The 21 Century Equipment Manager: Fireman or Leader? Equ… · FMI Corporation . Jim Schug ....

© 2014 FMI Corporation 0

The 21st Century

Equipment Manager: Fireman or Leader?

Presented by: Jim Schug Principal

FMI Corporation

CONEXPO 2014

Las Vegas


Who is FMI?

2

- Get In - Strategic Planning

Buyer Representation Acquisition Integration

- Get Work - BD Assessment

Market Perception Studies Presentation skills

- Develop People - Leadership Development Management Succession Executive Coaching / Peer

Groups

- Do Work- Productivity Improvement

Project Partnering Risk Management

- Get Out – Ownership Transition Seller Representation

Management Buyout / Valuation

FMI services span every phase of the construction firm’s lifecycle…

…to include:

60 years dedicated to the construction industry

84% of the ENR 400 Largest Contractors

60% of the ENR Top 600 Specialty Contractor

97% of the ENR Top 100 CM Firms

40% of the ENR Top 500 Design Firms


Performance Problems Can Emerge When CONTEXT CHANGES, but Strategy Does Not


• Competition willing to work for “wages”

• Project speed, complexity and change

• Competition has doubled or tripled for your targeted customers or projects

• Poor-quality documents

• Price pressures and tighter margins

• Delivery methods

Challenges & Changes


• Workforce demographics and attitudes

• Finding A players

• Customer demands

• Technology

• GCs & CMs taking work at unbelievably low fees

• Little or no room for anything to go wrong

Challenges & Changes


Question

If you improve your ability to run the shop by 5%...

how big of an impact would that have on the company? how big of an impact would that have on you?


What Are Your Biggest Challenges?

1. Communication (field – shop, HQs – shop, shop – shop) 2. Implementing change 3. Personnel related 4. Equipment company vs. construction company 5. Scheduling 6. Cost management and control 7. Inventory management 8. Maintenance management system


Introduction

“Things aren’t going to go back to the way they were. Today, every firm must adapt to the changed competitive landscape in order to survive.”

CEO, Skender Construction ”FMI Case Studies from Successful Contractors – post 2007”


What Are Your Responsibilities ???

Procurement

Logistics

Equipment Maintenance

Shop Operations

Strategic Planner

Business Unit Leader

Financial manager

Record keeper

Compliance

Vendor Management


Today’s Demands on the Equipment Manager

Documentation and Compliance

Budget Fleet Sizing

Field Management Vendors

Internal Customers Technicians

Equipment Company

Vs Construction

Company

Employee ‘Management Vendor Mgt

Lifecycle Mgt

Purchasing


Leader or Firefighter?

You will not react your way to operational excellence

Being reactive comes with big costs Labor costs Material costs

Equipment costs Overhead costs Emotional costs


“You Might Be Reactive If…” (1 of 2)

Comments heard in reactive companies: “We don’t have time to plan” “Things change too much to plan” “We’ll figure it out in the field” “Our jobs are different” Blame lack of planning on customers and time constraints

http://www.google.com/imgres?imgurl=http://athomeinchandler.files.wordpress.com/2009/05/ready-fire-aim.jpg&imgrefurl=http://dyn.politico.com/members/forums/thread.cfm?catid=2&subcatid=33&threadid=3345274&start=2671&CurrentPage=90&usg=__rJeGdKLYh0Tr1DwFs-pclGSnkFI=&h=381&w=540&sz=33&hl=en&start=1&sig2=b5hgevu4GLBoOVYmgTwEjw&zoom=1&itbs=1&tbnid=v1i9W-wdqDdHKM:&tbnh=93&tbnw=132&prev=/images?q=ready+fire+aim&hl=en&gbv=2&tbs=isch:1&ei=tuO9TOa4CoGdlgfd85TfBw


“You Might Be Reactive If…” (2 of 2)

