of the most effective ways a construction company can motivate and manage its workers.

RECOGNIZE

The most common form of employee motivation is appreciation and recognition. It’s a natural human need to be recognized and feel valued. Appreciation doesn’t always have to be in the form of monetary rewards or raises. It can be something as simple as saying ‘Good Job’ or ‘Well done’ whenever a worker has produced quality work or put in some extra effort.

Such acknowledgment accounts for intrinsic motivation which leaves a greater impact on the worker than other motivational factors. Another way of recognizing hardworking staff members is by naming employee of the month or employee of the day. This not only encourages the worker to keep doing better but also creates a healthy workplace competition.

REWARD

Even though monetary rewards aren’t the only form of praising an employee, they are effective ones. Bonuses and raises act as a strong motivational tool, especially if the worker has worked extra hours or done additional jobs. Apart from bonuses, rewards can also be in the form of gifts, vouchers or a company-organized day out. In general, it can be anything that shows the workers that their employers notice their hard work and their efforts never go unnoticed.

EMPATHIZE

Simply recognizing and rewarding employees is never enough to ensure a fully motivated workforce. Employees expect their employers to be concerned of their well-being and value them as an important part of the organization. This can be done by being respectful towards your workers and showing them your concern in significant personal events like birth of a child or demise of a family member.

SPECIFY GOALS

It is impractical to expect your staff to know exactly what their tasks and goals are when you hire them. Everyone needs to know what exactly is expected of them. Employers must set smart and achievable goals for the workers and clearly brief them about them. The best approach is to discuss these goals with the employee beforehand. This would promote ownership in the worker towards an assigned task. However, if goals aren’t clearly defined, it results in poor performance and hence substandard production.

TAKE CARE OF THE NEW GUY

Let’s face it, the numbers on new people entering the construction profession aren’t as good as anyone would like. There is a labor shortage, we need good skilled people. It can be rough starting a new profession, how a younger person experiences their first weeks on the job will influence their decision to make construction a career or not. Don’t tolerate any hazing new people, instead give them the support they need to learn how to thrive in construction.