Articles Written by Charles Vander Kooi

Managing projects by teamwork

Involve key employees in the decision-making process to produce better results.

By Charles Vander Kooi

I believe very strongly that construction companies need to be run by teamwork. If you are running your company dictatorially, you are running it with tunnel vision. There are things that are happening to you that you cannot see, and you will never see because you are not allowing anyone around you to show you those things.

I know that most of you are running small- to medium-sized companies, but I hope you can gain some insight from my experience with a 3-person team that ran a large site-development general-contracting company.

Mutual respect & equal rank

There was something almost magical about this team. We had a camaraderie that would not quit. We also had mutual respect for each other and for our roles within the company.

We understood one of the most important human dynamics, that all of us were strong in some areas and weak in other areas. Consequently, we covered each other’s weaknesses with each other’s strengths. Where I was weak, someone else was strong. Where I was strong, someone else was weak. And, the success of our team was due to our willingness to recognize this fact and to work things out together.

There was one other important ingredient that this team had: That was that none of us had any rank or supervisory responsibilities over another one of us. We all felt an equality in our special roles of making that contracting firm successful.

Let’s look at the roles each of us had to fulfill.

1. The field superintendent

He was the one who saw to it that the work got finished. He coordinated all of the people, the materials and the equipment on jobs. He worked out the methodology that would be used in getting the job completed. If there were problems on the job, he got the right people involved to get them resolved.

There are a couple of personality traits that are important for a field superintendent.

One, they have to like – and be able to motivate – people. What is the biggest risk in construction? Labor. Where can you make the most money in a consistent way in construction? Labor. A field superintendent who likes people and is liked by others, and who knows how to motivate people, is going to make you money.
Two, he has to be the kind of person who doesn’t mind problems and, in fact, thrives on the challenge of solving them. There is no greater place for problems than in the field, so whoever is in charge can't get frustrated handling them. The superintendent on my team was just such a person. In fact, to this day I accuse him of starting problems when there weren’t enough around just so that he could keep himself challenged. If he was a fireman, he would have been an arsonist.

2. The accountant

We had an excellent accountant. She didn’t take any jive talk from any of us. She could read right through some of our talk. She kept all of the books, did payroll, the accounts payable and receivable. She was also the office manager in charge of all the administrative staff and the flow of paperwork around the office.

3. The contract administrator

I was the contract administrator. I always brought in the field superintendent to see what he thought about a job before I bid it. If he didn’t like it, or was not challenged enough by it, we didn’t bid it. If we had won a job he didn’t like, you can bet that it would not have been a very profitable job for us.

Meeting to beat our own estimate

After winning a job, I would set up a pre-construction conference with the client. But, before we met with the client, we had our own internal conference to get all of our ducks in a row. Our meeting was attended by the field superintendent, a project superintendent if one had been designated, the accountant, myself and Mr. Tape Recorder. The meeting was taped and later typed out. It then became a part of the job file and the project superintendent had a copy to refer to continually when he needed to know what we had discussed during that meeting.

One of the first things we did was review my estimate with this goal in mind:

To find a way, some way, to make that job better for us.

I remember being low bidder on a city highway job. The job had several median islands with real bad soil in them, and they wanted the soil replaced with topsoil mix for plants. We were to excavate the bad soil 18" and replace it with topsoil. There were 10,000 cubic yards of material to be taken out and replaced.

On the same job we were to build some huge earth berms. They required we bring in 30,000 cubic yards of material. I had gotten a quote of $4.50 per yard for the imported dirt. At the same time, the trucker quoted me $4.50 per yard to haul off those 10,000 cubic yards of bad soil. So I calculated $4.50 per yard for new soil and $4.50 per yard to haul off the bad.

We were sitting in our internal pre-construction conference trying to figure out a way to make this job better. Someone asked, “Charlie, would they let us put that bad soil in the bottom of those berms and just import good soil for the top?”

“Let’s ask them,” is all I could respond.

Saving thousands of dollars

So we had our pre-construction conference with the client, and we asked them. They blinked their eyes a few times and said we could do it that way. We put $90,000 back into our pockets at that very moment! $45,000 less to haul away (10,000 yards x $4.50), and $45,000 less to buy (10,000 yards x $4.50).

And, it was all because we were willing to ask ourselves, “How can we make this job better?” We didn't always find things that saved us that much. But we did find things, and we were able to add to a job's profitability more often than you'd think.

