Plumbing and heating wholesale distributor magazine Supply House Times started this new Plumbing & Mechanical magazine in March 1984 and invited me to share my wisdom and experience with its readers. (Check for back issues and more silver anniversary features on PM’s Web site http://www.pmmag.com/Articles/PM_25Anniversaryhere.)

Being a contractor’s son and born in the Depression, I went on my dad’s payroll at age 8. On June 1 of this year, I will have completed 70 years of “on-the-job” construction experience as a laborer, craftsman, foreman, project manager, estimator, purchasing agent, licensed contractor and consultant. Naturally, I enjoy the pride of a craftsman to look back and know that I did that!

In 1970, I ventured into the consulting business with a sincere goal to give something back to this great construction industry that has been so good to me. My dream was to work with contractors and their key personnel in all 50 states. That took 18 years to accomplish, but I also reached most of the Canadian provinces as well.

Throughout all of those years, I learned something new every day. I would adapt and use all of the good practices and policies, and avoid all of the negatives. The primary thrust in all of my PM articles has been eliminating waste to provide more money for your employees and yourself.

Profit is not a dirty word! Construction is a very competitive, profit-making industry and you cannot survive without it. There is no such thing as “too much profit.”

Waste On The Jobsite

Let’s begin with some of the horrendous waste I’m certain most of you have observed:

1. At the top of this costly list is wasted wages for nonworking hours. Our industry average for all trades is six active work hours for an eight-hour paycheck. Many employees start late in the morning and take a long coffee break, a long lunch break (some go to restaurants), another long break in the afternoon and then quit early.

2. Next is the time lost handling materials. How many bricks would a bricklayer lay if he handled all of his own material? Contractors need tenders for their craftsmen.

3. Add the cost of tools and materials that are lost or stolen rather than returned to your shop.

4. Poor productivity due to low morale, lack of training and comparable wage adjustments.

All of those jobsite lost dollars are due to a critical lack of management training. Most foremen serve four-year apprenticeships to learn their trade. If they are efficient craftsmen, they are promoted to jobsite foremen, usually without even one hour of supervisory training. These are good employees with good intentions, but lack the know-how to run a job:

• The legal white-collar ramifications of sexual harassment, discrimination, unfair labor practices, first-aid certification and jobsite documentation.
  
  
• How to give orders, discipline or motivate employees, measure and reward productivity.
  
  
• Communication and cooperation with your customers, architects, engineers, the other trades and inspectors.
  
  
• Cost-effective value-engineering for every task they perform. There is always a better way!

Waste In The Office

But all of those crucial dollars are not wasted on our jobsites. Let’s go clear to the top and look at the inefficiency and wasted dollars due, unfortunately, to a lack of education and management principles.

Many contractors were successful employees who took advantage of the American Dream to own their own business. Here again, they didn’t learn all of the rules and even failed to follow some that they knew. The Small Business Administration statistics show that 91 percent of all new businesses fail in less than three years for many different reasons, but the primary cause is lack of profit.

We can take those same four items of know-how to run a jobsite and apply them to running a company, while adding these specifics:

Establish and abide by a written organizational chart (chain of command), which defines who is responsible for whom. No one can answer to two bosses. If an employee does what one person tells him and then is criticized by the other “boss,” you have lost the efforts of that employee.

Criticizing in public multiplies that negative situation. In many cases, you will also lose the employee.

A chain of command is free and it cannot offend anyone, yet the majority of today’s contractors will not use or follow it. That is definitely the single biggest cause of expensive employee turnover.

Many contractors do not use job descriptions for office and management employees with a specific scope of work to assure proper execution of critical tasks and responsibilities. Any performance above or below an employee’s defined scope of work should be discussed and documented in his or her performance file when it happens. This assures each employee a proper reward for his or her efforts and ability.

Unfair wage and salary administration is naturally a de-motivator, causing poor productivity along with costly turnover. This is especially true when dealing with employees with seniority and relatives on the payroll.

Possibly the biggest money-losing catastrophe follows an incorrect or incomplete estimate on a hard bid project. If you don’t get it in your estimate, you certainly can’t get it from the project. You must carefully read every page of the bid documents — plans, specs, alternatives, addenda, etc. — and question any doubtful cost situation. Consider how little that extra time costs compared to missing one item.

Some Good Ideas From The Past 25 Years

I’m sure that you have either experienced or witnessed some of those hole-in-the-bucket or down-the-rat-hole wasted profit fiascoes. I hope you learned from each one and now consistently search for and adopt that value-engineering better way.

Let’s look at some of the good profit-producing ideas I have learned from other contractors:

1. At the top of the list is the virtual office where your employees work at home and save travel expenses, as well as babysitting and office clothing costs, etc. Today’s electronic world makes all of this feasible and saves you office space, too.

2. Using flex time (4-10s or 3-13s) to save your employees travel time and expenses. This should be an individual option on each project.

3. A database skills inventory will fortify your training efforts and simplify providing certified, skilled craftsmen on every project.

4. Use our 6-8-10 daily productivity ratings to motivate, measure and reward jobsite employees. Your monthly audit on these scorecards allows you to monitor and adjust each employee’s take-home pay.

Above all else, have fun! I spent my life in the construction industry and always enjoyed competing with contractors who didn’t know what they were doing. If they can survive doing it haphazardly, think about how much profit you can make by doing it right.

Always wear a smile and speak to everyone. Your smile turns people on vs. a frown that scares them away. The more you smile, the more money you will make! This is called momentum — the more money you make, the more you will smile. Your smile does not cost a single penny but it will help to make you rich.

Honor your word. Years ago we called it the old school way, where a man did what he promised or he apologized for not being able to fulfill his commitment.

Never be late. You are telling the waiting party that his or her time is not as important as yours. You will be lucky if they wait for you.

Help everyone you can. Some will return the favor, but it feels good even if they don't. As long as you stay in this industry, you will probably cross paths with that same individual.

Do not bury yourself in this business. Successful contractors spend valuable time with their families and relax with hunting, fishing and golfing, or whatever recreation they enjoy. You must learn to delegate your responsibilities to be sure that everything critical gets done on time without you personally doing it.

If you’re wondering how all of this could be possible, you simply need to watch what your competitors are doing. Adopt everything they do better than you, and avoid their shortcomings.

Thank-you for reading PM and sharing your questions and ideas for these 25 sterling years.