What are the most common mistakes made by construction contractors?  In this two-part series we will have a look at what construction contractors do wrong that could lead to their downfall, and how to address these mistakes.

Mistake 1:  Unclear Business Strategy

I find that many business owners and managers simply are not clear on their business strategy.

• You need to define what you do in your business – basically it can boil down to: what you’re good at
• what size contracts you can manage
• who you do it for
• who your target client market is
• geographical locations you want to cover
• what returns you want to make in your business.

Actually having this information in a strategy could save your business from going bankrupt, because in tough negotiations and tender adjudication meetings you would be encouraged to drop the price lower, which you might do just because you’re so desperate to get the contract.

Yet having clear strategy could be what saves your business.  It will stop you from going below the price that is actually a good price for your business.

Who in your business is actually responsible for making the strategy, when there is one happen?

I often see that there are lots of expectations about who does what within the business, but this is not clarified well.  There are also not very many people who take responsibility to make those things happen.

Mistake 2:  Not Continuously Improving

A mistake often made is not continuously improving.

I love the saying that there’s nothing more constant than change.

There is immense knowledge in the people who are working close to you in your business.

You get ideas from your employees. They do the job day in and day out. They know what should and could be improved. Do you ever ask them?

On a side note, do you know what your employees think of you as an employer?  These people have a direct link to your clients. What messages are they giving out to your clients? Are they ambassadors for your business or are they assassins who talk you down at every available opportunity?  If you don’t know the answer to this, then I suggest you find out.

Get ideas from suppliers.  A good sales rep should keep you up to date with what’s new, what’s changing, what’s being developed. Have you ask them to? You could feed this back into the PQQ and ITT stages and take it to your clients as a new innovation.

Get ideas from your clients.  They may not tell you directly if there is an issue. So, do you often ask them how you’re performing and what you could do to make their life easier?

Look out for part 2 where more common mistakes made by construction contractors are addressed.

To further understanding how I could help you to Survive and Thrive in your business, do make contact.  Or, if you have not already done so, register now to download the content filled presentation highlighting what clients who have £1b to spend are looking for from their supply chain. 

I figured from my business point of view that the more I understood this, the more I could help my clients build the businesses that would deliver what their clients wanted.

These were their top 5 requirements, not ranked in any order of importance.

1. They must know that you are financially secure
Contractors and sub-contractors going bust is a massive risk to clients and main contractors.
If you go bust before you get on site, you create a huge risk for your client. They have to find another contractor within a set time scale to match your price, and this is not easy.

If you are on site and you go bust, the client has to scramble to find a price match, as well as sort out all the issues with guarantees, lost management time, etc. This is a nightmare for them.

The cost of companies going bust, not just in financial terms, but also in their management time, can be massive. This is why clients obviously want to know that you’re financially secure.

2. You can value engineer a project
The clients asked a lot and talked a lot about value engineering. This term has been around quite a while now.

One person who I interviewed said, “you know, Irene, you’ve got to realise that many of the big players in the industry now are not builders, we’re project managers.”

What clients are actually looking for is a pre-contract award for you to bring your expertise and your ideas around the table, especially with things like working efficiently with new products and services, as they know that this could be the difference between them winning the contract or not.

3. Your ability to deliver
Clients obviously want you to deliver. They want you to deliver quality standards, maintain a safe environment, and meet project deadlines. They want you to deliver by having the right resources in place, whether it’s materials, machinery, methods or people.

There are a couple of main contractor supply chain buyers that said to me that they definitely want to work with people who help them at the bidding stages.  That might not be the case for every contractor. However, if you’re involved at pre-contract stage, you do have more of a chance of getting the job when it is awarded.

4. You will contribute to PQQ and ITT stages of bidding work
Can you demonstrate your excellence in quality, flexibility, performance improvement, your team ethos, innovation, whole life costing, safety, health, training, job creations, equality, diversity, and environment?

These are all things that go into the bidding process for the majority of contracts right now.
If you are able to contribute in these areas, it will help your clients immensely.

5. The best price you can put forward
Clients do want your best price. Price is the main driver for the vast majority at the moment.
Look for the best price you can put forward for the job that you’re looking for without jeopardizing your business.

To further understanding how I could help you to Survive and Thrive in your business, do make contact.  Or, if you have not already done so, register now to download the content filled presentation highlighting what clients who have £1b to spend are looking for from their supply chain. 

Do You Need To Take A Closer Look At Your People?

Main Contractors in Construction in particular win work by going through a process of Pre Qualification and then Quality Submissions.  Many Main Contractors are then replicating this when appointing their Sub Contractors.

I recently worked for a large construction company in the North East in relation to a bid they were submitting to win a place on a long term framework agreement worth £m’s to their turnover.

