The following article originally appeared in the March newsletter to clients of Kiley Advisors, LLC. Reprinted with permission.The benefits of interval training, where periodically you speed up and then slow down again, are proven to enhance athletic performance and overall health, no matter whether the athlete is a cyclist, runner, canoer, skater or walker. In fact, there is a new study that validates that interval walking is the best exercise for most people who want to stay both healthy and trim.Can interval markets produce the same benefits for commercial construction companies? The greater Houston commercial construction market has certainly been in the “speed up cycle” of the interval since 2012, and now it will enter the “slowdown cycle” for a couple years. Can this pattern allow companies to stay fit with steady and reasonable profitability? Can they stay trim with no excess expenses, but with enough additional funds to invest in talent and technology? And in this more staggered and cyclical environment, can companies meet their strategic growth goals over a normal strategic planning horizon of 3-5 years?
March 13, 2015
The following article originally appeared in the December newsletter to clients of Kiley Advisors, LLC. Reprinted with permission.Read any industry publication or newspaper article on the construction boom in Houston and throughout Texas and the phrase “craft worker shortage” will appear in the early paragraphs. It is the number one strategic challenge facing contractors of all types. The residential builders are faced with alternating crews between projects; the highway and road builders are working short. Most commercial trade contractors would hire at least 10 more craft workers tomorrow, and the big industrial contractors, with mega-projects just about to start, estimate they are as much as 65% short, despite juicy per diems. Schedules in all markets are strained; overtime is almost the standard everywhere.
December 19, 2014
The reason contractors in the Houston area need comprehensive immigration reform immediately is straightforward: to have legal access to immigrant workers so that they can help build all the projects that are planned or are already under construction in this market, which is coming on like gangbusters. The market is projected to keep booming for at least the next three to five years.There is no doubt in my mind that the greater Houston area is in the midst of an unprecedented building boom. In my 31 years of closely monitoring this construction marketplace, I have never seen the conditions that exist now. And it’s projected to continue going forward. All major market sectors – residential, heavy industrial, highway and civil, and commercial – are on fire and so is every segment within those sectors.In residential, both single-family and multi-family units are being built at record levels. In heavy industrial, it is both power and chemical plants – driven by natural gas as both a power and feedstock source – that are being built here in Texas and next door in Louisiana. In highway and civil construction, the Texas Department of Transportation as well as cities and counties all have projects underway, and more projects are on the drawing board. And in commercial, it is the medical segment, the K-12 school segment, the colleges and universities segment, the warehouse segment, and general purpose office space segments that continue to all see building at near record levels.
December 11, 2014
The following article originally appeared in the October newsletter to clients of Kiley Advisors, LLC. Reprinted with permission.Every CEO and senior executive has, as a major part of their responsibilities, the obligation to set the strategic direction for their organization so that it has a deliberately designed future – one that is believable and desirable. They also have the obligation to lead their organization toward that future, acquiring the necessary resources and making the critical changes.Strategy, simply defined by the reigning guru Michael Porter of the Center for Strategy and Competitiveness at Harvard, is what an organization faced with competition does to gain a sustainable completive advantage in the markets. It is how it puts resources at risk to provide more value, or a different value than competitors, to a targeted group of customers within target market segments. It becomes in essence “What” the company does.
October 23, 2014
The following article originally appeared in the August newsletter to clients of Kiley Advisors, LLC. Reprinted with permission.In every good company there are two functions that must occur simultaneously, but require different skill sets, and they must become integrated at the CEO and senior management team. One activity is managing what is under contract TODAY – seeing that schedules and budgets are met. There is not margin or fee fade; overhead is controlled. The other activity is doing the things that ensure that the organization will have TOMORROW – creating a clear vision of a desired future, then acquiring the resources and making the changes necessary to realize that future.