Move field managers, crews and teams constantly

Constant phone and radio noise

Too many emergencies or last-minute needs from your shop or vendors

Large number of small purchases made in the field

Very little or no formalized processes

http://www.google.com/imgres?imgurl=http://athomeinchandler.files.wordpress.com/2009/05/ready-fire-aim.jpg&imgrefurl=http://dyn.politico.com/members/forums/thread.cfm?catid=2&subcatid=33&threadid=3345274&start=2671&CurrentPage=90&usg=__rJeGdKLYh0Tr1DwFs-pclGSnkFI=&h=381&w=540&sz=33&hl=en&start=1&sig2=b5hgevu4GLBoOVYmgTwEjw&zoom=1&itbs=1&tbnid=v1i9W-wdqDdHKM:&tbnh=93&tbnw=132&prev=/images?q=ready+fire+aim&hl=en&gbv=2&tbs=isch:1&ei=tuO9TOa4CoGdlgfd85TfBw


Greatness Quotes

“There are three kinds of men: The one that learns by reading. The few who learn by observation. The rest of them have to pee on the electric fence for themselves.” - Will Rogers


Career Equipment Manager (AEMP)

Standard One – Finance

Financial Management Procurement & Acquisition

Risk Management Warranty and Performance

Guarantees

Standard Two – Information

Benchmarking Life Cycle Cost Specifications

Technology

Standard Three – Policies

Employee Training Environmental

Human Resources Safety

Standard Four – Controls

Outsourcing Parts Management

Preventive Maintenance Shop and Facilities

Management

Standard Five – Customer Service

Service Marketing

Communications Improvement


The Certified Equipment Manager

POC Jim Phillips: [email protected]

or call (970) 928-3404


Prioritize Your Time and Help Your Team


Time

HOW MUCH TIME IS SPENT IN THE FIELD WAITING

ON EQUIPMENT DELAYS?


Impact of Equipment Management on Productivity

Crew

Information

Equipment

Manpower

Materials

Tools

Support

Provide Training

Feedback


Construction Company Income Statement

AMOUNT % of Sales

SALES $ 50,000,000 100.0% DIRECT COSTS Labor $ 18,000,000 36.0% Materials $ 8,000,000 16.0% Equipment $ 12,000,000 24.0% Subcontractors $ 5,000,000 10.0% TOTAL Direct Costs $ 43,000,000 86.0% Gross Profit $ 7,000,000 14.0% Overhead $ 5,000,000 10.0% NET PROFIT (before taxes) $ 2,000,000 8.0%


The Challenge

Percent Improvement

8-Hour Day

Percent Increase in Profitability

2% 9.6 minutes 20%

5% 24 minutes 50%

10% 48 minutes 100%


Average Industry Net Profit (Before Taxes)

Source: RMA 2008 – 2013 Annual Statement Studies

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 Type of Contractor % % % % % %

Mechanical 4.00% 4.30% 2.60% 2.40% 1.50% 2.20% Electrical 3.80% 5.10% 3.90% 1.40% 0.70% 2.40% Drywall 4.10% 4.40% 4.70% 1.10% 0.10% 1.00% Paving, Residential & Commercial 4.30% 4.70% 1.60% 3.70% 2.50% 3.50% Road Construction 5.00% 4.90% 3.10% 2.00% 3.20% 2.30% Pipeline, Gas & Oil 6.00% 11.00% 8.20% 3.60% 8.50% 7.20% Structural Steel & Precast Concrete Contractors 6.00% 2.40% 6.30% 3.10% -1.30% -1.00% Roofing Contractors 5.80% 5.60% 5.10% 1.50% 2.50% 2.80% Site Preparation Contractors 4.80% 3.90% 1.30% -0.90% 0.10% 2.20% Glazing Contractors 3.00% 2.20% 3.80% 7.30% 2.70% 1.70% Foundation & Structure Contractors 4.40% 3.40% 2.00% 0.10% -1.50% 0.20% Other Heavy & Civil Engineering Construction 7.00% 6.00% 2.20% 3.40% 2.80% 2.50%


How Field Employees Spend Their Time in the Construction Industry

Recoverable Lost Time (32%) Waiting for information, materials,

equipment, tools, manpower, or other trades. Rework on items already

installed.

Primary Time (42%) Installing units of work

for the first time.

Secondary Time (26%) Planning, scheduling,

material handling, lay-out, set-up, mobilization, etc.


