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Education Fact about Construction
It is noteworthy that all education levels are acceptable in our industry. According to the U.S. Department of Commerce, there are approximately 2.7 million U.S. construction firms. According to the United States Census Bureau, of citizens ages 25 and older, 28 percent have a bachelor’s degree. As we look at the construction industry and apply this percentage, 72 percent of construction firm owners do not have a four-year college degree. If I can extrapolate, more than 1.8 million construction firms are managed by someone who does not have a bachelor’s, master’s or doctorate degree.
The Close Out of a Construction Project
The close-out phase of the project is one the most important factors in determining how a project ends. Does it end with a strong finish and the owner is delighted at how quickly they received occupancy? Or did the last 10% of the job drag on forever and it seemed as though you would never finish? Customers remember most vividly the last 10% of the project. How you close-out a project will leave a lasting impression in the owner’s mind. Unfortunately, they won’t remember all the hoops you jumped through to get the job started in the dead of winter, but they will remember that it took three weeks longer than expected to patch the drywall or to broom rocks………
Excerpt from “Managing a Construction Firm on Just 24 Hours a Day” (McGraw Hill, 2007, 416 pages) – Go to www.stevensci.com for book bundle of excel templates, online courses and book.
The Standard as an Anesthetic
J.M. Juran points out the danger of the “Standard as an Anesthetic.” In manufacturing for many years, 90% good product was considered the best a company could achieve on a consistent month to month basis. Certainly, since the first publishing of his book in 1964, that myth has been shattered by many companies with the help of other quality legends, such as, Deming, Crosby, Ohno and others. However, during the first half of the 20th century, if 90% was attained, no alarms tripped and no action was taken.
Do we have the same standard as an anesthesia problem in construction? Do our “rule of thumb” practices cause a lack of challenging current thinking and thus, breakthroughs?
Read my book, “The Practical Construction MBA” for this and other insights.
Construction Productivity and the “Hustle” Factor
Construction productivity is flat in the United States. We tend to think that productivity has risen in our industry but, as we have seen in the last decade, it has not risen at all. There have some incremental increases in productivity that have kept us from being completely at the mercy of uncontrollable factors such as red tape, material shortages and owner whims. The increases in productivity are non-existent as measured against other parts of the economy. We were starting to benefit from advances in materials, methods, and attitudes in the construction industry as well as an increase in the “hustle factor”………
An excerpt from my book, “The Practical Construction MBA”. For more construction contracting insights, sign up for our free monthly newsletter, “The Construction Contractor’s Digest” at www.stevensci.com
Market Cycles
If your markets are recession resistant such as roofing or remodeling, the value of your firm is higher than normal. To contrast, contractors in the residential building business are exposed to the whipsaw of interest rate and environmental activism more than most other construction firms. Your strategic plan should address the danger and opportunity of market as well as political cycles.
This is an excerpt from The Practical Construction MBA – for more information go to www.stevensci.com
Increasing the Value of Your Construction Firm – #144
The value of a firm is affected by its long term growth prospects in its market(s). Certainly, finding growing niches in being profitable in them helps makes future years more profitable. Sticking to a niche that declines only leads to project margin cutting by competitors and less service offered by competitors. Be sensitive to finding growing niches and transitioning away from shrinking ones.
Excerpt from “The Practical Construction MBA” – go to www.stevensci.com.
ENR’s Book Review of “Managing a Construction Firm on Just 24 Hours a Day”
Richard Korman, Senior Business Editor, Engineering New Record and ENR.com writes:
If you want to clear your head about something in construction contracting, just pick up consultant Matt Stevens’ new book, Managing a Construction Firm on Just 24 Hours a Day. It is like talking to your older brother who has clamped a hand on your shoulder and is telling you the blunt honest truth about the costs associated with schedule compression or right-sizing your overhead. Yes, this book is full of takeaways and sample equipment forecasts. But where it really shines is in discussions of resource allocations and the uses and significance of CPM schedules. Stevens makes them simple. It is in essence the ultimate, easy-to-digest book about the financial management of contracting for an industry where the younger people have college degrees and the older set don’t exactly want to focus on finance. I’ve never seen anything more accessible on getting and managing work profitably.
There’s also a fascinating and tightly narrated chapter called “The Business of Contracting” on the changing nature of the construction industry. In it, Stevens discusses, among other subjects, how most young construction professionals “do not [and did not] go through the ‘field’ because they don’t want to work” in the dirty and dangerous environment of the jobsite. They have “turned construction into a business” in which “craftsmanship is now assumed to be the same from contractor to contractor.”
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Book Review – “Managerial Breakthrough” by JM Juran
Many people have said, “Don’t read all the books in library, but know the important few”. This is a crucial lesson these days in the days of “books as marketing”. We have all read more than one that promotes the author rather than the subject matter.
For construction professionals that critical list to know may include Adrian, Clough, Covey, Collins, Deming, Drucker, Hinze, Jackson, Newitt, Peters, Porter, Schaufelberger, Sears and others. Let me suggest another one – Juran.
If J.M. Juran was with us today, he would have none of this new writing and publishing ethic. That was not his professional purpose. Understanding, solutions, problem solving and helpfulness were part of his character. He wrote 11 other books including “Bureaucracy: A Challenge to Better Management”, “Architect of Quality”, “The Corporate Director” and “The Quality Control Handbook”.
Today, it seems more books are written for notoriety or controversy and not for contribution of content. Pity the young people who may not realize this. It must be confusing. Back in my twenties, books were serious endeavors. They are written because they were personal. If you asked any of the above authors about the reason for their written work, they may respond, “I just couldn’t keep what I thought to myself and my clients. It was important to me that others benefited also.” This must be the reason for writing “Managerial Breakthrough.” Joseph Juran had to share what he knew, it was that important to him.
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