Construction Biz Wiz

“The ability to maintain your business’s standards is one of the best indicators of long-term success. Business owners can be under pressure to lower their standards for two main reasons: when conditions are abnormally bad or when they’re abnormally good.”

That’s the take on maintaining quality as presented in an article published by American Express OPEN Forum, an online community of business owners.

Business owners often lower the quality of their offerings if company’s revenues and profits are low, thinking that it’s a survival method and things will turn around. The opposite scenario draws the same owner reaction. If experiencing a flood of work and interest, owners don’t want to turn down business and opportunities for increased revenue, and so cut corners and lower quality standards to meet the demand.

Have you compromised quality? For example:

• Purchased subpar materials?
• Took shortcuts with methods, processes, plans?
• Lowered customer service by reducing personnel?
• Employed less experienced workers to cut costs on labor?

Maybe you saw a short-term boost to cash flow by lowering standards, but the long-term effect could damage or sink your business. Your customers will feel the impact of poor products and service. Plus you’re sending a message to your competitors, customers, and employees that you care less, choose not to compete, and can’t produce quality the way you used to. Compromising quality is a sure way to lose. Do not concede to the pressures to lower your standards, whether times are good or bad. Maintaining (or enhancing quality) is the way to succeed and stay competitive.  

To read the source article for this blog post, read this OPEN Form item, authored by Mike Periu.

Even during the tough construction market of recent years, Maxwell Systems continued to take its quality offering very seriously. The company has invested in developing an innovative solution from the ground up on Microsoft’s .NET and SQL technology; invested in resources to service and support customers with convenient and reliable tools and information; and made an investment in its development capacity to continue delivering product offerings and updates at an accelerated pace. All of these efforts are to solidify Maxwell Systems’ ability to best meet the needs of contractors and be the ideal technology partner to construction businesses across the industry’s sectors. To learn more about Maxwell Systems and how you can evaluate vendors to be your technology partner, you’re invited to download this free eBook: 7 Reasons for Partner Fit.

How have you demonstrated your company’s quality standards? Invested in software for business management? Demanded your material producers, subcontractors, and employees maintain certain standards on projects?

According to an article recently published in AGC’s Constructor magazine: “Contractors are taking more extensive measures to protect themselves from the risk of subcontractor and supplier defaults. As the construction industry continues to falter in a poor economy, an increasing number of subcontractors and suppliers are merging, defaulting or simply going under. Consequently, contractors are paying much closer attention to—and spending more money on—managing subcontractors.”

As the article explains, in many cases, the subcontractors are not to blame as they face scarce work available and slim profit margins, which cause overly eager subs to accept work that turns out to cost them money. And that’s a slippery slope toward default.

One expert reveals that in the case of subcontractor defaults and failures, the “ripple effect is typically 2.5 times the bond price” and emphasizes how important it is for contractors to have a plan in the case, explaining that “if the general contractor has to come in due to sub failure, there are expenses for things like materials, job scheduling and delays [that can’t be replaced] for as-is cost.”

Concerned general contractors use subcontractor default insurance and are enforcing stringent subcontractor prequalification criteria and a detailed review process, which may include audited financial statements for several years and strong balance sheets. More GCs are also scrutinizing subcontractors’ past performance and financial capacity for job completion. This due diligence often demands more time and overhead expense, but the article shares opinions of some construction executives who feel it’s surely worth the effort. 

Value of Software

Of course, many contractors are also investing in software to help ease the burden of managing subcontracts and minimize risk throughout the process. At Maxwell Systems we see contractors using the capabilities in our complete, all-in-one solution to streamline document workflow and more easily ensure subcontractors have liability, workers compensation, and correct bonding in force during jobs, as well as have an easy way to track and hold retainage.

And because the solution can be used to manage the entire project lifecycle, the benefits are experienced by the whole team. For example, the controller is able to ensure that invoices are applied to correct cost codes, that a contractor does not overbill, and that subcontractors are not paid if insurance, license, or bonding information is not up-to-date. Plus the project manager can easily know which subcontractors are assigned to which work, understand what the committed cost is on a phase of work, and efficiently track original contract versus revised scope of work for each subcontractor.

Download our free article, “All for One and One for All” and read more about how a complete software solution can help with managing subcontractors and minimize risk.

