Scaling a Construction Company:
A Quick Guide

Expanding; it’s equally exciting and stressful as running your business. With a single crew moving from job site to job site, you were in control. Keeping track of labor, deliveries, shipping, and materials wasn’t the easiest, but it was manageable.

Now, you have more requests for estimates than you can fulfill as a single team, and it’s time to create that next crew. At the surface, it’s pretty simple, do what you did last time - except there is still only one you. So, until that cloning machine everyone is talking about is finished, you have to figure out how to scale your efficiency, management, quality, and team.

As you dive into our quick-to-digest guide on scaling your operations, keep in mind that we get it. Get what exactly? Get what you’re about to do or are in the middle of doing. Our founders own a roofing construction company. LaborSync was first built to support our needs of scaling, growing, and running a sustainable business.

We know that you’re going to find just as many headaches as you do successes in this path, and our goal is through our guide (and our technology), we can help make those headaches a little less frequent.

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1. First Things First: Are You Ready To Expand?

You have much to consider before you decide to take on more work and serve more customers. As you’ve already found, many factors go into growing your company than just gaining more business and hiring new employees.

Here are a few questions that are great to start with when considering expanding:

Am I financially ready to grow?

You have to spend money to make money, but first, you have to have it. For instance, you need to know how much extra money you will need for supplies, utilities, building space, construction, advertisement, and employees. If your line of work requires travel, you must figure that in as well. Otherwise, you could end up starting an expansion project and then later have to abandon it.

Additionally, you need to make sure you know what you’re getting yourself into before you attempt to take your business to the next level. When you take a leap of faith using the education and assistance you provide by successful people, you will not fail. Don’t move forward without taking wise instruction from others who have already expanded their operations.

You will make more profit when using the strategies that work instead of aimlessly wandering toward money-making goals. Not only that, but you will have a spotless reputation when it appears as if you have a plan instead of just going from day to day, not knowing what to expect.

What is my plan for managing multiple projects/job sites simultaneously?

Remember, if you want to make more money, it will require additional responsibility. One of the new obligations you will need to fulfill is managing other projects with one or more new teams. Are you ready to keep track of more projects?

One way to handle multiple projects is to take your task management online. Several online organizations, assignments, and collaboration tools can help you oversee your business no matter how busy you are. Having a calendar you can print and send to your contract workers helps keep your company organized both in season and not in season.

Of course, successful project management also involves effective communication. Online and offline technologies have made it easier for co-workers and team leaders to keep track of one another.

How will I manage payroll and additional employees/contractors?

The more employees you have, the more complicated your payroll records are. To make sure you pay people the correct amount, you need to have as simple of a record-keeping system as possible.

You also need to make sure you have a way to verify that your contract employees show up for work. One way to do this is to have a real-time online tracking system.

You can monitor workers from anywhere in the world using this kind of system. However, you can also use a traditional time clock system and place supervisors on duty who you can trust to tell you who didn’t show up for work.

If you’ve realized that now is the time to expand and your market is ready for it, let’s talk a bit more about how you’ll manage your labor…

🛠️ There are some many questions when just starting out. We've found the best 8 articles about construction business management. Check them out here!

2. Streamlining Your Labor Management

As with all things regarding running a business, labor management is essential and can be complicated. The more teams and crews you’re running, the more to keep track of. And while supplies and tools can be inventories, contractors require a little more finesse.

Much time and effort are spent on labor management, particularly in the construction industry, when labor can be seasonal depending on location and is quite often transient.

We’ve gathered our four most important tips that you should be considering about your labor management strategy:

How will I manage payroll and additional employees/contractors?

  1. Detailed Upfront Planning
    One of the significant losses of labor productivity is waiting around. Some studies have shown that up to 50% of a worker's time on the job can be spent waiting. Understanding in detail the construction process from beginning to end and then having a detailed plan to execute that process can help to limit management involvement during the process. Workers will be more effective as their roles are laid out before the project even starts, and metrics can be devised based on the plan to determine how it is progressing.

  2. Have a Comprehensive job site Training Program
    How much of your labor management time is spent showing someone how to do a job? This can be prevented by ensuring that supervisors and crew have proper training on the job before it begins. This allows employees to be more productive as they do not have to seek guidance every time they switch tasks. It also helps supervisors be better at their job by letting them know exactly what is expected of their crew.

