Andy from The Trades Coach, Part 3: Reduce errors to maximise margins
Currently, rework accounts for up to 20% of the cost for a typical construction project according to “A Guide to Construction Rework Reduction” from the Construction Industry Institute. While this report focused mostly on commercial projects in the US, the same principles apply to NZ and residential builds as well. As a further twist of the knife, the same issues that result in rework – being bad, or lax communication, oversight, inconsistent file management, and spotty follow-through – often lead to warranty claims as well. Rework and warranty claims not only reduce margins, but also negatively impact customer satisfaction, referrals, and repeat work.
Whether it’s 20% of your build cost or not, the fact remains that when I ask builders what their biggest unnecessary cost is, they almost always reply “errors”… Although they typically have a different name for it! Being such a big problem for builders nationwide, it should be a priority to address errors, and put processes in place to minimise their occurrence. There is a long list of potential strategies you can implement to reduce errors – frankly too many for this article, but here are some of my first recommendations that you should consider if they aren’t already being used on your sites.
Checklist and Operations Manuals
There is a common tendency for builders to keep information on how to do certain tasks, in their heads and nowhere else. While this is a handy place to store such information, it doesn’t help much in improving the overall performance of a business, especially when it comes to bringing on less skilled or experienced staff.
Long-winded procedure manuals don’t really work well in practice, so the simplest, most flexible and effective document to use is a checklist. Referring to a simple checklist enables you to clear the mind of a huge amount of information and then focus on the bigger picture, as long as there is a policy to use them, and keep them updated! They are generally very easy to implement and update, and once tested on paper can be incorporated into your project management software. Rave Build, already contains a range of checklist templates to make it an even easier implementation.
It seems obvious, but making sure your team is being constantly trained in new techniques, and focussed on becoming more efficient in the existing ones is crucial, and sets a great standard amongst the group. I know this costs time and money, but it must be viewed as an investment that will pay dividends in the form of higher productivity and fewer mistakes.
Apart from the usual industry training, you may want to implement your own skills register and ensure team members tick off the required skills on an on-going basis. Another level of this is to require team members to not only acquire the skill themselves but to be able to teach the skill to someone else.
Culture is not just about beers on a Friday afternoon. While some of the fun stuff is very necessary to balance out the hard yakka, developing a culture of responsibility and forward-thinking is also important. If you expect a better result (in the form of fewer errors), it requires people to take different actions. To encourage different actions you may need to instill some new beliefs, or aim to improve or develop the team culture.
A change in culture takes time and it takes commitment or buy-in from everyone. I have worked with a few companies on culture change projects and usually see improved company performance as a result and usually more satisfied team members too. It may take a while and needs persistence on the part of the owner. It also sometimes means that a team member or two that “don’t get it” may need to move on.
Communication breakdown is often at the root of many errors on site. There are lots of moving parts in a typical build, and many people involved in the communication process: such as owner(s), architect, engineer, building authority, inspectors, builder, foreman, apprentice, project manager, multiple subbies, and so on.
Like a game of Chinese whispers, it’s not surprising the message gets a bit scrambled at times. How many times have you been on a build where someone follows an out-of-date version of the plan and rework is required to match the latest plan?
Having a centralised repository for all the necessary plans, specifications, amendments and related build information will help to minimise confusion and make sure everyone is speaking the same language regarding the project. One person needs to be held responsible for ensuring this central information source is kept up-to-date, but by using cloud technology this is becoming easier and more reliable. This is where project management systems like Rave Build can be extremely beneficial for project management and project communication in particular.
Carrot and Stick
Incentivising people to work faster in the complex world of construction has been shown to be counter-productive. Incentives for speed usually only work for simple, repetitive tasks.
Incentivising people to make fewer mistakes, and taking away those incentives when errors occur, may be a better way to go. This needs to be developed within the wider cultural setting of the business but to specifically encourage people to think a bit more before they act, in order to achieve a better outcome can save the business in the long run. As the leader of your company, it’s your job to set the required outcome for the job and make sure everyone knows what that looks like. Furthermore, you need to coach your team on how to think more effectively, and how to take a little time upfront to plan the work. It’s also crucial to determine what the most efficient way to complete the work is, and then develop a bonus system to reward efficiency and quality. If mistakes are made the team needs to realise the consequence of that – no bonus.
I could keep going on ways to minimise errors, but I would end up writing a book! I suggest you try implementing some of the above ideas if errors are a frustration to you and measure the effect. Even if errors are not a big issue for your business, these ideas will still be of benefit to the bottom line, so think about using them anyway.
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The Trades Coach
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