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Four Successful Construction Business Models

• February 3, 2022

Successful construction companies follow successful construction business models. A business model influences a company’s target customers, hiring practices, funding needs, and marketing efforts. Before we describe four successful construction business models, we’re going to answer the question: what is a business model? We’ll also dive into the best construction bidding websites to ensure that you’re connected to the best subcontractors, for the best price. 

What is a business model?

A business model answers the question: What business are you in? It provides the goal and structure for your business. It’s one of the first decisions you need to make when starting a business, as it informs the market, audience, and message of your marketing efforts. It also determines how you conduct your business, where it’s located, your staffing needs, and the amount of financing you’ll need.

Your business model should align with your skills, your employees’ skills, the existing competition, and the available market. Before deciding on a model, you’ll need to assess your knowledge, training, and experience, and find out where your skills best fit into the local market. To learn more, also be sure to visit our post answering the question, “What Is Lean Construction?”  

One company can have multiple business plans that they are pursuing at the same time. Generally, larger companies have the resources, both financial and workforce, to provide multiple business models and work towards business model innovation. A small construction company should start out focusing on just one until they have developed a market share and have seen success. From there, they can expand their products or services into other areas.

Succesful construction business models

Building a thriving construction business hinges on adopting successful construction business models that effectively navigate the complexities of the industry. A robust construction business model is the cornerstone of sustainable growth and profitability. Companies operating in the construction sector must carefully craft a construction business model that aligns with their goals and market demands. Whether it’s streamlining project management, optimizing the supply chain, or embracing innovative technologies, a well-defined business model for a construction company is essential. By continually evaluating and refining the construction company business model, organizations can stay adaptable to industry shifts and ensure long-term success in the dynamic and competitive construction landscape.

1. General construction services

General construction companies provide non specialized services to their customers. They may focus on just one customer type or offer generalized services to appeal to a broader market. General contractors are an example of companies that provide general construction industry services. They may focus on appealing to specific sectors of the market, like only residential construction, or may focus on a specific area within the construction sector, like renovation.

General services contractors either hire skilled construction workers, like a project manager, or other contractors to provide services to their customers. Through the use of subcontractors, they are able to provide a wide variety of construction services to their customers.

2. Niche construction services

Niche contractors provide specific construction services that require licensing or special knowledge or training. They often hire workers to provide the necessary specialized skills to perform the work. These companies are hired by general service contractors to perform trade work and specialized work.

Niche contractors are in high demand, but there can be a lot of competition. It’s important to research the demand and state of the market in your local area before starting this type of company.

3. Production and manufacturing

Production and manufacturing companies produce or fabricate materials used in construction projects. They can provide a wide range of standardized and custom products and materials. These types of companies are always in high demand.

Before starting one of these companies, research the products and materials that are in need in the local market. You may find a niche that you can fill with your knowledge and skills. These companies often need a lot of funding to get started.

4. Suppliers

Suppliers don’t produce or manufacture construction material but are responsible for selling and distributing products manufactured by others. These businesses can be brick and mortar establishments that serve the local market, or an e-commerce site that serves a larger market. Their customers include general contractors and trade contractors that use their materials. They require less money to get started.

How business models influence marketing

Depending on which construction business management model you select, it can have an effect on how you market your business. It affects your target audience, how you deliver your marketing message, and what message you send.

General services contractors market to the general public. The marketing campaign may target only business customers for commercial contracting or homeowners for residential contractors. General contractors may also choose to provide services targeted to specific niches, like healthcare, restaurants, or infrastructure. These companies should target their marketing to these audiences where they get their information. Their marketing message should focus on their knowledge and experience.

Niche contractors, or subcontractors, have a more specific audience – general contractors who can use their services. Their marketing message should be tailored to these companies and describe their experience and expertise. Trade contractors can find GCs looking for their services on lead sites, like PlanHub . It’s an easy way to find work and market effectively to GCs who need them.

Manufacturers and suppliers can market directly to the contractors who need their services or products. They can also target designers who specify their products in project documents. The marketing message should focus on the features and benefits of their products.

Selecting a business model is one of the first steps to starting a new business. It determines who the business’s customers are, which in turn affects the workers they hire and directs their marketing efforts. Contractors looking for work need to be clear about their marketing audience and where they can find them. Free general contractor software like PlanHub connects general contractors and subcontractors. To see how PlanHub can help your company find more work, schedule a demo today .

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Business model canvas for a construction company (examples).

Get a watermark-free, fully customizable business model canvas in our business plan for a construction company

In the dynamic and competitive world of construction, having a clear and effective strategy is crucial for success.

Welcome to your detailed walkthrough of the Business Model Canvas, customized for construction companies.

This piece will deconstruct the framework into manageable sections, enabling you to pinpoint your unique value proposition, target customer segments, essential activities, and other critical components of your business model.

And, if you're looking for a ready-to-use Business Model Canvas that's fully customizable, be sure to explore our construction company business plan template .

What is a Business Model Canvas? Should you make one for your construction company?

A business model canvas is essentially a strategic management tool used for developing new business models or documenting existing ones.

Think of it as a visual chart with elements describing a company's value proposition, infrastructure, customers, and finances.

In the context of a construction company, it serves as a framework that outlines how your company plans to generate revenue, deliver value to clients, and ensure operational efficiency.

So, why do people make it? Creating a business model canvas allows construction business owners to gain a clear, concise overview of the key components of their business. It assists in pinpointing how you plan to create and deliver value to your clients, what differentiates you from the competition, and how you intend to maintain financial health.

For a construction company, this might include detailing your specialized construction services, your approach to project management, your marketing tactics, and your cost structure, among other elements.

The benefits are substantial.

Firstly, it promotes strategic thinking and helps you concentrate on what's most important. It can reveal potential issues or opportunities you might not have seen, allowing you to tweak your strategy before you're too far along in the implementation phase.

For example, you may discover that your plan to focus on large commercial projects isn't as viable in a region that's experiencing a boom in residential construction. This insight could save you significant time and money.

Should you make one if you start a new construction company project? Definitely.

It’s an essential step in the planning process that can steer your decisions and strategies. It enables you to clearly and succinctly communicate your vision to potential investors or partners. A well-prepared business model canvas, similar to the one you will find in our business plan template tailored for a construction company , can make the difference between a venture that seems risky and one that is strategically savvy.

Is it useful for you? Without a doubt, it is, especially if you're aiming to establish a clear plan for your construction business. It encourages you to methodically think through your business model and challenges you to evaluate the practicality of your construction company's concept.

Moreover, it's a dynamic document that you can modify as your company evolves or as the industry landscape shifts.

How to create a Business Model Canvas for your construction company?

Creating a Business Model Canvas for your construction company should be straightforward.

You can simply adapt the one we have already crafted and filled in our business plan template tailored for a construction company .

Need more guidance? Let's dissect it into digestible sections, focusing on each part of the canvas, and we'll steer you through the process of completing it with practical suggestions and insights, using a clear and concise method.

Value Proposition

Let's start with the Value Proposition.

This is the core of your construction company. What sets your business apart? Is it your innovative building solutions, your commitment to sustainability, or perhaps your competitive pricing?

Consider what will compel clients to select your services over the competition.

It might be your state-of-the-art construction techniques, a strong focus on energy-efficient buildings, or a reputation for completing projects on time and within budget.

Customer Segments

Moving on to Customer Segments.

Who are your clients? Are you catering to residential homeowners in need of renovations, commercial clients looking for office build-outs, or government contracts for infrastructure projects?

Identifying your target market will influence many of your strategic choices, from service offerings to marketing campaigns.

Now, let's delve into Channels.

How will you connect with your clients? This may include a combination of direct and indirect approaches.

Consider leveraging industry networking events, maintaining a strong online presence with a professional website, and utilizing trade publications to reach potential clients.

Remember the importance of building relationships in the construction industry and think about how you can foster referrals and repeat business.

Customer Relationships

Customer Relationships are about how you engage with your clients and ensure their satisfaction.

Outstanding project management, clear communication, and post-construction follow-up are vital.

Think about how you can use customer feedback to improve your services and how technology might help streamline client interactions.

Revenue Streams

In the Revenue Streams section, you'll ponder how your construction company will generate income.

Beyond the primary construction services, consider additional streams such as offering maintenance contracts, selling extended warranties, or providing design and consulting services.

Be inventive and think about what aligns with your expertise and client needs.

Key Activities

On the flip side of the canvas, we have Key Activities.

These are the critical tasks required to run your construction company. This includes project planning, site management, procurement, and ensuring compliance with safety regulations.

Focus on the activities that are essential to delivering your value proposition and how you can carry them out effectively.

Key Resources

Key Resources are the assets vital to your business operations.

This encompasses your construction equipment, skilled labor, project management software, and your network of suppliers. Reflect on what you need to execute projects successfully and how you can access these resources.

Key Partnerships

Key Partnerships might involve subcontractors, suppliers, architectural firms, or strategic alliances that can help you scale operations or enter new markets.

For example, collaborating with a local architect can help you offer a full-service package to clients.

Cost Structure

Finally, Cost Structure.

Operating a construction company comes with a variety of expenses, from equipment purchases and leasing to labor costs and insurance. Understanding these will aid in managing your finances effectively.

It's crucial to distinguish between fixed costs, such as office rent, and variable costs, like material expenses, to properly plan your financial strategy.

What should be included in each section of the Business Model Canvas for a construction company?

Unsure about how to complete the Business Model Canvas for your construction company? You might want to take a look at the template we've included in our business plan template .

Let's break down what you could include in each section of the Business Model Canvas for a construction company.

