How to Fix Your Manpower Problems
Let’s say that you run a small electrical contracting firm, My Electric, LLC. And you’re looking at manpower requirements for a single project: a commercial tenant improvement project for a Five Guys Burgers that begins April 13 and is projected to end the week of June 8, about a 2-month project. For simplicity, we will assume that there is a ramp up in the middle of the project schedule to a peak manload of eight electricians, then a ramp down after that, as seen here:
Now let’s assume that you have steady supply of these projects starting at regular intervals, all with the same manpower requirements. Each project would be ramping down as the other starts to ramp up. In an ideal world, this would result in a constant number of electricians on payroll, in this case, 12 workers at all times (represented by the straight horizontal line at the top of this graph).
This makes your project manager and your HR manager very happy because you have consistent manpower to assign to projects and there’s never a rush to hire enough hands to be able to staff a project.
Now let’s say that your company with an ideal project backlog has just one project start date delayed because of complications with permitting approvals (we’ve all been there). Look how delaying one project by just two weeks changes the overall manpower needs for the company:
Having just one project delayed by two weeks doesn’t sound like a big deal, but look what it does to your company’s manpower requirements. Because of the ideal operating scenario, you have 12 electricians on payroll, but only enough work to support 10 electricians in May and only enough work to support 7 in June. The company’s need for manpower is cut in half because of one single project delay! Then in July, you will need 17 electricians to cover all your needs!
Well it doesn’t make sense to employ 12 electricians if you only have projects to support 7. Let’s take stock of your options.
Do you lay off 5 reliable electricians? You’ll just need them back plus more in July, which means wasted time and money on job postings, background checks, reference checks, and interviews. And layoffs are obviously never great for company morale. Plus, you’re likely losing money paying severance to workers who aren’t working as well.
Redistribution of Resources
Do you try to send them to other projects? Those projects are either ramping down or ramping up and don’t have the needs for an extra 5 bodies. And in fact, they would be getting in the way and causing more issues than they’re helping by the time they’re sent to new projects. Your PM doesn’t want these extra electricians on these jobs and placing them there also means losing money due to inefficient production.
Sit at Home
So then maybe the right solution is to pay the extra 5 electricians to sit at home until they’re needed in July. Obviously, that’s not great for the bottom line. That’s cash out without revenue in. Plus, you’re doing your electricians a disservice by not giving them an opportunity to learn new skills or advance their careers.
Decline the Delayed Project
Maybe you tell that customer with the delayed project that you can no longer do their project because of the delays. That’s revenue off the books, which isn’t great. Plus your customer isn’t happy (after all, it’s not their fault the permitting office is backlogged). But maybe you can at least stabilize your manpower needs. Check out what happens if that project is deleted off the schedule:
This actually exacerbates your manpower problems, not helps them.
So then none of these are great options.
And, if you’ve spent any time in construction you know that projects are never actually distributed this evenly in the first place. Projects have much more complex manload requirements because you need to do underground work early in the project, then come back later to finish rough-in and finishes. Or a project falls through that you were sure would be starting next week. Or a project takes a few more weeks than anticipated. So let’s add in a few more variables to the project schedules to more closely resemble real world scenarios.
So now the time that you dreamt you would be spending building projects that you could be proud to add to your portfolio, you are spending juggling manpower, onboarding new employees, laying off the employees that make your company great in the first place, and managing customer expectations and a deteriorating relationship because of schedule delays.
Contractors who have recognized this problem and chosen to resolve it by partnering with a staffing agency are starting to get ahead. They spend less time managing workers and more time focused on a good customer relationship and exceeding expectations. They utilize a staffing agency to help smooth out the line above representing the company’s electricians on their payroll in the same way that a capacitor is used in a circuit to smooth out the power flowing through a circuit. The staffing agency supplies electricians to a contractor to help with manpower at peak needs, then reassigns the same workers to projects with other companies when the same contractor is light on projects. That minimizes the risks inherent with taking on new projects and overall strengthens these company’s bottom lines. So then if the answer is partnering with a staffing agency to fix the peaks and valleys associated with trying to manage a workforce in a highly-variable market, then the question simply becomes, which staffing agency? Read Part 2 to see what makes Ladder different.