Arguments Against Flexible Overhead

I have already heard complaints that this is impractical and too expensive, that temporary personnel are less qualified and it is cheaper to own equipment than to rent, and so on.

To this criticism, I say that the market we deal in is cyclical. Continuous growth in sales as a business model is impractical, high-risk and dangerous. A concentration on growth in profits rather than sales makes more sense.

When maintaining size is the chief motivator, overhead tends to grow. When growth in profits is the primary focus, selection in projects shifts from a desperate need for sales to what the organization does best. Team members still have job security because flexible overhead will preserve the company and its staff.

A company that concentrates on profitability, not size, has a totally different understanding of the market and its place in it. It still enters new markets, but with careful attention to how much it attempts, what the risks are and whether it can afford the learning curve. A new definition of the successful contractor of the future has evolved. 

Thomas C. Schleifer, Ph.D., is a management consultant, research professor at the Del E. Webb School of Construction at Arizona State University and author of the new book, "Managing the Profitable Construction Business." He can be reached at tschleifer@q.com or 480-945-7680.