Timothy O’Brien
Executive Vice President and Chief Financial Officer
KBE Building Corporation
Farmington, Conn.

We use benchmarking and metrics to be healthy and competitive, and to plan for the future. 

KBE works throughout the Northeast and Mid-Atlantic, using different delivery methods, so we are constantly analyzing how each market performs and measuring that against past performance, as well as evaluating our performance against overall trends in that particular industry. Our goal is to create the perfect combination of profitable work that is spread across a number of market sectors.

We compare ourselves to our peers to make sure we have the right overhead to support the volume of business we are managing. It is also important to measure the success rate of our bids. We want to position ourselves as competitors, but we do not want to pursue opportunities we do not have a chance of winning.

Finally, we look at whether our backlog is expanding or contracting and whether we need to make any changes to our organization based on what we see down the road.

Doug Reaser
Partner
Electrical Associates
Olathe, Kan.

Keeping score is critical if you want to win in this industry. We must track our costs to be able to project our costs in the future. I heard long ago “what gets tracked gets done.” Material and labor can be tracked from different levels based on what kind of contractor you are.

I see basically three methods for this tracking. The easiest method is one job one cost; in other words, we spent $100,000 and the contract was $130,000. Good job.

The second level is material and labor breakdowns: We spent $50,000 for material and $50,000 for labor on a $130,000 job.

The highest level is material/labor broken down by phase for each. Typically, this could be as few as 10 cost codes or as many as 100 codes. More effort taken by the company produces better results.

Heather Bunn
Vice President
Rafn Company
Bellevue, Wash.

We measure ourselves by utilizing the Construction Financial Management Association’s Best in Class annual metrics, as well as a peer-to-peer benchmarking group started through Associated Builders and Contractors more than 20 years ago.

Our focus has always been on profitability, not revenue. Benchmarking against our peers drives us to be a leaner, more efficient organization.

This focus helps us implement effective marketing strategies, select the right customers and recruit the top talent. We measure profitability in many ways: dollars per full-time employee, dollars per project manhour, and dollars by customer and market type. Key profitability benchmarks we use are return on assets, gross profit percentage and net income percentage. 

 
Correction
The March Viewpoints section incorrectly identified one of the respondents as Brad Trunnell. The correct respondent was Jack Trunnell, CFO and co-owner, Trunnell Electric, Rockville, Md.