Construction professionals are a strong group and most owners of construction companies have seen hard times. 2008, 2009 and many years that followed were tough years; some companies did not survive through the Great Recession.
It seems nearly every aspect of our business is challenged right now: cash flow constraints, labor shortages, supply chain disruptions. We’ve been talking with our clients and business owners as well as our own team members who have operated construction firms and gathered some best practices to share. Today’s strategies are centered around your workforce to help your business survive to build another day.
Over the last 30 years, the construction and engineering training business has evolved. In the old days, you had to send your workers off to a metropolitan area to get your required OSHA and various other training. This costs you lost billings plus expenses for travel, hotel and meals. A week of training could easily cost you $1,000 to $2,000 per employee. With COVID-19 travel restrictions, look online for essential training resources and use these slow times to get your employees trained and ready to go to back to work.
Re-evaluate your schedules
Even if you are still busy, pull every project schedule and calculate the various interruptions and slowdowns, whether labor, supplies, equipment, or simply the GC slowing down the project. Labor is likely your biggest expense, and one strategy to reduce cost is to stop paying overtime and manage your workforce to a 40-hour week. Look for ways to consolidate your labor power, especially if you have jobs in near proximity to one another. Consider stopping work at the jobs that have been reduced to a trickle. Move your labor and equipment to the jobs that are still full bore. You can move back to those trickling jobs at a later time. Pull out those project schedules and look for efficiencies…they are there.
Make the hard decisions
There is no harder decision than to let people go. With labor as one of the industry’s biggest costs, too many owners wait too long to reduce the payroll. Forecast of your labor needs and do what is necessary to protect the business and the remaining employees. Cutting payroll does not have to mean the loss of employees – consider furloughs, temporarily laying off personnel while still giving them certain benefits such as health insurance. Consider job sharing when possible. This is when two employees share the same position alternating days or hours worked. Consider managing workforce like a spigot; it doesn’t have to be turned completely off. If you get creative you can reduce your costs while maintaining good and loyal employees. We understand you may have struggled to build a great workforce when unemployment was low and you may be reluctant to lose good people, but at the end of the day you need to make the hard decisions that could protect the company.
Lastly, take heart and know you’re not in this alone. We’ll continue offering strategies and advice in the weeks and months ahead. We urge you to stay connected and wish you well in navigating these times.Back to blog