Despite being similar in dozens of ways and having many lessons we could learn from them, contractors rarely look towards the manufacturing industry for tips on how to run their operations more effectively.  That's a real shame.

Prior to 2000, nearly every business improvement practice introduced to the business world came from the manufacturing industry. Some examples are: breaking jobs into specialized tasks, statistical process improvement, cost accounting, incentive pay, self directed work teams, safety standards, standardized operating procedures, and customer centric business planning.

What has always caught my eye is how similar construction is to manufacturing, and specifically to a manufacturing job shop. In a job shop, each item is built to a specific drawing, the product is generally not mass produced on an assembly line, and controlling productivity is a never-ending cause. The same can be said about construction projects.

Today, we're going to take a practice from the manufacturing world and adapt it to our world. Manufacturers are obsessed with one piece of information that contractors across-the-board are almost oblivious to: indirect labor.

Are you familiar with the term Indirect Labor?
Indirect labor has a profound impact on your cost competitiveness and your bottom line. Indirect labor is something you need to keep a close eye on and manage aggressively.