Examples of Business Model Canvas for a construction company

Below are examples of business model canvases for three different types of construction companies: Residential Construction Company, Commercial Construction Company, and Sustainable Construction Company.

Residential Construction Company Business Model Canvas

Commercial construction company business model canvas, sustainable construction company business model canvas.

You can also read our articles about: - how to build a marketing strategy for your construction company - how to segment the customers of your construction company - how to make a competition study for your construction company - how to start a construction company (guide)

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Construction Business Models

Table of Contents

I. Introduction

A brief overview of the construction industry and its importance.

The construction industry is a vital sector of the global economy, responsible for the design, construction, and maintenance of the built environment. This includes everything from homes and offices to bridges, roads, and infrastructure. The industry plays a crucial role in the development and growth of society, providing the infrastructure and buildings that support our daily lives.

The construction industry is one of the largest employers in the world, providing jobs for millions of people. It is also a major contributor to economic growth, as construction projects generate significant investments and provide a boost to the local economy. Construction projects also stimulate other industries, such as manufacturing, transportation, and services.

In addition to its economic importance, the construction industry is also essential for improving the quality of life. Construction projects, such as hospitals, schools, and affordable housing, are essential for meeting the basic needs of society. Furthermore, well-designed and constructed buildings and infrastructure can improve the health, safety, and overall well-being of people.

However, the construction industry is also one of the most resource-intensive industries, with a significant impact on the environment and society. Therefore, it is increasingly important for the construction industry to adopt sustainable business models that minimize negative impacts and maximize positive contributions. This includes reducing the environmental footprint of the industry, improving energy efficiency, and promoting the use of sustainable materials and technologies.

Image: Business Model Canvas for construction business on EpiProdux.com

The need for a robust and sustainable business model innovation

As the construction industry continues to evolve, the need for robust and sustainable business model innovation becomes increasingly important. A robust business model is one that is well-suited to the needs of the project, the owner, and the industry and can withstand changing market conditions. A sustainable business model is one that minimizes negative impacts on the environment and society while maximizing positive contributions.

Business model innovation in the construction industry can take many forms, including new ways of financing, designing, building, and operating construction projects. For example, new technologies such as Building Information Modeling (BIM), cloud-based project management tools, and data analytics are changing the way construction projects are managed and are leading to a new generation of technology-driven business models. These technologies can lead to improved efficiency, reduced costs, and faster completion times.

Another example of business model innovation is the adoption of sustainable business models such as Integrated Project Delivery (IPD) and Green Building. These models focus on reducing the environmental footprint of the industry while also improving social and economic outcomes.

A robust and sustainable business model is essential for the long-term success of the construction industry. It allows the industry to respond to changing market conditions, to meet the needs of the project, the owner, and the industry, and to minimize negative impacts on the environment and society.

You can read more here about the construction business models in this library, with 200 different business models for construction companies’ products.

Image: Construction Business Model Library with 200 + examples generated on EpiProdux.com

II. Traditional design-bid-build model

Explanation of how the model works.

The traditional design-bid-build model is the most widely used business model in the construction industry. Under this model, the owner of a construction project hires an architect or engineer to design the project and then solicits bids from construction companies to build it. The company that submits the lowest bid is awarded the contract. This model is straightforward and easy to understand, but it can also be time-consuming and expensive.

Image: Design-bid-build business model vs Design-Build Business Model in Construction

The design-bid-build process typically begins with the owner hiring an architect or engineer to design the project. The design team creates detailed plans and specifications, which are then used to solicit bids from construction companies. The construction companies review the plans and specifications and submit a bid, which includes a detailed estimate of the cost of the project and a proposed schedule for completion. The owner then selects the company with the lowest bid to build the project.

Pros and cons of the model

One of the main advantages of the traditional design-bid-build model is that it is easy to understand and implement. The process is straightforward and the roles and responsibilities of each party are clearly defined. This can make it easier for the owner to manage the project and for the construction company to estimate costs and schedule the work.

However, the traditional design-bid-build model also has some significant drawbacks. One of the main disadvantages is that it can be time-consuming and expensive. The process of designing and soliciting bids can take several months, and the cost of hiring an architect or engineer can be significant. In addition, the pressure to keep costs low can lead to corners being cut or inferior materials being used.

Another drawback is that the design-bid-build model can be less transparent and less competitive. Since the owner is not involved in the design and construction process, they may not have a clear understanding of the project’s progress or the quality of the work being done. Additionally, the process of soliciting bids from multiple companies can be less competitive than a single company doing the design and construction.

III. Design-build model

The design-build model is a popular alternative to the traditional design-bid-build model in the construction industry. Under this model, the owner hires a single company to design and build the project, which simplifies the process and reduces costs. This model is particularly well-suited to smaller projects and can be more efficient, but it can also be less transparent and less competitive.

The design-build process begins with the owner hiring a single company to design and build the project. The company is responsible for both the design and construction phases of the project, which eliminates the need for the owner to hire separate design and construction teams. This can save time and money, as the design and construction teams are able to work together more efficiently.

One of the main advantages of the design-build model is that it is more efficient than the traditional design-bid-build model. The design and construction teams work together from the start of the project, which can reduce the time it takes to complete the project and minimize delays caused by miscommunication or misunderstandings. Additionally, the owner only has to deal with one company, which can simplify the process and reduce costs.

However, the design-build model also has some disadvantages. One of the main drawbacks is that it can be less transparent and less competitive. Since the owner is only dealing with one company, they may not have a clear understanding of the project’s progress or the quality of the work being done. Additionally, the process of awarding the contract to a single company can be less competitive than soliciting bids from multiple companies.

Another disadvantage of the design-build model is that it can be risky for the owner. Since the owner is relying on a single company to design and build the project, if that company is unable to complete the project, the owner may be left with a partially completed project and no other options. Additionally, if the company goes bankrupt or otherwise fails to complete the project, the owner may be left with a significant financial loss.

IV. Construction management model

The construction management model is a widely used business model in the construction industry. Under this model, the owner hires a construction manager to oversee the project, who then hires subcontractors to perform the work. This model can be more flexible than the traditional design-bid-build model and allows for more input from the owner, but it also carries more risk for the owner as they are responsible for managing the subcontractors.

Image: Dassault Systems approach to Construction Management

The construction management process begins with the owner hiring a construction manager to oversee the project. The construction manager is responsible for managing the project from start to finish, including the hiring of subcontractors to perform the work. The owner is responsible for providing the construction manager with the necessary funding and resources to complete the project.

One of the main advantages of the construction management model is that it is more flexible than the traditional design-bid-build model. The construction manager can work with the owner to create a customized plan that meets the owner’s specific needs and budget. Additionally, the construction manager can be more involved in the design and construction process, which can lead to better quality and more cost-effective projects.

However, the construction management model also has some drawbacks. One of the main disadvantages is that it carries more risk for the owner. Since the owner is responsible for managing the subcontractors, they may be held liable if the subcontractors fail to complete the work properly or on time. Additionally, since the owner is responsible for providing the necessary funding and resources, they may be left with a partially completed project if funding runs out.

Another disadvantage of the construction management model is that it can be less transparent and less competitive. Since the owner is not involved in the design and construction process, they may not have a clear understanding of the project’s progress or the quality of the work being done. Additionally, the process of hiring subcontractors can be less competitive than soliciting bids from multiple companies.

V. Public-Private Partnership (PPP) model

The Public-Private Partnership (PPP) model is becoming increasingly popular in the construction industry as a way to finance, design, build and operate large, complex infrastructure projects. In this model, the public sector partners with the private sector to share the risks and rewards of a project. This model can provide significant benefits such as reduced costs, improved efficiency and better alignment of incentives between the public and private sectors.

The PPP process typically begins with the public sector identifying a need for a new infrastructure project, such as a new highway, hospital or school. They then invite private sector companies to submit proposals for designing, building, financing, and operating the project. The private sector company that is awarded the contract is responsible for designing, building, and operating the project, while the public sector provides the funding.

One of the main advantages of the PPP model is that it can reduce costs for the public sector. The private sector is typically able to design, build, and operate the project more efficiently and at a lower cost than the public sector. This is because private sector companies are typically more efficient and have more experience in managing large construction projects.

Another advantage of the PPP model is that it can improve efficiency. Since the private sector is responsible for designing, building, and operating the project, they have a strong incentive to complete the project on time and within budget. Additionally, the private sector is typically able to bring new technologies and innovations to the project, which can lead to improved quality and cost savings.

A key advantage of the PPP model is that it aligns the incentives of the public and private sectors. The private sector is typically only paid once the project is completed and is generating revenue, which means they have a strong incentive to complete the project on time and within budget. Additionally, the private sector is typically responsible for maintaining and operating the project for a specified period, which means they have a long-term incentive to ensure the project is of high quality.

However, PPP projects can also have some drawbacks. One of the main disadvantages is that it can be complex and time-consuming to set up and manage. Additionally, since the private sector is responsible for designing, building and operating the project, the public sector may not have as much control over the project, which can lead to a lack of transparency. Additionally, the private sector may not always put the public’s interest first, and the contract may not always be in the public’s best interest.

Another potential challenge with PPP projects is the allocation of risks and responsibilities between the public and private partners. PPP projects often involve a transfer of risks from the public sector to the private sector. However, the allocation of risks and responsibilities should be carefully considered and balanced, as both parties have different capabilities, interests, and objectives.

Additionally, PPP projects require a significant amount of legal and financial expertise to set up and manage. The public sector may lack the necessary resources and expertise, which can lead to delays and increased costs. Furthermore, PPP projects often require a significant amount of upfront financing, which can be a challenge for some private sector companies.

