The construction industry has been struggling with a labor shortage for years now. Unfortunately, the impact is felt the most during the busy season of the summer, when skilled laborers are stretched few and far between. While we’re all working hard to bring more people back into the industry and develop solutions that address some of our most common challenges, we all still need options that help us remain profitable right now.
If you’re a builder looking for ways to handle the construction labor shortage profitably during this busy season, here are a few ways you can optimize your business strategy and processes to keep your cycle time short, even when you’re working shorthanded.
Set A Cut-Off Date For Customer Changes
Whether you’re a single-family home or multi-family project builder, one great way to reduce cycle time, especially in the face of a labor shortage, is to set a clear cut-off date to allow customer changes.
While you certainly want to create a pleasurable building experience for all of your customers, the process will go better for everyone if all decisions are made before you start the build. Changes create errors, wasted time, and additional labor — all things that extend your cycle time and reduce profitability. Establishing a change cut-off date helps you ensure you meet your building deadlines even when you don’t have as many hands on deck as you’d like.
Identify and Eliminate Recurring Bottlenecks
This might seem like an obvious step, but for many builders deep in the heart of the busy season, it’s a business practice that gets tossed to the side in favor of completing as many jobs as possible. We know you’re busy. But one way to make sure you maintain a profitable cycle time, while you’re working without all of the laborers you need, is to take a close look at every job for recurring bottlenecks.
They happen more than we think they do. Let’s say your framing crew always takes about 8 days when really they should need just 6 or 7. Why does this keep happening? Is it a product delivery issue? Is it weather related? Does your crew just not have the hands to get the framing done in the time span you’ve allotted? Whatever the problem, it needs to be identified and then addressed.
Is There A Faster Method?
For example, if you are having trouble sticking to the framing schedule, and that then puts the rest of your project behind, consider investing in pre-manufactured components. Roof trusses, floor trusses, and wall panels are all items that can be delivered directly to your job site, exactly when you need them, and already put together, so all your crew has to do is stand them up and keep moving.
For more information about pre-manufactured building components, check this blog: How Prefabricated Wall and Flooring Units Can Save You Time and Money.
Again, you’re working in a serious labor shortage. That means that every aspect of your build should be under scrutiny if you want to keep turning a profit. If something is consistently holding you up — be it your plumbing subcontractor, your framing crew, or your roofing team — it’s important to address those bottlenecks sooner, rather than later, so the hold up doesn’t extend through your entire busy season.
And if you’re really not sure what’s going wrong? Compare a job that’s on schedule to a job that’s not. That’s a surefire way to show you what’s happening differently in the two projects. Then, you can standardize and apply the good practices from the job that’s on schedule to new projects in the future.
Eliminate Jobsite Waste
When you’re working shorthanded, waste in your schedule, waste on your site, and waste in your building process can all contribute to slower cycle time and less profitability for your company.
We’ve talked about bottlenecks a little bit already. The above tips are a great way to start eliminating wasted time. But jobsite waste is also a big factor that can hold up your build time. You’re already working shorthanded. When your crew is tripping over extra lumber, products you’re not ready to use yet, or that have been incorrectly delivered, you’re losing time.
Make Cleanup A Regular Task
The best way to combat jobsite waste and clutter is to first enforce an end-of-day cleanup. Starting with a fresh, clean site helps keep production moving along. Second, make sure you’re working with a material supplier who is actually working for you. If you’re waiting weeks for credit pickups, you’re not getting the supplies you ordered when you ordered them, or they’re messing up product deliveries, it’s time to take a good hard look at your supplier.
Invest in a Supplier Who Works For You
When you’re shorthanded, you don’t have the crew availability you need to make your project schedule flexible. If you have a flooring crew onsite for two days, you need those flooring materials the days they’re there, or you’ll lose out on their labor, and possibly set your schedule back by weeks.
That’s why a supplier who is boringly reliable is a must-have. Here at Zeeland Lumber & Supply, we take great care to ensure that all of our deliveries make it exactly on time. We GPS track our trucks to ensure we can get our products to you exactly when you need them, and we put a huge emphasis on working with our clients. We’re in the construction industry too — we know that skilled labor is hard to come by, and we work with you to ensure you always have what you need when you need it.
We also follow a tight turnaround time for credit pickups, so you’re not stuck with a messy jobsite. Our truck tracking allows us to deploy available trucks near you in as few as two to three days, so your job site stays as clear and uncluttered as possible.
Take a Look at Cash-to-Cash Cycle Time
In an industry where there are never enough hands to get the job done as quickly as you’d like, your cash-to-cash cycle time is a big indicator of your profitability, and your potential to increase profitability. For builders, your cash-to-cash cycle starts when you begin a job. You purchase all of the materials for the job, and your cash is tied up in that project.
The cycle ends when you get paid, definitely, but also when your credit pickups go through, and you have the money to invest in your next project. Since you’re running shorthanded, you can’t afford to have a long cash-to-cash cycle time, because skilled laborers cost extra these days, and you need to get them booked as soon as possible to keep your next project on track.
Two key ways to keep your cash-to-cash cycle time short are to 1) enforce a fairly strict invoice period on clients, and 2) keep your credit pickups reasonable.
You have to get your money from your completed jobs as quickly as possible, so you can hire laborers for the next project before someone else snaps them up. Just like you set a clear cut-off date for construction changes, you need to set a clear cut-off date for that final invoice. The sooner you get paid, the better.
2) Credit Pickups
Credit pickups can have a huge impact on your overall cash flow. It’s important to first make realistic, data-driven estimates about how much product you’ll actually need. The closer your estimates are, the less cash you’ll have tied up in unnecessary product.
Then, for those times when you do have leftover materials, you’ll need a quality supplier with a great credit pickup process. It’s best to partner with a supplier who sees the importance of getting your credit pickups turned around quickly. Here at Zeeland Lumber & Supply, we work hard to have credit pickups refunded back on your account within 5 days from the time you call us. More on our credit-pickup process here.
The construction labor shortage is having a huge impact on the industry as a whole. While we’re all working to turn it around by offering attractive benefits and careers and encouraging new people to get involved in the industry, we still have to deal with our current reality. And for builders and construction pros like you, that means eliminating as much waste as possible and keeping cycle times short. We hope the suggestions above help you lean up your business to push through this shortage.
If you have more questions about tackling the construction labor shortage in ways that are still profitable, give us a call at 888-772-2119. The Zeeland Lumber & Supply team is dedicated to finding solutions for our industry today and in the future. For more information about our pre-manufactured components, our credit pickup process, or what we’re doing about the construction labor shortage, don’t hesitate to get in touch.