Why you shouldn't get too comfortable in a good market  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

May 24, 2024   |   Read Online

Edgevanta Weekly 🚀 🛣️ 5.24.24 - Complacency

Your essential guide to dominating the construction bidding and building world with the latest tech, market trends, and wisdom.

Complacency

When I was in college, Hurricane Katrina devastated New Orleans and the surrounding communities. Thankfully, the management team at our family’s business Barriere Construction rallied together using a makeshift office in Baton Rogue and worked tirelessly to orchestrate the safe return of our 450 dedicated employees back to work in a matter of weeks. It was a logistical challenge. Some of our people had lost everything they owned and had to start over from scratch.

We returned to work and the company and our dedicated teams played a major role in helping rebuild the city’s roads, levees, and infrastructure over the following years. We witnessed hard working folks get back on their feet financially and emotionally. Within a few months, the good times were rolling. And the next 8-10 years were the most successful in the company’s history. There was plenty of work to go around for us and the competition. Profits rose. Great people, a culture of excellence, a solid employee incentive structure/bonus program, and being in the right place at the right time all translated into huge years. It was electric.

Some of you may be experiencing something similar today. With the IIJA funding in full swing, the next 4 years look pretty good if you’re building highways and paving roads. For instance, yesterday I saw bid results for a $530 million job with a one and only bidder. Never seen that before.

When I rejoined the company in 2013, things had changed. Funding from the federal government had dried up. New competitors moved into our markets. We overreacted to their presence and dropped pricing as the market size contracted. Our profit margins tanked over the next 3 years. What had been our most profitable division was barely breaking even.

Our cultural and operational performance was most concerning. When times got tough, it was clear that some entitlement built up during the boom had hurt select parts of the business. The outlook wasn’t great and we wondered what had gone wrong.

Some examples:

• A rogue PM and Superintendent that “always made a lot of money on their jobs” were rarely questioned. They did not want to share resources with other teams and shielded “their crews” from accountability for their work. This blew up later.
• Operators stopped filling out equipment reports because the Foremen were not held accountable for their crews.
• Quality became less of a focus because “We’re Barriere, we got this”. Cue $150K in asphalt pay cuts because we didn’t follow the checklist.
• Field supervisors not checking yield, over-ordering and throwing away asphalt led to mix waste in excess of 3%. When this was prioritized and tracked weekly, that number decreased to below 0.50%.
• “Our paving crews don’t do cleanup work” mentality and the prep/grade crews will clean up after them when they dress the shoulders. Breaking this mindset was hard.
• Jobs were being bid with extra budget so we weren’t tuned into our actual costs.

Eventually, after some adjustments and turnover, things got turned around. We were a bit humbled. We got back to our checklists and a culture of ownership and accountability. But it didn’t have to be that way. Here’s how we could have avoided some of that pain and my advice to you as an manager, owner, or leader of a construction business in a good market:

• Process over results
  • When the score is 24-3 in a football game, should the winning team’s offense give 70% effort because they’re ahead? The same concept applies to construction companies building work with healthy budgets and profits. Focus on what you control today (safety, quality, planning, productivity) and the process that it takes to be great every time. NOT the scoreboard.
• Markets are cyclical
  • Markets go up and down. Good times don’t last forever.
  • 1 new competitor or a DOT funding issue can derail the gravy train.
• We humans cannot predict the future (and think that we can)
  • You never know when event outside of your control (e.g. 9/11, 2008 Financial Crash, COVID) could rock your world and change the landscape. Best to be prepared.
• Focus on culture and people
  • It starts at the top. Culture is what happens when you’re not around. Your standards become what you put up with. What you do not correct is what you accept. Know that things tacitly approved now will have to be dealt with later.
  • What gets rewarded gets repeated. Celebrate good work!
• Innovation
  • Stay on the cutting edge regardless of how green your P&L is.
• Markets do not make you
  • Share the message with your teams that what makes your company unique is the people who do the work how it’s supposed to be done every time even when it’s inconvenient.

Here’s a quote from a recent book our Principle Product Manager Jackson suggested called “Chop Wood, Carry Water” that inspired this post:

“In Phil Jackson’s book Eleven Rings, he was constantly telling the guys on his teams about the necessity of “chop wood, carry water”. No matter whether you are winning or losing, the point was to focus on the process and neither get too high or too low, but instead control the controllables”.

Complacency kills. Be pleased, but never satisfied.

Thanks for reading this week!

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