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Business gurus and construction books always talk about how important it is to create systems for construction companies.
We hear that systems allow us to delegate work to others in our company, create predictable results, reduce errors, and increase profits.
That is all true...
That used to really bother me.
So, I did what most contractors do when faced with a problem…
I worked hard on the problem and figured it out.
It wasn’t easy.
I read numerous books.
I talked with a lot of smart business people about how they create systems.
Then, I used my own construction company as the guinea pig for what I was learning.
Some tactics worked for us. And, some ideas failed miserably.
I will spare you the details, but after a lot of trial and error, I finally figured out how to create systems for construction.
Over the years, I’ve refined that process. And now, any contractor can create systems for their construction company by following my six-step checklist[link to BPLM].
I’ve shared my method with contractors in trade magazines and by speaking at construction industry events.
For example, the organizers of the World of Concrete Convention in Las Vegas hired me to share my process during a seminar with more than 300 people in attendance.
And now I’m going to show you how to create systems for construction.
Let’s get started…
Effective systems are the secret to success in any contracting company.
The unpredictable nature of construction projects makes the use of systems more important than in most industries.
Here are just a few of the challenges we face in construction:
With all of these variables, it is vitally important to have effective systems that will produce reliable, predictable results.
There are many ways your contracting business can be improved by implementing systems.
Some benefits of implementing systems in your business:
Systems are the solution to the sticking points in your contracting business.
Wherever you have consistent problems, a system can help you.
Systems can be implemented in any area of your business, including...
In many cases, when you see a company finally break through a plateau and get to the next level, they have done so by embracing systems.
One of the best investments you can make in yourself and your construction company is to learn how to create and implement business systems.
I made a cheat sheet that accompanies this article. It lays out the six steps for creating systems in your construction company.
Here are the six steps for how to create systems for construction:
If you’d like to download a free version of this list and use it to implement systems in your business (or delegate it to someone else at your company) then go here to get the checklist.
If you need to fast-forward this process, you can have me and my team teach your people how to do this. Contact us here and we’ll chat.
Let’s break down each step in this process of creating a system for your contracting business.
The first step is to figure out what part of your business can benefit from a system.
Since you are reading this, I’m guessing you already know where you need a system. Nonetheless, let me give you some ideas…
When determining where to implement a system, ask yourself these questions first:
The answers to those questions will tell you what needs a system.
If you need to get your mind around more specific questions, consider these:
Q: Are we getting accurate, timely reporting on our job costs?
Q: Do we complete every project without mistakes or problems?
Q: Is there new construction software we could utilize that can replace people?
Q: Are our cost control procedures and our cash flow where they need to be?
Q: Is the critical path of how we complete a project clearly defined?
Q: Do our new employees need extensive training to understand how we do things around here?
Q: Have we identified a good option to duplicate our best project team?
Q: Could we get better control of the total project cost on future projects?
Q: Do we have the basic information to determine our actual construction costs and how much money we are making on every project?
By answering those questions, you should develop a long list of areas that need systems.
If you are a bit discouraged by how long your list becomes, don’t worry. I’ve seen very well-run companies identify over 30 areas that need a system.
But the trick is to determine where to start.
Here are some things to think about when determining the first system you’ll create:
Start with easy problems – Look for an area in your business that could be improved by a simple system. Since you will be learning how to create a system for the first time, then a simple system is much easier to begin with.
Look for a big win – When you solve a big problem with your first system, your team will get on board much faster. It will build momentum for the second and future systems.
Your time is limited – You don’t have a lot of extra time on your hands. Therefore, you want to find a problem in your business that will have a high return on investment once it is solved.
What problems do you have right now – Sometimes the best place to start is with the problem that is causing you the most trouble right at this moment. It’s often easier to focus on other problems once the biggest one has been taken care of.
Many contractors struggle to make money on small jobs.
We wrote a great blog post on how to bid small jobs profitably.
OK, you’ve determined what problem in your business will be addressed with a documented system.
Now, it’s time to clarify your desired outcome and who will be involved in creating the system.
Let’s first determine exactly what you want to accomplish with the system. To do that, ask yourself these questions and write down the answers.
