I spent much of my construction career working for the nation’s top sureties who were providing the payment and performance bonds to our industry. My firm, CMA Consulting Group, was the nation’s largest workout specialist, completing projects left incomplete by companies who failed in mid-project. This unusual “cat-bird seat” gave me unprecedented access to a treasure trove of industry data never before available to research. With more than a decade of unfettered access to financial statements from every conceivable size and type of contractor engaged in commercial, institutional, industrial, heavy, highway, public, and private projects across the country, we were able to analyze why these companies had failed.
Data Acceleration
Was the project too big for this contractor? Was it too complicated for that one? Was it outside the normal geographic area of this contractor? Did another one lack sufficient capital? Was a contractor’s personnel inexperienced? My staff and I mined data from each business’s historic financials up to the time the firm failed and abandoned the project or required assistance. We would track their cash flow and capital base until it began to take a decided turn for the worse. Then, we would scour company records for any changes in type of job or geography or size or personnel that affected the company’s financial stability.
- Did the added expense of taking on a remote job begin to use cash at a rapid rate?
- Or did unfamiliar project design require the purchase of new, exotic equipment or the employ of expensive specialists?
- Perhaps the pace of work slowed down due to negative inspections increasing?
- Maybe the job slowed because experienced tradesmen were not available in a new unfamiliar market?
At first the possibilities seemed endless. But after many years accumulating data, we began to see patterns emerge. It was at that point that we realized specific risk variables could be categorized and eventually weighted by the frequency and degree that they negatively impacted the on-time and on-budget completion of a construction project. We eventually accumulated data from thousands of failed projects over a period of more than ten years. These data files became the statistical basis of the predictive algorithm that powers the Project Selection Tool found here on the site.
Horsepower
The Project Selection Tool is deceptive in its simplicity. Contractors often tend to dismiss its predictive power because it is so simple to use. That, however, is exactly the magic. It is simple to use because its vast and varied data base is so powerful.
No other research group has ever been given the unique opportunity, over more than a ten-year period, to audit and evaluate the records of hundreds of failed construction enterprises building different types of projects in different states under different market conditions with a single research objective in mind: Find out when and why these construction firms began to fail.
- We knew it wasn’t the day they threw the keys on the desk and drove away.
- Financial collapse starts slowly and is caused by factors that contractors and their staff seldom recognize.
- Because of the wide variety of companies, projects, and locations, we also discovered that it was almost never external factors (market downturns/labor shortages/materials inflation) that caused contractor failure. Usually, the wounds were internally self-inflicted.
Tesla
Do not let the simplicity of the Project Selection Tool deceive you. We all bow to the horsepower of the Ferrari, the Lamborghini, the McLaren, and even the Corvette. These are true muscle cars that take great skill to operate at high speed. The Tesla Model X, on the other hand, simple in both design and operation, ran neck and neck with the Ferrari 812 in a drag race in Palm Beach, Florida losing by only two-tenths a second. Anyone who test drives a Tesla is lulled by the simplicity of its design and operation until they step on the accelerator. The same is true of the Project Selection Tool. Using it is simple, but the predictive results are powerful.
Test Drive the Project Selection Tool
Simplicity of design and ease of use say nothing about the horsepower under the hood of a Tesla or under the hood of the Project Selection Tool. The huge risk-factor database provides unbelievable horsepower to the tool. Do not fail to harness this power to reset the odds of success in your favor.
For more information on the Project Selection Tool, read more at: https://simplarfoundation.org/?s=project+selection+Tool
For a broader view on Project Selection, read more here: https://simplarfoundation.org/?s=project+selection
To receive the free weekly Construction Messages, ask questions, or make comments contact me at research@simplarfoundation.org.
Please circulate this widely. It will benefit your constituents. This research is continuous and includes new information weekly as it becomes available. Thank you.