Building Blocks We Must Integrate With

Pre-Job Planning

Short-Interval Planning

Daily Huddle Exit Strategy

Post-Job Review

Material Management

Equi

pmen

t M

anag

emen

t Measurem

ent Feedback Process

Productivity


What Processes or Systems Does Operations Have?

How do you integrate?


The Marketplace of 2014 - 2017

Turbulent public and private market

Resources under pressure

New markets and methods of delivery

Action, Action, Action

And not enough qualified people!


Convergence of Trends

– Command and Control – Unsophisticated – Volatility – Mobility – Ethics

– Baby Bust – Baby Boom – Immigration

– Fewer Technical/Science – Lower Skills – “Soft” Subjects

– Multiple Market Growth


Generation Y (The Millenniums)

Born between 1981 – 1999 Ten percent of today’s work force No such thing as “before the internet”

Short attention spans High expectations of employers Multicultural Want immediate responsibility Family values similar to Greatest Generation Greater number of people but younger and inexperienced Communicate well electronically, but weak interpersonal skills


Leading Millennials

Allow for multi-tasking

Provide creative and challenging work assignments with structure and supervision

Create stimulating learning opportunities

Provide them an ability to take part in decision-making

Putting them in roles that push their limits

Treating them as professional colleagues

Keeping them focused with speed, customization and interactivity

Provide recognition for achievements


Generational Differences

“Young managers today want clear goals for the week on

Monday, some feedback on Wednesday and a

performance review on Friday.”

Bill Rogers, Suntrust Banks


“ ”

Every two days now, we create as much information as we did from the dawn of civilization up until 2003. - Eric Schmidt, CEO


− 50 document types

− 56,000 pages

− 6 @ 20” dia., 50’ tall trees of paper

1992 2012 (1) Project Management for Construction by Chris Hendrickson

Average $10 Million Project


People Leadership and Management

Management versus Leadership Planning, Organizing and Controlling (POC) Setting Direction, Aligning People, Motivating People (SAM)

Plan for Training and Development in Leadership Perception and approach to solutions

Cynical, negative and pessimistic Supportive, creative and opportunistic

Coaching and Development


Mentoring / Training: The “Educator”

Paint the picture with peers – graphics and charts versus spreadsheets

Training: Negotiations Customer Service Training planning Scheduling Cost/Financial Technical training on equipment Diagnosis training Time management Software


Customer Management: The “Customer Service Manager”

Identify your customers – why?

Don’t do: Lack of Process in place to measure satisfaction

Fail to measure because of dissatisfaction No incentives in place to reward performance

Equipment Managers thinking their CEO is their only customer Stuck in the past – “same way for 30 years” Using financial reports as weapons versus tools Timeliness in construction “Bid Day Mentality”


…what does this mean? Turning Equipment Managers into business managers means developing leadership skills and increasing business focus – giving them the skills to advance and add further value to the organization

Project-Focus Business-Focus

Managerial Needs Plan Organize Control

Leadership Needs Set Goals Align Resources Motivate Staff

Project Manager

Accountant

Operations Director

CEO President

CFO

Controller

Craft Employee

Super

Foreman

General Super

VP Operations

Estimator

Career Focus Matrix

Business Developer

Admin Staff Project

Engineer

Project Executive

Turning Equipment Managers Into Business Leaders…

Equipment Manager

Technician

Shop Foreman

Identifying Talent

© FMI Corporation 2009

High Performance Low Potential

High Performance High Potential

Low Performance Low Potential

Low Performance High Potential

Rookies High Risk

Valued Contributors

Super Stars


1. Your company does not have a vision that motivates key employees and/or a strategic plan for executing on the vision.

2. Your organizational structure and/or roles are not clear, thus impacting lines of accountability.

3. Your company does not have a structured performance management and development plan for key employees, so they do not know how to work toward the “next” level.

4. Top performers do not have a portion of their pay that is truly performance / incentive-driven.

5. Training and development investment does not exist, or is ill-defined. 6. Field and managers do not have a means of tracking their performance. 7. There is an inherent fear of sharing information across the company. 8. No one outside of ownership/senior management is involved in setting direction for your

company. 9. Your company does not have formal best practices in place. 10. Field and managers do not have any formal responsibility of providing mentorship to more

junior staff.