  3. Use Technology to Take Detailed Metrics
    We live in the age of big data. All sorts of businesses can leverage that data, including construction. If detailed metrics are set up during the planning phases, supervisors can be trained on writing daily electronic reports that will help monitor progress. This allows managers to diagnose problems with the project by looking at a graph at a desk instead of spending time digging and observing the job site.

  4. Create Open Lines of Communication
    The worst thing that labor managers can do is not communicate with their crew. This is particularly important if union labor is being used. Expressed goals and expectations within your construction company can go a long way to resolving problems before they start. This means less of management’s time is spent answering the same question over and over because the expectations are clearly stated at the start.

3. Setting Your Sub-Contracts Up for Success

In the coming weeks and months, you’ll likely be expanding through both traditional W2 employees as well as sub-contractors. While both will require a lot of the same things from you, such as direction, payment, accountability, etc., you’ll have less ability to “manage” a sub-contractor in how you do an employee.

While much can be written about the appropriate ways to hire, train, and onboard new employees - we wanted to focus on what it takes to help build a successful team of sub-contractors.

8 Ways to Manage Sub-Contractors So Everyone is Successful

  1. Write down your expectations.
    Before the job begins, provide a document or email that outlines your expectations. By doing this, there is no question of what is expected.

  2. Plan for the worst.
    Have a backup plan and a backup to your backup. That way, no matter what, you will recover from a given situation. We know this sounds obvious, but of the millions of things you have to accomplish every day, make room for this one. Trust us.

  3. Communicate.
    Do not expect that your subcontractor will have the same knowledge as you. Communicate everything. Too much is always better than not enough when it comes to communication. You’re ultimately responsible for the success of the project - be proactive.

  4. Encourage Collaboration.
    Do not look at each subcontractor as an individual entity. For example, encourage your sheetrock team to collaborate with the painters. It will make the entire process easier for everyone.

  5. Stay Organized
    Keep the job site organized and ensure everyone knows where they can find all the needed supplies. Many problems occur when there is chaos on site.

  6. Replace Contractors Who Don’t Mesh
    For the best results, you need a team you can count on. If your electrician is not returning calls or finds out the HVAC expert doesn’t know the basics, don’t be afraid to keep looking for other team members. The right people make all the difference.

  7. Have Team Meetings
    If possible, get together with all the subcontractors and hold a meeting. It is a great time to outline expectations and discuss potential problems before they get out of hand.

  8. Quality Control
    While your subcontractors should be doing a fine job checking the work of their teams, it is up to you to make the final approval of all creation. Spend time reviewing things as they progress.

How To Manage the Risk of Using Sub-contractors

No one likes to think about the downside - especially when you have to make fast decisions and are already busy enough. But, you must realize that you have risk when hiring anyone, but it is slightly more elevated when you’re hiring subcontractors.

  1. Keep Your Eyes Out for Warning Signs
    During the pre-qualification process, attempt to weed out all high-risk contractors. Examine potential subcontractors' track record, financial assets, and project backlogs, among other signs. Check the references they provide and note their safety records if this is a concern. You may also want to contact your surety company to see if they have any past experience dealing with a particular subcontractor. These pre-qualification steps will help remove many of the high-risk options.

  2. Contract Alterations
    At times, you may have to make do with a contractor with a higher risk level than you would prefer. Here it is time for contract alterations: Ideally, you will have several different contract options that you can use based on risk. For example, if you are concerned about material quality, you can use a labor-only contract to retain control over material selection. Other agreements can have similar limitations for greater control.

  3. Additional Guarantees
    Surety bonds and SDI policies can provide some protection against default, but they will not help you reclaim lost time. If possible, use additional guarantees to help encourage subcontractors, including letters of credit and personal contracts from the owners of the subcontractor.

  4. Double-Checking
    Provide room in your contract for periodic audits if you believe a subcontractor is high-risk. Audits can catch problems before they spiral out of control and lead to defaults. You should also consider additional quality assurance, financial checks, the approval process for material purchases, and additional hiring. If subcontractors show considerable variance in what financial records they submit and their contractual obligations, these need to be addressed immediately.

  5. Waste No Time When it Comes to Claims
    If you have to claim because of a related discount, act immediately. Have all necessary data ready to go, particularly the direct costs the project still requires and the indirect costs incurred by the default. All points must be supported by documents and subcontract reconciliations.

What to Look for When Hiring Subcontractors

Hiring a subcontractor is a big deal. The right ones on your job can make it go very smoothly and save you time and money. The wrong ones can lead to chaos and wind up costing you big time!

