Have you ever tried to learn a new game? Like a card game or a board game? Do you remember how many times you needed to play it before you “got it”? Look at the game of football. If the scoring system and rules were more complex do you think so many people would watch it? Or what if the score was not even kept? It’s the same as measuring field production in the construction industry.

In my conversations with contractors, the first response is often that it can’t be done, period. Once I get past that roadblock then the next response is that maybe it would work for some companies but not for my company.

But the answer to both of these mental barriers is YES, it can be done and YES, it can be done with ANY company.

To get started, the first thing to do as an owner is find a great people person who communicates well and is tech savvy—this person will be the process owner (the PO). The rest of the skills can be taught. The other requirement is that you, the owner, must communicate with and support this person completely. All the employees must see your involvement and support to build trust in this new system.

Once you have the PO in place, have meetings with the estimators to define the measurements. If you are estimating with spreadsheets the job will be more difficult than if you are using a database-driven estimating system, but either way, the point is to remember that what we want to measure is going to start out much simpler then what the estimators will want. Think of this as a new game that we are teaching. The simpler the game—especially to start off—the easier it is to learn. The simplicity also depends on the number of employees to be taught and the collective knowledge (intelligence) of those employees.

To start, have the estimators summarize the detailed labor tasks into very broad work codes. They will argue that the collected information will have no value because it includes too many types of work for a meaningful measurement. Remind them that the measurements are for the guys producing and to be patient because over time the collective knowledge will increase and the detail can become more complex. Here are some important points to remember when starting out:

  1. Every employee must record their own time tickets. (This is absolutely vital to success because it builds trust and allows for daily communication.)
  2. An employee should never have to break their time into more than three work codes. (There is an increasing loss of accuracy with more work codes.)
  3. Companies starting the process should have only 40 to 50 work codes total and generally only 10 to 15 on a single job.
  4. Your accounting system is the source of the correct data. Add the un-posted time tickets and qualities completed to and present this live during each time-user’s input or approval process.
  5. Use phases if the quantity or length of time needed to accomplish the work code is more than 15 to 30 days.

 

Refer to the previous entries in this series on cost codes What is a Cost Code? and Job Cost Standardization for clarification in determining the final work codes to use to start.

The problem is defining how you are going to measure. Establishing the unit of measure you will use is difficult. The simplest way to determine this is to pick 5 or 6 of your best craftsmen and do a little brainstorming with them. What should be measured? Some units of measure that might work are:

  • square feet
  • linear feet
  • cubic yards
  • squares
  • tons
  • pounds
  • each
  • gallons

The key is to start with something. You can always change it if you determine that a different measure is better.

An example was a general contractor that was required to keep 165,000 square feet of floors clean during a year-long project. They used square feet as the unit of measure and determined they would have to completely sweep the floors three times a day to keep them clean. The size of the job was therefore:

165,000 square feet x 3 sweepings = 495,000 square feet.

They calculated that this task would require two laborers using a rented floor sweeper and hand sweeping for the last four months (80 days) of the year-long project. The time spent would therefore be:

2 Laborers x 8 hours/day = 16 hours/day x 80 days = 1,280 hours

So the production rate would be:

495,000 square feet/1,280 hours = 386.72 square feet/man-hour.

This calculation provides a way to see if we are ahead of the goal or behind and we can discuss the reasons why and make the necessary adjustments. Every day when each of the two laborers entered their time, they could see the production rate goal and the square feet they actually completed was reflected in the current production rate. If they were ahead or behind, they talked about it and planned accordingly. If the goal was too high, everyone would see it and the estimators could make an adjustment.

The more data you collect, the better the unit of measure is understood and fine-tuned. This communication takes planning to a new level. This example is a very simple solution; every work code will require considerable thought to determine the best unit of measure to use.

In closing, remember that this is a journey that takes time. Selection of the PO is critical. That person needs to fully understand and embrace the value the measuring system will bring and stay with it until it becomes a habit. Each year that passes the historical data gets more accurate and the process gets easier. Using technology to connect your accounting data to real-time gives you the tool to make it become a reality!