Jim Murphy

Building a fine custom home is a complex and exacting task; building a business to repeat that performance on a routine basis is a whole different animal. And, as Jim Murphy can attest, the latter task has no completion date. Every stage of growth presents new challenges, some steep enough to sink an otherwise successful business—or lift it to a quantum level above its previous status. Murphy led his company through just such a transition.

In business since 1987, Murphy built his reputation on doing the best quality work in Northern California’s exclusive Sonoma Valley, using essentially the same seat-of-the-pants management he used when he was building one house at a time. “To a certain point,” he explains, “you can keep track in your head, and you can keep score pretty well.” But a few years ago, Murphy found the limits to that approach. “After you get over $8 million or $10 million, it’s pretty hard to keep all that in your head,” he says. The wakeup call came the year his volume grew to $12 million, “and we didn’t make any money at all.”

Retaining construction industry consultants FMI, Murphy restructured his company’s management program to grow profitably by following written procedures. New software has sharpened the company’s scheduling capabilities. Weekly labor reports and monthly job costing reports give an accurate fix on the company’s projects. Standardized procedures have improved the budgeting process, staff training (now at 40 hours per year for every employee), and project management. Project meetings occur on a regular schedule and follow a standardized agenda. Perhaps most important to Murphy is the three-week schedule report—covering the week just past and the two weeks to come—that the company generates for each project. “Every Monday morning I expect that three-week schedule on my desk,” says Murphy, who credits it with keeping him abreast of project progress, allowing him to catch errors and improving communication with clients and architects.

Murphy also revamped the company’s approach to jobsite safety, adding weekly “tailgate meetings” on safety issues, 10 hours per year of OSHA certification training for every employee, bonuses for injury-free project teams, and impromptu safety inspections by an outside specialist. “Knock wood,” Murphy says, “we’re about to complete our first year with no accidents. No nothing.” That’s good for both employees and the company, which enjoys lower workers’ comp rates. Since completing its transition, JMA has more than doubled annual volume, setting a high mark of $30 million. As a result of the management makeover, Murphy reports, “It was easier to do than $8 million.”