Lessons learned at the February 2018 YPO Construction Industry Roundtable Event

Jonathan SlainProductivity


Lessons learned at the February 2018 YPO Construction Industry Roundtable Event
  • What I’m Doing Now to Prepare for the Next Downturn (Panel Discussion)
    • Betsy Mack – Mack Industries
      • Betsy is the catchphrase queen and my two favorite catchphrases from her talk:
        • During the Last Downturn: “Concrete – It’s tougher than you think”
        • “You’re Growing or You’re Dying”
    • Daren Alexander – A-C Electric
      • In a downturn, you need to cut DEEP and cut ONCE
      • A-C Electric PRACTICES how they’ll reduce headcount and expenses during a downturn to avoid analysis paralysis by their management team in the next downturn
      • A-C Electric asks their managers to come up with a plan and prompts them: “What if we have to cut 20%, what would you do?”
    • Don Greenland – Nabholz Construction
      • Relationship trumps just about everything and is the key to making it thru a downturn
      • Counterintuitively,
        Nabholz hired sales people during the downturn to help keep sales
        volume up despite simultaneously cutting other positions
      • Nabholz developed a 4-tier “Hunker Down Strategy” that they enacted in the last downturn systematically (they only had to cut to tier 2, but they had tiers 3
        and 4 ready in case things got worse or failed to get better)
      • Nabholz is developing a “shopping list” for the next downturn so they can acquire companies/equipment at low prices if they wish
    • Mike Lancaster – Frank L Blum Company
      • Mike holds quarterly, “State of Blum” meetings to make sure everyone at the company is on the same page
      • Frank L Blum “zippers” relationships to make sure they lock up relationships with clients from top to bottom in case a key relationship leaves a client
        or is fired
      • One of the best “canary in the mine” indicators of future performance is the backlog of Frank Blum’s architects
        • If the architects’ backlog goes down, it could mean that a downturn is on the way or getting closer
      • During the next downturn, Blum will invest in talent

  • How to Protect Your Company During Contract Negotiations
      • Process matters when negotiating
        • Meet with the other side’s decision maker EARLY in the process and IN PERSON if at all possible
        • Agree first, then write
        • Don’t waste time having attorneys create redlines and going back and forth
      • Use attorneys for two main reasons in contract negotiations
        • First, they will help identify risk
        • Second, they know what language in a contract is “typical” and can let you know whether or not your contract is reasonable or not and then YOU need to make
          a business decision on whether or not you want to accept the risk
          in the contract as written
      • WILD – 4 Major factors to review in a contract
        • Warranty
        • Indemnity and Insurance
        • Limitations of Liability
        • Design, Default and Differing Site Conditions
      • Doug’s
        best quote, “If every contract looked like the ones that come across my
        desk, I don’t know why any of you would do this!” – in other words, we
        need to be careful
        as contractors to make sure we understand and negotiate contracts to
        reduce our risk!
  • Test Your Skills – The Marshmallow Challenge
      • The marshmallow challenge includes:
        • Twenty sticks of spaghetti, one yard of masking tape, one yard of string and one marshmallow.  
        • Teams
          of 4 then have 18 minutes to build the tallest free-standing structure
          they can that will support a marshmallow using only the materials
      • The Marshmallow is a Metaphor for the Hidden Assumptions of a Project
        • The
          assumption in the Marshmallow Challenge is that marshmallows are light
          and fluffy and easily supported by the spaghetti sticks.  
          • When you actually try to build the structure, the marshmallows don’t seem so light.
      • The lesson in the marshmallow challenge is that we need to identify the assumptions in our project – the real customer needs, the cost of the product, the duration
        of the service – and test them early and often
      • Contractors can use this challenge at their companies to teach their teams about hidden assumptions and have some fun!

  • How Can Operations & Finance Maximize Value (Panel Discussion)
    • Jason Baumgarten – FMI – Moderator
    • Rich King – Schlouch
      • Creating a common language between operations and finance is critical
    • Brian Albanese – Lithko
      • The 3C’s between operations and finance are:
        • Clarity
        • Communication
        • Consensus
      • Brian’s best quote, which he borrowed from Lithko’s owner was: “You wouldn’t go to the driving range and hit balls into the dark.”  In other words, contractors
        would do well to be transparent with their staff and share the P&L and numbers with them so they know how they’re doing.
    • Brendan Murray – Hollister
      • Transparency is a core value at Hollister and is important both for internal and external customers