Why am I seeing inconsistent performance from job to job?
You may be wondering why two nearly identical jobs had two completely different outcomes. One had favorable margins, while the other lost you money. How could this happen when the work was nearly the same?
This is a question that plagues many subcontractors. Most accept it as part of the business, and to a degree, it is. There are some factors, like weather, that you will never be able to fully control. However, a lot of the problems that lead to job performance inconsistencies can be solved by putting the right operational systems in place.
Let’s talk about a few of the reasons you might be seeing inconsistent performance from job to job.
One potential reason is that the jobs aren’t as similar as your bid may have suggested. There may be way more detail on one job compared to the other that you didn’t account for during the bidding process.
Let’s say you’re a painting subcontractor. You bid two jobs based on square footage. The bids total out to about the same amount, but one job involves a wider variation of paint colors, more windows to tape off, more trim and details to paint. That means more labor hours than you originally anticipated.
Bidding software can help you anticipate your costs more accurately and ensure you’re not underbidding jobs or taking on losing jobs. Spending some extra time on bidding might not sound like something you want to do, but it is an important part of cost management that will save you time and money down the line.
Lack of Realistic Standards
Another reason you might be seeing performance inconsistencies is because you lack realistic standards for the time and material it takes to complete a job. How can you gauge job performance without knowing how long a particular task should take? Without knowing the exact amount of supplies you’ll need?
Think about it. You might think you have an idea of what it takes to complete a task, but is that standard based on actual data or on a feeling you get? In other words, are you just guessing?
The problem stems from bidding inaccuracies as well as operational inefficiencies. Making detailed bidding part of your process will go a long way in setting standards for both material and equipment usage and labor hours needed. But access to real time job performance data is a huge game changer.
Job costing allows you to compare bid numbers with actuals, but oftentimes owners aren’t seeing these types of reports until a project has wrapped. Even then, they lack in detail and don’t tell you much about what’s going on at your job sites.
However, by using a software with labor and material tracking capabilities, subcontractors can gain access to detailed job costing reports in real time. Time and material should be attributed to exact tasks within the software program, so you can see if you’re above, below or on target with your budget every step of the way.
Access to these data-driven insights will help shed some light on how long certain tasks actually take, how many workers are needed and how much material is really needed so managers have a more practical standard against which job performance may be evaluated.
So now you’re bidding accurately, tracking actuals and comparing them against bid numbers in real time. You’re confidently aware of how long tasks should take and have set reasonable standards to compare job performance against. Unfortunately, you’re still experiencing instances of discrepancies in performance from job to job.
It’s possible you have a labor problem. We’re not going to use the word lazy, but perhaps your workers on certain jobs could use some extra motivation. Or, it could be that the practical standards you’ve set haven’t been adequately communicated.
Either way, the real time job costing reports you’ve been referencing can help your field staff better understand what’s expected of them. Go ahead and show your field manager in charge of the underperforming job how their workers’ hours are stacking up against those of workers on an adjacent job that’s performing on or under budget. You could find that this solves your productivity problem, or figure out that something else is to blame.
The beauty of using a software that “does it all,” so to speak, is that you can better identify problems on your job site. As discussed above, real time job costing functionality could help you pinpoint the tasks on which crews are underperforming. Sometimes this can be due to scheduling problems.
You may discover that you’re underperforming on a job because you have too many workers on the job. When there are too many workers on a job, each one has less to do and more time for distractions like playing on their phones, talking or just moving at a slower pace.
Or, you may discover that you’re underperforming on a job because you don't have enough workers on the job. When there are not enough workers on the job, you typically unscrew overtime costs trying to finish the job on schedule. Not only do you have to pay 1.5 times more for overtime, but workers start to get tired and production rates will typically slow towards the end of the day.
If you use software to help project the exact number of hours it takes to complete a job, then you will know exactly how many guys to send out when it’s time to execute that job. Having bidding numbers, scheduling and labor hours data readily available within the same web-based software enables you to identify potential scheduling problems, to which you might otherwise be blind.
Uncontrolled Material Usage
Just as detailed bidding can help you control labor productivity, it can help you get a grip on material usage. When bidding, we typically use rough percentages for materials needed or general costs for assemblies. Once the job starts, we expect field staff to figure out exact products and quantities needed. While some employees are better at this than others, the problem with this method is that tracking the exact amount of quantities ordered becomes very difficult.
Utilizing a construction software that allows you to bid with exact materials and quantities needed, you can really streamline the process. The software should be able to automatically produce purchase orders that include all the materials needed and the exact quantities that should be ordered. This reduces the work for the field employees have to do and allows them to immediately communicate if they see problems in the bid information.
Once orders are submitted, you can easily review bid versus actuals. This is critical when reviewing job costing per project. You can also use these data-driven insights to look at trends of material usage over longer periods of time to see if there can be adjustments made to standard material usage rates.
This one comes at no surprise. If you’re a subcontractor, then you know the headache that is rework. In fact, $31.3 billion in rework was caused by poor project data and miscommunication in the U.S. alone in 2018 according to Autodesk and FMI.
Rework has the potential to make or break your budget on a project. Whether it’s a major whoops or a bunch of small mistakes that need to be corrected, redo work has the potential to destroy your profit margins. Don’t allow yourself to get so accustomed to rework that you accept its abundance as unavoidable reality and forget about the detriment it can inflict on your bottom line.
Yes, human error is a reality that you’ll never eliminate completely. But, construction software can help you streamline business operations and improve communication between office and field staff, dramatically reducing the amount of rework you’re used to.
Inclement weather is one factor that software won’t really be able to control. If I could develop technology allowing users to cast a large dome-like barrier from a smartphone, I’d be a very rich man. Alas, I’ll leave controlling the elements to forces greater than I and focus on what I can do to help businesses control their costs.
For example, using a web-based software with GPS-based mobile time clocking capabilities can indirectly help control costs in bad weather situations by creating transparency. Employees know that you can see when and from where they are clocking in and out and what tasks they are performing each day. Thus making it very visible which employees are “working” during times when weather prevents them from actually doing so.
Though weather can definitely present challenges outside a subcontractor’s control, the good news is that most of the problems behind inconsistent performance across jobs can be solved with a good construction software.
As a second generation subcontractor, I understand the struggle businesses face when it comes to inconsistent performance from job to job. It’s part of the reason why I created A.C.E. Construction Software to be a one-stop-shop software solution for subs.
A.C.E. offers a wide scope of functionality designed to help subcontractors run their businesses more effectively and efficiently, from bidding to project management to accounting and every step in between.
Schedule an introductory phone call to learn more about how A.C.E. can help you solve your performance inconsistencies, streamline your day-to-day operations and increase your overall profitability.