Top 10 Reasons Managers do Not Become Business Leaders


Is Equipment Management a Strategic Initiative for Your Company?

Can you prove it?


What Does Strategic Initiative Mean?

Guides direction over the long term

Creates competitive advantage

Aligns internal resources

Requires investment (i.e., time, energy, money)

Requires leadership

Requires change

Requires a plan


“Watch your step!”

Case for change Vision Skills Incentives Resources Action

Plan Real Change

Vision Skills Incentives Resources Action Plan

Case for change Skills Incentives Resources Action

Plan

Case for change Vision Incentives Resources Action

Plan

Case for change Vision Skills Resources Action

Plan

Case for change Vision Skills Incentives Action

Plan

Case for change Vision Skills Incentives Resources

Status Quo

Confusion

Anxiety

Gradual Change

Frustration

False Starts

Source: Adapted from a Dupont presentation to CURT


How Are You Providing Value to Your Company?

Are you a trusted advisor or are you just an obstacle to getting things done and improving the company?

How can you better organize your roles and responsibilities to help ensure a more consistent success rate?

How well do you integrate with current operations policies and processes?

What are you doing to develop future Equipment Managers (like you)?


Procurement Operating Budget Establishment

Capital Budget Purchasing Technology

Benchmarking Financial Advisor

Vendor and parts Management Safety

Documentation Specifications and Warranty

Outsourcing Shop and Facilities

Preventive Maintenance

Project Integration Risk Management

Scheduling Lifecycle Management

Rightsizing Logistics

What Makes a Great Equipment Manager?

Business Partner

Planner Leader & Communicator

Manager

Hire, train retain HR

Development Coordinate across company

Customer Management Meeting Management


Personal Action Plan

What actions are you going to take as a result of this program? By when?

What resources or help will you

need?

•

•

•

•

•

•

•

•

•


James C. Schug FMI Corporation 308 South Boulevard Tampa, FL 33606 Tel: 813.636.1254 Fax: 813.636.9601 Email: [email protected] Website: www.fminet.com

Jim is a principal and engagement manager with FMI, management consultants and investment bankers for the engineering and construction industry. With more than a decade of experience as an Army Officer, Jim led operations in complex and challenging environments. Some of his roles included strategic planning, training across large organizations and command with honors. He refined these skills working for a national builder, repeatedly leading his teams to successfully integrate operations, sales and customer service. Today, Jim is passionate about developing customized strategy and best-in-class operations with his clients. He applies practical experience with an in depth understanding of leading lasting behavioral change in dynamic environments. Jim earned a bachelor’s degree in quantitative economics from the United States Military Academy at West Point and a master of science in engineering management from the University of Missouri. Jim has completed post-graduate work with Cornell University in Achieving Competitive Advantage and is Certified in Lean Six Sigma. He has served in leadership positions on various local and national non-profit industry associations and is frequently invited to speak at industry events.

Jim Schug Principal

Thank you


About FMI

FMI is the largest provider of management consulting, investment banking and research to the engineering and construction industry. We work in all segments of the industry providing clients with value-added business solutions, including:

Strategy Development Market Research and Business Development Leadership and Talent Development Project and Process Improvement Mergers, Acquisitions and Financial Consulting

Founded by Dr. Emol A. Fails in 1953, FMI has professionals in offices across the U.S. FMI delivers innovative, customized solutions to contractors; construction materials producers; manufacturers and suppliers of building materials and equipment; owners and developers; engineers and architects; utilities; and construction industry trade associations. FMI is an advisor you can count on to build and maintain a successful business, from your leadership to your site managers.

Knowledge • Expertise • Relationships

Visit us at www.fminet.com

The 21 Century Equipment Manager: Fireman or Leader? Equ… · FMI Corporation . Jim Schug ....

Documents

Transcript of The 21 Century Equipment Manager: Fireman or Leader? Equ… · FMI Corporation . Jim Schug ....