Study the answers to the above questions to be clear on exactly what you want to accomplish once the system is up and running smoothly.
Now it’s time to figure out who will be involved in creating the system.
There are two ways you can go with this...
Create the system by yourself with minimal input from others.
This works well when it is a task you are currently performing that you want to delegate.
You lead others in creating the system. This works best when other people are closer to the problem that needs to be solved.
For example: If the system is intended to improve a problem on the construction site, then you'll want to involve the construction PMs, field operations people, and other team members that handle important decisions in the field.
When you are considering who should be involved in creating the system, it is best to involve the following:
Now that you’ve determined who will help create the system, it’s time to begin that process.
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You’ve identified a problem area within your company. And, you’ve decided who will be involved in creating the system. The next step is to…
Every system you create for your company has to be documented – or else it isn’t a system. And, each system has to be stored where it can be viewed by anyone involved in that part of the business.
For example, a system on how to do payroll needs to be saved and viewable by everyone involved in doing payroll each week. However, that system does not have to be viewable by the salespeople.
There are several ways to store the documented systems in your business. That is largely based on what type of document management system you already have in place.
Places to store your documented systems:
Use whatever storage location that works for your company.
Create a master file and name it with your company name and the word Systems.
For example: Smith Construction Systems
Within this folder, you will set up separate folders for different areas within your business. Examples of these separate folders would be:
- Sales & Marketing
- HR
- Financial
- Construction
Before you document the steps within the new system, consider the best way to show them to those who will be following them. There are several ways to document the steps in the system.
Let me tell you what I mean…
A new system for handling incoming phone calls at your company is best explained by writing out the instructions in a document. A copy of that document would be printed and placed next to the person who answers the phone.
On the other hand, a new system to set up an all-terrain crane on a job site is best explained by a video you’ve recorded, along with a laminated checklist that is attached to the crane so it can be used on the job site.
The system you are creating will determine how the steps within that system are documented for others to follow.
Here are some ways to document the steps:
Many of your systems will have a combination of several methods above. Stay flexible in what you use to document the steps. In the end, you want to use the best method that will allow others to easily follow along.
Remember, how you document the steps in the system will have a big impact on the system being clearly understood and followed.
If you want the guide that shows each of these steps for creating systems, click here for the instant download of that helpful guide.
A quick note about using software such as project management tools, software applications, construction management software, construction erp software, mobile apps, mobile devices, project management software, online scheduling solution, construction accounting system, customer relationship management, and other software products for construction businesses:
Be sure you document each step within this software. Don't assume every person, including the new person you hire next week, knows how to use this software. As you document the steps, you will document the steps to use any of the above software needed to follow the system.
Here is where you will document every step and every task that is required to complete the system.
Start with the first task or action that begins the system.
For example, to create a system for doing payroll in your construction company, the first task would be documenting how the time is gathered. If you use a time clock or mobile app, then you would document exactly how you download or transfer that information into your payroll or accounting system.
Continue doing this for every step or task that is required to complete the system.
Caution: For your employees that perform these tasks every day, the tendency will be for them to skip over information.
This is because the steps are second nature to them.
But what you want is for each step to be very thorough. You don’t want steps to be ambiguous or too vague.
As you document each step, be sure to include the information necessary to perform the task.
Include information such as:
Without this information, someone cannot easily follow the steps in the system. They would need to ask someone where a file is located, or what a password is to access software.
Be very clear with each step and include everything someone would need to follow the steps in the system.
With each task or step that is documented, also state who is responsible for performing that task.
This is important because it provides clarity and accountability for each task. Everyone is clear about who is responsible for that task.
In addition to the person responsible for the task, it is also wise to state whom to contact if there is a question, problem or variance while the task is being completed.
This is important for two reasons:
Reason #1. It is easier to distribute a task to a position than it is to a person. If your project manager’s name is Tom, it is better to assign a task to Tom by saying, “That is something the project managers would be responsible for.” That is easier than saying, “Tom, we want you to begin doing that task.”
Reason #2. People come and go from your company. If you state the position instead of the person, then if one person leaves and another person replaces them, you won’t have to edit the name in the system
Once you’ve documented all of the tasks and steps in the system, test the system by using it as it was intended.