Examples of successful PPP projects in the construction industry

There are many examples of successful Public-Private Partnership (PPP) projects in the construction industry around the world. Some notable examples include:

The Chicago Skyway Toll Bridge: This project involved the renovation and operation of a toll bridge in Chicago, Illinois, USA. The private sector partner, Skyway Concession Company, financed, designed, built, and operated the bridge for 99 years under a lease agreement with the City of Chicago. The project was completed on time and within budget, and it has become a model for other PPP projects around the world.

The Sydney Harbour Tunnel: This project involved the design, construction, and operation of a tunnel under Sydney Harbour in Australia. The private sector partner, Sydney Harbour Tunnel Company, financed, designed, built, and operated the tunnel for 99 years under a lease agreement with the government of New South Wales. The project was completed on time and within budget, and it has significantly improved transportation in Sydney.

The London Underground Public-Private Partnership (PPP): This project involved the upgrade and maintenance of the London Underground rail system in the UK. The private sector partners, Metronet and Tube Lines, financed, designed, built, and maintained the rail system for 30 years under a contract with Transport for London. The project was completed on time and within budget, and it has led to significant improvements in the reliability and safety of the London Underground.

The M6 Toll Road: This project involved the design, construction, and operation of a toll road in the UK. The private sector partner, Midland Expressway Limited, financed, designed, built, and operated the toll road for 30 years under a concession agreement with the government of the UK. The project was completed on time and within budget, and it has significantly improved transportation in the region.

The Golden Ears Bridge: This project involved the design, construction, and operation of a bridge in British Columbia, Canada. The private sector partner, Golden Crossing General Partnership, financed, designed, built, and operated the bridge for 30 years under a concession agreement with the government of British Columbia. The project was completed on time and within budget, and it has significantly improved transportation in the region.

VI. Technology-Driven models

Explanation of how technology is changing the construction business models.

The construction industry is currently undergoing a technological revolution, with new technologies such as Building Information Modeling (BIM), cloud-based project management tools and data analytics being adopted at an unprecedented rate. These technologies are changing the way construction projects are managed and are leading to a new generation of technology-driven business models.

Image: Construction managers collect construction data in real-time for a instant reporting

The adoption of new technologies such as BIM, cloud-based project management tools and data analytics

Building Information Modeling (BIM) is a digital representation of a building or infrastructure project. It allows architects, engineers and construction professionals to work together in a virtual environment, creating a detailed and accurate model of the project.

BIM enables better collaboration, coordination, and communication throughout the construction process, which can lead to improved quality, reduced costs and faster completion times.

Image: 10D Building Information Modeling (BIM) from Accenture

Cloud-based project management tools are also becoming increasingly popular in the construction industry. These tools allow construction professionals to access project information from anywhere, at any time, using any device. They enable real-time collaboration and communication, as well as providing an easy way to store and share project information. This can lead to improved efficiency, reduced costs and faster completion times.

Data analytics is also changing the way construction projects are managed. With the growing amount of data generated by construction projects, data analytics enables construction professionals to make better-informed decisions by providing insights into the performance of the project. This can lead to improved quality, reduced costs, and faster completion times.

EpiProdux is a business model software that can help construction businesses to create more innovative business models and make more profit by providing them with the tools and resources they need to optimize their operations, reduce costs, and improve efficiency

The impact of technology on the industry’s efficiency, productivity, and cost savings

Technology-driven business models in construction are more efficient and cost-effective, as they allow for better collaboration, coordination, and communication. They also enable construction professionals to make better-informed decisions and to improve the overall performance of the project.

However, there are also some challenges associated with technology-driven business models in construction. One of the main challenges is the lack of expertise and skills needed to implement these technologies. Construction professionals need to be trained to use these technologies, which can be time-consuming and expensive. Additionally, the cost of these technologies can be high, which may be a barrier for some companies.

In conclusion, the construction industry is currently undergoing a technological revolution, with new technologies such as Building Information Modeling (BIM), cloud-based project management tools, and data analytics being adopted at an unprecedented rate. These technologies are changing the way construction projects are managed and are leading to a new generation of technology-driven business models. They are more efficient and cost-effective, as they allow for better collaboration, coordination, and communication. However, there are also some challenges associated with technology-driven business models in construction such as lack of expertise and skills, and high costs of technology. Despite these challenges, technology-driven business models in construction are becoming increasingly important and are the future of the industry.

VII. Conclusion

The importance of choosing the right model for a specific project and the needs of the owner.

It is important to note that choosing the right business model for a construction project is crucial for the success of the project. Each business model has its own advantages and disadvantages, and the best model for a specific project will depend on the project’s size, complexity, and the needs of the owner.

For example, the traditional design-bid-build model is well-suited for small-scale projects where the design is well-defined and the owner is not looking for significant input or flexibility. However, for larger, more complex projects, the design-build or construction management model may be more appropriate. These models allow for more input and flexibility from the owner, and they can lead to more efficient and cost-effective projects.

Similarly, the Public-Private Partnership (PPP) model may be suitable for large, complex infrastructure projects, such as transportation, energy, and water supply. However, it may not be as effective for smaller or less complex projects.

The key to success in choosing the right business model for a construction project is to conduct a thorough evaluation of the project’s needs and the owner’s requirements. This includes an analysis of the project’s size, complexity, budget, and schedule, as well as the owner’s goals and objectives.

It is also important to consider the owner’s level of expertise and experience in construction. For example, if the owner is new to the construction industry, they may want to consider a more traditional model, such as the design-bid-build model, as it is easier to understand and manage. However, if the owner has experience in construction and wants more input and flexibility, a design-build or construction management model may be more appropriate.

In conclusion, choosing the right business model for a construction project is crucial for the success of the project. Each business model has its own advantages and disadvantages, and the best model for a specific project will depend on the project’s size, complexity, and the needs of the owner. It’s important to conduct a thorough evaluation of the project’s needs and the owner’s requirements before deciding on the right business model.

The importance of the construction industry and the need for sustainable business models.

The construction industry plays a vital role in the development and growth of society by providing the infrastructure and buildings that support our daily lives. However, it is also one of the most resource-intensive industries, with a significant impact on the environment and society. Therefore, it is increasingly important for the construction industry to adopt sustainable business models that minimize negative impacts and maximize positive contributions.

Sustainable business models in the construction industry focus on reducing the environmental footprint of the industry, while also improving social and economic outcomes. They aim to minimize the use of resources, reduce waste and pollution, and promote the use of sustainable materials and technologies.

One example of a sustainable business model in the construction industry is the Integrated Project Delivery (IPD) model. This model is based on collaboration, trust, and a shared vision among all stakeholders. It aims to optimize the performance of the project by aligning incentives, reducing waste, and fostering innovation. This model is considered more sustainable as it emphasizes on shared risk and reward, and it encourages collaboration and communication among all stakeholders.

Another example of a sustainable business model is the Green Building model, which promotes the use of sustainable materials and technologies, and aims to reduce the environmental impact of buildings. Green buildings are designed to be energy-efficient, water-efficient, and to have a reduced carbon footprint. This model is considered sustainable as it helps to reduce the environmental impact of buildings and promote energy efficiency and conservation.

In conclusion, the construction industry is essential for the development and growth of society. However, it is also one of the most resource-intensive industries, with a significant impact on the environment and society. Therefore, it is increasingly important for the construction industry to adopt sustainable business models that minimize negative impacts and maximize positive contributions. Examples of sustainable business models include Integrated Project Delivery (IPD) and Green Building. These models focus on reducing the environmental footprint of the industry while also improving social and economic outcomes.

EpiProdux is a business model software designed specifically for the construction industry. It helps construction businesses to create more innovative business models and make more profit by providing them with the tools and resources they need to optimize their operations. The software allows businesses to streamline their processes, improve communication and collaboration among stakeholders, and make data-driven decisions.

Frequently Asked Questions

What are the different types of business models in the construction industry.

The traditional design-bid-build model, the design-build model, the construction management model, and the Public-Private Partnership (PPP) model are some of the main business models used in the construction industry.

What is the traditional design-bid-build model?

The traditional design-bid-build model is the most widely used business model in the construction industry. Under this model, the owner hires an architect or engineer to design the project and then solicits bids from construction companies to build it. The company that submits the lowest bid is awarded the contract.

What is the design-build model?

The design-build model is an alternative to the traditional design-bid-build model. Under this model, the owner hires a single company to design and build the project, which simplifies the process and reduces costs.

What is the construction management model?

The construction management model involves the owner hiring a construction manager to oversee the project, who then hires subcontractors to perform the work. This model can be more flexible than the traditional design-bid-build model and allows for more input from the owner, but it also carries more risk for the owner as they are responsible for managing the subcontractors.

What is the Public-Private Partnership (PPP) model?

The Public-Private Partnership (PPP) model is becoming increasingly popular in the construction industry as a way to finance, design, build, and operate large, complex infrastructure projects. In this model, the public sector partners with the private sector to design, build, and operate a project.

What are the advantages and disadvantages of each business model?

Each business model has its own advantages and disadvantages, and the best model for a specific project will depend on the project’s size, complexity, and the needs of the owner. The traditional design-bid-build model is straightforward and easy to understand, but it can also be time-consuming and expensive. The design-build model is more efficient, but it can also be less transparent and less competitive. The construction management model allows for more input and flexibility from the owner, but it also carries more risk. The Public-Private Partnership (PPP) model can be a viable option for certain types of projects, but it is important for the public sector to carefully evaluate whether it is the right fit for their specific project and needs.

