Construction is a Three-Legged Stool: Get Work, Do Work, Keep Score

You’re about to read a post that’s a part of a blog series from Gary Fuchs, our Workforce Management Advisor. Want to take a step back and read his earlier blog posts? Or skip a few topics and read ahead? Here’s a quick table of contents to help guide you:

Post 1 | How to Start the Workforce Evaluation Process
Post 2 | The Ten Commandments of Project Execution
Post 3 | The Construction Industry’s Supervision Model is Broken (Here’s How to Fix It)
Post 4 | How My Team Restructured an Entire Electrical Contracting Firm
Post 5 | Construction is a Three-Legged Stool: Get Work, Do Work, Keep Score


During my time as VP of Construction at Westphal & Co., we liked to use the analogy of a three-legged stool when referring to the contracting business:

Leg #1: Get the work (getting the job through marketing, estimating and proposals).
Leg #2: Do the work (actually doing and completing the project).
Leg #3: Keep score (accounting).

he three-legged stool of any construction business is Get the Work, Do the Work and Keep Score.

Construction companies need all three legs in order for the stool to stand. Remove any one of these legs and the stool tips over. In other words, if you’re missing a leg, your company could fail.

Neglecting the “Do the work” leg

For years, the “Get the work” and the “Keep score” legs have been supported by groundbreaking technologies. Estimating softwares and CRM softwares are powerful “Get the work” tools. ERP and accounting softwares have done wonders for the “Keep score” side of the industry. Project management teams everywhere rely heavily on these platforms to manage projects.

But here’s the problem—the industry has only focused on integrating technologies into two of the stool legs. “Get the work” and “Keep score”, although important legs of any construction business, only account for about 15% of expenses.

A pie chart of contracting expenses where 40% goes to direct cost labor, 40% goes to direct cost material, 15% goes to overhead, and 5% goes to other.

What about “Do the work?” The remaining ~85% of revenue is consumed by the “Do the work” leg (direct job cost). Obviously, the “Do the work” leg will have the largest impact on the profitability of any contractor.

The “Do the work” solution has become a band aid

It can’t be stressed enough. When addressing labor management, the riskiest, most volatile and most complex side of our business is the one that, at many organizations, has no platform to stand on (other than a patchwork of spreadsheets, databases, and other proprietary processes). This is a problem.

In previous blog posts, I’ve mentioned that contractors are very creative. They will adapt, create and improvise in order to satisfy their needs. This is particularly true when addressing labor management issues.

In an attempt to manage labor (or part of the “Do the work” side of the business), contractors have built a patchwork of software packages, whiteboards, magnetic boards and industry know-how to create a system that half-works. This “system” that they spend time and energy building isn’t a platform; it’s a collection of tools not specifically designed for the construction industry. It has become a band aid. And it doesn’t work very well. (Just read my story on how I attempted to make it work at Westphal & Co.)

“Do the work” a better way

OK, so we understand the problem. How do we fix it? That’s where LaborChart comes in. LaborChart gives that 40% of revenue spent on labor costs a sturdy, digital leg to stand on (no pun intended). It’s the only platform designed to support and manage labor.

Thanks to LaborChart, the “Do the work” leg can operate just as smoothly, efficiently and transparently as the “Get the work” and “Keep score” legs of your business. You now have a solid stool to sit on. No more balancing on two legs to make your organization efficient and profitable.

Keep in mind that LaborChart can be integrated with other existing “Get the work” and “Keep score” platforms, too. Finally, a workforce management system is being used in the same sentence with API and ERP. To learn more about our integration partners, check out our Integrations page.

Until next time,

Gary Fuchs

Workforce Management Advisor

 

Gary Fuchs, Workforce Management Advisor at LaborChart.

Gary Fuchs

Workforce Management Advisor

Gary Fuchs is Workforce Advisor at LaborChart. Prior to LaborChart, Gary was VP of Construction at Westphal Electric. He and his wife Cheryl are proud parents of three daughters and 10 grandchildren. Gary enjoys woodworking, golf, hunting, fishing, and working with LaborChart. In his past, Gary was a volunteer firefighter and basketball official.