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Reduce defects to increase profit!

by editor

Defects, even the tiny ones, will eat your profits as quickly as a Labrador devours a plate of unguarded sausages on the barbecue bench. Invest time and money in reducing defects and I promise you’ll notice a positive difference to your bottom line.

Defects not only hit your bottom line, they hit your reputation as well.

• Direct cost – Fixing a defect is ALWAYS more expensive than doing the job right in the first place, no matter the cause. Cutting corners is not always the cause, poor communication is probably the number one reason for a long defects list.
• Delayed payment – A defects list will stop you being able to make a claim and give the client a reason not to pay, causing major cashflow issues.
• Frustrated staff – Nothing knocks the wind out of a team like a long defects list at the end of a project they all thought was behind them. Staff can become disillusioned and frustrated, which encourages them to look elsewhere for work. They don’t leave because the physical work is hard, they leave because they are frustrated with the work environment and defects are a good way to destroy company moral.
• Frustrated client – Even the nice clients are fed up at the end of a project. They’ve spent more money than they anticipated, and it’s taken longer than expected. Defects breed defects because a frustrated client goes looking for reasons not to pay that final bill.
• Damaged reputation – Defects can damage your reputation. Your client will bang on at their barbecue about how you dealt with the defects much longer than they will about the other stella work you did for them. They (rightly) have an expectation that you will do an outstanding job; they’re looking for a reason to believe you haven’t.

So, how do we solve the defect issue? The solution is Policies and Procedures (P&Ps) – to put systems in place to drive them as close to zero as possible. Here is how you do it:

• Improve communication with staff – Write P&Ps that outline the responsibility of all colleagues and clearly show how information is passed between departments. Create a central and organised document storage system and make all staff aware of where they can find the latest and accurate documentation. Ensure there is a good handover to the construction team, that they are up to date on all aspects of the project, so they can build the project with confidence. This also ensures the client can’t steamroll the site staff with incorrect information.
• Improved communication with clients – Always take and distribute meeting notes. Always have variations signed off by the client. Get material samples inspected and signed off by the client. Discuss construction issues and solutions with the client and architect and get the meeting notes signed off by both parties. The aim is to make the client and architect aware of all changes, and obtain their written approval, so that no changes cause defects.
• Identify patterns – Record all defects across all sites on one database, including the cause of those defects, so that you can identify repeat offenders. Write specific P&Ps to address these.
• KPIs – Make ‘defects reduction’ a company wide KPI. Set targets and track your progress towards them. When you focus heavily on defects you will make progress with reducing them.
• Forward planning – Use a project schedule to plan overlapping trades, to ensure one doesn’t damage the work of another. Also plan to inspect work on a regular basis and when each trade is complete.
• Inspections – Regular inspections, especially when milestones are reached, is a good way to spot potential defects and rectify them before they become so. It is much easier to get a subbie to fix an issue on the spot than it is when they’ve left the job. Most importantly, inspect the project a few weeks before completion with colleagues, the client and architect. Identify the issues and fix them well before D-Day.
• Checklist – Create a checklist of final defects and clearly communicate those to colleagues. Work quickly to get the list completed before the finish day. It is a good idea to have the client agree on the final list and then to sign off on completion of each item on that list. This way the client acknowledges that these final things signal the final completion of the job.
• Software can help – Invest in defect tracking software and use it to get on top of your defects list. Many project management packages include defect tracking software, however there are some good standalone ones on the market.

All of the above tips work best with a Policy & Procedure. The act of writing the P&P helps you identify and iron out all the issues with the process. You can formally sign responsibility of the P&P to a colleague who now has clear written objectives.

Don’t sit down to write them all at once, that would be too daunting, instead write a Cradle-to-Grave P&P to set out the overview of your business and give you the structure to work with. The next step is to chip away, week by week, until you have them all written. I suggest you start with the big-ticket items, the areas you will see the quickest benefits (for example, communicating with clients, document control). And break it down, be as detailed as possible. Smaller, more specific P&Ps are easier to digest and follow and more successful than long winded, general ones. For example, instead of writing a P&P about “communicating with clients”, write a smaller, more specific one for each type of interaction with the client (for example, Initial contact, Variations, Material approval).

Defects cause headaches for so many reasons. They frustrate clients, colleagues and subbies. They damage your reputation. And most importantly, they cost you money and stuff up your cashflow. The solution is to put systems in place to reduce defects before they happen. It takes work, but not as much work and heartache as fixing stuff-ups all the time!

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