Strategic Planning

High-performing contractors are always learning from others as they do their strategic planning. Ted Garrison, a well-known consultant in the construction industry, makes annual predictions for the coming year. Here are some from his 2010 forecast

“Doug Woods, founder of DPR Construction, has said our industry hasn’t altered in more than 100 years, but that’s about to change because the consensus within the industry is that modification is needed.

“The residential marketplace is going to improve its efficiency and the value it delivers.

“Doyle Wilson, a Texas homebuilder, attempted to introduce lean construction into the housing industry in the early 1990s.. He told me he gave up because once the housing business took off in the ’90s, no one cared, but the depth of the current recession in the housing market is causing homebuilders to try new approaches. As homebuilders find that lean can help them be more profitable, as others have discovered in other industries, this trend will grow.

“The combined impact of increased difficulty in qualifying for home mortgages and a more realistic approach to personal finances has caused homebuyers to become more conservative in their purchases. Consumers are demanding greater value, not just bigger and fancier. Homebuilders who are learning how to adapt their approach to the demands are seeing success. I see this trend continuing as the nation enters a more conservative personal financial era.”

You can hear his entire forecast

Source: The Garrison Report #2010-1

Customer Focused – Are you serious?

“Are you serious about them? Are they serious about you?

Most people misunderstand and mis-define the word serious. They view it as stoic, non-smiling, stiff, non-humorous, and boring. Hardly.

“Serious is the intention, the intensity, and the focus that you put into your work ethic and your personal ethics. Serious is a way of life, a way of business, a way of selling, and a way of serving.

“How serious are you?

When your prospect or customer comes to the realization that you are “serious” about doing business or earning business, it stems from the actions you took to make that feeling possible.

“Those serious actions or characteristics include:

• Speed of response.
• Ability to deliver.
• Ability to serve.
• Desire to serve.
• Knowledge about how what we have will help someone.
• Friendliness.
• Personable.
• Perceived value of product or service.
• Truth at all cost.
• Available when THEY call.
• Easy to access anyone.
• Easy to do business with.
• Online access to information and ordering.

“If you have all those attributes, you have a CHANCE of being perceived as serious.

What are you serious about?

“Yes, I’m serious about the economy, and our present state of affairs, but I am 1000% MORE serious about my business, my finances, and my sales. My focus is on success, not doom and gloom. There’s no bailout for entrepreneurs. And the only stimulus I have is the one I create for myself.

“In good times or bad times, here are a few things we are serious about in my business: (How do you and your business compare?)

• We are serious about helping our customers. Many are in need, and looking for answers.
• We are serious about being friendly. It costs no extra money to be friendly, and it sets the tone for positive outcome.
• We are serious about being an online leader. Online is forever, and we are investing in our future.
• We are serious about NOW IS THE TIME. We are not waiting to see what happens, we are taking success actions on the opportunities that exist NOW.
• We are serious about error-free order processing and packing. We focus on delivery, not shipping. And yes, we do make errors. But our recovery is spectacular. The best email I get is one that says, “You walk your talk.”
• We are serious about getting every order shipped the day it’s received. Our customers expect “fast” and “perfect” and we deliver.
• We are serious about doing the right thing and the best thing for our customers. This is a true mission statement.
• We are serious about having fun while doing it. We kibitz, we wisecrack, we engage customers about them, and we do it with the serious intention of having a great time and being memorable.
• We’re a family, not a team. Maybe that’s why we’re serious about working together, staying together, and succeeding together.

“I realize that many of my customers need help and I am serious about giving it to them. Not selling – giving.”

Source: Jeffrey Gitomer's Sales Caffeine issue 407

From a contractors’ view are we serious about:

Giving a true bid of the cost to do the job not a low bid with anticipation of many change orders?

Giving value engineering even if it the savings is only to the customer?

Honoring our promises to start and complete the job as scheduled?

Helping the other trades be successful by doing reliable work?

Cooperating as a team on a project rather than seeking only what best for you? This may include sharing resources and information.

Keeping Score - Do your measures matters?

