Improving productivity in the small to medium-sized building company

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The New Zealand construction sector is characterised by a large number of small to medium-sized firms, with only a relatively small number of large firms.
A massive 91% of firms in our sector have five or fewer employees, and we also have a high proportion of sole traders, at 21% of this total.
While larger firms have dedicated departments for human resources, health and safety, and marketing and finance, often the small to medium business owner must cover all of these roles personally.

Managing productivity outputs through a good work ethic and production on site are relatively easy to control. However, it is in the management side of the business where most gains can be made.

Supervision
• The world is short of good organisers!
• Continual improvement in managing the flow of labour, materials, specialist trades and design is critical to efficiency.
• By disciplined planning, constant communication and attention to detail, projects will run as smoothly as possible.
• By encouraging staff members to bring fresh ideas and to solve problems promptly, they can be empowered to work more effectively.

Health and Safety
• The construction sector has had the highest proportion of work-related fatalities over the past six years out of all New Zealand industry groups, and a higher than average number of non-fatal injuries over the same period.
• Each of these has a negative effect on productivity through project disruption and loss of skills, time, morale and focus.
• We need to change the “she’ll be right” culture to a “safety first” culture.
• Safety planning almost always reveals other efficiencies in methods, time lines and productivity.

Management
• Management is not some innate ability that some people may have been lucky enough to be born with.
• It is developed by continuous learning, improvement and practice.
• Small to medium-sized firms are especially vulnerable to changes in the economic cycle.
• Financial management is critical to survival and growth through the continual boom/bust cycles that we, as an industry, are particularly exposed to.
• Capital must be retained within the business during the good times to ensure liquidity, productivity and employment impacts are minimised during the inevitable downturns that follow.
• Spending on the bike, the bach, and the boat won’t help you much when the going gets tough.
• Good management also means being able to look ahead and assess risk.
• Currently, I believe we are entering challenging times where there is increasing workloads combined with increasing labour and material costs.
• Firms signing fixed sum contracts without fluctuations clauses that cover cost increases are vulnerable and exposed to risk.
• Personally, in the past, I have seen many building companies go bust at this stage of the cycle.

Quality
• Defects and rework are the enemy of productivity.
• Taking enough time to get it right first time always costs less than returning later to fix it.
• It is important to always have the right equipment, information and processes at the coalface.
• Having an on-site computer or smartphone to access manufactures’ and regulators’ information and web sites is essential.

Succession
Most small to medium-size businesses simply close down when the owner retires. This causes disruption to employment, training, suppliers, systems, specialist trades and the client base. By planning ahead for ownership change, business owners can ensure continuity.
Productivity can be increased by hiring the right people, managing them and the business efficiently, and building a quality product that’s priced correctly.
You may be a great builder, but the challenge is to build a great business.

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