Can you provide examples of successful Public-Private Partnership (PPP) projects in the construction industry?

Some notable examples include The Chicago Skyway Toll Bridge, The Sydney Harbour Tunnel, The London Underground Public-Private Partnership (PPP), The M6 Toll Road, and The Golden Ears Bridge.

What is the role of technology in construction business models?

The construction industry is currently undergoing a technological revolution, with new technologies such as Building Information Modeling (BIM), cloud-based project management tools, and data analytics being adopted at an unprecedented rate. These technologies are changing the way construction projects are managed and are leading to a new generation of technology-driven business models.

Why is it important to choose the right business model for a construction project?

Choosing the right business model for a construction project is crucial for the success of the project. Each business model has its own advantages and disadvantages, and the best model for a specific project will depend on the project’s size, complexity, and the needs of the owner. A thorough evaluation of the project’s needs and the owner’s requirements is necessary in order to select the most appropriate model. Failure to choose the right business model can lead to project delays, cost overruns and failure to meet the needs of the project and the owner.

How can business model innovation contribute to the sustainability of the construction industry?

Business model innovation can take many forms, including new ways of financing, designing, building, and operating construction projects. Adopting sustainable business models such as Integrated Project Delivery (IPD) and Green Building can minimize negative impacts on the environment and society while maximizing positive contributions. This includes reducing the environmental footprint of the industry, improving energy efficiency, and promoting the use of sustainable materials and technologies.

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Construction Business Plan Template

Written by Dave Lavinsky

Construction Business Plan

You’ve come to the right place to create your construction business plan.

We have helped over 100,000 entrepreneurs and business owners create business plans and many have used them to start or grow their construction companies.

Sample Construction Business Plan Outline

Below is a construction business plan example to help you create each section of your own construction business plan:

Executive Summary

Business overview.

VB Residential Construction Company is a startup construction company located in Milwaukee, Wisconsin. The company is founded by two cousins, Victor Martinez and Ben Schmidt. Together they have over 20 years of experience in constructing homes from design concept, remodeling and renovating homes. They are highly skilled in all aspects of construction and have garnered a positive reputation in the local construction community for their ethical practices and competitive skill set. Now that Victor and Ben have an extensive network of clients and contacts, they have decided to begin their own residential construction company.

Product Offering

The following are the services that VB Residential Construction Company will provide:

• Custom home building/design build
• Home remodeling and renovation
• Project Management
• Kitchen and bath construction

Customer Focus

VB Residential Construction Company will target those individuals and industry professionals requiring home construction services in Milwaukee, Wisconsin. Those individuals are landowners looking to develop homes on their lots, architects who have clients needing homes built, developers who have the vision but need a company to make it a reality, and households needing home remodeling services.

Management Team

VB Residential Construction Company will be led by Victor Martinez and Ben Schmidt. Together they have over twenty years of construction experience, primarily in residential builds, remodeling, and renovation. They both started at a young age working and learning from their fathers. When they graduated from high school, their fathers got them jobs at the construction company they were employed at. The four family members worked together for ten years at the construction company. The fathers recently decided they were going to retire from the industry which prompted Victor and Ben to branch out on their own and start their own residential construction company.

Success Factors

VB Residential Construction Company will be able to achieve success by offering the following competitive advantages:

• Friendly and knowledgeable contractors who are able to take any project from concept to reality.
• Unbeatable pricing – Clients will receive the best pricing in town for services on any project while maintaining the best quality and customer satisfaction.

Financial Highlights

VB Residential Construction Company is seeking $200,000 in debt financing to launch its construction business. The funding will be dedicated towards securing a small office space, purchasing two trucks, and purchasing all the construction equipment and supplies. Funding will also be dedicated towards the advertising agency and three months of overhead costs to include payroll of the staff, rent, working capital, and monthly fees to the accounting and human resources firm. The breakout of the funding is below:

• Trucks: $40,000
• Construction equipment, supplies, and materials: $100,000
• Advertising agency in charge of promotions: $10,000
• Three months of overhead expenses (rent, payroll, HR and accounting firms): $40,000
• Working capital: $10,000

Company Overview

Who is vb residential construction company.

VB Residential Construction Company is a newly established contracting company located in Milwaukee, Wisconsin. Founded by cousins, Victor Martinez and Ben Schmidt, they have over 20 years experience in the construction industry. VB specializes in residential remodeling, kitchen and bath construction, as well as custom home building. VB Residential Construction Company also offers residential design, construction, and project management services. VB prides itself in delivering a level of expert craftsmanship to fulfill the vision for the client while exceeding expectations at exceptional value.

Company History

VB comes from the initials of the owners, Victor Martinez and Ben Schmidt, two cousins who have been working in the construction industry most of their lives. Both of their fathers spent decades as contractors and raised their sons working and learning the construction trade. The four have been working for another residential contractor in Milwaukee and have built and remodeled numerous homes for multiple builders and clients. Now that both of their fathers are retiring from the construction industry, Victor and Ben have decided to start their own residential construction company and use their years of experience, expertise, and contacts to be an independent residential contractor.

Since incorporation, VB Residential Construction Company has achieved the following milestones:

• Registered VB Residential Construction Company, LLC to transact business in the state of Wisconsin.
• Located a small office space to have a physical address for the company as well as a receptionist.
• Reached out to their numerous contacts to include real estate agents, developers, architects, and landowners to advise them on their upcoming construction company in order to start getting construction contracts.
• Began pricing out costs for trucks and necessary construction equipment.
• Began recruiting a team of contractors that cover different areas of construction to include mechanical, plumbing, electricians, and roofing.

The following will be the services VB Residential Construction Company will provide:

Industry Analysis

Revenue for the Construction industry is expected to continue growing over the five years as demand for new housing expands. Revenues are expected to reach $107 billion.

Relatively low interest rates, coupled with rising per capita disposable income, is expected to support individual investment in new homes, providing an opportunity for industry revenue growth over the next five years.

Per capita disposable income is expected to rise steadily over the next five years, while concurrently, unemployment will drop, proving favorable conditions for industry growth.

Housing starts are expected to rise an annualized 2.9% and this growth is projected to stem partly from forward-looking consumers that choose to purchase homes while interest rates are low. Relatively low housing stock and relatively low interest rates are expected to lead demand for industry services to increase over the next five years.

Customer Analysis

Demographic profile of target market.

The precise demographics for Milwaukee, Wisconsin are:

Customer Segmentation

VB Residential Construction Company will primarily target the following customer profiles:

• Households in search of home remodeling services
• Landowners who would like to build homes on their lots
• Architects who have clients that need home building or remodeling services
• Developers who have already partnered with landowners and/or architects and are in search of a residential contractor

Competitive Analysis

Direct and indirect competitors.

VB Residential Construction Company will face competition from other companies with similar business profiles. A description of each competitor company is below.

JM Remodeling

JM Remodeling has been in business in Milwaukee, Wisconsin since 1990. They are a full-service design and build company. JM Remodeling specializes in residential and commercial restoration and renovation including custom carpentry, kitchens, bathrooms, roofing, siding, dormers, additions, home gyms, home offices, porches and decks, and mechanical services. JM Remodeling carries a staff of plumbers, electricians, journeymen carpenters, restoration specialists, roofers, siders, sheet metal workers, and expert estimators. JM Remodeling also has an apprenticeship program to train employees within the company. They are licensed, bonded and insured and also part of the National Association of Remodeling Industry (NARI). JM Remodeling also provides warranties on all their services. The work is guaranteed by labor warranties, factory warranties, and extended warranties.

Cream City Construction

Cream City Construction has more than 50 years experience in home design, remodeling and renovation in the Greater Milwaukee area and Southeastern Wisconsin. The home remodeling services they provide are additions, whole house remodeling, kitchens, bathrooms, lower levels, master suites and historic renovations. Cream City Construction is a design build company that works with the client to create the design plans, generate project costs, and build the project.

Cream City Construction is owned and managed by Todd Badovski and Jim Grote. Together they have decades of experience and have spent years refining the skills required to run a high end, quality driven remodeling company. The majority of their projects come from repeat business or referrals from clients delighted with their previous service. Cream City Construction is also a member of the National Association of Remodeling Industry (NARI) as well as the Historic Milwaukee Incorporated.

Sazama Design Build Remodel, LLC

Former restaurant owner Don Sazama established Sazama Design Build Remodel, LLC in 1987 after becoming a Master Carpenter. He wanted to merge his passions of business and design and expand his skills in carpentry and architecture. Don’s firm has completed over 700 homes and won 11 awards from the Milwaukee Home and Living magazine. Sazama Design Build Remodel builds homes that are modern and luxurious and have completed many large remodels of bathroom and kitchen renovations. Sazama likes to collaborate with firms such as Ivy Interiors and an award-winning landscape designer, Gingko Leaf Studio. Sazama Design Build Remodel can build and design all aspects of a home – from a home office, outdoor entertaining area, serene spas, and inviting kitchens. The team at Sazama is able to do a historic renovation, build or renovate into something modern and posh, or keep it traditional.

Competitive Advantage

VB Residential Construction Company will be able to offer the following advantages over their competition:

Marketing Plan

Brand & value proposition.

VB Residential Construction Company will offer the unique value proposition to its clientele:

• Highly trusted and professional contractors with over 20 years of experience remodeling, renovating, and building homes.
• Unbeatable pricing to its clients – VB Residential Construction Company does not mark up its services at a large percentage. They will offer the lowest prices in town.

