The Third of the Seven Deadly Sins of the Construction Industry: Avoidable Bad Decisions!

The Third of the Seven Deadly Sins of the Construction Industry:

Seven Avoidable Mistakes Construction Businesses Commonly Make

Together, we've talked about the importance of internal controls, and cash flow in the overall fiscal health of your business.  This week, we look at how to help your employees avoid making bad decisions for your business.        

Let’s face it:  everybody makes a bad business decision now and again.  Occasionally, bad business decisions happen as a result of simple bad luck.  More often than not, however, bad business decisions are the product of uninformed decisions.  Before making any affirmative business decision, your employees should consider each of the following four points.  Failing to consider any one of these four points may undermine a positive outcome, and ultimately lead to anarchy at your office, with each employee devising their own standards of what a “good” decision means to him or her. 

Does the decision support the company’s stated goals of profit and sales growth?  Whether estimating, facilitating buy-out, or communications, all employees vested with decision-making authority must consider whether his/her intended action will move the company closer to achieving its stated revenue and profit goals.  These should be considered together.  You have all likely encountered the scenario wherein a decision may negatively affect profit in the short-term, but support long-term sales growth, which in turn positively affects long-term profit.  Consideration of the full spectrum of impacts is critical to good and thoughtful decision making.

Is the decision consistent with the company’s promises to the customer?   Each employee with customer-contact must know the specific commitments made to the customer.  This means:  put the commitments in writing!  Commitments should be in writing so that expectations between your company and the client are clear.  Those expectations can then be communicated throughout your organization to all employees who interact with that customer.  Scheduling issues, changes, job site meeting follow up, etc. should be shared and reinforced at each level, with practical input from employees interacting with that customer. A promise is nothing more than an agreement upon a standard of performance made between your company and the customer.  If there is no record of the standard of performance, the customer may believe the standard to be different, or not accurately recall the conversation.  If your employees aren’t in the loop, the customer may be given a different story depending upon with whom they interact.  In either of these situations, rest assured, this avoidable problem will impact your revenue, profit, and reputation.

Is the decision consistent with good teamwork?   Be sure that decisions include consideration of the resulting impact upon other departments and team personnel affected by the decision.  Get their input.  The decision may be good for one area, but not another.  The bottom line is, don’t “kill” someone critical to your business by not letting them know what you are about to do.

Is the decision compliant with local, state and federal law, and all regulatory requirements of your industry?  While this may seem like common sense, all businesses want to prevent negative interactions with regulatory agencies.  Whether the issue relates to taxes, insurance, certified payroll requirements, or local sound and dust abatement ordinances, simply ask the question of someone who should know the answer…and “I don’t know” or “I think so” are NOT acceptable answers!

Ideas?  Thoughts?  Questions?  Post a comment and let’s discuss!

The next discussion in this series will look at how to analyze your true project costs.  Stay tuned!