Leaders

 

t-and-h

Courtesy KarstenKares

There are many reasons why Trump won and Hilary lost but imagine for one moment of you could choose one or the other to lead your business. No question it would be Trump because too many companies are led by Hilary types.

Trump’s style is one of motivating people and he achieves this by displaying what motivates him. I have no idea what motivates Hilary and she does not inspire. One talks about the future and a journey he wants people to join and the other is staid and maintaining the status quo. We need leaders in construction who are recognised in the organisation whether you are a site labourer, a project manager, subcontractor or client. We do not need faceless, bureaucratic bean counters who hide behind others when they make decision yet bask in the glory of others.

Trump style leaders make mistakes, they sometimes get it wrong but this is exactly what people empathise with, they are human and suffer the same anxieties, challenges and doubts we all do. That is why people who work in the organisation they lead, see a future for themselves.

Many years ago when I had to address an audience of several hundred for the first time I was give some advice from my then boss who was a mini Trump. He told me that unless you are a politician or a stand up comedian, the audience does not want you to fail. The reason being is they all see themselves having to do exactly what you are doing and for the grace of God go them. So they are with you. Then, he told me, show empathy and emotion and do not lecture them. It worked. How many time have we all attended meetings where the leader has delivers a “now hear this” message and when they ask for questions nobody speaks because they do not want to appear either stupid or in disagreement with what they have been told.

I may not agree with Trump’s policies entirely, but I would work for him. I have put up with too many like Hilary.

 

 

Surviving

img_0012It is my birthday today and thanks for all the best wishes. However, it is also the anniversary of my first day in the construction industry. It was forty five years ago in Liverpool and I was a seventeen year old plasterer’s labourer and very wet behind the ears. I recommend anyone to read The Ragged Trousered Philanthropist  Which was set in the 1900’s and opens all our eyes to what the industry was like then.

It has been a hard road traveled since the first day I set foot on a construction site, many changes have taken place but we are still pouring concrete the same way, still have divisions between site workers and management, and working even harder to make a dollar. We have not embraced whole heartedly technology and still make the same mistakes.

Besides the negatives, I still love the industry and get the same buzz watching a tower crane going up or handing a project over. These days I get a great deal of satisfaction from spending time with our graduates and less satisfaction from winning contractual arguments.

Anyway this is a short blog tonight as it is time for the party. A great day, good memories of 1971, a phone call from each of my children, a form worker, an electrician and a music teacher, and pictures from my two princesses of granddaughters, and know a great evening with my darling wife.

Cost Reporting

Censor

As each month ends the project prepare the dreaded cost report. This report is reviewed by management and information extracted to be consolidated into the overall business reporting regime. But what value are these reports and what benefit do they provide?

The responsibility for the report lies with the project manager but it is usually prepared by the contracts manager/administrator and due to time constraints often the project manager has little input into the report even though he is responsible for it. The report can be quite long and detailed and all too often the only number the project manager looks at is any movement to the project margin.

The following points are all to often encountered in the preparation of the cost report:

The reports may include forecast revenue for head contract variations which have been submitted but not approved. The forecast cost of these must be include but not any margin uptake. However, in the world of design and construct how accurate are the forecast cost when design has not been finalized and the revenue/cost is not based on subcontract pricing but on elements of the cost plan.

The reports may not include all of the true project costs. Such as head office charges, late submission of subcontractor’s variations, late suppliers invoices, costs incorrectly costed to another project and incorrect cost coding.

Revenue may also be overstated by including the most recent client progress claim which is yet to be certified and is over claimed..

The cash flow report may show a large cash positive position. This may be due to subcontractors not submitting accurate claims

If there is over claiming it simply means the costs have not been incurred and the cost to complete are disproportionate to the physical progress on site. If this is not considered the margin position of the project is spurious.

They take too much time to prepare because:

  • The information is outdated often by a minimum of one month.
  • The report has simply too much information and detail.
  • Several people have input including Health and safety, programming, procurement, pictures and the person preparing it ends up chasing individuals who submit their “section” at the last minute not giving enough time for analysis prior to the report being tabled.

How to tighten up cost reporting (and control costs before they are incurred)

  • On a design and construct project It is essential that all decisions taken regarding design changes or trade lettings are based on a forecast of the cost implications of the alternatives being considered, and that no decisions are taken whose cost implications would cause the total budget to be exceeded.
  • The project leader must be involved in the preparation of the cost report, not simply reviewing what a junior contract administrator has prepared.
  • Accurate cash flow reporting is a function of accurate programming and an analysis of the programme status at the month end of the cost report period. Cash flow is not independent of the programme.
  • Only project members who have the authority to spend, commit expenditure or approve variations should do so. And should be carried out in accordance withe the head contract and the subcontract..
  • Most projects include a contingency for risk for items not included in the cost plan. However, before the contingency is accessed involvement by the cost planner is essential

Vale Jim Gordon

June

Breaking with tradition I have to name the person to whom this blog is dedicated. Jim Gordon passed away this morning. He was a friend and a work colleague and an inspiration to us all in our industry.

Jim was one of our senior site managers and his life was simply construction. Years of experience in delivering projects, mentoring staff, pushing subcontractors to perform, a complete all round building professionIMG_2243al.

