June 2002

Improving Job Performance and Profitability

By JAMES S. ANCHIN, CPA

In today's economy, it's more important than ever for contractors to run their jobs as efficiently as possible. We've seen insurance costs soar, bonding is more difficult to obtain and profit margins on jobs are being squeezed. Consequently, it's imperative that contractors maximize job performance and profitability to succeed in these trying times.

One of the best ways of improving job performance is to critically review past completed jobs and use the lessons learned from those jobs in approaching future work.

A good project review process, which involves the participation of all key project staff, offers multiple benefits, not the least of which is improving the bottom line. But companies also stand to gain in other key ways. At the very least, internal communications will be improved. Productivity will also improve and involved staff members will be more likely to "own" their projects and have a higher stake in project outcomes. Strengths and weaknesses will be uncovered both on a company and individual basis, pointing the way either to corrective action or additional training. Perhaps, most importantly, routinely pinpointing the factors critical to project success will engender a "success consciousness" among employees that will serve as the linchpin of the company's ongoing growth and development.

What Should be Covered in a Project Review Session?

While parameters will vary from company to company and job to job, basic to any review agenda should be a comparison of projected vs. actual figures in terms of both budget and schedule at every phase of the job. If costs exceeded budget, why? If work lagged behind schedule, what were the contributing factors, and how can they be avoided in the future? Other considerations are:

Deviations from budget should be thoroughly reviewed.

Change orders should be fully explored with particular attention paid to identifying "scope creep," (doing additional work at the owner's request, but outside the scope of the original contract and without a change order). In many instances, scope creep can seriously undermine profitability.

Contractors should take a hard look at the project in terms of efficiency. The field crew, the equipment, the suppliers, the subcontractors and internal support staff should be rated on their performance and contribution to overall project goals. Also up for discussion should be the overall working environment. Was there a high cooperation factor among team members? If not, what could be done to improve the situation?

Should partnership programs be required on future jobs with the same team? Make sure the review discussions don't take the form of finger pointing or general grousing, but are conducted with an eye to learning what can be done to make the next job go more smoothly and create greater profitability.

Who Should Participate
in Review Sessions?

As a matter of course, senior management as well as the project manager, job foreman, and superintendent should all participate. It's also a good idea to include the estimating staff, so they'll have first-hand knowledge of how their projected costs stand up to real world situations. Obviously, some of your most valuable feedback will come from the owner. If you're in a position to do so, encourage the owner to participate in the briefing session, or at least to provide verbal or written feedback, preferably sooner than later so that his or her comments can be discussed at your in-house review.

Holding these sessions on company time underscores their importance. But they don't have to be lengthy administrative nightmares that take staff away from billable tasks. If properly structured, project reviews can be as simple as two-hour debriefing session over a brown bag lunch. In any event, the more systematic these sessions, the better.

Contractors would be well served to develop a standard post-project evaluation sheet, one that lists critical aspects of the job-from preplanning through closeout. Score it on a one-to-five, unsatisfactory-to-excellent ranking system for each aspect. Have participants fill out the forms beforehand and come prepared to discuss their ranking at the meeting. After the session, it's critical that each manager communicate all feedback, and particularly, any lessons learned, to his or her staff.

Chances are your project team is Monday morning quarter