I wonder how many of you reading this are wasting thousands of dollars on your jobs right now. I'm not saying you are not getting your jobs done for the cost at which you bid them, but you could be getting them done for less.

You could come up with some new methods or approaches, other pieces of equipment to use, or a different material that would give the client the same quality of job but save you money. And, the only reason you are not doing that is because you don’t sit down with some of your key people before you start a job and ask the question, “How can we make this job better?”

Once you sign a contract, that price is set. The only way you can increase your profit is to lower that job’s cost to your company by finding a way to do it faster and cheaper. We took it on as a personal challenge to find ways to make jobs better. And the time to do that is before you ever start the job. Because once you start, the job will find a way to make itself worse.

During our internal pre-construction meeting we also decided on what subcontracts we would award and where we would buy – or shop – for material. We laid the job out as to its expected progress and billing schedule. We also pin-pointed potential problem areas and laid out preliminary plans for solving them.

Staying involved with the field

After that meeting, I turned the job over to the field superintendent to build. I still stayed involved in 3 ways.

1.) First, I priced all change orders. Don’t let your field people price-out change orders. They will do it on the back of some matchbook cover and burn your whole company up. I stayed involved with the job so I knew what was going on and how our working relationship was going with the architect/engineer, so I was in a good position to price change orders. Plus, I wanted to ensure change orders were estimated at their true cost.

2.) I also was involved in the monthly billing process. I would work with the field superintendent to get the pay estimates figured and submitted. I wanted to do that so I could stay in touch with how quickly that job was actually coming together.

3.) Lastly, I looked over the payables to get a feel for the actual costs to do the job. As the estimator/contract administrator I know the prices quoted that I used to put together my bid. I have often found suppliers adding delivery charges even though they had quoted me a price FOB jobsite. Other times suppliers charged a higher price because someone in their firm didn’t know of the special price that had been quoted for that job.

But before I review payables, the accountant reviews them for math. Does the quantity multiplied by the prices work out mathematically? And the field superintendent reviews them for quantity and quality. Did he receive that amount of material and was it acceptable? Then I do my review and the invoice is ready to be paid.

Anything to get off a job

At the end of the job I liked to be involved with the final “punch list.” Don’t ever let your project superintendent do the punch list. I have found that they can give away the farm just to get off a job. Let’s say that they've been out on that job for months and the client, the architect/engineer and the subcontractors have given them problems day after day.

At that point, your project superintendent will do anything to get off that job. The architect/engineer will quickly read this attitude and realize that they are in the driver’s seat for the punch list. They can ask the superintendent to do things that were never in the contract, and he will do them just to get off the job. He may be willing to write the architect/engineer a check just to get off the job.

The estimator/contract administrator should be in a better frame of mind to hold his own with the architect/engineer in handling the punch list.

Get out of there fast

Let me add one final observation: The quicker you can get in and out of a job, the more money you are going to make, and not just from labor savings.

A large construction company won a $13 million contract to rebuild a major viaduct into a city's downtown area. They were given 400 working days to do the job. For every day beyond that time limit they had to pay a $10,000 penalty. For every day under 400 days they would receive a $10,000 per day bonus.

They finished the job in 300 working days, and there were pictures of them collecting a $1 million bonus check in every area newspaper. Is that all they made by finishing that job 100 days early? Not on your life! For 100 days they were not paying out general condition costs for trailers, temporary toilets, job phones, etc. For 100 days they had a dynamic project superintendent – who could build a viaduct 100 days ahead of schedule – over working another job and making them more money. And, the client was so thrilled to have the job done early, I’ll bet the punch list wasn’t very long at all.

Do not "go long"

If you stay longer on a job than you should, the opposite happens to you in a big way. Your costs for general condition items begin to exceed your estimate. Everyone’s attitude on the job goes downhill, and the production begins to go bad. You have a project superintendent who is still on that job losing you money, plus losing the money he could have made you on another job during that time. The client and architect/engineer are mad – and they are mad at you. When it comes time for the punch list, it’s not 6 items. It’s 6 pages of items.

I have heard contractors take on the attitude that it takes a certain amount of time to do a job, and they will finish when they finish. That kind of attitude costs thousands of dollars. As for me, I like contracts with designated completion times, incentives for beating the schedule and penalties for exceeding it. They force me to make money!

Since 1980, Vander Kooi & Associates has been helping business owners add more to the bottom line of their company’s financial performance. We would be proud to help you with budgeting, estimating, high-performance management, marketing, sales, productivity and field training. Visit VanderKooi. com or call (303) 697-6467.