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Latest Project Management News and Articles..come back soon for more updates...Washington DC Metropolitan Police Department Selects TranTech's CLEARView(TM) for Project VIRTU (Business Wire via Yahoo! Finance) Best Practices Ranking - Sample Edition Rank our Sample Best Practices in Construction Contracting. Learn what other regions of the country are doing. Link is below: Differentiating the Business Value of Microsoft Office SharePoint Portal Server 2003 and Windows SharePoint Services The Rule of 72 in Construction Which is more? million or a penny doubled every day for a month? Surprisingly, the answer is the penny. This illustrates the power of the rule of 72. This is a simple financial rule that dramatically shows the power of doubling. It shows the power of time with interest to produce large outcomes. This solidly points to the importance of expense discipline and financial management for construction firms. Done with frugality, the reward is substantial wealth at a relatively early age. Done poorly and we work longer than we want to. The math of this rule is simple. It should be the first question when interviewing your next company financial officer or personal investment advisor. The rule of 72's gives us a standard to determine the doubling period for a given interest rate. For example, if a principal sum is earning a fixed rate of interest of 6%, that sum will double in value in approximately 12 years (72 divided by 6 equals 12). If the principal sum is earning interest at a rate of 12%, it will take only 6 years for the principal sum to double in value (72 divided by 12 equals 6). Divide other interest rates into 72 and observe the time required to double your initial principal. Using the same logic for expenses provides us an insight about business costs. Let's review the example of a common tax write off; the 6000+ pound vehicle used in a company's business. This is a significant incentive for making a new vehicle purchase of this size. The Best Industry in the United States My child is in college. She is starting to ask about industries and careers. Olivia has made me think further about what construction contracting has to offer her. I have concluded it is the best career a young person could choose. You may not believe it, but, the facts will show our business is unmatched. It offers participants long term tangible benefits. However, many people will argue. Let me show you the many virtues our industry has. You be the judge. The Industry is Not Going Away - Construction is a basic necessity to human life - shelter, food, clothing, and water. Contrastingly, most manufacturing will be leaving this country over the next few years. Construction cannot be exported. It must be "insitu" or occurring where it produces the end product. This is unlike service center, computer programming or engineering where other countries provide it from afar and then send it back to the United States. Construction and its sister, demolition is captive to the site. Merit Based – the construction industry rewards hard work. There is no substitute. We are all dissatisfied with the work ethic today. When we find it, we reward it. Let me give you an example – a person comes to you (male / female) doesn’t speak English well, but has promised to work hard and keep their nose clean. You give them a chance and 1 year later, you are glad you did. They kept their promise. Now, what will you do? Ignore them? Cut their pay? Of course not! You will increase their wages and give them more responsibility. Construction contractors reward merit. In a few years, that same person, having earned the technical understanding and crew following might start their own business. It is almost expected. After working in the field and interacting with clients and managing labor, it is normal and rational for this person to at least attempt it. Additionally, the industry is also merit based. Question: What is the best advertising in the construction business? A completed project that is on-time and on-budget. It speaks volumes of a contractor’s savvy and diligence. There are a minority of good contractors. Word of mouth will travel fast. Excellent contractors have more opportunities for work than their lesser competitors. Small is Big – Construction rewards the small construction firm. That is they make a higher percentage of profit. This is a variable cost business. In other words, you do not have to have “critical mass” to be profitable. Net profit statistics consistently show that smaller contractors make a higher percentage of profit before tax than their larger brethren do. Construction is one of the few industries where the big don't eat the small, the fast eat the slow.
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