Promotions Strategy

The promotions strategy for VB Residential Construction Company is as follows:

Word of Mouth/Referrals

Victor and Ben have built up an extensive list of contacts over the years providing home construction services for numerous highly satisfied clients. Most of the clients are repeat customers and have also referred them to other associates for home projects. These referrals and repeat customers are very likely to use VB Residential Construction Company instead of the previous construction company Victor and Ben were employed at.

Professional Associations and Networking

VB Residential Construction Company will become a member of construction and professional associations such as the National Association of Remodeling Industry (NARI) and the Milwaukee Chamber of Commerce. VB will also become a member in associations where other builders, developers, and architects are a part of. They will focus their networking efforts on expanding their client network.

Print Advertising/Billboard

VB Residential Construction Company will invest in professionally designed print ads to display in programs or flyers at industry networking events. They will also invest in two billboards to display in highly trafficked areas of town.

Website/SEO Marketing

VB Residential Construction Company will utilize the same advertising company that designed their print ads and billboards to also design their website. The website will be well organized, informative, and list all their services that VB is able to provide. The website will also list their contact information and a gallery of pictures that show their previous projects. The advertising company will also manage VB’s website presence with SEO marketing tactics so that anytime someone types in the Google or Bing search engine “Milwaukee residential contractor”, “contractor near me”, or “residential contractor near me”, VB Residential Construction Company will be listed at the top of the search results.

The pricing of VB Residential Construction Company will be moderate and on par with competitors so customers feel they receive value when purchasing their services.

Operations Plan

The following will be the operations plan for VB Residential Construction Company.

Operation Functions:

• Victor Martinez and Ben Schmidt will be the owners and managers of the company. They will oversee all staff, contractors, and subcontractors. They will also act as project managers for every job they receive and handle all pricing and bids to the client.
• Victor and Ben will employ a team of contractors under them that will have an array of skill sets. The contractors will be trained and experienced either in plumbing, mechanical, electrical, roofing, or siding. Not all contractors need to be certified in all trades, but they need to be certified in at least one of the trades.
• Office manager/assistant to be located at the small office. This person will handle all incoming calls, assist with visiting clients, bookkeeping and maintain files.
• Victor and Ben will utilize a third-party human resources company to handle all hiring, onboarding, payroll, and benefits for the staff. The HR company will also handle all employee issues.
• Victor and Ben will also pay a third-party accounting firm to manage all the high level accounting and tax payments.

Milestones:

VB Residential Construction Company will have the following milestones complete in the next six months.

3/1/202X – Finalize contract to lease small office space

3/15/202X – Execute advertising agency contract 4/1/202X – Begin networking and placing bids for construction jobs

5/1/202X – Begin recruiting and hiring team of contractors

5/15/202X – Purchase all necessary construction equipment, supplies, and trucks

6/1/202X – Start on first official job as VB Residential Construction Company

Victor and Ben are highly skilled at project management and residential construction. They are also both certified in plumbing, electrical, and mechanical. In the next few years, they will be certified as Master Carpenters.

Financial Plan

Key revenue & costs.

The revenue drivers for VB Residential Construction Company are the upcharge they will charge to the clients for their services. VB will purchase or subcontract a service at cost and will charge a 15% markup in order to obtain the markup fee. 15% is below the normal 25%-30% that other competing residential contractors charge.

The cost drivers will be the overhead costs required in order to maintain a construction company. The expenses will be the costs to purchase and maintain construction equipment and trucks, payroll and overhead costs for the staff, and rent and utilities. Other expenses will be the cost for the advertising agency, accounting firm, human resources firm, and membership association fees.

Funding Requirements and Use of Funds

VB Residential Construction Company is seeking $200,000 in debt financing to launch its construction business. The funding will be dedicated towards securing a small office space, purchasing two trucks, and purchasing all the construction equipment and supplies. Funding will also be dedicated towards the advertising agency and three months of overhead costs to include payroll of the staff, rent, and monthly fees to the accounting and human resources firm. The breakout of the funding is below:

Key Assumptions

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.

• Initial Monthly Average Contract Amount: $20,000
• Growth in Average Monthly Contracts: 10%

Financial Projections

Income statement, balance sheet, cash flow statement, construction business plan faqs, what is a construction business plan.

A construction business plan is a plan to start and/or grow your construction business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can  easily complete your construction business plan using our Construction Business Plan Template here .

What Are the Main Types of Construction Companies?

Construction companies can be classified according to the type of constructions that they perform. Some are small renovation contractors, others are new home builders and others are commercial construction companies.

What Are the Main Sources of Revenues and Expenses for a Construction Company?

Construction companies get their primary source of revenue from individual contracts for new homes, remodeling projects or commercial projects.

The key expenses for construction companies are office space rent, salaries and wages, and equipment costs. 

How Do You Get Funding for Your Construction Business Plan?

There are many options for financing a construction company like SBA loans, commercial loans, personal loans, or line of credit. There are also equipment funding opportunities that cover expenses associated with necessary tools, machinery and other equipment. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Construction Business?

Starting a construction business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Construction Business Plan - The first step in starting a business is to create a detailed construction business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.  

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your construction business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your construction business is in compliance with local laws.

3. Register Your Construction Business - Once you have chosen a legal structure, the next step is to register your construction business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws. 

4. Identify Financing Options - It’s likely that you’ll need some capital to start your construction business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms. 

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations. 

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events. 

7. Acquire Necessary Construction Equipment & Supplies - In order to start your construction business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your construction business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising. 

Learn more about how to start a successful construction business:

• How to Start a Construction Business

Where Can I Get a Construction Business Plan PDF?

You can download our free construction business plan template PDF here . This is a sample construction business plan template you can use in PDF format.

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Understanding Business Models in the Construction Industry

In the increasingly competitive world of construction, success hinges not only on the quality of work but also on the underlying business model that supports operations. From project-based to service-oriented approaches, to thrive in the industry, construction companies employ various business models that align with their goals, resources, and market demands. In this guide, we’ll explore these different business models, their characteristics, advantages, and frequently asked questions.

What is a Business Model in Construction?

A business model in construction refers to the framework and approach a company uses to generate revenue, deliver services, and create value for stakeholders. It encompasses the organization’s strategy, operational processes, and revenue streams, shaping how it conducts business and interacts with clients and partners.

Traditional Bid-Based Business Model

Characteristics:.

• In the traditional bid-based model, construction projects are awarded based on competitive bidding processes.
• Contractors submit proposals or bids outlining their pricing, timelines, and project approach.
• The lowest responsive and responsible bidder typically wins the contract.

Advantages:

• Competitive pricing: Clients benefit from competitive bids, often resulting in cost savings.
• Clear scope: Projects are well-defined, with specific requirements outlined in bid documents.
• Established process: The bid process follows industry standards and protocols, providing a familiar framework for contractors and clients.

Challenges:

• Price-driven competition: Contractors may engage in aggressive pricing to win bids, leading to thin profit margins.
• Limited flexibility: Once a contract is awarded, changes to project scope or specifications may incur additional costs.
• High bid costs: Preparing bids requires significant time and resources, with no guarantee of success.

  Design-Build Business Model

• In the design-build model, a single entity is responsible for both the design and construction phases of a project.
• Design-build firms may include architects, engineers, and contractors under one umbrella, streamlining communication and coordination.
• Clients enter into a single contract with the design-build entity, simplifying project management.
• Streamlined communication: With design and construction teams integrated, communication and collaboration are enhanced, reducing errors and delays.
• Faster project delivery: The design-build approach can expedite project timelines by overlapping design and construction phases.
• Accountability: The design-build entity assumes responsibility for project performance, reducing the potential for disputes between parties.
• Limited design options: Clients may have less control over the design process compared to traditional design-bid-build projects.
• Potential conflicts of interest: In integrated design-build firms, conflicts of interest may arise between design and construction teams.
• Client risk: Clients may bear the risk of design errors or omissions, as the design-build entity assumes greater control over project delivery.

Construction Management at Risk (CMAR)

• CMAR involves hiring a construction manager early in the project development process to provide pre-construction services.
• The construction manager works collaboratively with the project owner and design team to manage costs, schedules, and quality.
• CMAR contracts typically include a guaranteed maximum price (GMP), providing cost certainty to the owner.
• Early collaboration: Construction managers contribute their expertise during the design phase, optimizing project costs and schedules.
• Cost certainty: The inclusion of a GMP in the contract provides owners with financial predictability, reducing the risk of budget overruns.
• Value engineering: Construction managers can identify cost-saving opportunities without compromising project quality, maximizing value for the owner.
• Increased upfront costs: Engaging a construction manager early in the process may entail higher initial expenses.
• Potential conflicts of interest: Construction managers must balance their role as advocates for the owner while maintaining relationships with contractors and subcontractors.
• Limited project control: Owners relinquish some control over project management to the construction manager, requiring trust and effective communication.

Integrated Project Delivery (IPD)

• IPD is a collaborative project delivery approach that involves multiple stakeholders, including the owner, architect, contractor, and key subcontractors.
• Participants enter into a single multi-party contract, sharing risks and rewards based on project outcomes.
• IPD emphasizes transparency, shared decision-making, and mutual respect among project team members.
• Enhanced collaboration: IPD fosters a culture of collaboration and cooperation among project stakeholders, leading to better outcomes.
• Risk mitigation: By sharing risks and rewards, IPD incentivizes all parties to work together towards project success, reducing adversarial relationships.
• Innovation: The integrated nature of IPD encourages innovation and creative problem-solving, resulting in optimized project solutions.
• Cultural barriers: Adopting an IPD approach may require a shift in mindset and organizational culture, challenging traditional hierarchical structures.
• Legal complexities: Crafting multi-party contracts that accurately reflect the intentions and obligations of all stakeholders can be complex and time-consuming.
• Performance metrics: Measuring project success in an IPD framework may require new performance metrics and evaluation criteria that differ from traditional models.

