ICT and SNIPS Magazine recently sponsored a webinar on the Construction Labor Productivity: How These Construction Managers Use Labor Tracking to Save Money, Build Success.
We had Guy Gast, President of The Waldinger Corporation – Iowa Division, and David Francis, CTO of ICT on hand for a discussion on this topic. In addition, Guy discussed the findings and objectives of recent reports issued by the New Horizons Foundation and the Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA).
Interviewed by Emell Adolphus, Editor of SNIPS Magazine, this four-part series covers many of the highlights of their discussion divided into the following topics:
- Part 1: Benefits of Productivity Tracking
- Part 2: Adopting and the ROI of Technology in the Field
- Part 3: Process and Best Practices
- Part 4: Impact of Implementing COVID-19 Protocols
You can listen to the complete webinar here.
Part 4: Impact of Implementing COVID-19 Protocols
New Horizons recently did a study about contractors losing as much as 8.7% of productivity from implementing COVID-19 prevention protocols such as hand washing sanitizing putting on masks, social distancing as well. The study also stated contractors wouldn’t feel that loss until further into the future. Could you tell us a little bit about the grounds of that study and what did it mean that they would not feel it until the future?
Guy: There are two parts to the productivity study. Early this year we re-deployed resources as we needed to get some research done quickly on many man hours of work to see what is going on. That 8.7% loss was a result of studying a hundred thousand man-hours at work and measuring what we called mitigation exposure. That is fit for duty, getting access to the job site, getting in, new safety orientations and procedures, hand-washing frequency, tool cleanup. What I call non-productive tasks.
In addition, we discovered that on the direct labor installation. There was an additional 9.2% average loss and that was for things like putting one man on a scissor lift instead of two or what you refer to as social distancing – reallocating crews and changing our methods of getting material in and out of the building. Vertical access – putting less people on a on a skip hoist to get to higher floors in the building. So, all sorts of things that contributed to potentially a loss of 17.9%. Why is that important? Well, because frankly a very small needle move on labor is a big move on the bottom line. If we lost 10% of production on labor, we might lose the entire margin in the job. To the converse, if we improved labor production 10%, we would probably double our margin. So, it was a paramount issue because while we generally say at the Foundation to give contractors a chance to grow, you can’t grow if you don’t protect the bottom line right now in difficult times.
That was the genesis of the study and why we did it. The concept is that people don’t see these things until later. Often, we are not able to really reflect trends in labor production until we’ve had quite a bloody experience and that is not a sacred cow and not just for small contractor midsize or large. It sometimes takes a long time for us to recognize a negative trend in production. Ultimately those things don’t show up on the bottom line of the job financial or the company’s financials until the last 10% of the job. It is really a challenging event to manage looking forward. David, I know you’ve been there you’ve seen that.
David: I am seeing a lot of new and younger foremen out there that have never estimated before and do not understand how the job is supposed to run compared to how a job is really running in and they have lost time to correct issues. You hit it right, the goals of efficiency are to minimize labor loss and the more loss you have on labor it doesn’t take much to destroy a job. And the hard part is if you don’t find out until the last 10% and say, “Holy smokes, we really have an issue.” That is the scary part for any project manager.
Guy: I know contractors. Rose colored glasses will come out, they will be overly optimistic about their ability to drive an outcome. They will believe, of course, that I have all my best people now, so I’ll do the work even faster than I did in the worst of COVID. And yet, I’ll be managing against those protocols. I think the reality is you are going to be faced with taking work at lower margins with higher labor risk in a downturn market. I don’t think any of that is negative, but I think it means you need to be more selective, be careful. You must be willing to measure production early because if you don’t, later in the year, that work that you took with your rose-colored glasses on will not look so attractive. That’s what I believe. And that is why I think the motivation to manage production is even more desperate now than it was at the beginning of COVID.
David: From my experience, change is always hard for contractors. When things are going well, they don’t want it to change, especially if they see profit. If things are going well or if they’re getting profits, they assume things are good. But a lot of times they are leaving money on the table, because they are still doing old processes. There are new processes out there that or even simpler processes that you can put in place.
And then the flip side happens. When things get tight, no one wants to spend money on technology. The worst part is they go back to their old safe practices. But the problem is people are adjusting and moving to be competitive so if you go back to how you’ve always done things is a real dangerous trend. The COVID world is a totally different world and how things operate, how jobs go and, I think more than ever, you really want to know what’s going on at your job.
Guy: Well, I think in a year where everybody has been challenged by manpower and recruiting and attracting and retaining the best talent, I think you start with people and there are two kinds of people. There are customers and there’s employees. I want to keep the ones I have or both, the customers, and the employees so if I don’t focus first and foremost on the safety, health, and wellbeing of those two parties, my customers and my employees, I’m getting distracted because that’s what’s going to be important, at least I think as we go in the first half of the year
Takeaway: Stay competitive and protect your profits. No more dirty paper with ICT Tracker.