Contractors discuss their greatest risk: Labor

Customers of RIVET

Labor planning leads to improved labor productivity

For self-performing contractors, labor is paramount. It’s what makes or breaks the profitability of every job. In terms of revenue and expenses, it’s usually in the top two line items. And even though it doesn’t often feel this way, labor is the one aspect contractors have the most control over.

“Labor is our most valuable asset that we have,” Bill DeNet, Vice President at Tessiers Mechanical Contractors said. “It’s also our greatest risk on any given project.”

Malou Laureano, VP of Finance at Xcel Mechanical, agreed.

“It’s labor that makes or breaks you because it seems to be the most uncontrollable cost on any project,” she said.

Labor Plans and the very act of Labor Planning have a profound impact on labor Productivity and business profitability. The way you staff jobs, move people between them and even how you bid and pursue new work to balance workforce capacity and labor demand affect productivity. This is a core belief shared by RIVET and our Workforce Management Champions.

So what’s the impact of not having a Labor Plan?

“Four to five percent off your bottom line. Gone,” said Shawn Kast, Operations Leader at Tessiers Mechanical Contractors.

Once your business hits a certain size, using your old methods is no longer feasible because there are too many variables. Too many projects. Too many people to keep track of. You can’t predict where you’re going because you don’t know where you’re at.

“It’s unbelievable that we’re still in an era where we run jobs like that,” said Chris Corder from CSI Electrical Contractors Inc. “The cost of everything, the competitiveness, everything is riding on it.”

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