September 26, 2014
The following article originally appeared in the August newsletter to clients of Kiley Advisors, LLC. Reprinted with permission.In this robust market, there is a terrific amount of positive activity, and it appears that it could last for another 3-5 years! Companies will have many opportunities to get work and make money. No company will have to particularly excel to do this. If a company has capacity and basic building competency, they should prosper. They can just drift with the momentum of the market.But there will also be another group of companies that will not only prosper, they will thrive. They will take advantage of this rare market to build multiple generational organizations. Their executive teams will not just drift with the market momentum; these leaders will drive their companies to pre-determined goals and reinvest profits to build more solid foundations; they will drive the necessary changes to move to the next level, to truly become, as heralded author Jim Collins says, “Built to Last.”
September 10, 2014
The following article originally appeared in the July newsletter to clients of Kiley Advisors, LLC. Reprinted with permission.This is the period we have been waiting for! From every indication, and from many different sources, the next several years should see a robust construction market in all major sectors (commercial, industrial, residential and civil) and in all segments (e.g. office, medical, educational, retail, light industrial, etc.). Companies that think and act strategically will use these coming years and this abundant market to build a stronger foundation so that they will add additional generations to their company’s future. Those that think only opportunistically, will make money, but struggle again as soon as the cycle turns.
July 22, 2014
The following article originally appeared in the June newsletter to clients of Kiley Advisors, LLC. Reprinted with permission.These are the times that will test.These are times of great opportunity; they are also times of great challenge. It is crystal clear, as we approach the mid-point of 2014, that the shortage of talent, predicted for many months, is finally here and affecting most constructions companies, both General and Specialty Contractors, across all classifications of employees: craft workers to executives. The War for Talent has escalated, and reportedly even reached the “armed” level. Pistol-packing security guards have been placed on residential projects to stop labor brokers from walking on jobs, adding an attractive premium to the per-foot wage of piece rate workers, and taking the entire crew with them that moment!This shortage, in the short haul, can only worsen, as the large industrial projects get underway. It is going to cause contractors, who were starving for work 24 months ago, to face the difficult decision to turn work down, or potentially violate or ignore some key values of their strong cultures, as it relates to people. All successful construction companies have strong cultures, 90% of it built around the people they want on their team and the way people in their company will be treated.
June 20, 2014
Memorial Day prompts reflection and appropriately so. We must never forget all of those who gave their lives for our freedom, whether in the two World Wars, Korea, Vietnam, the Gulf or in the fighting that continues today. To paraphrase, Winston Churchill, “Never has so much been owed by so many to so few.”This day also prompts homage to those who returned, those heroes who then turned their talents and patriotism to making this country the great nation that it is. One group that deserves our continuous study and emulation is the veterans of World War II, that special group of men and women heralded in Tom Brokaw’s marvelous book, The Greatest Generation. Brokaw wrote this book as a tribute to his father and his buddies, all World War II vets. It is a compelling story, which every American can benefit from reading. He eloquently conveys how this group came back, and although they were owed so much, they never wanted to do anything but continue to serve and give in their companies, their communities and their country. The leaders, both officers and enlisted, went on to start and head companies, to build America into a great industrial economy, while at the same time ensuring that the men and women who had served and supported them in wartime had decent jobs in peacetime, jobs that could allow them to feed their families and realize the American Dream.
May 26, 2014
Successful construction CEO’s and senior leadership teams are constantly striving to take their companies to “the next level.” The best teams have a clear vision of what that next level is, often expressed in terms of specific measureable, time-dated goals. Some even set “Big Hairy Audacious Goals”, BHAGs, as articulated by Jim Collins in his seminal work, Built to Last. Typically these BHAGs are set for a longer horizon, perhaps three to five years out, and require bold strategies that involve significant organizational development and change to achieve. The achievement of these certainly takes the organization to “the next level”, perhaps even transforming the company.In a cyclical industry like commercial construction, a critical requirement for setting growth goals is favorable market direction and dynamics. It is difficult to grow a construction company serving a single geographic market that has negative direction. However, with the market direction and dynamics we face in Houston for the foreseeable three to five years,
March 20, 2014