Experiencing Cost Overruns? You May Have the Wrong Workforce Model
In a different blog post, I dug into the pros and cons of the Supervision Model and challenged each of you to ask yourself some pretty tough questions.
Today, I’d like you to think about your most recent projects. Did you experience labor cost overrun or exceed your estimated labor hours? Chances are, the answer is yes. And if so, it could be because the project utilized the Supervision Model.
Does the following scenario sound familiar?:
You have a workforce that is in complete control of labor and cost with little or no time to focus on job costing. You have a project management team that is familiar with job costing but is isolated from labor decision making.
The scenario described above consequently creates a condition that fosters cost overruns. This is why the Supervision Model of labor management is fundamentally flawed.
Who is Accountable for Cost Overruns?
Whom can we blame the cost overruns on?
Certainly not the Project Manager; they’ve been locked out of the labor decision making process.
Not the General Superintendent. He/she needs to get the job done and keep his workforce happy.
The easiest target to blame is the site foreman. The FM is a tradesperson, usually trained to supervise (not manage) the workforce crews. They are on the frontlines and in direct control of the project workforce. Directing labor, monitoring labor consumption, staying on the project plan and schedule is not easy. Ask yourself: has the FM been trained in the nuances of labor management and cost controls?
Don’t Supervise Your Workforce—Manage It
What is better than supervising your workforce? Managing it. The difference between the two is clearly outlined in my blog post: The Construction Industry’s Supervision Model is Broken (Here’s How to Fix It).
Ask yourself: Are your supervisors’ and managers’ responsibilities clearly defined? Are you holding your supervisors and managers accountable for cost overruns? If your company is using the Supervision Model, accountability (or lack thereof) could be a major issue. It’s my belief that, in this model, no one is deeply held accountable for cost overruns. The model doesn’t allow for accountability. Too many people are insulated from the issues causing the overruns.
So how do you shift from the supervision mindset to a management mindset? I have good news for you—I’ve done it before. Read my story on how my team restructured an entire electrical contracting firm to follow a completely different labor model (and in turn, reduced cost overrun).
Until next time,