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Is Your Company Dialed in to A Market Recovery? MCA Explains

Is Your Company Dialed in to A Market Recovery? MCA Explains

Chicago – Good, solid mid-tier mechanical contractors may actually get hurt when the market improves.
“We’ve heard about the coming uptick in 2013 from economists. It seems engineers are busy and contractors are telling me they’ve seen a dramatic increase in jobs for bid recently,” John Koontz told Mechanical Contractors Association Chicago (MCA Chicago) member companies.
“I’m concerned however; contractors need to be mindful that capture rates are likely to be much lower than in past market upturns. There will be the temptation to take work cheap just to have work,” says Koontz. He is the Mechanical Contractors Association of America National Director for Project Management and Supervisory Education.
Will Your Profits Grow?
Planning is the key for a good, mid-tier size company to effectively grow with a changing market. “This size company had better get dialed-in now to become incredibly efficient before the market comes back,” says Koontz. “You have got to have good control measures in place and a team that manages well. Otherwise you may see increased volume, but no significant percentage increase in profits.
“We’ve got some new conditions not present in the last market upturn. Baby Boomers are retiring in unprecedented numbers, which is affecting field supervision and estimating functions at almost every company I have dealt with. Also, contractors are telling me that they can’t hire experienced BIM and CAD modeling experts fast enough to meet demands for off-site fabrication,” says Koontz. Making the most of the team you have in place and assimilating new recruits is a critical part of the secret sauce for operation efficiencies, he says.
A Checklist for the Turning Market “Great planners find their costs are much lower, they can build more and be paid more quickly. If your percentage of completes are not coming up quickly, you can’t bill as much and you will find your profit margins are lower,” says Koontz. He offers these tips, which he frequently shares in his teaching and consulting assignments:
• Every project, every time, gets a turnover meeting. “This is where the people who acquired the work transfer all of their knowledge to the people most responsible for getting the work done,” said Koontz. “Even the smallest projects benefit from a quick and informal meeting. As simple as this advice may seem, probably 80 percent of mechanical contractors don’t use turnover meetings.”
• Involve foremen very early in the process. “Great companies involve foremen at the bidding stage on very large projects,” said Koontz. “An active foreman brings a keen perspective to the process and often sees something the office staff does not. And since he or she will most likely be assigned to the project, why not take advantage of their knowledge?”
• Involve foremen in the project planning stage. “Good companies involve foremen once the office staff has the plans in place. Great companies take it a step further,” said Koontz. “It seems like common sense doesn’t it? This is the role that has the most impact on the profit or loss of a project. An additional benefit is that the foreman will be better treated onsite by workers, because he or she truly understands the project from the start.”
• The project manager and the foreman participate in servant leadership. “You have to break down the ‘us and them’ barriers. To any project there are two leaders: office and field. A great company understands these roles are interdependent and puts people in place that can build a partnership based on mutual respect, active communications, and the ability to anticipate the other role’s needs,” said Koontz. “Projects become problematic when these leaders don’t operate as a single unit. You miss out on opportunities to find greater efficiencies and often experience more surprises. Sure, sooner or later the work gets done. The real question is what just happened to your profitability?”
• Together, the project manager and foreman tweak prior to taking it to the field. “Great companies require the project manager and the foreman to work together on the project schedule. Then they work together on the cost control system. It’s important the info is fine-tuned prior to moving to the field,” said Koontz.
Koontz regularly teaches at the MCA Chicago Construction Education Institute®, the premier training facility in Chicagoland for educating mechanical contractors. It leads the green contracting movement by offering courses in commercial building retro-fit and re-commissioning, as well as LEED® and sustainable design. More than 75 courses are available in classroom and online formats. Ranges of topics include use of information technologies, safety and risk control, estimating, project management, HVAC service, as well as operations, supervisory and sales management. More information is available at www.mca.org.

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