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FMI Quarterly/September 2013/September 1, 2013

If You Want World-Class Operations, Focus on the Foreman

Tech1_imageWhat sets world-class contractors apart from average and struggling contractors? World-class contractors all have incredible talent at the foreman level. That is not to say company leadership, business strategy, project management, etc., are not important, but operations without great foremen always struggle to achieve anything but mediocrity.

With this in mind, there are a few universal truths that foremen and their companies need to remember.

1. FOREMEN MUST KNOW THEIR TRADE.

Everything else is built upon this foundation. A foreman must know how to install work (or supervise installation) correctly the first time. There is no replacement for experience and time in the trade. Foremen should have all the necessary training and experience before being placed in a position of leadership. Only experienced tradespeople can be expected to plan projects, prevent rework and keep the crews productive.

2. THE ENTIRE ORGANIZATION MUST FOCUS ON MAKING THE FOREMAN SUCCESSFUL.

2013q3_world_class_operations_ex1-260x300Whether documented or not, world-class contractors operate with an inverted organizational chart, with foremen at the top (see Exhibit 1). Superintendents, project managers, shop/safety/prefab and executives exist to make sure the foreman and the field have what they need, when they need it. This kind of thinking/acting focuses everyone on the most important internal customers — the foremen. After all, foremen are the ones who manage production, productivity, quality, safety, communication, morale, craft training and site logistics. They personally know and care for the individual tradespeople working for them.

3. FOREMEN MUST CARE ABOUT PERFORMANCE.

The minimum requirement to be a foreman is that he or she has to care. The tactical skills needed to be a foreman, such as planning site logistics, overall project planning, communicating internally and externally, motivating and inspiring crews, filling out paperwork and such, can all be taught as long as the foreman cares to learn and apply them. If a foreman does not care or seems unwilling to respond thoughtfully in tough situations, he or she is not a foreman after all. An apathetic “apple” at the foreman level will quickly “spoil the barrel.”

4. FOREMEN MUST BE INVOLVED IN THE PRE-JOB PLANNING PROCESS.

Getting foremen involved in project planning prior to mobilization has a positive impact on productivity, profitability and overall project success. It is what allows them to be proactive rather than reactive; become project managers rather than project witnesses.

Most companies only have a foreman come into the office to preplan a project when there is a gap between his or her last project and when the next one begins. When early involvement happens, not only does the project start well but it also finishes well, beating the labor budgets and experiencing margin gains. The foreman, project manager and senior management all like the results. So if everyone knows that foreman involvement in preplanning is a best practice, why is it that most contractors do not make it mandatory?

The bottom line is that how companies prepare to start a project is inside their influence and control. Average contractors sometimes do things right by accident. The best contractors make foreman preplanning mandatory and have a purposeful approach to the project.

Involving Foremen in Pre-job Planning
Armed with a preliminary scope of work, budget, schedule and set of plans, a foreman should conduct a site visit. While on-site, he or she should assess items such as:

  • Truck and delivery access
  • Traffic patterns, school zones, foot traffic and neighborhood particulars
  • Utility locations, locates and overhead restrictions
  • Parking location and availability
  • Portable toilet locations and numbers
  • Location and size of laydown yards
  • Status of project — is it/will it be ready to mobilize, etc.

During and/or after the site visit, a foreman should:

  • Create a list of tools and equipment
  • Build the first short-interval plan — what is needed to be productive day one, hour one
  • Provide input/confirmation on budget and schedule
  • Develop a list of any questions or concerns that need to be answered prior to mobilization

5. FOREMEN MUST HAVE BUY-IN AND TRUST IN THE PROJECT LABOR BUDGET.

It should be everyone’s intent to have a labor budget that is realistic and achievable. Prior to beginning a scope of work, the foreman needs to spend enough time thinking about the project and the budget to make sure he or she believes it is achievable. Changes, if needed, should be made prior to work beginning. Without buy-in and an understanding of the budget, foremen often allow themselves to become project witnesses instead of project managers, resulting in a laissez-faire approach to the project.

6. FOREMEN MUST KNOW THE “SCORE” ON THE PROJECT SCOREBOARD, AT LEAST WEEKLY.

If the foreman does not know where a project stands or how it is performing, neither does anyone else. Foremen and their crews need to know how they are performing compared to the budget on a weekly basis. The easiest and most important scoreboard to show foremen is an earned value graph. This graph requires a project to have cost codes, budgeted hours, budgeted number of units, actual hours used to date and actual units installed. Exhibit 2 is an example of an earned value report. From this, it is easy to see which cost codes have the most risk (the ones with the most budgeted hours) and whether or not we are ahead or behind the budget.

Scoreboard information that needs to be quickly understood by the foremen and the field include:

  • Graphs, charts, pictures. Graphical information is easier and faster to process and understand.
  • Up-to-date information and numbers. The data cannot be old or outdated.
  • Consistent distribution (every Monday, first of every month, etc.) The information must be given to the field on a regular basis, not just whenever the office feels like giving it.
  • Color documentation. Color makes information seem more important.
  • 15-second rule. Anyone looking at the information should be able to understand what it is saying in 15 seconds or less.
  • Simplicity. Resist the urge to build a chart that throws everything in but the kitchen sink. Projections, averages, trends should be left off in the interest of absolute clarity.

