On Target Group Coaching for Painting Contractors November 6, 2014

Group Discussion/Check In

Job Profitability & Productivity On Target Group Coaching

Job Profitability & Productivity

Job Costing  Starts with a good Estimate and Work Order  Inform your Production Team  Expectations  Hours  Hours by task breakdown is better  Collect Hours daily or weekly  Stay on top of Material costs  Job cost after every small job and during every big job  Debrief in a timely manner  Job Costing Example and Tool  QuickBooks can also be used as a simple job costing method

Put a system in place  Use QuickBooks to keep track of employee hours, materials & equipment charged to each job  Implement a tracking system  Job Cost each job in QuickBooks or Excel  Summarize the data using the On Target Job Profitability Template  Or adapt your existing job costing system to be able to look at all jobs  Update monthly & review reports  Use for evaluating employee productivity - monthly  Use for evaluating profitability of types and sizes of jobs – quarterly or semi-annually

Gross Profit by Job Total Price - Labor - Materials -Equipment rental/other pass-through item = Gross Job Profit

Job Costing Example…

Components of Job Profitability  Job Type  Invoiced Price  Materials  Equipment rental and other pass-through costs  Labor Cost (Hours x average rate or actual payroll for hours worked)  Labor Burden (payroll tax and Workers Comp)  Bid rate  Hours estimated (and added on)  Hours actually worked  Foreman/person in charge of job  Sales person who sold the job  Other relevant data – date of completion, job number  Other customized data you want to include or track  Customer service feedback  Materials estimated  What else?

Set a target from your own budget Revenue500,000 - Labor (31%)155,000 - Materials (9%) 45,000 - Other Job Costs (1%) 5,000 - Subcontractors (3.6%) 18,000 = Gross Job Profit277,000 Gross Job Profit % Target 55.4%

This becomes a KPI  Use budget target KPI as a starting point  As you begin to track data, your actual company average will emerge  High/low performers will show up  Re-evaluate & set new targets periodically – company & individual

Profitability & Productivity Tracking  Track the Gross Job Profit % to analyze:  Employee Productivity  Profitability by job type, by size, by foreman  Track the hours bid to hours actually worked by job to analyze:  Employee Productivity  Accuracy of Hours Estimated

Let’s look at an example 13

Use the data for management decisions  Find out the size of jobs that are the most profitable for your company  Find out what types of jobs are the most profitable  Discover your company’s average gross job profit  Evaluate gross job profit by foreman  Use this data as a management tool to encourage employee productivity

Implement the system  Generate job profitability reports monthly  Meet with each foreman monthly to review graphs & reports  Use the opportunity for coaching the foreman for increased productivity

Coach for Success  Share company targets  Review data together  Receive feedback from foreman  What support he needs from you  His ideas for improvement  Together set personal targets  Discuss ideas for improvement  Agree on what will be done  Arrange follow-up

 Start Job Costing every job if you aren’t already  Implement a system to track job profitability over time to measure progress  Coach foremen to improve Implementation steps