How to Become an Operationally Superior Subcontractor

A study from FMI Corporation found that 32% of time in the field is recoverable lost time. For subcontracting executives, wasted time is poisonous to a project. It means lost productivity, and that erodes your bottom line.

How Labor Productivity Impacts Your Bottom Line

The typical sub’s profit & loss statement includes a massive labor expenditure, which, unlike material and equipment costs, is more within the subcontractor’s control. According to Matelan, the average trade makes 3–4% net profit before taxes, but “operationally superior” firms make 2–3x this amount.

Consider a sub with $50M in revenue spending $20M on labor — gross profit of $7M, $2M net after overhead (4%). A 10% improvement in labor productivity saves $2M, doubling net profit to $4M (8%). A 10% slip does the exact opposite — wiping out net profit entirely.

That means saving just 6 minutes per hour, per crew, company wide can double your bottom line.

FMI’s research shows the average crew’s time breaks down as:

40% Primary Time — Installing units correctly, doing it right the first time.
28% Secondary Time — Planning, strategizing, and coordinating next moves.
32% Recoverable Lost Time — Waiting for tools, materials, or general downtime.

Recoverable Lost Time usually amounts to 2½ hours each day — plenty of room for improvement.

The 5 Key Drivers of Productivity and Project Performance

1. Pre-Job Planning

“It’s where all the money is made,” Matelan says. Most jobs experience profit erosion within the first 20% of the project, so it’s vital to prime the field for success upfront.

Objective: Get the project out of estimating and into the hands of the people doing the job. A robust handoff meeting communicates all the deals cut and agreements made in the leadup.
Who’s Involved: Foreman, Project Manager, Estimating Team, and the Field.
What to Do: Have the foreman and PM work together to create a budget — not just assume the estimate serves as a built-in budget. Break it down into cost codes based on how the job will actually get built.
Pro Tip: This shouldn’t be a box-checking meeting. Center the conversation on how to blow the estimate out of the water — from budget to change order philosophy.

2. Short Interval Planning

A short interval plan is a plan of attack for the next three weeks of work, updated every week, and submitted to the PM and superintendent. This forces the project team to think ahead proactively.

The foreman’s plan should include: expected production (schedule milestones, tasks in order, durations, resources needed), location, expected challenges, current issues, and Plan B work. Always have backup work ready in case the primary plan changes — don’t let disruptions become recoverable lost time.

3. Daily Huddles

Matelan identifies three foreman archetypes in daily huddles:

The 500-pound Gorilla — Passive, drags feet, doesn’t address issues head-on.
The Drill Sergeant — Fires off orders, creates doers not thinkers. Straightforward to a fault.
Hall-of-Famer — Lays out the plan AND gets the crew’s ideas. Creates buy-in, creates thinkers.

Start each huddle with: How did we do relative to yesterday’s goals? What are today’s goals? Do we have what we need for tomorrow? What do we need to think about for safety today?

4. Exit Strategy

The last 10% of a job can make or break your margin. AIA found that change orders increase 4–5x at the end of projects. The “Kick Finish” approach:

Call a timeout as you near the end of the project.
Get the foreman, super, and PM out with the owner and inspectors to identify everything remaining.

The goal is to punch out just once, not three times. Get off the job and onto the next one.

5. Post-Job Review

Matelan calls this the most skipped step. He likens it to football players watching game film. Conduct reviews for all projects — even bad ones you want to forget and good ones where mistakes were limited.

Capture important cost information — did you hit your budget? Why or why not?
Share best practices gathered in future trainings.
Focus on the controllable and influenceable.
Give the estimating team feedback so they can refine their rates for the next project.

What Is Your Role as a Construction CEO?

Higher productivity and increased profits start with you. The processes above will only be as effective as your ability to shepherd and sell them to your team.

This requires a significant investment of time and money.
Buy-in from the field is critical — they have to understand why this isn’t just a paper-pushing waste of time.
Provide consistent, frequent updates as you implement. If they’re being asked to change, they may resist — but consistency shows you’re serious.
Embrace new technology and software to amplify this process.

Remember that you work for the field. It’s where the money is made or lost. Your job as a leader is to put the field in the best position to have a successful project.