2013q3_world_class_operations_ex2

7. FOREMEN, GIVEN A SPECIFIC SCOPE OF WORK, NEED TO BE ABLE TO CREATE A PLAN AND A SHOPPING LIST FOR IT.

If a foreman’s supervision skills lies in ensuring installation of work is correct the first time, then whatever keeps him or her from doing that better be worthwhile, like planning and communicating the plan to others.

As long as foremen know what scope of work to plan for (usually a discussion between GC/customer, project manager and foreman), they must be able to document what will be needed (manpower, tools/equipment, materials, information, etc.) and when it will be needed. Once the shopping list has been created, two things happen: 1) the foreman can go back to installing work, and 2) the organization (PMs, superintendents, purchasing and others) can do the shopping — getting what the foreman needs, on time.

8. FOREMEN, ON ANY SPECIFIC DAY, NEED TO BE ABLE TO SET PRODUCTION GOALS WITH A 50%/50% CHANCE OF BEING ACHIEVED.

Given the jobsite conditions, who showed up in the morning, the individual skills of those people, where the material is located, if the area is ready for them, what scopes of work will be worked on, etc., a foreman should be able to talk with his crews and come up with a written production goal.

Goals that are too easy to achieve are not motivating. They end up being unrealistic in a competitive environment, like kid’s T-ball — everyone gets a trophy and every team makes the playoffs. Often, once the goal has been achieved for the day, workers drop their bags and begin to prematurely clean up rather than strive for additional production. Goals that are too difficult to achieve (more prevalent in construction) tend to be demotivating after a few days. If a foreman continually sets goals that cannot be met, workers soon begin to doubt the foreman’s capability to plan rather than their own performances.

Setting challenging yet achievable goals WITH the crews builds buy-in and accountability. Keep in mind, the real value of setting daily goals is not the goal itself, but the discussions at the end of the day. “What helped us beat the goal today? What unexpected things slowed us down today? Can we do/avoid that tomorrow?” helps to build awareness and knowledge for everyone. Five minutes a day discussing what affects our productivity and by how much quickly develops the “gut instincts” of even the greenest tradesperson.

9. FOREMEN MUST RESPECT THE PEOPLE WORKING FOR THEM.

The best foremen have tradespeople who would “take a bullet” for them. That does not come from being a pushover or from yelling and screaming — it comes from mutual respect. Deep down, even the toughest construction workers are still human beings who like to know their efforts and skills are appreciated. People perform better when competent leaders recognize and respect what those around them bring to the table.

These nine universal truths, consistently employed, will ensure that your company has world-class operations and will prove profitable again and again.


CASE STUDIES

Case 1
A civil contractor finished phase one of a development project. The crews were slightly able to beat most productivity expectations and, overall, the project finished with moderate margin gains; it was a successful project!

While phase one was wrapping up, the customer let out the second phase for bidding. The estimator, knowing the market was getting ultracompetitive, felt the company would have to be more productive on the second phase if it wanted to win the project. Without consulting with the field (or anyone else), the estimator doubled the productivity on certain scopes of work, thus lowering the cost of labor on paper.

Sure enough, the company won the project. When the estimator handed over the project budget to the field, they immediately and understandably objected to the estimator’s assumptions. “Why did you take so many hours out of the budget? Why did you think we only needed half the time —we barely beat the last budget?”

The estimator told them, “I did my job —I got us the project. You are going to have to do your part now to hit the budget. If I didn’t assume an increase in productivity, we would not have gotten the job.”

Results
The field felt cheated and felt no obligation to perform to false expectations. They just worked as hard as they could and let what happened happen. The project ended up losing money and did not even cover its direct costs. Overall, this lowered morale and drove a wedge of distrust between the office and the field. The field managers wondered why they were going to be held accountable for obvious estimating errors.

Case 2
A mechanical contractor was feverishly putting together its final numbers for a bid. Minutes before the deadline, it successfully submitted the numbers. Soon the company was notified that it had won the job … with a lot of money left on the table. Instantly, the company began to suspect it missed something. As it reviewed the data, the contractor found a row of numbers were left out of the spreadsheet’s formula sum. About 15% of the project’s labor, equipment and material was not included in the final numbers.

The company decided to go forward with the project anyway. Knowing what it had missed, the company added back the needed budget dollars and hours before it handed the project over to the field. “Look, we had an estimating bust on this project. We added the needed dollars and hours into the budget once we found the mistake —we want to hold you accountable for a realistic budget. We know that we will be losing money on this project if we cannot make up for the bust with increased productivity. ”

Results
The field staff knew the labor budget given to them was “real” and that they had an opportunity to help the company “win” in a tough situation. With the support, hard work and some great ideas from the field, the project ended up almost breaking even. Compared with the original budgeted loss, this was seen as a huge victory!

This time the field knew what it was going to be held accountable for. It also knew the office would be held accountable for what it could and should be held accountable for. Overall, morale and trust were built up rather than destroyed through the experience.


Ethan Cowles is a senior consultant with FMI Corporation. He can be reached at 303.398.7276 or via email at ecowles@fminet.com.

 

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