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Moneyball tips for construction managers

Posted: February 23, 2017



By Greg Michael

The construction business has a lot in common with Major League Baseball. Both are team sports with nearly a year-long schedule of competition and daily lineups. Can we pick up some construction management tips from the game? Yes, from Moneyball.

The best-selling book and hit movie written by Michael Lewis is the story of how the Oakland A’s general manager Billy Beane, played by Brad Pitt, used analytics to rebuild the A’s with a thin budget, to compete with big-spending franchises like the Yankees. In Moneyball, Brad Pitt throws a few chairs after the departure of three stars Oakland can’t afford. He doesn’t give up and rebuilds his team into a 103-game winner.

The A’s used sabermetric analytics to rate talent. Specifically, Beane used the Bill James Handbook of past season statistics for Major League players and teams to score performance.

Using these stats, the A’s were able to extend successful careers of older players who had high on-base percentages and high batting averages with men on base. They are better metrics of a hitter’s value than batting average alone. Moneyball paid off with the A’s reaching the playoffs in four consecutive years from 2000 to 2003 and back-to-back division championships in 2012 and 2013. In 2009, Sports Illustrated named Beane to the “Top 10 GMs/Executives of the Decade in All Sports.”

Improve your bid-win ratio
Ramp up your game with metrics

Put some Moneyball strategy into play at your construction company
What is your bid-to-win ratio? Is it improving or stagnant? Are you using state-of-the-art software or is your estimator manually calculating bids using paper plans, notes, and a 10-key? How long does it take you to build a bid manually? Are your manual estimators Gold Glove champions, or do they have a fair share of human errors? Are you submitting enough bids manually to build your project backlog? Are you submitting bids on the right projects? Are your bids professional looking? How do they compare with your competitors? Are they major league?

Do you plan to improve your bid-to-win ratio or are you okay with it? If not, you might try construction estimating software to more efficiently maximize your bid production, giving you more time to target your bidding, which collectively, will increase your bid-to-win ratio.

You might not be solving the problem, you may not even be looking at the real problem

Identify a fundamental problem facing your construction company and then focus on solving that problem. Don’t get distracted by all the hype swirling around about 3-D printers, BIM, and drones. Don’t listen too closely to those in your company who are emotionally attached to the old school playbook — it’s possible they’re part of the problem. Figure out what the actual issue is, and solve it. How do you eat an elephant….one bite at a time!

You’ve got to think differently

Like the Oakland A’s, your business is also working under big constraints. Maybe even unreal constraints. If you’re trying to beat competitors that are bigger and better funded, you’re going to have to do it with fewer people and technology advantages. You’ll need to think differently and use software to automate your estimating and project management processes. Playing the same game while your competitors are in the big leagues with expensive rosters, using the latest construction planning software puts you at a big disadvantage and a sure-fire way to a losing season.

First job in construction, rookie?

Experience is sometimes overrated. Some of the most successful baseball teams and construction companies consisted of people that lacked relevant experience at the time they joined the team. But, what they lacked in experience, they more than made up for in sheer energy and hunger. In the early days of your company, hire athletes. People with raw talent and a work ethic to get things done. Don’t resist hiring people who are early in their careers. You’re looking for the future stars — because you likely can’t afford the heavy hitters.

On the other end of the field, don’t overlook middle-aged former estimators and project managers. They are workhorses who know how to get on base with bids, win jobs, and follow through. They may not look the part but could be your most valuable player for years to come.

Hire a pro from another “game.” The oil and gas industry has had large layoffs the past three years. There are thousands of experienced project managers and facilities engineers eager to apply their skill sets to construction.

Your goal shouldn’t be to buy players; your goal should be to buy wins

I’m going to let you into a conversation I had with a general contractor recently. It went like this: Me: What do you need to increase your job pipeline? GC: We need to hire a chief estimator. Me: So, you have a budget to hire a chief estimator for $70,000 or more a year? GC: Yes. We need to bid twice as many jobs as we did last year. Me: You may actually need software at a fraction of that cost, which automates estimating and bid packages.

Don’t think about buying titles — think about buying outcomes

Don’t hire a head of estimators, hire someone who can build detailed, accurate, professional bids that win you jobs. Someone that’s committed to client’s needs and is a people person. They can become your chief estimator in no time. Promote from within, that is team building.

You are in the game to win

Your ability to teach is one of the single biggest advantages you have at a small or medium-sized construction company. It’s one of the biggest benefits you can deliver to your team members. They may get a higher salary somewhere else. They can get a better office at a big GC, and all the software technology they like.

At your company, they may not get an office, but you can provide the latest estimating software and teach them customer service skills in addition to the meat and potatoes of estimating by following your processes and game plans.

It’s day one of spring training, you can’t judge just yet

Be a little bit patient. Often, your best people will take a little time to really shine. Don’t judge too early. If someone’s not hitting yet, is it because getting up to speed at your company is hard? Everyone’s too busy to show them the ropes? Do your training systems include interval milestones so the new member can understand clearly how they need to act and perform in order to show progress? Take some time and go out to the field with your new team member. Show them the tricks of the trade on takeoff and estimating, and how you work with clients and general contractors when calculating the bid. Introduce them to your best clients. Help your new recruit hit the field running on opening day. They may develop into your starter and ace closer.

Did you find some helpful coaching tips from this article? If you have pointers to share, please let us know by throwing an email to us at marketing@oncenter.com. We always appreciate hearing from our big league performers.

Greg Michael is a communications consultant for On Center Software, with deep experience in publishing for major media, and in corporate communications and project management for IT and energy companies. Michael has a BA in Communications from Rowan University and an MBA from the University of Dallas.



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