In construction, most contractors say we do have much we can measure. Then we measure everything; but little that matters! High-performing contractors measure to analyze to drive action. If you have measures but don’t analyze them to take action - why measure?

Note in using the term “measure” I am talking numbers that are written or recorded. These may be after the fact measures like profit, or the number of jobs over budget. They may be more like indicators such as the feet of pipe welded right the first time today or the percent of shop fabricated material delivered on time to the job site.

Analyzing measures doesn’t require a PhD in statistics. It simply means that we compare the measure to some target. That target often is last month’s or last year’s same month’s number. Another type of target may be the goal we expected to reach as a result of actions we took during the month. High-performing contractors will compare their performance to best-in-class (within the construction industry) or world-class performance.

Some more sophisticated contractors may even use statistical process management to compare past performance. This approach looks at the upper and lower performance system limits of the particular operation calculated using the average and standard deviation. This gives a more precise view of the function being measured - if its variation in control or not. While this may sound complex, managers, foremen and even front line employees can learn how to analyze the measures without knowing all the calculation details. This leads to a better identification of when to take action.

Regardless of what targets and analysis one uses, the measures must drive action. The first level analysis can only tell us three things – we are at, below or above the target. Depending on that conclusion, we can start the actions. If at target, what actions do we take to maintain this level? If below target, we need to first understand the root cause for being under and then what countermeasures to improve? If we are above target, assuming that is a good thing, we need to identify the root causes for achieving this level and take action to replicate it the next month and on other jobs or at other locations.

If we just look at the numbers as one manager did and conclude that “some days are better than others,” we are wasting time and resources. Take this measurement challenge:

List all measures that you currently have for field, shop, office, service, accounting, productivity, etc.

Group each measure by what it tells you related to:

Performance in meeting your customer’s needs

Financial performance

Operations performance

Employees (safety goes here) satisfaction

Determine who actually uses each measure?

Who analyzes the measure?

Does each measure have a target & how is it set?

Who takes action when the measure goes the wrong direction?

What actions have been taken during the last 3 months or year as a result of analyzing the measure?

Weed out all measures that don’t drive action. Set useful targets and post the key measures so everyone can see them.

TAKE ACTION - DO SOMETHING TO IMPROVE AND SEE IF IT DOES.

Learning Opportunities

You may be interested in attending one of these training seminars by Dennis Sowards:

Feb. 25, 2010 - Eliminating Treasure Hunts – Applying the 5S’s - Phoenix, AZ, Sponsor: PIPE & 469 JAC, contact Cathy Mayeux at 480.966.0377 or CMayeux@pipetrust.org

March 10, 2009 – Lean works in Construction – sponsored by Mid Atlantic SMACNA Chapter. Contact them at (301) 446-0002 or info@smacnaatl.org for details. Must be a SMACNA Member or affiliate to attend.

March 25, 2010 - Job Planning that Really Works – The Last Planner not the First Planner system – Phoenix, AZ, Sponsor: PIPE & 469 JAC, contact Cathy Mayeux at 480.966.0377 or CMayeux@pipetrust.org

April 22, 2010 - Lean Applied to Service – Phoenix, AZ, Sponsor: PIPE & 469 JAC, contact Cathy Mayeux at 480.966.0377 or CMayeux@pipetrust.org

May 20, 2010 - Getting to the Root Cause by Analysis not Luck - Phoenix, AZ, Sponsor: PIPE & 469 JAC, contact Cathy Mayeux at 480.966.0377 or CMayeux@pipetrust.org

Sept 30, 2010 – Lean Construction – It can work for you - Phoenix, AZ, Sponsor: PIPE & 469 JAC, contact Cathy Mayeux at 480.966.0377 or CMayeux@pipetrust.org

Oct. 28, 2010 – Gaining Customer Loyalty by Design - Phoenix, AZ, Sponsor: PIPE & 469 JAC, contact Cathy Mayeux at 480.966.0377 or CMayeux@pipetrust.org

Thought for the day

If I only had an hour to chop down a tree, I would spend the first 45 minutes sharpening the axe. - Abraham Lincol

For more information about the High-Performing Contractor assessment process contact Dennis Sowards at 480-835-1185

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