From Builder to Manager
Thomas C Schleifer, Ph.D.
With the possible exception of prostitution, construction is the world’s oldest industry. It is, however, a business unlike any other. All modern industrial companies introduce a product or service to the marketplace and after a short test period promote widespread product utilization, gain sufficient market share, and craft efficiency into the manufacture and delivery of the product to promote profitability and enhance shareholder value. Does that sound like the business we’re in?
Construction pursues its ongoing business one new customer (contract) at a time. It is not an ongoing business that enjoys both market and operating inertia while becoming more efficient and profitable. Immediately after signing a contract and setting the project managers, supervisors, and tradespeople to work completing the project, we turn our attention to finding new work. As I have often said, every new project is like going into a new business; different owner, different payment styles, different capital requirements, different design, different location, often different subs, and different available capacity depending on how many jobs we already have ongoing.
Because most of us construction professionals started our careers either working with the tools or as engineers, we see ourselves as builders/contractors rather than businessmen/women. After a construction project is up and running, we are rarely directly involved in the actual building activity. We may oversee the progress and administrative details of ongoing projects but, as I stated above, our primary attention is on procuring future business. This activity involves us in estimating, marketing, reviewing contracts, accounting, banking and surety relations, staff recruiting and training, and a whole variety of professional management functions that have little to do with actual construction. The contractor/builder gradually morphs into the contractor/manager.
It has been my primary purpose for the past 40 years to talk constructors into becoming business executives. I have been asking contractors to see themselves as managers rather than builders. It has proved to be a difficult transition for contractors. The self-image of the builder as a hands-on brawny risk taker who makes big bets for big payoffs is fixed in the construction professionals’ imagination.
Most of us are proud of this persona and avoid the office and the pencil pushing like toxic chemicals. Construction is a hands-on business, and in our minds our proper place is on the job site rather than in the office. We prefer to leave the estimating, ‘score keeping’ and legal work to the estimators, accountants, and lawyers but, we ultimately pull the trigger on all new work and need to be well informed of all risk factors.
Business as Usual
Construction professionals have never questioned the construction business model that submits competitive bids for future work. After all, that’s why we’re called “contractors”. It is the business, and we wouldn’t have it any other way. In fact, many successful construction professionals have told me over the years that they could never manage a manufacturing, retail, or hospitality company. “What is there to do every day? The same product is produced in the same plant by the same people, sold to the same distributors and is paid for ‘cash on delivery’. What’s so hard about that? I would be bored to death.”
Doing What Needs to be Done
Construction professionals wake up every morning not knowing where their next buck is coming from.
- There is a limited amount of work coming up for bid in my marketplace and lots of competition for that work. “I better check the bids because the estimators tend to tell me what I want to hear, and margins are getting too tight.”
- Every day the complexity of construction activity presents one snag after another on jobs that we are racing to complete, for what turns out to be an unrealistic fixed price. We had to bid low to get the work in the first place, so we know in the back of our minds that profits are evaporating even as we pause for our morning coffee.
- Our bankers and sureties are ready to pull the plug at any minute, so we better get over there and bring them a good cigar, a company ball cap, and a pat on the back.
- The trades are always grumbling about wanting more money, less work, safer working conditions, better insurance, and a fully funded retirement plan. If they strike, I’ll end up a barista in Starbucks.
- And that developer still hasn’t sent the check. I knew he was slow pay but how slow is too slow? It’s time for a visit to his top floor office suite. I better get over there today. No cigars this time.
Constructors Are the Real McCoy
Whether they like it or not, constructors face more demands as managers than the President of Apple. It is my mission to convince construction professionals of this truth: That improving their management skills begins with changing their self-image. Our employees know how to produce the work. We need to know how to produce a profit. Stick with this blog.
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