Contractors who prep for Q4 now protect margins others lose

You’ve got your hands full managing today, which can make planning for end-of-year seem like a tomorrow problem. But construction business coach and mentor Ron Stein says contractors who balance urgent response and strategic preparation are more successful. We asked him what construction company owners need to do now.

—Interview by Margot Lester, edited by Bianca Prieto

How can contractors ease the negative impact of the labor shortage?  

Labor scarcity—experienced PMs, engineers, supervisors, especially trade personnel and subcontractors—drives delays, inflates costs and caps growth even when work is available.

Do a manpower vs. commitments audit to review available crew and subcontractors versus project needs. [Then] re-sequence or de-scope lower-margin work to match capacity. If not enough people, then what work should be let go or how can the needs be covered? This prevents overtime burn, protects margins and reduces delay risk. No sense in struggling to perform work that won't be profitable. 

What's one mistake you wish contractors would stop making? 

Treating change orders and documentation as secondary, which leads to unpriced changes and margin loss. Enforce a strict CO workflow—daily logs, immediate notice, priced COs before work or capped T&M, and a weekly risk register. Get more tips for better contracts and terms.

As we head toward Q4, what project management task can we undertake to improve efficiency and margins?

Start closeout paperwork on every active job scheduled to end in 6 months or less now. Pre-assemble O&M manuals, test packages and submittal logs and align subs on documentation deadlines. This accelerates final billing, release of retention and avoids liquidated damages.

Anything else we should tee up now to prepare for year-end?

Complete a job-by-job financial performance review and WIP reconciliation with your bookkeeper and CPA to ensure accurate job costs, catch miscoded costs and unlock potential tax planning. 

When does it make sense to hire a coach or mentor?

When you’re busy but margins aren’t improving, you have cash flow issues, lack a repeatable operating system—forecasting, WIP, closeouts—are scaling into new work or spend most days firefighting instead of leading. 

The owner knows the trades and how to run jobs. Nine out of 10 times, they need help with the other areas. Look for a mentor who has owned a business and completely understands the financial side of construction and also business development, estimating and pre-construction.

Business stressing you out? You’re not alone!

Thanks for reading today's edition! You can reach the newsletter team newsletter@thelevel.co. We enjoy hearing from you.

Interested in advertising? Email us at [email protected]

Was this email forwarded to you? Sign up here to get this newsletter.