Business management for years has taken the advice of statisticians: that if you don’t or can’t measure something, then you can't manage it. In construction, this simple truth is the key to being successful. Management of bidding, projects, labor, or profits is not just a group of tasks that you must perform, it is taking in facts, analyzing those facts, coming to conclusions, taking action, and then reviewing the results of the action. Too often, estimators, project managers, foreman, and executives come to work to manage, but they don’t measure what their managing.
Let’s take a look at managing labor. Traditionally in construction companies managing labor entails ensuring people are on site, are well trained, have the tools needed, and providing rewards and discipline as necessary. Superintendents or foreman are typically tasked with these functions, but how are they measuring their labor to effectively manage them? Is it through years of experience and timecards? What is the critical aspect of labor to the company?
I submit that there is nothing more critical to a company’s success than the productivity of the labor. Being able to measure the productivity of the labor on a project is the top level measurement for how to take new actions to manage. Sure there are other critical items like safety, attendance, quality, and attitude, to name a few, but if you’re measuring productivity properly all of these items are subsets of the productivity measurement.
So how would you measure productivity on a construction site? Productivity is simply the ratio of what is produced (read as units installed) to the amount of input (read as dollars or hours) required to produce those units. For example, if your company is doing concrete work, it is the total yards completed properly versus the hours to make that happen (2.1 cubic yards/hour). If you are in charge of labor or have an ancillary responsibilities regarding labor efficiency (i.e. Project Manager, Operations Manager, President), you need to ask yourself if you are measuring what you are supposed to be managing.
Measuring labor can be done utilizing many different tools from old school paper forms, to fancy Excel workbooks, to custom software like crewHD. Each of these methods will yield the same results if done properly, however, they each will vary on the amount of time and control needed to produce the information and verify the results.
Another key component of construction that often doesn’t get measured is bidding work. Do you know how many bids went out last month? How many were won compared to a year ago? What your statistical chances are on a project based on past performance? How many bids you made to a particular client and how many of those you won? If you are in the preconstruction department, you might want to think about what you are actually measuring so you can manage it better.
Getting work is a complicated system and as so eloquently put by W. Edwards Deming-
A system must be managed. It will not manage itself. Going out and bidding job after job, getting results some of the time, and then bidding some more will not improve the system. It is not managing, it is just acting. At some point, measurements need to be taken and those measurements need to be analyzed and different actions need to be taken.
Some have compared bidding to going to the plate in baseball. It is a fair analogy, especially because the success ratio of both is so low. It is very difficult in construction to “hit” .300, in fact most companies are lucky to be half of that. But let’s look deeper into how professional ball players to it. Do they sit back and say “the more plate appearances and swings I take the more hits I will get”? Doubtful. They measure their performance and the performance of the opposition so that they can make different decisions when faced with a pitch. You should be measuring yourself and your competition as well, so that you can get more hits.
Just like labor, measuring bids can be done utilizing many different tools from old school paper forms, to fancy Excel workbooks, to custom software like bidHD. Each of these methods will yield the same results if done properly, however, they each will vary on the amount of time and control needed to produce the information and verify the results. You also need to ask yourself if you are measuring the most critical data or just measuring what is easiest for your current system. When doing analysis on data, the more data the better and not having enough can lead to poor conclusions.
It is self evident that you cannot manage what you don’t measure. In the past it might have been easy to say that we “can’t” measure that, but with the multitude of tools out there that is not a valid reason any more. Think about what you are responsible for and check to see if you are measuring it properly and if you are not, take some steps to start measuring, it will lead to better results.