Frequently Asked Questions (FAQs)

What factors influence the choice of a business model in construction.

• The nature and complexity of the project
• Client preferences and priorities
• Market conditions and industry trends
• Contractor capabilities and resources

How do construction companies determine which business model to use?

• Conducting feasibility studies and risk assessments
• Analyzing project requirements and objectives
• Evaluating potential partners and collaborators
• Considering past project experiences and lessons learned

What are the key considerations when transitioning to a new business model?

• Assessing organizational readiness and capacity
• Communicating with stakeholders and team members
• Implementing necessary changes to processes and workflows
• Monitoring and evaluating performance and outcomes

How do changes in technology impact construction business models?

• Technology advancements can enable new project delivery methods
• Digital tools and software can enhance collaboration and communication
• Automation and robotics may transform construction processes and workflows
• Data analytics and insights can inform decision-making and optimize project outcomes

Key Takeaways

The choice of a business model in construction is a critical decision that shapes project outcomes, client relationships, and organizational success. By understanding the characteristics, advantages, and challenges of different business models, construction companies can make informed decisions that align with their goals and objectives. Whether employing a traditional bid-based approach or embracing innovative integrated project delivery methods, the key is to select a model that optimizes value, fosters collaboration, and delivers exceptional results. With proper strategic planning, careful execution, and a commitment to excellence, construction companies can navigate the complexities of the industry and thrive in today’s competitive landscape.

Ready to establish a more profitable, resilient foundation for your business?  Connect with us today !

Why Choose Us?

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Disclaimer:  This article is for informational purposes only and should not be taken as professional business advice. Always consult with a business professional or financial advisor before making significant changes to your business strategy.

If you found this blog post helpful, be sure to share it with fellow trade business owners and visit our blog page regularly for more content like this. Together, we can build stronger, more resilient businesses that stand the test of time!

5 Successful Construction Business Models

Construction business models that work are followed by successful construction companies. A company’s target market, employment procedures, financial requirements , marketing strategies and business growth are all influenced by its business model.

One of the biggest employers in the world, the construction sector employs millions of people. Construction projects produce considerable investments and help the local economy, making them an important factor in economic growth. Other businesses, like manufacturing, transportation, and services, are also boosted by construction projects.

In fact, by the end of 2023, the construction industry will add 168.5k jobs, 10k more than expected a year ago.

Strong and durable business model innovation is becoming more and more necessary as the construction sector changes. A strong business model is one that can endure shifting market conditions and is well-suited to the needs of the project, the owner, and the industry. 

Let’s take a look at some successful construction business models here.

What is a business model?

A business model establishes the direction and framework for your company. It’s one of the first choices you have to make when beginning a business because it determines the target market, target audience, and marketing message. It also affects your company’s operations, location, personnel, and financial requirements.

Your company’s business strategy should align with your skills, those of your staff, the level of competition already present, and the market size. Before settling on a model, you must evaluate your education, training, and experience to determine where your talents best complement the regional market.

One business may be pursuing several different business concepts at once. In general, larger businesses have the labour and financial capacity to provide a variety of business models and pursue business model innovation. 

A small construction company should concentrate just on one until they have achieved success and gained a market share. From there, businesses can diversify their offerings by adding new markets.

5 successful construction business models

In 2021, the UK construction market was valued at $448.7 billion . Key construction sectors are expected to see annual average growth rates (AAGR) of over 1% between 2023 and 2026, supported by infrastructure initiatives for transportation, energy, housing, healthcare, education, and telecommunications.

The selection process can be overwhelming for potential construction businesses due to the abundance of models. So how do you decide? You must first think about your strengths and weaknesses.

Additionally, you’ll devote endless hours to reading books and conducting market research. Here are some of the most effective business models for the construction industry.

General construction management

Companies specialising in general construction offer their clients non-specialized services. They might concentrate on a single customer segment or provide more broadly applicable services to a larger market. 

One company that offers broad construction industry services is a general contractor. They may concentrate on appealing to certain market segments, such as exclusively residential buildings or a particular area within the construction business, such as refurbishment.

To provide services to their clients, general contractors work with other contractors or experienced tradespeople like project managers. They can provide their clients with a wide range of construction services thanks to the utilisation of subcontractors.

Niche construction services

Niche contractors offer specialised construction services that call for licensing, specialised training, or knowledge. They frequently employ construction professionals to give the specialised talents required to complete the assignment. General service contractors use these businesses to carry out specialised construction projects and trade work.

Despite the great need for niche contractors, there can be fierce competition. Before launching this kind of business, it’s crucial to investigate the market and demand in your area.

Materials used in building projects are produced or manufactured by production and manufacturing organisations. They can offer a vast selection of regular and unique items and materials. These businesses are in high demand all the time.

Investigate the goods and resources required in your local market before launching one of these businesses. You might discover a void that your expertise and abilities can fill. These businesses frequently need significant financing to launch.

Suppliers are in charge of marketing and distributing goods produced by others rather than creating or manufacturing construction materials. These companies might be shops that cater to the local market or e-commerce websites that cater to a broader customer base. 

General and trade contractors who rely on their materials are among their clients. They require less money to get going.

Commission-based model

The commission you receive for acting as the middleman between buyers and sellers is the foundation of this type of business model. You’ll collaborate with a different house construction business to locate potential clients for their goods and services.

Every time you bring in a paying customer, you’ll receive a portion of the revenue. You will earn more money the more transactions you close. Because you won’t need to make a significant financial investment in this firm, this business plan is ideal for those who don’t want to take chances.

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One of the initial steps in launching a new firm is choosing a business model. It establishes who the company’s clients are, which impacts the hiring decisions they make and how they focus their marketing efforts. Contractors looking for work should know who their target market is and where to locate them.

If you want help growing your construction business within the construction industry , our team at Growth Idea can assist you. 

As well as our expert Business Growth Consultancy Services , we offer a free business strategy review where we will assess your current situation and develop a plan for how you can scale your business effectively.

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Successful construction business models faqs, how do you structure a construction company.

Typically, the general manager, department managers, project managers, project supervisors, project coordinators, and employees are listed in the organisational chart from top to bottom. The owner/CEO is positioned at the top.

What are the qualities of a good construction company?

The five characteristics of a successful construction company, starting with the head and using the body as an example, are leadership, planning, work performance, project management, and accounting.

What does the future look like in construction?

Robotics, automation, and emerging technologies in construction. Future construction sites are projected to make greater use of cutting-edge equipment including 3-D printing, exoskeletons, autonomous vehicles, drones, and building information modelling (BIM).

Next steps…

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The Most Successful Construction Business Models

To succeed in the construction industry, it is essential to understand the different business models available. 

This article will outline the five most successful models and explain how they work. Each model has its own set of advantages and disadvantages, so entrepreneurs should carefully consider which one is best for their specific business.

General Construction Services

The most common business model for construction companies is general construction services. In this model, the company provides a wide range of services to its clients. This can include everything from design and engineering to project management and construction. In addition, the company will typically have a team of experts who can handle all aspects of the project.

This model works because the company will usually charge a fixed fee for its services. This fee can be based on the size and scope of the project. The advantage of this model is that it is very flexible and can be adapted to different types of projects. The downside is that it can be difficult to estimate costs accurately, leading to problems down the line.

Is this the best model for your business?

This model is best suited for construction companies with a team of experts who can handle a wide range of projects. It is also a good choice for companies that want to be able to charge a fixed fee for their services or provide a wide range of services instead of just a niche.

Niche Construction Services

Another successful business model is niche construction services. In this model, the company focuses on providing a specific benefit to its clients. For example, they may specialize in residential construction or commercial construction. The advantage of this model is that it allows the company to become an expert in a particular area. This can make it easier to win work and charge higher prices. The downside is that the company may have to turn down work that is not in their area of expertise.

This model is best suited for construction companies that have a specific area of expertise. It is also a good choice for companies that want to focus on a particular type of work or market.

Contractor Services

Another standard business model is contractor services. In this model, the company contracts with other businesses to provide their services. For example, a construction company may contract with an architectural firm to provide design services. The advantage of this model is that it allows the company to focus on its core competencies. The downside is that it can be challenging to find good contracts and there may be a lot of competition.

This model is best suited for construction companies with a strong core competency or niche. It is also a good choice for companies that want to focus on their own work and avoid the hassle of managing other businesses.

Construction Materials Supplier

Another successful business model is construction materials suppliers. In this model, the company provides materials to other construction companies. For example, they may sell lumber or concrete. The advantage of this model is that it allows the company to focus on its core competencies. The downside is that it can be challenging to find good contracts, and there may be a lot of competition.

This model is best suited for construction companies with a strong core competency or niche. It is also a good choice for companies that want to focus on their work and avoid the hassle of managing other businesses.

Construction Materials Production and Manufacturing

Another successful business model is construction materials production and manufacturing. In this model, the company produces and sells construction materials. For example, they may make bricks or windows. The advantage of this model is that it allows the company to focus on its core competencies. The downside is that it can be challenging to find good contracts, and there may be a lot of competition.

This model is best suited for construction companies with a strong core competency or niche. It is also a good choice for companies that want to focus on their work and avoid the hassle of managing other businesses. It’s also a great option if you want to make construction supplies instead of using them.

There are many successful business models for construction companies. The best model for your business depends on your company’s strengths, weaknesses, and goals. Choose the model that best suits your company’s needs, and you will be on your way to success.