Test it to see if each step is documented. If something is missing, add it to the system.
Big Question: Are the steps clear enough for a new employee to follow the system and perform the work?
If not, then you need to make the steps more clearly understood.
Have those involved in the system provide feedback on the documented steps.
Ask these questions:
Also, ask questions like those below to ensure that the original problem is being addressed with the system you've just documented:
Want to save this article in an easy, Step-by-step guide you can show your team?
Click the button below to get the fREE guide.
Now that we’ve documented each step and finalized the system, we move into the implementation and training phase.
Have a meeting with all of the people that are involved in implementing the new system.
Employee cooperation and buy-in is crucial to the system’s success. So, you’ll want to have a meeting with all that will be responsible for implementing and following the system.
In order for you people to buy into the system, they need to –
Your people will wonder why a new system was needed. It is up to you to explain the problems that the company was having before the system was created.
Describe the pain the problem caused the company in terms of…
- Dollars spent to fix the problem
- Additional time employees spend working on the problem
- Customers lost due to the problem
Let your people know that a new system was created to eliminate those problems.
It will produce consistent, reliable results with clearly defined tasks and responsibilities.
Explain to your people that the new system will help them by:
This is a very important part of this whole process.
If you don’t take the time to train your team on how to use the system, it will not succeed.
The best way to train each person on how to follow the system and perform the steps is by using the “Show, Do, Watch” training method. Here’s how that works:
Show – Show them how to do it. You perform each step and explain it.
Do – You and they perform each step together.
Watch – You watch them do it without helping them. Then, give feedback on how they performed the steps.
Now that you’ve trained your people on how to perform each step in the system, you’ll have them use it for their day-to-day activities.
Each time they perform that task, they’ll use the system instead of winging it like they used to do.
Now that the system is being used, look for ways to improve it. Also, ask if any unnecessary steps are in the system that should be removed.
Your goal at this stage is to run the system in the simplest way possible with it still being effective. This means that there are enough steps to clearly state what is needed, but no more than that.
Expect that there will be some issues with implementing the steps in the system. This is normal and perfectly acceptable – especially if this is your team’s first system.
If you run into trouble with the system, check for the following issues and their recommended solutions:
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Now that you’ve created the system, trained those involved, and everyone is following the process, your work is done here, right?
No. Your work is not done.
You have to follow up to make sure everyone is following the system.
If someone from management doesn’t follow up to ensure people are following the system, then there will be problems.
Here are the three pitfalls of not following up with the people that perform the steps in the systems:
You don’t want one or several people modifying the steps without your permission. And, you don’t want people only performing the steps occasionally. And you especially don’t want people deciding they are not going to perform the steps at all.
The whole reason for creating the system is that problems used to occur when people performed the task the way they wanted to.
So, they need to follow each step every time.
Therefore, this means you or someone else has to regularly follow up to ensure that this is happening.
In addition, the follow-up has to happen for as long as the system is in place. Follow-up is forever.
But don't worry, I have a good way to follow up. Here it is...
There are two ways to follow up and ensure compliance. The one you use is determined by how frequently the system is used:
If the system is used daily – Follow up every day to ensure each step in the system is being followed. You cannot let a few days go by without checking in and seeing if the steps are performed. Too much can happen in a few days if you don’t follow up.
If the system is used occasionally – Many systems are created for things that only happen every once in a while. For these systems, place a reminder on your calendar to check in and see if the steps in the system were followed the last time they were needed.
If at this point, you are concerned you've just created another job task for yourself with all of this follow up, let me show you a great way to prevent that...
Once you’ve followed up and you feel comfortable that everyone associated with the system is performing the steps consistently, then you are ready to delegate the follow-up to someone else on your team.
This is often the person or manager who is in charge of the area covered by that system.
For example: If the new system addresses an Accounts Receivable process then your Accountant/Controller/CFO is responsible for ensuring the system is performed every time.
Have them determine the right time frame for follow-up and how they want to ensure compliance, and then you hold them accountable for everyone following that system.
