All of the sudden, it’s hustle and bustle!

Although it seems like the year just started, we’re already beginning to enter the holiday season. I hear “Can you believe this year went by so quickly?” nearly every day. This season means many different things for people. It can be a time to give thanks, spend time with family and friends, give to others, and enjoy time off. But at work, large shutdown projects loom. Companies are starting to think about how to spend this year’s money to avoid losing next year’s—so jobs are being rushed to be completed. Stress can enter the picture pretty quickly when work collides with the hustle and bustle of the holiday.

At Maddox, it is our goal to not just have an impact on your project or your company, but to provide an outcome and experience that gives you a personal, positive impact. No, we probably aren’t best used as personal shoppers, but we can make a dent in your workload. Give us a call or shoot us an email and we can talk about your year end and how we can help you through it.

This month’s article deals with a contractor’s focus on profitability and how it can affect your own bottom line.
 

How a Contractor Makes Money:

As an outsider to the world of contracting, I had to ask. “How in the world can we lose money on a T&M job?” “Easy, we had to deduct 20 hours off of the bill because of rework,” was the reply.

Then came the crazy part.

I discovered that the guys who had installed the work incorrectly, got paid to do the rework as well. The only party who really lost in that job was our company. Workers got paid for the work, and the customer only paid for the time it took to do it right.

I also heard a customer once say, “That contractor’s guys are taking forever to do the job, but it is lump sum, so I don’t really care.” They cared two days later when they were scrambling to make up for lost production.

It doesn’t really matter what kind of contract you use to hire a contractor. T&M, Lump Sum, and Not to Exceed contracts all have an appropriate use. However, to be a successful project, one thing is critical, productivity. Contractors and their customers both make money when the project is productive. If the majority of a man hour is being spent actually installing or performing work, we know that the contractor is going to be profitable, but the customer rarely realizes the effect it has on them. As an example, assume that the market rate is for 2 total man hours to make a weld. If a productive contractor can make the weld in 1.5 man hours, there is a savings. That contractor can do work less expensively whether on a T&M job or a lump sum job. A contractor who can only perform at the market rate has limited options to save the customer money. Those savings usually translate into lower margins. I am sure that you have experienced a job where the contractor was operating with lower margins rather than lower production costs. Usually it is not an experience worth repeating.

Maddox has been improving job productivity by 10-15% over the last three years. Let us show you the job pre planning, on the job task planning and scheduling, and the other ways that we have boosted productivity to benefit our customer’s bottom line. Find out why the majority of our customers actually embrace T&M work using Maddox.

It is never really about the price, it is about the productivity.