Management by Teamwork

By Charles Vander Kooi

One of the things I believe in very strongly is construction companies need to be run by teamwork. If you running your company dictatorially, you are running it with tunnel vision. There are things that are happening to you which you cannot see, and you will never see, because you are not allowing anyone around you to show you those things. I want to describe to you a team I was on which ran a very large site-development general contracting company for several years.

There was something almost magical about this team. We had a camaraderie that would not quit. We also had mutual respect for each other and for our roles with the company. We understood one of the most important human dynamics: We understood all of were strong in some areas and weak in other areas. Consequently, we covered each other's weaknesses with each other's strengths. Where I was weak, someone else was strong. Where I was strong, someone else was weak. And, the success of our team was due to our willingness to recognize this fact and to work it out in our working together. There was one other important ingredient this team had -- no one of us was over another one of us. We all felt an equality in our special roles of making contracting firm successful.

Let's consider the roles each of the three of us had to fulfill. First, let's consider the field superintendent. He was the one who saw to it the work got finished. He coordinated all of the people, the materials and the equipment onto the jobs. He worked out the methodology which would be used in getting the job completed. If there were problems on the job, he got the necessary people involved to get them resolved.

There are a couple of personality traits I think are important to a field superintendent. One, they have to like-and be able to motivate-people. What is the biggest risk in construction? Labor. Where can you make the most money in a consistent way in construction? Labor. And, a field superintendent who likes people and is liked by others, and who knows how to motivate people, is going to make you money. Two, he has to be the kind of person who doesn't mind problems and, in fact, is challenged by problems. There is no greater place for problems than in the field, so whoever is in charge had better not get frustrated with handling them. The person with whom I was on a team was just such a person. In fact, to this day, I accuse him of starting problems, if there weren't enough around, just so that he could keep himself challenged. If he was a fireman, he would have been an arsonist.

The second person we need to consider is the accountant. On our team, this was a lady and she was a good one. She didn't take any jive talk from any of us. She could read right through some of our talk. She kept all the books, did payroll, the accounts payable and receivable. She was also the office manager in charge of all the secretaries and the flow of paperwork around the office. I was the third person: the contract administrator. I first decided what to bid using the criteria I have written about in the section Troubleshooting the Estimating and Bidding Process, with one addition. I would always bring in the field superintendent to see what he thought about a job before I bid it. If the job made him sick and he didn't like it, or was not challenged enough by it, we didn't bid it. If we had bid a job he didn't like, and got the job, he would still be sickened, and you can just be that it would not have been a very profitable job for us to do. If we were low bidder on the job, I would negotiate the contract, if needed, and get it signed. I would see to it that all the preliminary paperwork was done; that is, the pay estimate forms were approved, submittals, work flow charts or CPM charts were taken care of; etc. I would then set up a preconstruction conference with the owner. However, before we went to the preconstruction conference, we had one in our office. We wanted to get all of our ducks in a row before we met with the owner.

The meeting was attended by the field superintendent, the project superintendent (if one had been designated), the accountant, the owner, myself, and Mr. Tape Recorder. The meeting was taped and later typed out. It then became a part of the job file and the project superintendent had a copy to refer to continually when he needed to know what we had talked about and agreed upon during that meeting.

One of the first things we did was to review my estimating mistakes and see how we could minimize their effect on the company. We looked over the job with one goal in mind: finding a way, some way, to make that job better for us. I remember being low bidder on a highway job in a large city in our county. On this job there were several median islands that had very bad soil in them, and they wanted the soil replaced with topsoil mix for plants. We were excavate the bad soil 18 inches and replace it with topsoil. There was only a pay item for the new soil. The removal of the old soil was to be bid in with the putting in the new. There were 10,000 cubic yards of material to taken out and replaced. On the same job we were to build some huge earth berms. They required we bring in 30,000 cubic yards of material. I had gotten a quote of $4.50 per yard for the imported dirt. At the same time, the trucker quoted me a figure of $4.50 to haul off those 10,000 cubic yards of bad soil. This the way I figured the job, $4.50 per yard for the new soil and $4.50 to haul off the old. We were sitting in a pre-construction conference among ourselves in our office trying to figure out a way to make this job better. Someone asked, "Charlie, would they let us take that old soil and put it in the bottom of those berms and just import good soil on top?"

"Let's ask them," is all I could respond.

And so, at the end of our pre-construction conference with the owner, we asked them. They blinked their eyes a few times and said we could do it that way. We put $90,000 back into our pockets at that very moment! We did not have to haul off 10,000 yards at $4.50 per yard, and $4.50 per yard they paid us to import what we did not have to buy. That's 10,000 yards at $9 per yard, or $90,000! And, it was all because we were willing to ask ourselves, "How can we make this job better?"

I wonder how many of you reading this book are wasting thousands of dollars on your jobs right now. Oh, I didn't say you were not getting your jobs done for the cost at which you bid them, but you could get them done for a cheaper cost. You could come up with some new methods or approaches, some other pieces of equipment to use, or a different material in which would give the owner the same quality of the job but save you money. And, the only reason you are not doing it is because you didn't sit down before you started the job with some of your key people and ask the question, "How can we make this job better?" You see, once you sign a contract, the price is set. The only way you can increase your profit is to lower the job's cost to your company by finding a way to do it faster and cheaper. We took it on as a personal challenge to find ways to make jobs better. I always say you need this before you ever start, because once you start, the job will find a way to make itself worse.

