Beyond COVID

Part 2

Your Company Renewed


Last week we began a series of blogs on looking beyond this sudden COVID pandemic market contraction to reimagine your company “Post-COVID”. Major events like this present an opportunity to improve any company’s profitability and efficiency into the future.

Improvement implies change

The question: “Is there anything that could change to make this company better after the pandemic?

Obvious possibilities come to mind:

  1. More revenue
  2. Expanded personnel training
  3. More efficient bidding procedures
  4. Superior contract negotiation
  5. More modern equipment
  6. Available financing
  7. Increased bonding capability

The Common Cold

Of course, all of these areas could stand improvement at any time in any construction company. However, they are not the causes of greater or mediocre performance. They are the symptoms.

A runny nose is not the cause of a cold. An internal viral infection is. You can’t cure a cold by putting a coat on.

If anyone is taking jobs that do not suit their company’s skill set, taking more of them will not improve their profit.

Let’s look a little deeper into how to adjust a company to perform more efficiently.

Top Ten Underlying Causes of Construction Company Inefficiency

Thirty years of research available to you on this site reveals the deeper causes of construction company underperformance and eventual failure. Let’s take a quick look at some of the hidden issues you might address if you seek to expand your company to maximum performance after this pandemic abates.

  1. Taking projects that are too big, unfamiliar, or located outside your comfortable operating geography.
  2. Taking on too many projects that strain your management and financial capability.
  3. Frequent turnover of key personnel.
  4. Unseasoned management team.
  5. Sacrificing “bottom line” for “top line”.
  6. Weakened accounting disciplines.
  7. Too much fixed cost overhead.
  8. Old-fashioned, inefficient procurement procedures. (Low-bid/fixed-price/etc.)
  9. Undisciplined capital management
  10. Ineffective billing procedures leading to slow pay and insufficient cash flow.

The management exposures above are the viruses that cause the common cold of marginal profitability and capital insufficiency.

Construction Company Self-Analysis Program

Designed and made available to you on this site, free of charge, is the Construction Company Self-Analysis Program.

Advancing a construction organization towards world class performance requires accurate identification of the organization’s strengths and weaknesses. Decades of research led to this do-it-yourself diagnostic tool that provides the equivalent of an independent expert evaluation of every aspect of your business. Research suggests that most managers understand construction methods better than the multi-layered business side of their business and the complicated interdependent relationships between marketing, production and accounting. This tool provides a comprehensive insight into the complex functional areas of your business. Once potential limitations are identified, most contractors have little difficulty correcting or compensating for them. Identifying strengths and weaknesses is the bigger issue.

I suggest that you start your company’s strategic analysis by filling out this simple interactive program. It is designed to bring to the surface the hidden potential for profit or capital erosion that often plague construction organizations. (The results are confidential, available only to you.) Most of us are too close to our organization to see areas that would benefit from improvement. Our industry also suffers from the: “that’s the way we’ve always done it” syndrome.

Making a Start

Shifting gears from “protecting” our companies during this pandemic market contraction to “improving” our companies for long term growth is a critical “shift” in emphasis. Good times don’t last forever – neither do bad times. Let’s get ready for the recovery that is sure to come and avoid making some of the mistakes our industry makes when it rushes prosperity.

Next week we will discuss some of the remedial actions that the “self-analysis” tool may indicate are appropriate for your company.