Contractors in the U.S. are enjoying opportunities in abundance. A resurgent construction economy has shored up backlogs and all but eliminated unemployment. Conventions are full, trade partners are busy and, by all accounts, we should be jumping for joy.
I’m particularly excited about the opportunities this market presents, but I’m also concerned about the risk of abundance. A colleague and friend of mine, Tom Schleifer, reduced what we do to three simple concepts: sell the work, do the work and get paid for it, but 2 out of 3 isn’t a winning formula.
Most days, it’s not hard to find work to bid on or propose. Properly executing the work is the hard part. It was hard before, and it seems to be even harder these days — hard to perform to clients’ expectations and often to our own. There isn’t anything magical about why that’s happening. It’s something I call the “risk of abundance.”
During the recession, a lot of really good people in HVAC construction moved on and found other careers. During the recovery, they didn’t come back. Of course, as we worked off backlog, we didn’t hire vigorously. At the same time, we started to see baby boomers retire — from our offices and among our field and shop managers. Even as we hire the next generation of talent, we’ve all admittedly lost the depth and experience to execute complex projects. The most successful contractors of the future will have talent development at the top of the list, starting with recruiting, and continuing with employee development and engagement to ensure retention of this next generation.
This loss of talent wasn’t limited to those who sell construction services. It happened to our customers, to general contractors, construction managers, architects, engineers and owners. So in abundant times, we are challenged to meet schedules with shortened benches or with people who, while eager, may not be prepared.
The risk of abundance also includes the risk of failure to meet expectations. Clients don’t expect less. Another byproduct of the recession: Many of our customers have been retrained to expect more, get more and get it on time. In the competitive bid market, customers are entitled to believe that a bidder has both brilliant staff and adequate manpower to complete the work. On negotiated projects, we’re asked to affirm capacity. Certainly, we didn’t come to the table representing that we lacked confidence in our ability to attract the resources. All of that fuels expectation. Resource pressures are everywhere, and disappointment is not part of a successful delivery model.
Abundance also extends to process change. Perhaps more than any time in recent history, we are seeing the convergence of major process and technological changes on our industry. Process changes include alternative procurement, expanded use of design-build, lean practices, building information modeling/virtual design and construction, modularization and prefabrication, and whole building commissioning. To those who would argue that many of these processes have been coming to the marketplace over the past decade, I would submit that the adoption and capability of the industry is overstated. Collectively, we’re not that good — yet.
Individually, we may feel confident about our ability. We may be leaders in BIM/VDC or ductwork fabrication. However, we don’t work in a vacuum. On many jobs, we find that our partners — other subcontractors on the job or even the general contractor or construction manager — have a different level of adoption of process change. Of course, we’re layering all this change on office and field staff, hoping for enthusiastic adoption amidst an ever-changing landscape.
Contractors live to manage risk. I’m optimistic about navigating the risk of abundance. It’s a heck of a lot better challenge than navigating a recession. And the measure of success in navigating this risk may be how well you prepare your employees and how well you deliver a high-quality experience to your customers because it’s all about employees and customers. Enjoy the challenge.
Guy Gast is president of the Waldinger Corp.’s Des Moines, Iowa, division, a mechanical, sheet metal, electrical, plumbing and service contractor with operations in four states. Gast was president of the Sheet Metal and Air-Conditioning Contractors’ National Association in 2015-16.