During the meeting we also decided on what subcontracts we would award and where we would buy-or shop-for material. We laid the job out as to its expected progress and billing schedule. We also pinpointed potential problem areas, and began to lay preliminary plans as to their solution in our favor.

After the meeting, I turned the job over to the field superintendent to be done. However, I wanted to be involved in it three different ways. First, I priced all change orders. Don't let your field people price out change orders. They will do it on the back of some matchbook cover and burn your whole company down. I knew what was on the job and how it had been going and how the architect/engineer had treated us to that point, so I wanted to price the change order. Also, as I have already mentioned, change orders are dangerous, so I wanted to be part of estimating their true costs. I also was involved in the monthly billing process. I would work with the field superintendent to get the pay estimates figured and submitted. I wanted to do it so I could stay in touch with reality of how quickly that job was really going together. I also looked over the payables to get a feel for the true costs which were being spent to do the job.

Let me insert here a suggestion as to how I feel the payables of a construction company should be handled. I feel the accountant should approve them for math. Does the quantity multiplied by the prices work out mathematically? Then they should go to the field superintendent to approve for quantity and quality. Did you receive the amount of material and was it acceptable? Then they prove the price. That person bid the job and should be aware of the price quoted them at the time of the bid. Often, I have found suppliers adding delivery charges even though they had quoted me a price FOB job site. Sometimes, they charged a higher price because someone in their firm didn't know of the special price which had been quoted for the job. After an invoice clears this process, it is ready to be paid.

There is one final thing I liked to be involved with and it is the final "punch list." Don't ever let your project superintendent do the punch list. I have found they can give away the farm just to get off a job. Let's say that person has been out there on the job for months an they are sick of the job. The owner and the architect/engineer have given them problems day after day. Subcontractors have given them the run around on a daily basis. At this point, your project superintendent will do anything to get off the job-then here comes the architect/engineer to do the punch list. They quickly read your project superintendent's attitude and know they are in the driver's seat. They can ask him to do things which were never even called for in the original documents, and he will do it just to get off the job. He may be willing to write the architect/engineer a check to get off the job. I, on the other hand, could come out there a little less frustrated and a whole lot fresher and be able to hold my own better with the architect/engineer. Thus, I have found I could do a better punch list.

Let me add one final bit of advice. Remember this principal: the more quickly you can get in and out of a job, the more money you are going to make. Not just from the possible labor savings but from many other avenues as well. A large construction company recently tore down a major viaduct into a downtown area of a large city under a 13-million-dollar contract. They were given 400 working days to do the job with a liquidating damage penalty of $10,000 for every day they ran over the time limit. They were also offered a $10,000 per day bonus for every day they finished earlier than the 400-day time limit. They finished the job in 300 working days and there were pictures of them collecting a $1,000,000 bonus check in every major newspaper in that city. Is that all they made by finishing the job 100 days early? Not on your life! For 100 days they were not paying out general condition costs for trailers, temporary toilets, job phones; etc. For 100 days they had one dynamic project superintendent-who could build that viaduct in 100 days less than anticipated-over working another job, which would make them more money. And, when it came time for the punch list, the owner was so thrilled to have the job done early, I'll bet the punch list wasn't very long at all.

However, if you stay longer on a job than you should, the opposite begins to happen to you in a big way. Your costs for general condition items begin to exceed your estimate. Everyone's attitudes on the job go downhill, and the production begins to go bad. You have a project superintendent who is still on that job losing you money, plus losing the money he or she could have mad you on another job during that time. You have an owner and an architect/engineer who are mad-and they are mad at you. When it comes time for the punch list, it's not six items, it's six pages of items. I have head contractors take on the attitude that it takes a certain amount of time to do a job, and they will finish when they finish. This kind of attitude costs thousands of dollars. Remember, the more quickly you can get in and out of a job, the more money you will make. For that reason, I like contracts with designated completion times and liquidated damage clauses. They force me to make money!

Management by teamwork, a much better way to run one of the most complicated businesses around: the construction business.

Seminars offered by Charles Vander Kooi
Estimating & Bidding Balancing Estimating, Job Costing, and Accounting People Management

Charles Vander Kooi Biography:

Charles Vander Kooi has been involved in the construction industry for over 30 years, thirteen as an upper-management employee of companies and seventeen as a consultant. He has bed over a billion dollars in work over his career. As a private consultant, he has helped over 1,200 companies in their estimating/bidding systems and has lectured to over 70,000 contracting people nationally and internationally.

Constantly in demand, Mr. Vander Kooi speaks at an average of 100 Trade Shows and Conventions annually, teaching his philosophy across the U.S., Canada and Australia. His company consults with an average of 100 clients annually to assist in improving their performance.

He has authored eight books to the industry and his seminars are available on audiocassettes as well as videos.

Vander Kooi and Associates, Inc.
Phone: 303.697.6467, Fax: 303.697.6815

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