Collaborate 2021: Construction Technology Conference, Day…
Construction Best Practices on Tap
Cybersecurity Factors Must Remain Top-of-Mind for Contractors:
Cybersecurity consultant Bryce Austin of TCE Strategy kicked off “Cybersecurity: How to Not be a Target” with a personal story about his own experience working as an employee during Target’s major 2013 breach—a big headline in a time before breaches were as common as they are today.
“Target didn’t understand the risk [surrounding data breaches],” Austin said. “The executives at Target hadn’t lived through a major cybersecurity incident and they weren’t making headlines every week of the month the way that they are now in 2021. This was new and that risk wasn’t understood by many, many companies.”
Austin went on to detail many other headline incidents—from Sony’s breach after announcing the release of the movie “The Interview” to the recent Colonial Pipeline hack—as well as provide practical advice to those who want to protect their data (and why they must protect their data). First and foremost, Austin said, was knowing where to focus: The common methodology to every breach was a chain of events in which each step is necessary for the hacker to succeed:
Disrupt any of those steps and companies can stop the breach. Or, as Austin says it: “Stop any step, stop any breach. All of these things have to happen in order for a breach to take place. And if you can detect and disrupt any one of these five, you will stop the breach. That’s an important take-home message.”
In a future blog, we’ll cover some of Austin’s s “Actionable Steps” that you can take to ensure you’re covering your bases in protecting your data. In the meantime, check out our blog: Why It’s Critical to Have a Sound Cybersecurity Strategy.
Helping Project Managers Understand the ‘Financial Stuff’
When it comes to profit, employee cost metrics—job costing your labor and tracking your employee utilization—are often at the forefront of those discussions, says Leslie Shiner, owner of the Shiner Group, who also held a session for construction project managers on cash flow forecasting (detailed below).Shiner detailed two areas: Understanding labor costs (often at an intimate level) and talking through the three ways to increase profits.
“How many of you want to make 10% more money?” Shiner proposed to the audience. “I often ask that, and everybody’s going to raise their hand. Now how many of you want to make 10% more money by actually working 10% more hours and 10% harder? Well, not as many people want to do that.”
Instead, the “Profit Cycle” Shiner refers to starts off with the right estimates, because budgeting provides the basis for proposals and invoicing. The key metric to look for is gross margin, which allows project managers to compare different jobs of different sizes and understand which are offering the greatest profit to the organization. In the end, there are three ways to obtain that gross margin:
So which is the best method? Turns out, it’s a combination.
“I’ve seen way too many construction companies increase their volume and lose their shirts,” Shiner said. “Double the volume, lose your shirt, because all of a sudden you’re selling more. Now, you’re managing six more jobs than you managed last month, now you don’t have time to finish those jobs and you have to leave and go do something else … they all of a sudden go from being on time and on budget to not on time and way over budget. So selling more is not the easiest way to improve profits, spending less and charging more is the way to go.”
Project Manager’s Guide to Cash-Flow Forecasting:
In the big picture, cash flow is more than just income and expenses, Shiner said. It’s all the money you take in and all the money you put out. It might sound oversimplified, but taken more broadly, money-in can also be borrowing funds, selling assets, or obtaining an investment from outside sources. It could be incentives, grants, or tax credits—especially now with the Employment Retention Tax Credit and PPP loans there are a lot of ways to get money, and it’s more than just income.
Likewise, money-out isn’t just the cost of goods sold, or operating and overhead costs; you’ll also have to have liquid cash to pay loans or purchase assets, or loans on equipment, for example. Then there’s the dreaded “T”-word (taxes).
With all of these factors at play, Shiner gives more plain-spoken advice for ensuring your cash flow is there when you need it: “Make sure you use your discounts. Use credit cards carefully, but to your advantage. Look at ways to borrow money and look at ways to improve your cash-flow and profits using the four tools” referenced in the webinar:
- Reviewing your current business cash standing
- Creating a cash flow project and sticking to it
- Creating an adjusted break even cash flow forecast to keep yourself honest
- Controlling your cash by understanding your financial windows
Be on the lookout: We’ll take a closer look at cash flow forecasting in greater detail in an upcoming blog.
The Importance of Training:
Shiner also spoke on the importance of building training programs into your business model to achieve stronger results and meet goals. Effective training programs, she said, increase productivity, reduce slippage on goals, lead to happier, more engaged employees and significantly reduced business costs. Companies that spend on training can actually save an average of $4,500 per employee in costs elsewhere, Shiner said.
“Think of training as an investment, rather than a cost,” Shiner said. “If you can create a company where training, success, teamwork and culture are valued you should be able to create a company that keeps your employees.”
Shiner provided a number of tips on the types of training platforms and channels that are most effective, and the following tips on what to think about when creating training programs:
- Identity who needs raining
- Identify which skills need developing
- Clearly determine goals and objectives
- Utilize all available resources
- Create programs with measurable results
- Continually assess training programs