Electrical contractors are realists. While you may long for a Utopian world in which your employees whistle happily as they create perfect work for delighted customers who pay you on time, earning you a healthy profit, you don’t expect this outcome. Recognizing that perfection is impossible, you are willing to settle for fewer “uff da” moments.
“Uff da” is a Norwegian term used as a substitute for swearing. Difficult to translate directly into English, it has been adopted by Scandinavian-Americans, particularly Midwesterners, as a response to unpleasant situations or unwelcome surprises. When a customer admits that your check will be late, slow decisions delay your installations, or your chief estimator quits just before a bid deadline, “Uff da” is a suitable response. Difficult circumstances and sheer exhaustion create uff da moments.
Replacing uff da moments with a more utopian contracting environment is possible if you improve your forecasting and planning and implement more accurate and extensive financial control systems. No matter how effective your systems and procedures become, you will never be able to control external factors. Life is change, and status quo leads to stagnation and death in business. Reducing uff da moments to a reasonable level is achievable if you focus on contingency plans related to people, scheduling and cash.
When Bob Knight coached basketball at Indiana University, he had no patience for prima donnas. His players worked together as an integrated unit, with at least one, if not two, layers of backup at each position. This emphasis on “bench depth” provided continuity in the execution of the play when a player was injured or fouled out unexpectedly.
You can create bench depth through crosstraining for positions integral to your ability to complete contracts. If a key member of your office or field staff is injured or suddenly departs, you want to send in a competent player from the bench for a seamless transition. Investing in your employees by aligning individual career opportunities with their interests and talents will ensure that they are prepared and willing to step up to fill in the gaps.
Research continually reveals that at least half of all construction projects are behind schedule. In my company, we regularly kept two schedules—one for the projected installation dates and the other with those dates moved back a month or two. Guess which one was the real schedule? Too many contractors continue to rely on aggressive customer projections and bumble through clumsy crew reallocations at the last minute.
To avoid the uff da moment when the schedule changes, closely monitor the progress of your projects, and create realistic projections of your own. Instead of avoiding smaller jobs or service work, use them as fillers and give these customers small discounts or other incentives in exchange for their flexibility regarding installation dates.
Most uff da moments are related to cash flow. It is easy to take your credit line for granted and laudable to pursue on-time payments. However, if you detest scrambling for cash to meet payroll and resist using personal funds to cover a shortfall, establishing a cash reserve equal to 60 days of expenses should be a top priority.
In a utopian world, all customers would pay on time, and your line of credit would always be available. In the world of uff da, neither event is certain. Offering a discount for early payment may move you to the top of the payables list on some projects, but the best financial strategy necessitates being selective in establishing customer relationships. There are always clients who pay on time, and you decide whether to pursue them or settle for less.
Other uff das
These are not the only areas in which unexpected problems occur. Equipment breaks down, but asset lifespans are fairly predictable. Anticipate replacement costs and factor them into annual budgets; then, maintain your equipment impeccably to extend its useful life. Theft and other losses are insurable, but you must prepare for cash outlays until your insurance reimbursements are processed. Injuries, even minor ones, are unpleasant surprises, and create indirect impacts on morale as well as the direct cost of time and money. A safety culture reduces the uff da potential in this area.
Mistakes in estimating, ordering and installation create other uff da moments, and you can reduce errors by looking for patterns as you debrief completed work. Then, adjust takeoffs, calculations, purchasing systems, training and job site procedures to eliminate the repetitive errors your analysis has revealed.
Uff da moments are inevitable, but you can create contingency plans to avoid the most common ones. You will never achieve contracting utopia, but you will reduce the level of stress in your company and create a culture in which everyone becomes more aware of potential problems. Uff da may be a fun word to say, but the financial health of your company depends on eliminating it from your corporate vocabulary.
NORBERG-JOHNSON is a former subcontractor and past president of two national construction associations. She may be reached at email@example.com.