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OP-ED: Five Steps Contractors Can Take to Improve Business in 2018

January 24, 2018


All the forecasts materialized in 2017. The construction industry sizzled. Crane towers were in every view in the metro area. Work trucks and material deliveries congested traffic. Tradespeople were in very short supply. No one had room in their schedules, and many companies were into their “X,” “Y,” and “Z” teams. And with all this buzz came the natural set of challenges forecasted over these last two years: project scrambling and delays, team development deficiencies, and yes, a rise in administration and claims. Many simply did not have the time or foresight to get those houses in order. Now that we are in the heat of this boom cycle, addressing many of these issues may seem too daunting. 

But there is hope for improvement. You do not need to maintain work at a manic scramble to the finish. Little adjustments you make this late winter and early spring can improve flow and reduce headaches. And these adjustments can spare teams the burden and cost tied to expensive claim resolution efforts. Here are a few well-shared reminders that are always worth another turn.

Dust Off the Old Contract

This of course is a familiar cheer from us folks in the business, and it is likely the least expensive but most important effort to mitigate problems. The courts are in business year-round, and each year there are a slew of cases that alter the allocation of risk and responsibility in subtle and not so subtle ways. Our legislature now convenes yearly, and new legislation is often enacted specifically for the construction industry. In this last year alone, changes to employee benefits and family leave, to the prevailing wage laws, and to insurance and indemnity alter how we manage our work each day. Having a quick legal refresher should be inexpensive, and just may be the touch that is the difference between a quick resolution of a problem and a protracted and expensive claim.

Review Employee Handbooks and Agreements

Similar to the first suggestion above, you should pick up those handbooks and agreements annually and ensure they are up to date. Much has changed in the last two years in the area of employee benefits, and navigating this evolution is no easy chore. If your in-house capabilities are not sophisticated, there are employment professionals who can help you assess this very volatile environment and ensure that you do not make any miscues.

Complete a “Project Administration” Audit

Each year construction teams encounter a slew of familiar and not so familiar challenges in their day-to-day affairs. Whether projects were plagued with chronic delays, labor inefficiencies, or a consistent hum in interrelationships with contracting partners, you should toss these issues out on a table and review them with your teams for improvement. This process may be tedious, but it is surprising how often teams identify themes or patterns. It is far easier to develop a solution when you figure out what the real problems are. Take this process one step further, and ask your brokers, accountants, and advisors for recommendations of third parties to help. The act of bringing in a third party itself will create a heightened level of attention from your teams, who may themselves need a little shake-up now and then. And you could take this even one step further by setting up a short retreat with your teams, or by joining a peer review group to assess your practices and procedures. If there is one thing I have learned about the construction industry, it is that many work very well together and are more than willing to share ideas and tips to improve even their competitors. You might consider a survey of independent partners—they often have a very reflective view of what worked and what could use some improvement. Taking that deep breath to reflect on the year and the opportunities for improvement is typically well worth the exercise.

Assess Your Team

Did your teams rise to the challenges this last year, or did they get overwhelmed? As the volume of construction work has grown over the last three years, companies have grown substantially. The skills that may have been very helpful during a growth cycle are not necessarily the same skills necessary to administer a larger and more sophisticated program. Though this is only a casual survey, when I have asked our clients what their number one challenge will be in the next 18 months, the clients have been nearly universal in their assessment that finding the right, qualified individuals to lead their efforts is the biggest hurdle. It is imperative to know what your teams are and whether your in-house training and development, or your recruitment program, is going to fulfill the needs of the company. With everyone experiencing a similar challenge, addressing this issue is infinitely more challenging. Using your trade association affiliations and reaching out to third parties will help. But this is no quick fix. With work volume up, now is the time to develop a program for development and recruitment.

Assess Yourself

Whether “you” as an individual or a leadership team, take a step back to review whether you are rising to the challenges presented by this sizzling environment. If your work teams are plagued with consistent challenges, this may not be your work team’s fault so much as a lapse in leadership. If resources problems cannot be resolved, taking a realistic step back, and thinking “better” not “bigger” may very well be the key to success. It can be very hard to resist the next project, especially after still feeling the effects of the downturn from earlier this century. But it has now been seven or eight years since the great recession, and a good four or five years since the beginning of this significant boom in construction. Take a look at your profit margins. If they are shrinking, it may very well be that “you” are not doing your work and may be overextending your resources. You may want to pass on that additional job and focus more on making the work you have more successful.  

Column first appeared in the Daily Journal of Commerce on January 23, 2018.


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