The questions I was asked to contribute to were around PEOPLE.  How were people recruited, selected and retained? How will the contractor ensure the workforce is representative of the local area?  How will training and employment targets be met and exceeded? How do you assess and develop skills and training needs? HOW DO YOU DIFFERENTIATE YOUR ORGANISATION FROM THAT OF YOUR COMPETITORS?

For this construction client, using what information I knew about them, I gave them my thoughts on what a perfect answer might look like.  Highlighting areas where they could improve their current people practices, which thankfully were already in a good starting place.

This brought home to me that your employees are ambassadors for your business, how they interact with your customers is likely to directly relate to your chance of repeat business. Can the level of repeat business you are getting be higher?

Are you clear regarding what your customers expect from you? Are these expectations clearly translated into the behaviours you expect from your employees? Do your employees know what these are and do you provide the appropriate training and development where needed?

If your customers, like the one above, require a PQQ or submission document as part of the tendering process, what stories are you going to tell to ensure they know your team have the knowledge, skills and competence to successfully deliver their contract?

If work is awarded on price alone, are you sure that work is carried out in the most efficient way, thereby keeping overheads and cost of sales as low as possible?

Which activities are you going to invest in to turn your employees into ambassadors?

To further understanding how I could help you to Survive and Thrive in your business, do make contact.  Or, if you have not already done so, register now to download the content filled presentation highlighting what clients who have £1b to spend are looking for from their supply chain. 

Can you remember the days when you could do a pretty good job and get lots of work from your clients ? These days it takes more than doing a good job, producing quality, and tendering contracts via drawings and specifications to win work and stay in business.

Now, you must do more and offer something different than your competitors to win contracts. I’m sure you are looking for the magic ingredient that will have a queue of clients lining up at your door.

I started working in the construction industry in the early 90’s.  At that time getting work was relatively easy. Through business contacts we could find a job that needed doing, call the client, meet them, get a set of plans to bid, do the take-off, estimate the job, and then turn in the tender with a reasonable mark-up on it. A few days later our senior QS would call to see if he could meet with the customer to review our bid. At the meeting they would negotiate the terms, inclusions, exclusions, and agree on a final price. It did seem that easy.

Now you are in the sales business….
It takes a lot more than just bidding and negotiating to win the majority of contracts now.  It’s not just about the price, inclusions, and exclusions.  There are too many competitors who can do the same job as your company and will cut their bid below their cost to get a job. To win more contracts these days, you must face reality. You are not in the construction business. You now have to also be in the SALES business!  Selling the benefits of choosing your company ahead of another contractor.

Estimating and bidding used to be the only sales tactic you needed to win jobs. Today that’s only a small part of the process in many contracts. Sales involves more than pricing jobs and delivering bids. It is about giving your client what they specifically want on each job you’re bidding.  There is not one magic way to solve this issue but there are many ways to make a positive difference in your customer’s decision making process – here are just a few:

• Create the perception of best value
• Offer completion, service, and quality guarantees
• Be the specialist or expert in the project type
• Professionally present your company
• Use cutting-edge technology
• Be well financed and bondable
• Have well trained employees at all levels
• Have the capacity available to resource the job
• Be able to finish jobs faster than competitors
• Offer more than the minimum required
• Understand the project goals and deadlines
• Offer value-added engineering budget ideas
• Build confidence you are the right choice
• Ensure you are following up on proposals/tenders/PQQ’s/ITT’s
• Show appreciation for the opportunity
• Have a trusted relationship with your clients
• Meet your client’s goals and make their life easier

What differentiates your company?
Imagine you are driving down the motorway and need to fill up the car.  Do you look for the best quality, service, or price? No, you look for the closest gas station because it doesn’t matter which gas station you visit because they’re all the same. The construction business is generally the same. It doesn’t matter which contractor clients use.  They generate tender lists of 4 to 6 or more contractors or subcontractors who are all equal in the clients mind. Most of these contractors do a pretty good job, with expected quality, in an acceptable and professional manner.  What can set them apart from their competitors are the stories they tell about their business.

Differentiation can include doing more than your competitor for the same price, being the expert or specialist in a particular type of work or project, adding more value than required, or having a deep loyal trusted relationship.

Create a list of reasons why clients should appoint your company for the project, think about what you offer that no other competitor offers. Think about what else you can do for the customer that is not required by the scope of work. Think about how you can help your customer meet their goals, make/save more money, build a better project, reduce risk, or have more fun while working with your company. I know what you are thinking: ‘We don’t get paid for all those extra things!’ If you want to win jobs today, you must do more than the minimum.

