Don’t Let Improved Technology Get in the Way of Basic Fundamentals of Managing Your Construction Business

I am simply amazed at how rapidly things are changing.  The onslaught of change in the business world over the last decade has been nothing less than fast and furious.  Just sit back and think of the new technological tools, software, and systems, that have been developed, tested, and introduced into the marketplace during that time and how they have positively impacted your business.   These rapid changes have forced some of the original systems to become obsolete and no longer practical for today’s use – Think AOL, Blackberry, and others.

This tidal wave of change has made its mark in the construction industry.  As I reflect on the tools of the trade when I started my career in the mid-1970s, I remember just how basic our go-to tools were back in the day.  We had such things as the T-square, a slide rule, a Texas Instruments calculator, walkie-talkies, timecards for a time clock, cost code multi-copy forms for manual written input, warehouse reports for materials being received, individuals physically counting the trucks and collecting paper tickets of quantities of concrete aggregate being placed during concrete pours.  Sounds like the Stone Age, doesn’t it? But believe it or not, these were some of the tools being used by my team with one of the largest general contractors in the country at that time, to construct multiple mega million-dollar nuclear power projects around the country.  It’s hard to fathom that this was “modus -operandi” for doing things on a construction site 50 years ago.

Compare some of those antique tools of the trade to the ones we have available for our use today.  Tools such as “pocket phones” with cameras, mini-computers in your travel bag, drones, laser technology, robots laying concrete block or hanging drywall, AI doing our research or writing our letters, and the list goes on.  As the great philosopher Bob Dylan would say, “The Times They Are a Changin.”

 Each day it seems as if we hear of something new in technology or AI that is going to make our lives and businesses as contractors easier, more efficient – and what one would assume, more profitable. But will it really? In theory it should, but in reality, there are challenges to overcome when innovation and change conflicts with, instead of complements, the fundamentals of a long-term, sound business practice. 

This conflict between innovation and basic business fundamentals may not be readily observed. Much excitement is generated by innovation, which may tend to overshadow and downplay the importance of paying attention to the basic fundamentals of operating the business.  A good sports analogy is in football.  When preparing for a playoff run, an underdog team comes to realize that they simply do not have the size, strength, and depth of their competitor on both offensive and defensive lines. They simply cannot block and tackle as good as their opponent; thus, they realize that they have to be innovative and change their approach by running different offensive plays or defensive schemes that will hopefully surprise and catch their opponent off guard. By confusing their opponent, they allow for enough new and/or innovative plays to pull off enough surprises for an upset victory.  Such a strategy may work (and it has many times) in playing for a championship game; but probably is not the best success.

So, what is the best long-term strategy for success on the playing field and the boardroom?  It is a combination of the right tools of innovation and technology to be implemented into an organization to complement and support, not replace, the basic fundamentals of sound business practice.  The tools of innovation, when properly implemented and used, can indeed be very useful to help you and your team take your business to the next level of success. However, they should never replace your involvement in championing and taking ownership in that effort. The buck has to stop somewhere, and it needs to be with the leader of the organization and his/her team. Afterall, only people are accountable to others and to their stockholders.  Technology and AI certainly aren’t!  It should never have a higher priority and precedent in managing the overall operation of the business than the sound business fundamentals and those individuals accountable for the success of the business. 

So, you might be asking, what are these basic fundamentals of business practice that are so paramount to the success of any business? In football, the team that does the best job of blocking and tackling during the game will win approximately 90% of the time. In the construction business, the teams that do the following five things productively will be successful over the long-term business cycle:

Strategic/Tactical Planning: Developing, implementing, and monitoring progress against annual business, strategic and tactical plans, divisional/project plans, human resource plans, capital plans, etc., are essential for identification of the desired goals and expectations of the organization.  The plans should give one an open, fresh look at the company and its resources while identifying its strengths, weaknesses, challenges, capital needs, and long-term objectives. Division and project plans should focus specifically on the objectives of the business unit or project team for that specific fiscal year or assignment.  Various artificial intelligence tools and technology can be used to support the development and planning activities – but not replace the overall decision-making of those individuals in charge of the respective organization.

Progress against these plans should be reviewed with the responsible parties on a quarterly basis to identify progress and shortcomings. 

Effective Contracting: All contracts with clients, subcontractors, purchase orders with vendors, and service agreements with service providers should be fair and equitable for both parties.  The contracting parties should make every effort to comply with and enforce, if necessary, the terms of the agreement. Open and responsive communication between parties during the life of the contract will build teamwork and minimize surprises for both parties during the life of the contract. 

Cost Awareness: It is critical that the responsible team players know every detail regarding the makeup of the corporate budget, capital plan, and project estimates prior to approval and implementation. Once approved, it is critical that these managers track the accruing costs against these cost centers on a real time basis (suggest not less than weekly) to stay abreast of the cost status.  Such a timely review should minimize the chances of the management team not being aware of any major cost surprises that may come to pass.  New and enhanced software tools can support management’s task to manage this cost but only the management team can take responsibility for what is applied to the respective cost center.  Cost management is clearly the responsibility of those personnel accountable and any innovative software programs to support these efforts are only tools to do such. 

Time Management: Time management for projects, teams and individuals is critical for their respective success. Perhaps the most difficult is individual time management with all the distractions one must deal with daily. Maintaining focus on the task or mission at hand can be difficult and requires self-discipline, a trait not as prevalent with individuals as in the past.  Staying on course is paramount to achieving cost performance and efficiency for both individuals and teams.  There are a multitude of various software applications available to support both individual and team schedule performance. Establishing reasonable schedule objectives and tracking performance against those goals is the responsibility of those in charge of managing the schedule for the team or individual.

People: The most important, valuable, and most challenging variable to manage in the basic building blocks of a company is its people. People bring work habits, skills, knowledge, experience, and drive to a company.  They also bring such things as attitude, feelings, individual problems, jealousy, poor communication skills, etc., to bear. Needless to say, the quality of a firm’s   people is a direct result of the professionalism, reputation, and integrity of the company. Over time, it is critical that the company’s management team invest dollars and time in the growth of the company’s personnel to not only enhance their knowledge and skills, but also to demonstrate management’s interest in their long-term career path with the company.  Being a member of a successful team is important, and the management team should go out of their way to make their team members feel engaged and valuable members of the team.

Remember, people are the ones who develop strategic and tactical plans, negotiate contracts, and manage the cost, time and other employees of the business.  Employees are a firm’s most important asset, and they should be treated accordingly as responsible, accountable individuals utilizing all the tools and technology available to support their cause to manage the business. 

As long as people make decisions to build new facilities, people will be responsible for managing the design and construction of those buildings. While technology and innovation will continue to improve and be useful tools for contractors in the future, management teams and their ability to effectively manage the basic business fundamentals of strategic/tactical planning, contracting, cost awareness, time management, and people will always be key to just how successful their firm will be over time. AI and technology will always be secondary in supporting those in charge in leading their companies to the level of success their shareholders expect in today’s dynamic, ever-changing world.

Bill Caldwell is a retired construction industry executive. Connect with Bill on LinkedIn.