Production is not a place to make money. In fact, it’s often a place to lose money. One mistake of the kind that you could easily offset back in the days of big and plentiful jobs, such as ordering the wrong vanity or tile color, can eat away at profit margins in today’s market. Small jobs can further compound losses if employees can’t shift to alternate or “floater” tasks and must pack up and relocate to another project. Lost days mean less production and less gross profit.
If these challenges are rearing their ugly heads in your business, shift your thinking and planning methods. Remember the time before you handed over production responsibilities to your staff? It’s time to go back to the basics.
Profit on Each Job
Beginning with the sales process, nail down client selections as early as possible. As you prepare estimates, map out the required tasks and supporting activities in “critical path” order — that is, the sequence in which the project will be built. What labor and equipment resources will you need to be efficient? Specify the materials to be used and their quantities.
These measures will help you to limit excessive change orders and last-minute additional work orders, which can leave little time for pre-staging and can compromise your overall schedule.
Why pre-stage projects? Because by gathering all, or most, necessary building materials before you actually need them, you won’t lose time trying to find and procure them during production.
Use Lead Carpenters as Lead Carpenters
Done right, a lead carpenter system can be more cost-effective than a production manager-driven system. By reducing production costs, you can lower job prices without compromising margins, making your business more competitive and profitable.
With a critical path sequence and a clear pre-staging plan, your project leads will be in full command of the schedule and the resources required to keep it moving. They will more eagerly buy into profit objectives and find ways to meet or beat labor hour estimates. With fewer open items, they’ll find it easier to manage homeowners, plan weather contingencies, confirm trade partners, and keep projects on schedule.
Have a Master Schedule
Maintain a master project schedule that assigns required resources and reveals scheduling holes. Fill those holes by selling profitable but small one-day or two-day projects. Ask these customers if they can be flexible about when you will do the work. If projects are pre-staged, and clients are OK with a two-day start notice, you can quickly and efficiently reassign resources and keep gross profit steady.
At my business, we posted a large production calendar that showed where each person would be and what they would be doing on each project. Not only did this help staff and trade partners plan ahead, but it gave them a concrete sense of job security. Imagine seeing your name spread across 10 to 12 weeks of scheduled projects.
Similarly, by looking ahead at the labor you need to build sold projects, you can maintain a lean production team, complementing it as needed with qualified trade partners.
Take Nothing for Granted
Think about what you learned and practiced in your business’s early days. Remember planning the night before? Does your staff do this now? Do they share your commitment to protecting profits? Do you give them the authority to see that responsibility through? Do you measure their performance and have consequences or rewards based on their outcomes?
The business is your ultimate responsibility, but in this economy, employees need leadership. Give them clear reasons to be motivated to still have their jobs tomorrow.
—Shawn McCadden founded, operated, and sold a successful design/build company. A co-founder of the Residential Design/Build Institute and former director of education for a national K&B remodeling franchise, Shawn speaks at industry events and consults with remodeling companies. [email protected].
