On time and on budget, self-perform contractors need to measure more and more often.

How often do you need to measure?

A general contractor recently shared with me, their need to track subcontractor work was monthly for progress but their need to track work performed by their crews was daily.

They went on to explain that their risk for subcontractors and material purchases were mitigated by executing and managing contracts (as noted above). With weekly coordination meetings and monthly progress billing, their project management staff is able to ensure predictable outcomes.

When managing their own labor and equipment on site, they stated that they wanted to know daily how they were doing compared to their plan. Explaining further, that plans often change due to the nature of a construction project and they want to be able to find issues early so they make adjustments while there is still time to preserve their margin.

Recalling my partial list of labor and equipment data above, that is A LOT of data EVERY DAY.

In my opinion, believing that it was obvious there is a lot of data from every day that self-perform contractors want and need at their fingertips is probably one reason for the massive influx of investor money to construction.

The real world application of managing labor and equipment on site is not about just raw data, it's about contractors getting the information about the work they are performing that will help them achieve (or outperform) the outcome they projected.

What needs to be measured?

Subcontractors progress, safety and quality. Clearly schedules matter. If subcontractors fall behind the impacts can affect multiple other trades and project coordination. Issues with safety and/or quality can also be sources of delays as well as have larger implications. While not full proof, in the end, contracts are designed to protect the contractor from poor performance by a subcontractor.

Materials pricing, compliance with specifications and delivery to site. You can't build without materials. Once awarded work, contractors can create and manage material buyouts to protect themselves from supply issues and price increases. In 2019 the response to COVID 19 changed what had already become a globally dynamic issue. Only weeks ago, new tariffs have been implemented and/or proposed that have impacts in the US and abroad. The results of these are yet unknown but more changes to supply chains will surely be on the horizon. Again, contracts are designed to protect the contactor from issues created by a vendor.

Labor and Equipment. Who was on site, how many hours did they work, what did they work on, how much did they install, what equipment did they use, were they safe and was work installed correctly? That's a lot in itself. For crews there are also certifications, expenses, per diems, sick days, no shows, and all of the other things that go into managing people. For equipment there are things like transportation, maintenance, damage and theft. Unlike with subcontractors and material purchases, there are no contract provisions to protect the self-perform contractor against the risks associated with managing their own labor and equipment.

Closing Thought

As a field engineer, I remember being told that the crane crew standing around waiting on a delay was costing us $90k a day. Compound that over a delay of a few days. Now add in all of the other things that didn't go according to plan on that project. It doesn't take much imagination to understand why real-time information is important.

When executed well, this self-perform work returns higher margins, but it also carries significant risk. Tracking so many data points accurately and in a way to not interrupt the ultimate goal of getting work done is part of the next post, How Are You Capturing Data.

Disclaimer: Unlike working with engineering, product or business (left brain stuff), when I am writing (right brain stuff), I try not to start with the end in mind but instead work from a target idea. Along the way, there are often many connected tangential and parallel threads on which to pull. To compose a concise article is a challenge. Each finished article leaves countless others unexplored. Your time is valuable, I hope I've inspired you with threads of your own to pull.