John has a good pavement maintenance company in the big picture of things. He’s a hard working contractor who has a normal mix of long term and short term workers. However, he can’t quite seem to break through the profitability ceiling, or “PC.” As much as he figures and refigures his estimating efforts he still is falling 3%, 5%, even 9% short of the gross profit that he should be realizing on most jobs. His frustrations led to his asking me to come along side for the rest of this year to get him over the “PC” barrier.
Too many good contractors are struggling today with getting that next 3%-5% of gross profit. Some contractors are literally approaching double figures in shortages from what they should be experiencing on their gross profit. After reviewing John’s work processes that his field guys practiced I’m convinced that he can realize greater gross profit and tighten up his job-site productivity but it’s going to take some good planning, execution, and commitment.
Image courtesy of Serge Bertasius Photography at FreeDigitalPhotos.net
Pre-Planning For Job-Site Productivity
First, most pavement maintenance contractors, do a horrible job of pre-planning their projects. This is their first mistake. Pre-planning, especially pre-construction, is a specialized effort among general construction companies and our industry could learn much from the same effort.
Pre-construction, with an emphasis on pre-planning, begins when a field leader takes all the collected information from the estimate and begins to review what he and his crew can do to maximize the production effort. This means recognizing where trucks, equipment, materials, etc. should be delivered, unloaded, loaded, and stored. This effort alone costs many contractors thousands of dollars a year in accidents and damaged materials when not done.
Second, continuing the pre-planning effort, the contractor should then set out the next week schedule by each Friday for the next week of work. I introduced many years ago the “Next Week Look Ahead” to our industry at our annual conferences. The contractors who have embraced this tool confidently share that this process of planning will add 2%-4% almost immediately to their gross profit, often more. The big objection I hear for not doing this is that “the schedule will always change.” The scheduled does change periodically but by having the plan in place the alternative decisions can be made faster and with more foresight. There is absolutely no excuse for not planning!
Third, there needs to be an organized process to unload, place, store, and load equipment, tools, materials, etc. This can also be preplanned by creating something Japanese Management has called “5-S.” There are five components involved with incorporate 5-S but one effort that is critical for us here is the development of a 5-S Map.
Develop Your 5-S Map for Job-Site Productivity
A 5-S Map can be used for many purposes that will help to keep things organized and encourage a cleaner and safer job, job-site, more organized trucks, and especially yards and shops. Consider an aerial drawing of your tool truck where you have most of your equipment and hand tools stored. Once drawn, you then identify where each item is to be kept. You can do this by drawing an arrow to the location on the truck where the item is to be kept and then writing what the item is such as rakes, blowers, buckets, etc.
You should have a 5-S Map done on your shop, yard, etc. Also, I recommend drawing a 5-S Map for how you want to lay out your equipment and tools once you are at a job site. Some contractors argue with me but soon realize how much they can save by having all the items that they will be using lined out or positioned on a job site for faster retrieval and better handling.
Fourth, the leadership to hold morning and afternoon “huddles” between a crew leader and the crew members is crucial for successful production each day. This huddle I’m referring to is a short 3-5 minute meeting at the job site that first clarifies what the targets are for the day, confirming who is doing what on the job, and reminding all workers to important information about the job and safety reminders. This morning huddle isn’t enough, there needs to be a “PM” huddle just before all the workers head home or back to the yard. The afternoon huddle would review what happened during the day, what can be improved, and what can be done to organize the site, trucks, equipment, etc. to make the next day’s production go faster and smoother.
Finally, the most critical issue to busting through your profitability ceiling is to be a driver of the first four items. We have enough to battle each day with inexperienced workers or negative attitudes reflected by many of our workers without you not driving, supporting, and enforcing the completion of the four items listed earlier.
