Managing Risk

You should never take on a project whose delayed cash flow is going to seriously jeopardize your ability to pay your suppliers. This happens frequently to trades who have a significant material component. Once the material suppliers cut you off, you are near done as a business.

A related issue is trades that are required to provide payment and performance bonds. Get yourself upside down with your payables - or worse your payroll taxes - and you may find yourself unable to acquire bonds. No bonds = no work. No work = no digging yourself out of the hole.

Another risk that we see is failure to set performance expectations, specifically with field crews. This mistake is so common that I'm still surprised when a field worker can tell me what he's supposed to get done by the end of the day. Instead of 95 percent of field workers knowing their daily targets only about 5 percent do.

You can't control field productivity and field costs if you don't set, monitor and hold your field crews accountable to their daily production targets. As margins are so severely squeezed, virtually no project has the breathing room to have crews go over their budgeted man-hours.

Another frequently uncontrolled risk problem is estimators. Are you holding them accountable for being able to predict the amount of time and cost it will take to complete projects? It's such a convenient excuse to blame the field crews for being lazy or stupid or whatever. It's also typically a BS excuse. We have a very simple way of testing whether an estimator is doing his job correctly. Few are.

You've worked hard to get to where you are. Don't let it slip away just because you ran into some harsh bad luck.