How much does disorganization actually cost?
We’ve all seen the difference between an organized and disorganized workspace. While there’s a wide range between the two extremes, it’s incredibly easy to fall into the disorganized bucket if you don’t have a system in place to make organization easy.
First, how does disorganization cost a contractor or company?
Generally, there are two main ways that a disorganized workspace or vehicle can affect your revenue for a job: lost referrals and wasted time.
Referrals
Even with a great sales and marketing strategy in place, the best business is always from repeat customers and referrals. A client’s opinion is massively important to getting more work in the future.
As a homeowner or commercial business manager, if a contractor working on your location opens the door of their cargo van or on-site trailer to reveal a mess with materials spilling out, the chances of you returning business or recommending them to a friend or colleague are slim. Organization communicates professionalism, which translates to a satisfied customer and more revenue in the future.
Time
Time wasted looking for the right tool, digging through materials on the floor to get to the right part and making frequent trips back and forth to the work van add up quickly. When inventory is misplaced, time wasted goes even further as an employee will have to make an extra trip to a parts supply store, also costing the company in inventory and, albeit minimal, mileage as well.
According to a report by FMI Corp., U.S. contractors wasted between $30 billion and $40 billion in 2022 due to labor inefficiencies.
How to calculate how much revenue is lost due to wasted time from a disorganized work vehicle
There’s a huge spectrum here, because it depends on how individuals work, how many employees are on the field and your business’ average hourly revenue per contractor.
Even if an electrician loses only 5 hours a week due to an inefficient workflow and their average hourly revenue is $100, the calculation would be:
Total Revenue Lost = Total Downtime (hours) x Average Hourly Revenue
Total Revenue Lost = 5 hours x $100/hour = $500 per week
Now, if you have a company with 50 contractors generating this rate, that quickly jumps to $25,000 per week.
How do you get organized?
Compartmentalization. Everything should have a place. Whether it’s something as big as a step ladder or as small as a segment of heat-shrink tubing, every tool, material and piece of hardware should have a home. There isn’t any one-size-fits-all container for everything, so it’s extremely helpful to use a modular system with shelves, drawers, boxes, small hardware compartments and cases that can be transported onto the job site directly from the vehicle.