Winning contracts takes more work than it used to. Now you must also sell and present your company as the best choice. This takes a restructuring of your time and commitment to excellence. Learn how to refurbish and upgrade your business, how you present and market your business, improve your proposals that you submit, ensure you follow up (and learn from what went well, and not so well!).  Start taking some positive action today.  Why today? Because tomorrow never comes.

I got an email from him today with exciting news of another 2 contract wins, bringing his total contract awards in the last 2 weeks to a MASSIVE 25% of his turnover goal for this year.  He also went in with margins he wanted and expects for the efforts of himself and his team.

The secret I think is the energy surrounding this guy.  With my help, his attitude and the way he sees what is really going on generally within the construction sector has flipped.  His mindset has shifted from “we’re all doomed”, or something like that to “bring it on”.

I attended a training course years ago where I was introduced to the concept of “possible in the world, possible for me – it’s just a question of how”.   So construction contractors winning contracts time and time again is possible, it’s just a question of where you are at in your business both mentally and physically.

To explore more of what is possible for you and your business why not check out our Survive and Thrive Strategy Programme  

Neglecting those who have made it through a reorganisation poses its own risks. Leaders and managers thinking workers “should be grateful they still have a job” could be asking for trouble.  Although they do still have their jobs, the “survivors” of redundancy may experience greater pressures owing to changed work patterns and increased workloads.

It is widely accepted that work-related stress can be triggered by change and the HSE lists it as a key factor. A redundancy process is one of the most obvious examples of large-scale workplace change, and failure to manage employees’ workloads or work patterns post-redundancy could cause them to suffer high levels of stress.

Leaving the employees to “get on with it” may not be the best plan.

Although successful claims are rare, Personal Injury claims are a possibility.  Employers have a common law duty to take reasonable care for employees’ health and safety in the workplace. They have a statutory duty to assess the risk to their employees of stress-related ill-health arising from work and to take measures to control that risk.  They should also consider the HSE’s “management standards” – these are statements of good practice designed to assist employers in tackling stress.

Top tips to manage the situation

• Proper communication with all staff during the redundancy consultation process is an important starter to easing anxiety.
• Train managers to look for signs of stress and ensure they have the skills to manage the remaining employees in a supportive manner throughout the reorganisation period.
• Carry out regular assessments focusing on the risk of staff developing stress-related illnesses as a result of their work. The HSE website provides detailed guidance on this.
• Monitor absences closely and use occupational health input where required.
• Consider any retraining needs employees will have after a reorganisation. Remember some will be doing a new job and may require a transition period before they become fully effective.
• Have a “survivors’ strategy” in place.
• Line management should have regular discussions with staff to ensure they feel supported in their new roles or new reporting structures.

Specialising in construction, Irene Liddle helps contractors to improve business through the people employed.  From RECRUITMENT to REDUNDANCY or RETIREMENT and most things in between.

The new Agency Workers Regulations 2010 will have a significant impact on companies that use agency workers, and they need to be aware of what the requirements are with regard to equal treatment of agency workers.

Legislation designed to protect temporary workers from being used as cheap labour will come into force on 1 October. The Agency Workers Regulations 2010 follow long debates between employers and unions over whether such workers should be given the same rights as permanent staff.

A compromise was agreed by the TUC, the CBI and the Department for Business, Innovation and Skills

After 12 weeks in the same role with one employer, agency workers will be entitled to basic pay parity with directly employed colleagues, including the hourly rate and some extra entitlements, as well as corresponding working conditions.

They will also have “day one rights” from the start of their assignment, including access to childcare, transport and a staff canteen, as well as the right to be informed of permanent roles in the company.

The new rules offer a timely reminder for organisations to take stock of staffing practices.

Employers and Agencies who fall foul of the rules could face legal action with fines of up to £5000 per worker.

Advice to employers is to engage with agencies and look now at their use of agency workers as well as the longevity of contracts.  Corepeople Recruitment are being proactive in understanding these key change and providing solutions to employers.

He urged me to use these ROI figures in my marketing so here goes:

ROI% = ((Gain from Investment – Cost of Investment)/ Cost of Investment) * 100

£12K client investment = £75K savings identified through system and process improvement

(75 – 12)/12 * 100 = 525%

£17K client investment = £70K savings introducing a 2 year apprentice programme

(70 – 17)/17 * 100 = 312%

£3K client investment = £500K contract awarded @ 9% profit

(500 * 0.09 – 3)/3 * 100 = 1,400%

£2K client investment = £5K savings linked to handling recruitment in house rather than through agency

(5 – 2)/2 * 100 = 150%

As base interest rates are very low at the moment at 0.5% we can say that working with us gives clients returns of at least 300 times (150 / 0.5) what they’d get on deposit.

I suppose it is quite good when you look at it like that!  With our MONEY BACK GUARANTEE,you could say there is no risk to working with us, and lots to gain.