To read the Constructor magazine article, authored by Angelle Bergeron, in its entirety at AGC’s web site, click here.

An article just published in Engineering News-Record/ENR.com, authored by Erin Joyce, notes that the use of social media is gaining ground among many engineering and architectural firms, but that construction companies have lagged behind.

As Joyce explains in the article, “Hashtag This: Social Media Risks and Rewards in Construction”:
“Although architecture and pure engineering firms have been early adopters of social media tools such as Twitter and Facebook—and continue to innovate these communication platforms in their business and communications strategies—for plenty of construction firms of all sizes, their social media use and presence can be hit, miss or just not part of the mix at all.”

So this begs the question: Why are so many construction firms hesitant to use social media as part of their operations?

One expert’s opinion is that, “for many construction firms, all their work is about getting a project off the ground.”

Perhaps that goes in hand with the opinion of Jason Falls, an online marketing expert and author, who explains: “Communicating effectively in social media platforms (Twitter, Facebook, LinkedIn) can be tricky. There are certainly challenges. You are going to have to dedicate time and physical resources to be more efficient in how you approach each channel. Building relationships with customers is what you’re doing here and building relationships takes time.”

So is building or enhancing your social media presence among your business objectives for 2012? How do you make sure to plan for, dedicate resources, measure impact, etc. of your efforts in social media? How do you primarily use it in business … for branding, networking, communicating with customers, something else?

To read the article in its entirety, click here.
You’ll also be able to see Falls’ seven business drivers for using social media.

You’re invited to participate in Maxwell Systems’ social media efforts! Please visit http://www.maxwellsystems.com/company/community and choose from the various offerings which you like best. 

Erin Joyce is ENR’s managing editor, integrated media, and has a deep background in online publishing and e-newsletters.

Construction businesses have shown much tenacity to endure industry ups and downs, fits and starts, slow-goings, and increased competition. At times, it may have seemed absurd to think of growing a business when simple survival was top of mind. But the key to growth and success is anticipating change, preparing for the future, and knowing what to expect.

An article, “Recognize and Manage The 5 Stages Of Small Business Growth,” was recently published online at American Express Open Forum. And although businesses have different goals, methods, processes, and management styles, but they face common problems that happen at similar stages in their growth.

Author Tom Harnish explains that: “Understanding the stages of small business growth and inherent problems can help you assess where you are in the growth pattern, and help you anticipate what’s going to be required to succeed.” Owners, for example, will have to spend an extraordinary amount of time during the initial start-up period, and then have to learn to begin delegating work and authority as the company grows.

An excerpt from the full article follows:

1. Existence stage. During the start-up phase, to move from an idea to a business takes customers, cash and stamina. You do everything. You’re the primary source of capital and energy, and if you have help, you supervise them directly. 

2. Survival stage. If you make it through the start-up and have proven you have a product that people can and will buy, then survival becomes your primary concern. You have to be able to make enough money to cover your costs. And you need to be able to finance growth. Cash forecasting is critical, and owners must be able and willing to delegate responsibility, to avoid the common hazard of ‘growing broke.’ 

3. Success stage. Once a company is economically healthy and is generating average or better profits to ensure success, the company can stay at this stage indefinitely. Financial management, organization development, and delegation to a growing management team require more than seat-of-the pants leadership. If you decide to grow your company you need to focus on using cash and borrowing power to finance the expansion.

4. Takeoff stage. If you opt to grow, delegation and financing will become your key problems. This is a pivotal time. You need to decide if you want to become a big business or sell the company at a significant profit.

5. Maturity stage. Controlling your substantial financial resources will be one your biggest challenges if you manage to create a mature company—you’ll probably have a whole division trying to do just that. In a rapidly changing world, flexibility and agility are crucial. Knowing what challenges you’re likely to face in the years ahead can help you mitigate their impact.

In closing, it’s clear that investing in technology would be a worthwhile consideration at any stage. Construction management software can help automate processes, save time, increase productivity, simplify workflow, and much more that can positively impact the bottom line. To help ensure the maximum return on your investment, do the research required. Evaluate your needs now and what you anticipate a few steps ahead down various paths.

How have your technology needs changed as your business evolved and grew? Did you have to change systems or software? Or did you have a solution that expanded with your needs?