Never Stop Estimating

When I was working in the field, I remember the constant ups and downs. We’d have a couple of really strong years, and then suddenly, work would dry up. One year, we’d be so busy we could barely keep up, and the next, we’d be wondering if we’d even have jobs to show up to the following Monday. It was frustrating to say the least. You’d put in all this effort, have a few great years and then get hit with a slow spell that wiped out half of what you’d earned.

In the great years, we’d go out to steak dinners, company trips and we had all kinds of perks. The culture of the company was fantastic. Then it’d be slow for a few years and the entire field management staff would be in the office estimating, completely consuming profits via overhead that we’d made the previous years. Why? Because we stopped estimating!

Over time, I realized that having a successful construction business requires a strategy, especially when it comes to managing the workload and keeping your estimating pipeline active, even when you’re busy. You want to make the prosperous years count by not only stacking profits but also by strengthening your team and setting yourself up for stability in the long haul.

Let’s dive in and talk about why keeping the estimating department going is so important, the benefits of being picky about projects and how to make sure you’re prepared if work ever slows down.

Don’t Stop Estimating Just Because You’re Busy

A lot of contractors hit a certain point of being "too busy" and think it’s safe to pull back on estimating; they figure they’ve got enough work lined up for now and can take it easy, but that’s a mistake. I do feel it’s time to pull back slightly, but now it’s time to become more picky. When you stop estimating, you’re essentially hitting a pause on future opportunities. Then, when the jobs start drying up, you’re left scrambling to fill your schedule and that’s when you end up in that feast-or-famine cycle all contractors hate. You then eventually take on cheap work fighting for low-profit work.

Here’s my suggestion, even when you’re swamped, keep estimating. Constantly bidding on new jobs keeps you in control. It lets you choose the best projects, avoid low-profit gigs and ultimately decide where your time and effort go.

Also, many of your clients rely on you for proposals. If you stop providing proposals for, let's say a year, you won’t be top of mind and you’ll soften the strong relationship you once had which took you many years to build.

Charge Higher When Demand is High

When work is flowing in, that’s your chance to boost your profit margins. Clients know the market is competitive and that quality contractors are in demand. Take advantage of that! Charge a bit more for your projects. Don’t undersell yourself just because you’ve got enough work for now. Trust me, you’d be surprised at how often clients are willing to pay more if it means they get top-notch work done on time.

Back off aggressive unit prices, increase your profits and stay away from price negotiating. I’ve personally run a project where we submitted a high number during a busy time, and guess what, we got awarded the project, made a ton of money and it was the least stressful project I was ever on!

Look at these higher-priced projects as an insurance policy against future slowdowns. The more you save during the busy years, the less stress you’ll feel when things get quiet. And if you happen to land a big project, that’s a great opportunity to train some of your newer team members and boost your team’s morale.

It’s also important to not ruin existing relationships you’ve spent many years building during this time. Be honest with general contractors or owners whom you’ve worked with in the past — and even new clients — and let them know you're busy. Open communication and honesty are always the best policy!

Be Smart About What Projects You Take On

In busy times, there’s a temptation to take on every job that comes your way. But just because you can doesn’t mean you should. When you overcommit, you run the risk of stretching your team too thin or compromising on quality. Worse, if the work slows down, you might find yourself overstaffed and struggling to keep everyone on board.

Being selective is a good thing. It lets you focus on the projects that bring in the most profit and match your company’s strengths. Remember, a packed schedule doesn’t always mean high profits. Sometimes, it’s better to turn down a project if it doesn’t fit your goals or if it would require you to overextend your resources. After all, keeping your reputation solid and delivering quality work is more valuable in the long run.

Train Your Team to Handle the Load

Busy periods are a perfect time to develop your team. If you’re winning more bids than you expected, use it as a chance to train newer project managers, supers and foremen or help your junior staff step up. Not only does this prepare them to take on more responsibilities, but it also strengthens your whole company. A team that can handle challenges together, learn on the job and build skills is a huge asset.

Delegate larger responsibilities to less seasoned managers and help mentor them. When you bid on less profitable work, you’re so worried about losing any kind of momentum. You now have the financial breathing room to do so.

If you’re worried about overwhelming your crew, start small. Bring your junior project managers into the fold on larger jobs, pair them with seasoned leaders and make sure they feel supported. This way, when you need them to step up during those busy seasons, they’re ready to handle it.

Avoid the Feast or Famine Cycle

One of the biggest problems in construction is the feast-or-famine cycle. You’ve got tons of work one year, and the next, it’s a ghost town. Keeping a steady flow of estimates out there prevents this issue. It means you won’t be desperate for work when things naturally slow down because you’ve got a backlog of jobs lined up or cash at hand to pick up the slack and keep your top talent working.

Always aim to have a steady pipeline, even during peak times. This way, when things start to quiet down beyond your control, like economic downturns, you’ll have cash in the bank to pick up the slack. It’s one of the best ways to ensure your company’s financial health over the long haul.

Consider Outside Resources

With so many tools and resources available today, there’s no need to do everything in-house. Consider using scheduling consultants, safety consultants and operation consultants to help streamline your operations, or consider outsourcing specific tasks that aren’t your strong suit. You can also hire subcontractors to help perform some work or even subcontract the entire project. If you go this route, make sure your overhead and profits are preserved. It frees up your time and energy so you can focus on what matters most — running your projects well and keeping your team engaged.

External resources can help you get through peak periods without overloading your team, and they’re easy to scale back when things slow down. Using these resources can lighten your load and help you avoid burnout.

Reward Your Team When Times Are Good

When your company is doing well, make sure your team knows they’re valued. A busy season means longer hours, harder work and extra stress. Consider rewarding them with bonuses, extra time off or other incentives. A well-compensated, appreciated team is more likely to stick around, stay motivated and put in their best effort, especially when things get challenging.

Happy employees mean better performance, which translates to better work for your clients. Plus, when you take care of your team, they are more likely to weather any future storms right alongside you.

Be Cautious About Rapid Growth

While growth is a good thing, expanding too fast can create its own set of problems. When you’re busy, it’s tempting to hire a bunch of new employees to keep up with demand, but if you overhire and work slows down, you could end up needing to make layoffs, which hurts morale and disrupts your team.

When contractors grow too quickly, cash flow problems often arise due to factors like taking on too many projects at once, delayed customer payments, high upfront costs for new projects, inadequate budgeting for unexpected expenses, poor project management and not securing sufficient advance payments, leading to a situation where they are spending money on new projects before receiving payment for completed ones.

Instead, try to grow cautiously. Consider hiring a few people on a temporary or part-time basis, or bring on freelancers as needed. This allows you to scale up when demand is high but keeps your core team stable if work slows down. Cash flow is always critical to business success.

It’s important to understand that, while you’re busy, you should take on additional work that will help you fuel your growth further, not work that will keep you bogged down and hurt your business. I love scope diversification, and perhaps this may be a great time to do so, but understanding the risks involved is imperative for this decision to be successful.

Get very clear on what scopes of work you can handle with ease and take on that type of work. Don’t let bad decisions ruin this prosperous time for your company.