Construction Business Management: A Guide to Contracting for Business Success
What you can learn from this book
Most general contracting firms start small—formed by smart and ambitious
construction project managers, executives, tradesmen, and occasionally even
students right out of construction training, but as accomplished as they may be
at what they’ve been doing they are not likely prepared to take on the range of
responsibilities forced on them in managing the business of construction in its
entirety. I believe this is the primary reason for the high four-year failure rate that
start-up contractors in the United States face. According to research published
by the Office of Employment and Unemployment Statistics, US Bureau of
Labor, by Amy E. Knaup, only about 43 percent of US construction firms that
started up in the second quarter of 1998 were still in business four years later.
A contractor or someone planning to become one can better these odds by
identifying and managing the elements of risk. This book offers that opportunity.
It is based on the things I’ve learned, used, and refined as a commercial general
contractor in the course of starting and operating my own construction firm1
for twenty-five years. It spreads these tools and the reasoning behind them
out on the table, makes suggestions for their use, and offers a proven business
philosophy—knowledge a contractor can set in place from day one to put his
construction business on a level playing field with the best-run companies. The
information presented here is born of missteps as well as best steps, and both
are instructive in building a business that is profitable, enjoyable, and enduring.
My guiding theme in planning and writing this book has primarily been to make
available in one place as much as possible of what I learned the hard way (due to
not knowing enough in the beginning about running a business despite having
an engineering degree and several years’ experience on the project-owner side
of construction) so that interested readers may minimize the pain and risk that
rush to fill the knowledge void. Of course, not all risk can be eliminated in
construction or in any field, but that risk certainly can be managed if its elements
are identified and understood.
Secondly, this book also makes the case for niche contracting, especially chain
stores and other light-commercial construction. Niche contracting, or special-
ization, is a strategy that allows a contractor to become more knowledgeable in
a field, be seen as an insider, perhaps sought after, more profitable, and better
satisfied with his place in construction. These chain store characteristics practi
cally beg the innovative general contractor to focus on chain store construction.
It is my experience that the bid lists are shorter, profit margins higher, nego-
tiated work more common, and owner–contractor working relationships a lot
better than are usually found in the open-bid private or public work in which
bid error is often the factor that determines the bid-winning contractor (note
that I did not say determines the “successful” contractor).
The business management principles and techniques presented throughout this
book apply to light-commercial building contractors, subcontractors, and to
owners of any small business, regardless of industry.
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