Congratulations! You and your team have created a system and are following it every time.
You’ll begin to reap the rewards, and you will have solved one of your company’s problems. Nice job!
You’ll start to see the positive results of the system. Not surprisingly, things are running more smoothly than they once did.
In order to keep your team motivated to follow the system – and create additional systems to tackle other issues – it’s important to find success stories.
What I mean by success stories is good results from following the system. So, when you hear of things being better because of the new system, those are success stories.
Share these success stories with your team. They’ll want to hear that the work that went into creating the system was worth it.
They may already see the benefits all by themselves. However, I’ve learned that it is beneficial to specifically and publicly tout the good things that have come from it.
I have learned that you must continually sell people on the best way to do something.
Even if it seems obvious to you, you have to continue to be the biggest cheerleader of systems.
But after you’ve implemented a system to solve a problem in your business, you’ll be able to see the positive results. Oftentimes, you’ll be able to quantify that improvement with specific numbers.
Once you have that info in hand, share it with your team.
Here are some areas where you may see improvement:
Where you see improvement in any of those areas, show them to your team so they can see the results in real numbers and data.
Download my guide for creating systems in your construction company.
It’s free…until I come to my senses and start selling it as a training course. 😊
I want to make three points about creating systems for your business:
Point #1: One is a dangerous number. When construction firms hire me to help them with their business, this is often the #1 issue I bring to their attention. If, anywhere within your company, there is only one person that can perform a very important part of the business, then you are in a dangerous position.
The reason you are in a dangerous position is that you are vulnerable to that person…
You cannot put yourself, your company, and the families that rely on the paycheck of your employees in that dangerous position.
You must watch out for everyone by ensuring that you have a back up plan in case any of the four scenarios above come true.
And how do you do that?
You do that by having clear, accurate, documented systems for everything. That way, if that person discussed above leaves the company without notice, then you’ll be able to have someone else follow the systems and complete the work.
Will that new replacement do the tasks as fast as the other person? No, not at first. But you may be surprised at how quickly they pick up on things and end up doing more work than the previous person.
Nevertheless, you will be in a much better position because you will have created systems. And you will be safe if any of those bad things happen.
Point #2: Systems must change with conditions over time. You need to maintain a modern building company. Therefore, as new technology, employees, and business conditions change, so will your systems.
And this is OK so long as everyone agrees on the changes to the system and everyone is aware that the system has been altered.
These systems aren’t set in stone. They are important, and they are to be followed. However, when a change is necessary, you’ll be right there seeing to it that any changes are for the better.
Point #3: Sometimes the simplest systems can have the biggest impact. A system for processing payroll will have many steps. A sales system may have several steps.
Both of those are fine.
But in my experience, some of the simplest systems (like a one-page checklist) can have the biggest payoff.
Keep this in mind whether you are creating your first system, or your 101st system.
Contracting businesses can see huge gains in production by implementing systems.
Here are some of those benefits for contractors:
I hope you see all that can be gained when you create systems for your construction company.
Whether you are one of the many small businesses in the construction world, or you have a large company, the best value for your time comes from implementing systems.
Systems will be the best tools in your business management and quality control management toolboxes.
And, they'll have the biggest payoff in your business.
Systems allow you to hire better people and increase sales.
If you want my free cheat sheet download that recaps what I’ve written here, then click this.
If you want me or my team to help you implement this into your organization, then that can be done in two ways:
1. I come to your company and train your people how to create systems.
2. I coach your or someone from your company remotely by phone and video calls to learn how to create systems.
But even if you chose to do this yourself (which is entirely possible with all of this great information I’ve given you here) the most important thing is to just get started.
Begin the process for your first system right away. The more you and your team do it, the better your company becomes.
Start now.
Hi, I'm Doug Herbert. I'm a 30+ year veteran of the construction industry and the active President of Herbert Construction Company in Atlanta, GA.
Contractors are often over-worked, stressed, and frustrated with their business.
I created Profitable Contractor to help good contractors make more money, find better employees, and delegate tasks so they can make it home in time for dinner.
Receive the weekly email that's filled with tips and tactics to grow your construction company, gain market share, and increase your profits.