The sadness of the team on site is palpable, from first year graduates to the most seasoned construction managers. The whole company is saddened and stunned by the sad news. We pass on our most sincere condolences to hi s family and to all on site.

Jim was old school. He could be belligerent with poor performing subcontractors but his common sense and complete understanding of the construction process is only achieved through years of delivering projects. Yet Jim always had a twinkle in his eye and was always willing to spend time with younger, inexperienced staff and would pass on his knowledge to them. Site managers simply make it happen, they are an integral element of any project team and the likes of Jim are few and far between.

I will miss him as a friend as well as someone I enjoyed working with. He would often pull me to one side and explain his concerns about a project: the safety; the programme; the quality; and the dollars. The essentials of any project. He will be missed by us all, we have lost a work colleague but more importantly we have lost a tue friend – vale Jim.

Congratulations

BdayIn keeping with my own blog policy I never name individuals or company details. Although in this blog I would dearly love to, I will maintain my own policy. Today is a significant birthday to a significant man. Rather than give him a present of another set of cuff links, bottle of Krug, Myer vouchers, I will simply pay tribute to him and let more then 10,000 people who will read this, learn about why we are in fact construction survivors.

All too often we praise people when they are departed, this person is far from departed and even though he has achieved a great deal to date, there is much more to come. Words like “legend” and”leader”, are bandied about all too often. He is more than that. What he has achieved so far is what we all aspire to in the construction industry. Simply he has left a mark on planet earth by the projects he has delivered, and he has left a similar mark on those who have had the good fortune to work with him and for him. It does not matter if you are a form worker on the tools or the mufti-million dollar client. He has the ability to relate to both and treat everyone exactly the same. His warmth and openness is not the norm in much of the corporate world, but he is no fool and can assiduously weigh up opportunities and people.

He has one defining ability which only exists in a very small number of people in our industry. That is he has a 360 degree vision for projects. That means a project discussion can in a short time span include the dollars, the programme, the contract, resource issues, construction methodology, the client and any risk and opportunities that others more often than not would miss.

People want to join him. Not because they are unhappy with the current companies but because they know they will not grow their career but they will develop as people.

So happy birthday mate and not only am I proud to work with you I am proud to be a friend.

Zero Overheads

v-30-PreviewSimple premise – reduce overheads, become more competitive, then win more work. So what overheads does a construction company essentially need. Perhaps if the projects were set up with the right resources we would not be as reliant upon a head office. The project becomes, in effect a stand alone business and if it needs anything from head office it has to pay for it. Simple. But in reality , if the project runs this way it will incur costs never envisaged in the cost plan and instead of wearing head office overheads, it just bleeds dollars and drags the business down anyway. It is all down to how the budget is managed, reported and controlled.

So we need to be competitive in the tender process, run the project pretty lean and not rely on additional resources from head office. The answer is smart people, good communication and the best IT we can buy.

Let’s start with IT. We  love to blame it, cannot function without it, do not embrace it and do not use it to its full potential. The IT department is an overhead that needs to charge the project for providing services and hardware.  First thing we can do is to stop buying hardware. Bring your own phone, ipad, tablet, monitor and simply connect to the company’s access points. Companies don’t provide cars any more so why provide computer hardware. All IT provide is the core software and managing internal communication. Everyone has a mobile phone so why is it most staff have two, one for work and one for personal.

Site office space is always a problem as we never seem to have enough. We need to understand space should be determined by function not status. Give everyone access to an open plan area and meeting rooms for meetings, not for egos. Site offices are expensive. We do not need a dedicated office for a project director who visits once a month, whilst others are working on top of each other.

But this is just simple good housekeeping. We need to look at all the functions that the project could manage themselves and ensure those they cannot are paid for. We all think very seriously before calling in external legal advise, yet pick up the phone at the drop of a hat if we have in-house counsel. Internal lawyers (if the company has them) are our best friends and having access to them is a true luxury. But we need to be aware not only do they have a cost, the resource is limited and whilst we are tying them up they are not available to our colleagues on other projects.

It is interesting to consider say fifty years ago we employed all the major trades for us to construct buildings and did not have internal support such as legal, marketing, green advisers, real estate novelists etc. Now we have various none core support divisions and we subcontract the construction.

Of course our support teams are vital and we need to make full use of their expertise, we simply need to remember we have to pay for them.

 https://gkeating.com/

picture courtesy of http://graphicriver.net/

Pastures New

3169262303_de9262f5d8_qWould you sign a job offer without checking the salary package, well I did recently . Was I desperate to leave my employer, no. They are one of the best employers world wide. Had I gone against everything I preach about risk management in construction, no. Had I simply taken leave of my senses, again no.

There were many reasons for, what some would see as a radical course of action, but to me it was simple. I was joining a business where I could make a difference, where i would have relevance and a part in shaping the company’s future. Not just an improvement to their bottom line but a difference to me personally.

The dollars were not important it was the opportunity to work with bright, motivated and like-minded people who matter most. Interestingly after signing I discovered the dollars were a pleasant surprise. But was no surprise was the buzz in the company, the determination to achieve and to enjoy the journey ahead.