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Construction Business Model Transformation With 10 Examples

Construction business model transformation  .

Construction business model transformation is a dynamic process that involves rethinking traditional approaches and embracing innovative solutions to enhance efficiency, sustainability, and profitability.

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This transformation journey leverages cutting-edge technologies, new methodologies, and advanced management practices to reshape the way construction projects are designed, planned, executed, and maintained.

As the industry evolves, stakeholders are increasingly recognising the need to adapt to changing market demands and address emerging challenges, propelling the construction sector into a new era of growth and performance excellence.

Why is Construction Business Model Transformation Important? 

Construction business model transformation is crucial for a variety of reasons, ensuring the long-term success and sustainability of the industry. One primary reason is the need for improved efficiency in project delivery. Traditional construction processes often suffer from delays, cost overruns, and quality issues, which can be mitigated by adopting innovative approaches and methodologies. By implementing new technologies and processes, construction firms can streamline their operations, reducing waste and boosting productivity.

Another important factor is the growing emphasis on sustainability and environmental responsibility. The construction industry has a significant impact on the environment, contributing to carbon emissions, resource depletion, and waste generation. Business model transformation enables the adoption of green building practices, energy-efficient technologies, and circular economy principles, resulting in more environmentally friendly and resource-efficient projects.

Moreover, market demands, and customer expectations are rapidly changing. Clients are increasingly seeking greater value, faster delivery, and more customised solutions. By embracing business model transformation, construction companies can better respond to these demands by developing new service offerings, incorporating digital technologies for enhanced customer experience, and fostering a culture of innovation.

The construction industry is also facing a growing skills gap and labour shortages. By adopting new business models that incorporate automation, robotics, and other advanced technologies, firms can address these challenges while increasing safety and reducing the reliance on manual labour.

The competitive landscape of the construction industry is evolving, with new players entering the market and established firms seeking differentiation. Business model transformation enables construction companies to stay ahead of the competition by continuously adapting to market dynamics, exploring new revenue streams, and fostering a culture of innovation and agility.

In summary, the importance of business model transformation in the construction industry lies in its ability to drive efficiency, sustainability, adaptability, and competitiveness, ensuring the sector’s long-term growth and success.

What are the Main Challenges of Construction Business Model Transformation?  

The main challenges of construction business model transformation include:

1. Resistance to change: Construction is a traditional industry, and many stakeholders may be hesitant to embrace new technologies, processes, or business models. Overcoming this resistance to change requires effective change management and communication strategies to engage all parties involved.

2. Integration of new technologies: Adopting new technologies, such as Building Information Modeling (BIM), drones, or robotics, can be challenging for construction companies due to the need for significant investments, training, and potential disruption to existing workflows.

3. Fragmented industry structure: The construction industry is characterised by a large number of stakeholders, including owners, contractors, subcontractors, suppliers, and regulators. This fragmented structure can complicate the adoption of new business models and collaboration efforts.

4. Regulatory environment: Construction projects are often subject to complex regulations and building codes, which may hinder the adoption of innovative approaches or technologies. Companies must navigate this regulatory environment while pursuing transformation initiatives.

5. Skill development and workforce training: The successful implementation of new business models and technologies requires a skilled workforce capable of adapting to new processes and tools. Companies must invest in training and education to ensure their employees are equipped to handle these changes.

6. Financial constraints: Business model transformation may require significant upfront investments in technology, infrastructure, and human resources. Smaller construction firms, in particular, may face financial constraints that limit their ability to pursue these initiatives.

7. Data management and security: The increased use of digital technologies and data-driven decision-making in construction projects necessitates effective data management and security practices to protect sensitive information and maintain compliance with privacy regulations.

8. Measuring success and ROI: Quantifying the benefits and return on investment (ROI) of business model transformation initiatives can be challenging, as the impact may not be immediately apparent or easily measured. Establishing clear metrics and performance indicators is crucial for evaluating success and ensuring continuous improvement.

9. Balancing innovation and risk: Pursuing transformation initiatives can involve a certain degree of risk, as companies experiment with new technologies, processes, and business models. Construction companies must strike a balance between fostering innovation and managing potential risks to project outcomes and overall business performance.

10 Examples of Construction Business Model Transformation  

Numerous examples of construction business model transformation exist across the industry, showcasing how companies have adapted their operations, adopted innovative technologies, and implemented new business models to increase efficiency, reduce costs, and enhance competitiveness. These transformations have led to significant improvements in project delivery, sustainability, and overall business performance.

Here are 10 examples of construction business model transformation:

Vinci Business Model Transformation  

The Vinci Group is a global player in the construction industry, and in recent years it has undergone a business model transformation to adapt to changing market conditions and customer demands. This transformation has involved several key elements:

• Diversification: Vinci has diversified its business lines beyond traditional construction activities, expanding into areas such as concessions, energy, and infrastructure. This diversification has allowed the company to reduce its reliance on traditional construction activities and to take advantage of growth opportunities in other sectors.
• Emphasis on sustainability: Vinci has made sustainability a core part of its business model transformation, integrating environmental, social, and governance considerations into its operations. The company has set ambitious targets for reducing its carbon footprint and has developed innovative solutions for sustainable construction.
• Digitisation: Vinci has embraced digital technologies to improve its operations and enhance customer experience. The company has developed tools for project management, data analysis, and collaboration, and has invested in new technologies such as artificial intelligence , virtual reality, and 3D printing.
• Partnership and collaboration: Vinci has adopted a collaborative approach to its business model transformation, partnering with other companies and stakeholders to develop innovative solutions and share best practices. The company has also established open innovation platforms to engage with startups and entrepreneurs and to foster innovation within the industry.

Vinci’s business model transformation has allowed the company to adapt to changing market conditions, to differentiate itself from its competitors, and to position itself as a leader in sustainable construction and digital innovation.

Bechtel Business Model Transformation

Bechtel Corporation is a global engineering, construction, and project management company that has undergone a business model transformation in recent years to adapt to changing market conditions and customer demands. This transformation has involved several key elements:

• Emphasis on sustainability: Bechtel has made sustainability a core part of its business model transformation, integrating environmental, social, and governance considerations into its operations. The company has set ambitious targets for reducing its carbon footprint and has developed innovative solutions for sustainable construction.
• Digitisation: Bechtel has embraced digital technologies to improve its operations and enhance customer experience. The company has developed tools for project management, data analysis, and collaboration, and has invested in new technologies such as artificial intelligence , virtual reality, and 3D printing.
• Modularisation and standardisation: Bechtel has adopted a modularisation and standardisation approach to construction, which involves breaking down projects into standardised components that can be assembled offsite and then transported to the construction site for final assembly. This approach can reduce construction time and costs, improve quality and safety, and minimise waste.
• Lean construction: Bechtel has implemented lean construction principles to improve efficiency and reduce waste in its operations. This involves optimising workflows, minimising unnecessary activities, and continuously improving processes to increase productivity and reduce costs.
• Collaboration and partnership: Bechtel has adopted a collaborative approach to its business model transformation, partnering with other companies and stakeholders to develop innovative solutions and share best practices. The company has also established open innovation platforms to engage with startups and entrepreneurs and to foster innovation within the industry.

Bechtel’s business model transformation has allowed the company to differentiate itself from its competitors, to position itself as a leader in sustainable construction and digital innovation, and to improve efficiency and reduce costs in its operations.

AECOM Business Model Transformation 

AECOM is a global infrastructure consulting firm that has undergone a business model transformation in recent years to adapt to changing market conditions and customer demands. This transformation has involved several key elements:

• Emphasis on sustainability: AECOM has made sustainability a core part of its business model transformation, integrating environmental, social, and governance considerations into its operations. The company has set ambitious targets for reducing its carbon footprint and has developed innovative solutions for sustainable construction.
• Digitisation: AECOM has embraced digital technologies to improve its operations and enhance customer experience. The company has developed tools for project management, data analysis, and collaboration, and has invested in new technologies such as artificial intelligence , virtual reality, and 3D printing.
• Client-centric approach: AECOM has shifted to a client-centric approach to its business model, focusing on understanding and meeting the unique needs of its clients. This involves working closely with clients to identify their goals and objectives, and then developing customised solutions to achieve those goals.
• Integrated delivery: AECOM has adopted an integrated delivery approach to construction, which involves bringing together all project stakeholders (including designers, builders, and owners) to collaborate on project design, delivery, and operation. This approach can improve project outcomes, reduce costs, and enhance sustainability.
• Partnership and collaboration: AECOM has adopted a collaborative approach to its business model transformation, partnering with other companies and stakeholders to develop innovative solutions and share best practices. The company has also established open innovation platforms to engage with startups and entrepreneurs and to foster innovation within the industry.

AECOM’s business model transformation has allowed the company to differentiate itself from its competitors, to position itself as a leader in sustainable construction and digital innovation, and to improve customer satisfaction and project outcomes through a client-centric and integrated delivery approach.

Skanska Business Model Transformation 

Skanska is a global construction and development company that has undergone a business model transformation in recent years to adapt to changing market conditions and customer demands. This transformation has involved several key elements:

• Emphasis on sustainability: Skanska has made sustainability a core part of its business model transformation, integrating environmental, social, and governance considerations into its operations. The company has set ambitious targets for reducing its carbon footprint and has developed innovative solutions for sustainable construction.
• Digitisation: Skanska has embraced digital technologies to improve its operations and enhance customer experience. The company has developed tools for project management, data analysis, and collaboration, and has invested in new technologies such as artificial intelligence , virtual reality, and 3D printing.
• Lean construction: Skanska has implemented lean construction principles to improve efficiency and reduce waste in its operations. This involves optimising workflows, minimising unnecessary activities, and continuously improving processes to increase productivity and reduce costs.
• Safety focus: Skanska has made safety a top priority in its operations, adopting a “zero accidents” policy and implementing strict safety protocols and training programs for its employees and partners.
• Collaboration and partnership: Skanska has adopted a collaborative approach to its business model transformation, partnering with other companies and stakeholders to develop innovative solutions and share best practices. The company has also established open innovation platforms to engage with startups and entrepreneurs and to foster innovation within the industry.

