Words: Corey Adams
It may be one of the worst feelings in the world, at least from the business perspective. You get an opportunity to bid and really want this one. You spend hours dissecting the proposal from all angles. You fine tune your numbers to a point that you are confident that no one could possibly beat your price. Then, they do.
That absolute sinking feeling surrounds you. You even start to question how they could be that price? Then, as most people do, you start to believe they made a mistake, cut their own throat, or just have no clue what they are doing.
If you are in the construction industry, you have felt this. It stinks. I will be honest; I have been on both sides of this equation. I have been the guy that lost and the guy who came in lower than the guy who thought he couldn’t lose. After tracking a few trends, I figured it out. It all boiled down to specialization, structure, and efficiency.
Adam Smith in his iconic book The Wealth of Nations, speaks to the specialization of labor as a driving force in an economy. To summarize, when labor forces begin to specialize into one trade, the productivity of that force goes up, costs go down, and the economy benefits as a whole. Now, read that last sentence again and replace the economy with your company.
The reality of life is that we all have something we are good at. This is extremely evident in the trades. How we harness this specialization and turn it into profit is the focal point of our businesses.
First, identify your specialization. Starting out, I knew that we were going to be a concrete and masonry company. It is what I did. The problem was that as we got going, I found that we did subsections of our trade better than others. It wasn’t enough to be a concrete and masonry company. We had to specialize ourselves down to a point of efficiency. Now, we focus on commercial remodel and tenant up-fit concrete and masonry projects. We found that our skill set was best utilized for these types of projects. This allowed me to go to the second step, structure.
Structuring a company isn’t just about systems and operations. It also deals with the equipment you own, the way the trucks are stocked, and the type of people you try to attract. Yes, structure flows over into marketing, accounts receivable, and every other operations system you can think of, but the real gain with regards to productivity and profit is in how our labor force completes the project.
I know a guy who has built hundreds of ground up spec homes. They only used about 3 or 4 different plan sets to build them all. They got to a point where they didn’t even need the plans anymore. They had every measurement memorized and were so specialized in those homes that they could spit them out in record time. They were structured to build homes, and only 4 of them. They then hit repeat until hundreds of them were standing. This is the final step, efficiency.
Efficiency is the culmination of everything we train and strive for. We learn a trade, practice it, perfect it. We buy the right tools for the right jobs. We eliminate waste. We pass on jobs that do not fit our specialization while we market for more of what does. Efficiency is the way to win.
Just like trade-based skill sets, we all are at different efficiency levels. This is why we lose some and win some. It may not be that the guy we lost to is dumb, new, or uneducated in the project. Maybe they are so efficient at that job style that they can just do it cheaper than you. I guarantee if you look closely, you can find one style of project that you do better than any other.
I am still not a fan of losing a job that I really go after in the bid process, but I don’t let it affect me the way it used to. Now, I look at it as a learning experience. Is there a way to do this project more efficiently? Is there a piece of equipment or tool that we are lacking that can up productivity? Is my labor force just not familiar enough with the scope to hit competitive productivity numbers?
Losing can be the catalyst that helps you to begin winning.