Identifying Management Systems for Success
Budgeting vs. Estimating vs. Don't Spend for it if You Don't Need it
A License to Spend
When oversight management has a little or no confidence in management, then a natural requirement is to require a business budget. The problem is, budgets many times automatically become license and authority to spend, spend, spend. The budget perceived oversight controls many times leads to over spending and many times accumulate into bottom line losses.
Taught to Manage to a Budget
I am quite certain almost all accounting education curriculums include classes on how to set and manage to a budget. It is doubtful if Masters in Business Administration (MBA) graduates will recognize the business procedures that I have been taught and used here at EFCO in my 50-plus years associated with business. This business process is very simple, "Don’t spend for it if you don’t need it."
Estimates are Used for Construction
When it comes to construction project bidding, contracting, and construction, of course it would be suicide to bid a project without an estimate and estimates are not budgets. Good oversight entrepreneurial management is required in all successful construction companies. In smaller companies, many times by necessity, the estimator and manager are all in one package. For larger companies and larger projects, two estimating teams may develop totally independent estimates, and then be required to defend their plan to capable entrepreneurial management in a bid review prior to finalizing their proposal.
Profit Means Life or Death for a Company
If there is one thing construction contractors know, contrary to a large percent of our society, profitable projects are a requirement. Profit is not a dirty word; it is life or death for a company.
For public governments, the norm is budgets are to be spent otherwise in the next budgeting period, the opportunity to spend will be lost. In large “bureaucratic businesses”, the same use of budgets many times exists. Budgets and construction project estimates have some similarities but in use are drastically different. Both are looking to the future, but construction estimates are to be beaten, solidly beaten for project profitability.
Comparing Construction and Manufacturing Management
Looking at the business world at large and specifically at construction project management and manufacturing management, we have identified two dramatically different mentalities. Manufacturing management and industrial engineers strive to design, buy, build, invest, and manage manufacturing operations and processes for long-term profitability.
Construction project management, of course, works hard for profitability, but is different than manufacturing management in many ways. Construction project management normally, in most cases, is not interested in long-term investments. It may sound funny but, management for a project is required to work themselves out of a job so they can move on to the next project. Early or on-time completion of a project is one of the most important elements for profitability. Almost without exception, late delivery of a project means less profit. How does EFCO fit into this picture?
EFCO’s R & D Journey is Alive and Strong
We at EFCO are known in the concrete construction forming and shoring industry for originality, innovation, inventions, and engineering solutions. Our 77-year company history has given us time to develop and perfect our own in-house automated manufacturing processes. We support both our manufacturing team and concrete construction customers with money-making engineered solutions, with a team of bright and qualified professional engineers (P.E.’s). We are a company far more than just a metal bender. Think about it; EFCO’s core ideology is to: "Deliver the best value and lowest in-place concrete cost."
When we say lowest in-place concrete cost, this means a lot more than just the cost of concrete. We are talking about all the expensive and variable costs, costs that are directly affected by the forming and shoring system used. Usually most important are the labor costs for equipment assembling, cycling, and don’t forget safety must be considered. Contractors should always select equipment that can be consistently cycled effectively and rapidly delivering a high-quality concrete finish requiring very little touch-up or rework.
EFCO’s R&D Starts with our Customers
The EFCO business is built on a firm foundation with a company creed to:
EFCO’s creed works internally within the company, as well as and most importantly externally with our customers. It starts by working with and listening for a statement of the problem or, in the case of construction, problems. We have learned that a good statement of the problem is half the solution. Combine this with good EFCO R&D engineering, years of experience, and quality proven products, and you can have a real winner.
EFCO customers have always and continue to play a very important role working side-by-side with EFCO’s engineers and job site field service. By listening to our customers, they have been our keys to success. We are noted for our R&D and engineering solutions now supported with job site support.
We pride ourselves with teaming up with some of the biggest and best contractors in the world. In many cases we have delivered results ahead of schedule and with labor costs better than expected. One of our mottos is to:"Under sell and over deliver."
We consider the "estimated cost for a project element" as only a maximum, and we set out to beat the estimates to make projects for our customers more profitable.
Please do not consider your next project too large or too small for EFCO. We are very, very competitive in the industry and grateful for your business.
By Al Jennings
EFCO Chairman and CEO
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