While it is impossible to judge subcontractors completely until you’ve seen them on the job, it’s good to have a few ideas of what to look for in these important workers.

Consider these tips for finding the right subcontractors:

  1. Use Your Network
    Work with people you know or with those who know people you know. This can assure that your subcontractor is just as invested in the results of the project as you are.

  2. Ask for References
    Most subcontractors are more than happy to provide references or work samples. This can give you a better idea of what to expect once the job has begun.

  3. Don’t Grasp at Straws
    Hire someone who is perfectly qualified for the job—not someone who may be able to figure it out. Your project is important and as such you deserve to have the very best subcontractors on the job.

  4. Choose Quality Over Price
    While you want to get the job done as cheaply as possible, don’t hire someone based solely on price. You will likely regret this decision and wind up paying more in the end. Choose a subcontractor who knows his value and isn’t afraid to charge it.

  5. Find Someone How Doesn’t Mind Direction
    Ultimately, the results of this project fall on your shoulders. That means it makes sense to work with a subcontractor who does not mind letting you put in your opinions on his or her work.

  6. Remember that Personality DOES Matter
    You will be working with this person over the course of the project. As such, it is important that you choose someone who has a personality that doesn’t clash with yours or your other subcontractors. A friendly, laid-back employee is going to lead to a smoother result.

  7. Trust
    You want someone you can trust. If you don’t trust him or her, keep looking. Full stop.

🎨 Starting a painting company? Check out this article here, just for you!

4. Create Efficiency For You & Your Team

If you are in charge of running a construction company, then you are obviously aware of the numerous responsibilities involved. One responsibility you must pay careful attention to is the general operations of the facility.

Optimal operational efficiency is essential if you expect your company to be as successful as you desire. Here are some tips that will increase efficiency, making it easy for you to ensure the operation of your construction company is flowing as smoothly as possible.

Time Management

Many people experience difficulty managing their time appropriately, and in order to stay on top of business, especially in the construction industry, time-management needs to be a priority. How can you properly address poor time management? There are many ways to tackle this problem, but an app is likely to be the most beneficial solution.

New apps are being created on an ongoing basis, but a special time tracking app is likely to be your best choice. Such an app can improve time management while simultaneously providing the following benefits:

Accurate time trackingThis helpful app will enable you to more accurately track the hours worked by each of your employees. You don’t want to fail to pay them for hours worked, and you certainly don’t want to pay employees for hours they didn’t work. The time management app your company needs contains a useful GPS system. This is how the tracking is performed, so you know when and where your employees are at all times.

Money-saving abilities – This app can save your construction company money in various ways. Not only can it reduce costs by making it easy to only pay employees for time worked, but it will alert you of overtime hours worked. In addition, the app can simplify the payroll and timesheet process. You will no longer have to worry about sloppy, late, and lost timesheets.

Regular Meetings

By holding regular meetings with your contractors and foreman, you can be sure that your employees are performing in a highly productive manner. If you notice that productivity levels have been lacking, then you can address this issue during these meetings.

Productivity issues you’ll want to remind employees about during these types of meetings are cell phone usage, smoke breaks, and good attendance. You can also discuss how making calls and sending/receiving text messages during work hours can interfere with their productivity levels.

As you can see, there is no need to settle for less-than-optimal operations at your construction company. If you are tired of losing time and money, then you should seriously look into attaining this very helpful software. It has the potential to save your company significant amounts of money by properly accounting for time.

Ways to Help your Construction Team Be More Efficient

Keeping employees motivated and functioning at a high level is important for any business. It can be even more crucial in the construction field when there are deadlines to meet and finishing late or producing below-par work can cost a company thousands of dollars.

The following are five ways to motivate your employees and help them work more efficiently.

Hire Effective Managers
Efficiency starts at the top. Placing the best managers in the right positions is critical to high morale and a strong work ethic. Managers must not only be good construction industry leaders but good communicators. Companies need supervisors who can relate well to management as well as the hourly worker. This person should have a clear understanding of management policies and also have a background in skilled labor.

Set Clear Goals
Each step of every project needs to be clearly defined. Poorly defined goals on a construction site will result in confusion and inevitably a lack of productivity and efficiency. This step also includes identifying potential problems before they occur. This translates into confident employees who have a clear vision of what’s to be accomplished. Planning effectively could mean something as simple as ordering materials ahead of time and making sure they’re stored near the site so time isn’t wasted walking or driving back and forth.

