Dirt Talk: How to Re-Invest in Your Company
by Harry O. Ward , PE
December 21, 2009
During this downturn, it makes sense to review the
obligation your company has to re-invest in itself. When it comes to
reinvestment, are you a laggard or leader?
The Laggards
Instead of making investments, laggards have been making
staff cuts, selling off equipment or closing offices. They have no strategy and
many of these firms feel that they can't cut any deeper.
One firm told me that if they lay off any more people they
won’t be able to do the work they currently have. What they fail to understand is that if they
were to re-invest in their own company and improve their production rates they
will likely find that they're still 20% overstaffed. They can then re-assign/re-train these people
and place them into new and expanding areas of work and gain a significant
increase in profits.
If the firm has taken out loans to continue operating or has
not re-invested in itself, the owners need to expedite the review of the firm
and re-assess where it's at and where it needs to be.
If a firm isn’t re-investing in itself because it cannot
afford to, then it didn’t make enough cuts during the recession to become or
stay viable. The idea of making cuts
during this time was to allow the organization to be business-worthy and
profitable. No one could maintain the
growth, revenue levels or spending that occurred during the good times and cuts
were mandatory in order to remain in business.
The Leaders
While laggards simply react to what they encounter, a leader
looks forward and is proactive. Many firms are using this recession to invest
in themselves and will come out of the downturn poised and ready to take
advantage of any turnaround.
Leaders are re-investing in themselves, acquiring and implementing
technologies. For contractors, this type of technology includes AMG, or
automated machine guidance, for your fleet. This technology can also aid your pursuit
of new markets by giving you the capability to perform 3D modeling and data prep.
If you have already made some investments to outfit your
heavy iron with technology that offers sensing or indicate mode, consider that AMG is a scalable technology that can be
improved and upgraded without losing the investments already made. In other
words, additional automation can be added to what is already there.
Some companies have identified that design-led management, a philosophy that acknowledges that a primary focus on design leads to improved business health, can steer them toward increased revenues, improved public perception and a better reputation. A contractor that has design-led management concentrates on design quality. This results in the construction of a project that has fewer flaws and less re-work, which ultimately results in hitting more deadlines on time.
For a design/build contractor, DLM produces a better design with a very high level of constructibility. Fora standard construction contractor, DLM is helpful because hardcopy plans must be raised to 3D for construction. The process of producing that 3D data (elevating the 2D site to 3D and performing QA/QC tasks) can also fall into the concept of DLM. This is because it raises the quality of the data that affects the overall construction of the project. DLM forces a major focus to be placed on design quality, presentation quality, data prep quality, QA/QC checklists and identifying problems before they affect fieldwork. Once the firm has the DLM philosophy established the reputation of the firm will be positively enhanced in the eye of the public, as well as clients and inspectors.
The next step is taking DLM public. You may want to offer “construction tours” highlighting your capabilities and your work to clients, local government agencies, suppliers (who can steer work your way), school systems and the general public. These tours will allow people to see a presentation on the work you do and also the quality of your work. You can spotlight certain aspects like your equipment, staff training, and your certifications and business practices. You will need to note that the average consumer does not know much about how construction really happens. Therefore, explain to the attendees what your equipment does and how you can use it in unconventional ways to move a project forward. You can tout the investments you have made in AMG and how DLM improves the work you do. Through all this you may be able to create a healthy local buzz about your firm.
Living in the Now
Leaders must continue to be proactive and laggards must acknowledge that the economy isn’t coming back. Take a look around and recognize that what you see today is the economy you must deal with. You must have a company that can generate work, make a profit and thrive. For a company to survive and be healthy it must adapt and learn to be viable in today’s business climate.
Harry O. Ward , PE
hward@harken-reidar.com
Harry O. Ward, PE, is a registered professional engineer, a state licensed contractor and certified in machine control. He is president of Harken-Reidar, a new infrastructure solutions company. He has been a member of the engineering faculty at George Mason University since 1997.
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