I recently had the pleasure of taking the WerkMaster concrete polishing course in Vancouver a couple of weeks ago.  A portion of the classroom discussion centered on the business side of running a contracting business.  

The instructor stressed the importance of fully considering all of the costs in a job when preparing a quote. Often it’s the set up, make ready, the trim and all the hidden costs that spell the difference between profit and loss. Just calculating cost per square foot is a sure recipe for loss.

The discussion took me back many years to a discussion I had with my then boss about how to get ahead in that large manufacturing organization. He told me that the best way to get ahead was to justify a large capital investment and then get yourself appointed project manager. He went on to say that although all capital projects had to be financially justified, very few in any industry actually paid off.

This of course surprised me, so when I asked why, he told me that optimizing a portion of the process does not necessarily optimize the total process. “Saving time or labor” for a part, but not the whole, really saves neither time nor labor. It was his opinion that a complete post audit of all projects was essential and usually it was impossible to demonstrate that the investment actually paid off. He also said that capital spending was essential for economic growth and that it was remarkable how little of it was done wisely.  

After the course, when I returned to the USA, I met a stone fabricator from Florida who runs a very busy shop with little capital equipment. He has been in the business a long time and has figured out how to save time and labor by thinking through all of the steps of the job. His conclusion was that in terms of total time, his low capital approach actually was significantly faster and more profitable.  

Later I met with the sales rep of a stone CNC tooling company. One of the things that has puzzled me is how CNC tooling is named. There are fast, ultra-fast, high-speed, ultra-high speed, warp-speed, lightning speed and regular old-fashioned extra-high speed tooling available from a variety of vendors. How on earth are you supposed to figure out what all this jargon means?

The visiting CNC sales rep showed me a chart of various tooling (his own and his competitors). What I learned was that only a couple of the tooling positions for the “new generation tools” were actually faster than the previous generation of tooling. Furthermore, in the typical process of fabricating a countertop, the actual machine time was only a portion of the total elapsed time and, to top it off, most of the “ultra-fast” tooling did not provide the quality of the shine that the previous tooling delivered. He went on to say that several companies have added an additional tool that can be used to improve the quality for “picky” customers; of course the extra tool slows down the process.

When I stopped laughing, I again remembered my old boss. His favorite saying was “optimizing parts of a process, usually results in sub-optimization of the whole.”

So, on this July 4 holiday (the time of this writing), in addition to the blessings of living in this great nation, one of the things that I am very thankful for is the wisdom of one of my former bosses. These three events have given me a renewed desire to study our operation to see how we are “sub-optimizing” and fooling ourselves. Perhaps you can improve your profits by giving it some consideration.

Hope you enjoy the read,

Rich Hassert

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