Explain Performance Metrics
Employees want to know how they’re doing on the job. Make sure the workers know exactly what standards they’re measured by. Performance metrics don’t have to be complicated and there doesn’t need to be very many. Those related to safety, construction time & cost, and client satisfaction are a few that could be implemented.

Provide Opportunities for Advancement
The opportunity for promotion is a key ingredient in motivating employees to work more efficiently. Employees who believe if they work hard and improve their skills that they’ll be rewarded are more likely to stay with a company. The longer employees stay with a company the more likely they are to understand how the company operates and the best methods to achieve quality results.

Promote High Safety Standards
High accident rates can have a profound impact on worker efficiency. A slower pace will almost certainly result when workers are faced with unnecessary dangers. One of the key ingredients to a safe construction site is proper training. Also, make sure to pay attention to potential problem areas. OASHA states that potential hazards for workers include scaffold collapses, trench collapses, electric shock, and failure to properly use personal protective equipment.

By making your employees more efficient you will be setting them up for greater success, and in return that will help you run a successful construction company.

5. Leverage Technology

Technology has already been mentioned a few times in this guide and for good reason - it’s a tool that you should be using to help run a more successful business. Are we a little biased? Yes - but for good reason!

Here are some areas where technology can have a real impact on your bottom line:

Cloud-Based Document Management

As a contractor, it can be very hard to keep track of all of your documents. Using accordion folders can be practical but can easily get unorganized.

Contractors are now implementing their smartphones and tablets to help improve efficiency at job sites. With all of the advancements in technology today, it’s important for contractors to look for other ways to store necessary documents.

“Cloud-based” means that your documents will be stored in a virtual filing cabinet, which can be accessed anywhere and with any internet-capable device including phones, computers, and tablets. These virtual documents can be shared with anyone you choose, by giving them access to only those files that pertain to them. You no longer have to carry around a bunch of documents. Your smartphone or tablet is all you need.

It is much easier to store documents electronically and find them when you need them than sifting through a folder to find the paper you need. Also, they are much safer when stored electronically, they can not be damaged by weather or a dirty worksite. Having one central location for all of your documents, which are retrievable from anywhere, is essential for someone who works on job sites most of the time.

Another major plus of these cloud-based documents is the ability to share information with your employees. Instead of printing out documents for your employees, you can save time and money by simply sharing files. Most of the document management apps allow you to share your content with people who may not have the app by allowing you to email it to them.

Time management is key for contractors, by eliminating the time it takes to organize documents from job to job, they create more time to actually work at the job sites.

How to Find the Right Tech For Your Company

Mobile software is revolutionizing the construction industry. Through apps and mobile devices, you and your employees have the potential to communicate with clients and with each other at the touch of a button.

You can share ideas, update each other on construction projects, report problems, and carry out a wide range of administrative functions at virtually no cost. In order to fully exploit these new technologies, however, make sure the software you buy has the following characteristics:

The best software is the kind that you can figure out how to use intuitively. Training all of your employees to use their new devices wastes both money and time, and distracts them from their jobs. Instead, choose apps that can be operated with a few clicks, or better yet, that are voice-operated. Ease of use is also a safety issue. The less distracted your employees are trying to make their tablets work, the more caution they can take while doing their work.

Before you choose an app, make sure it works on all your employees’ operating systems. Buying an app that only some of your employees can use will compromise communication and lower productivity. Worse still, the employees who can use the app will have an advantage over those who can’t, leading to a division in the workplace.

To avoid these problems, make sure that you know what kind of devices each of your employees uses, and buy apps compatible with all of them. Alternatively, consider buying each of your employees the same kind of device. The increase in productivity and workplace harmony will more than makeup for the cost of buying these devices.

In our increasingly multicultural society, it’s no longer possible to demand that all your employees speak English fluently. This can create communication problems, but fixing these problems is now as easy as choosing the right software! Many apps are available in multiple languages, allowing employees of all backgrounds to use the same systems. You can also download translation apps, allowing your employees to immediately translate all of their conversations and messages.

Minimal Advertising
Don’t be fooled by cheaper apps. Designers often lower the retail price of their software by including advertising space in them. Frequent ads can be a major distraction on the job, and they make it difficult for employees to use their software efficiently. To avoid this, only buy software that doesn’t contain advertising space, even if it costs more.