Skanska’s business model transformation has allowed the company to differentiate itself from its competitors, to position itself as a leader in sustainable construction and digital innovation, and to improve efficiency, safety, and collaboration in its operations.

Turner Construction Business Model Transformation 

Turner Construction is a leading construction management company that has undergone a business model transformation in recent years to adapt to changing market conditions and customer demands. This transformation has involved several key elements:

• Emphasis on sustainability: Turner Construction has made sustainability a core part of its business model transformation, integrating environmental, social, and governance considerations into its operations. The company has set ambitious targets for reducing its carbon footprint and has developed innovative solutions for sustainable construction.
• Digitisation: Turner Construction has embraced digital technologies to improve its operations and enhance customer experience. The company has developed tools for project management, data analysis, and collaboration, and has invested in new technologies such as artificial intelligence , virtual reality, and 3D printing.
• Integrated project delivery: Turner Construction has adopted an integrated project delivery approach to construction, which involves bringing together all project stakeholders (including designers, builders, and owners) to collaborate on project design, delivery, and operation. This approach can improve project outcomes, reduce costs, and enhance sustainability.
• Lean construction: Turner Construction has implemented lean construction principles to improve efficiency and reduce waste in its operations. This involves optimising workflows, minimising unnecessary activities, and continuously improving processes to increase productivity and reduce costs.
• Safety focus: Turner Construction has made safety a top priority in its operations, implementing strict safety protocols and training programs for its employees and partners.

Turner Construction’s business model transformation has allowed the company to differentiate itself from its competitors, to position itself as a leader in sustainable construction and digital innovation, and to improve efficiency, safety, and collaboration in its operations.

Bouygues Construction Business Model Transformation

Bouygues Construction is a French construction and engineering company that has undergone a business model transformation in recent years to adapt to changing market conditions and customer demands. This transformation has involved several key elements:

• Emphasis on sustainability: Bouygues Construction has made sustainability a core part of its business model transformation, integrating environmental, social, and governance considerations into its operations. The company has set ambitious targets for reducing its carbon footprint and has developed innovative solutions for sustainable construction.
• Digitalisation: Bouygues Construction has embraced digital technologies to improve its operations and enhance customer experience. The company has developed tools for project management, data analysis, and collaboration, and has invested in new technologies such as artificial intelligence , virtual reality, and building information modeling (BIM).
• Client-centric approach: Bouygues Construction has shifted to a client-centric approach to its business model, focusing on understanding and meeting the unique needs of its clients. This involves working closely with clients to identify their goals and objectives, and then developing customised solutions to achieve those goals.
• Industrialisation: Bouygues Construction has implemented industrialisation principles to improve efficiency and reduce waste in its operations. This involves optimising workflows, using prefabrication and modular construction techniques, and continuously improving processes to increase productivity and reduce costs.
• Partnership and collaboration: Bouygues Construction has adopted a collaborative approach to its business model transformation, partnering with other companies and stakeholders to develop innovative solutions and share best practices. The company has also established open innovation platforms to engage with startups and entrepreneurs and to foster innovation within the industry

Bouygues Construction’s business model transformation has allowed the company to differentiate itself from its competitors, to position itself as a leader in sustainable construction and digital innovation, and to improve customer satisfaction and project outcomes through a client-centric, industrialised, and collaborative approach.

Hochtief Business Model Transformation 

Hochtief is a German construction and engineering company that has undergone a business model transformation in recent years to adapt to changing market conditions and customer demands. This transformation has involved several key elements:

• Emphasis on sustainability: Hochtief has made sustainability a core part of its business model transformation, integrating environmental, social, and governance considerations into its operations. The company has set ambitious targets for reducing its carbon footprint and has developed innovative solutions for sustainable construction.
• Digitisation: Hochtief has embraced digital technologies to improve its operations and enhance customer experience. The company has developed tools for project management, data analysis, and collaboration, and has invested in new technologies such as artificial intelligence , virtual reality, and building information modeling (BIM).
• Client-centric approach: Hochtief has shifted to a client-centric approach to its business model, focusing on understanding and meeting the unique needs of its clients. This involves working closely with clients to identify their goals and objectives, and then developing customised solutions to achieve those goals.
• Lean construction: Hochtief has implemented lean construction principles to improve efficiency and reduce waste in its operations. This involves optimising workflows, minimising unnecessary activities, and continuously improving processes to increase productivity and reduce costs.
• Safety focus: Hochtief has made safety a top priority in its operations, implementing strict safety protocols and training programs for its employees and partners.

Hochtief’s business model transformation has allowed the company to differentiate itself from its competitors, to position itself as a leader in sustainable construction and digital innovation, and to improve customer satisfaction and project outcomes through a client-centric, lean, and safety-focused approach.

Fluor Business Model Transformation  

Fluor Corporation is an American multinational engineering and construction firm that has undergone a business model transformation in recent years to adapt to changing market conditions and customer demands. This transformation has involved several key elements:

• Emphasis on sustainability: Fluor has made sustainability a core part of its business model transformation, integrating environmental, social, and governance considerations into its operations. The company has set ambitious targets for reducing its carbon footprint and has developed innovative solutions for sustainable construction.
• Digitisation: Fluor has embraced digital technologies to improve its operations and enhance customer experience. The company has developed tools for project management, data analysis, and collaboration, and has invested in new technologies such as artificial intelligence , virtual reality, and building information modeling (BIM).
• Integrated solutions: Fluor has shifted to an integrated solutions approach to its business model, offering a range of services across the entire project life cycle, including engineering, procurement, construction, and maintenance. This allows the company to provide end-to-end solutions to its clients, improving project outcomes and reducing costs.
• Operational excellence: Fluor has implemented operational excellence principles to improve efficiency and reduce waste in its operations. This involves optimising workflows, using lean construction techniques, and continuously improving processes to increase productivity and reduce costs.
• Safety focus: Fluor has made safety a top priority in its operations, implementing strict safety protocols and training programs for its employees and partners.

Fluor’s business model transformation has allowed the company to differentiate itself from its competitors, to position itself as a leader in sustainable construction and digital innovation, and to provide integrated solutions that improve customer satisfaction and project outcomes. By emphasising operational excellence and safety, the company has also improved efficiency and reduced risks in its operations.

Royal BAM Group Business Model Transformation  

Royal BAM Group is a Dutch construction and engineering company that has undergone a business model transformation in recent years to adapt to changing market conditions and customer demands. This transformation has involved several key elements:

• Focus on sustainable construction: BAM has made sustainable construction a key focus of its business model transformation, integrating environmental, social, and governance considerations into its operations. The company has set ambitious targets for reducing its carbon footprint and has developed innovative solutions for sustainable construction business model transformation.
• Digitisation: BAM has embraced digital technologies to improve its operations and enhance customer experience. The company has developed tools for project management, data analysis, and collaboration, and has invested in new technologies such as artificial intelligence , drones, and building information modeling (BIM).
• Integrated solutions: BAM has shifted to an integrated solutions approach to its business model, offering a range of services across the entire project life cycle, including design, engineering, construction, and maintenance. This allows the company to provide end-to-end solutions to its clients, improving project outcomes and reducing costs.
• Operational excellence: BAM has implemented operational excellence principles to improve efficiency and reduce waste in its operations. This involves optimising workflows, using lean construction business model transformation techniques, and continuously improving processes to increase productivity and reduce costs.
• Collaborative partnerships: BAM has formed collaborative partnerships with clients, suppliers, and other stakeholders to improve project outcomes and reduce risks. This involves working closely with partners to identify common goals and objectives, and then developing customised solutions to achieve those goals.

BAM’s business model transformation has allowed the company to differentiate itself from its competitors, to position itself as a leader in sustainable construction business model transformation and digital innovation, and to provide integrated solutions that improve customer satisfaction and project outcomes. By emphasising operational excellence and collaborative partnerships, the company has also improved efficiency and reduced risks in its operations.

Kiewit Business Model Transformation  

Kiewit Corporation is an American construction and engineering company that has undergone a business model transformation in recent years to adapt to changing market conditions and customer demands. This transformation has involved several key elements:

• Integrated project delivery: Kiewit has shifted to an integrated project delivery model, which involves collaborating with owners, designers, and subcontractors to optimise project outcomes. This approach focuses on aligning project goals, sharing risks and rewards, and maximising value for all stakeholders.
• Emphasis on safety: Kiewit has made safety a top priority in its operations, implementing strict safety protocols and training programs for its employees and partners. The company has also developed innovative solutions for improving safety on construction sites, such as wearable technology and automated monitoring systems.
• Digitisation: Kiewit has embraced digital technologies to improve its operations and enhance customer experience. The company has developed tools for project management, data analysis, and collaboration, and has invested in new technologies such as virtual reality and drone technology.
• Lean construction: Kiewit has implemented lean construction principles to improve efficiency and reduce waste in its operations. This involves optimising workflows, reducing lead times, and eliminating non-value-added activities to increase productivity and reduce costs.
• Sustainability focus: Kiewit has made sustainability a key focus of its business model transformation, integrating environmental, social, and governance considerations into its operations. The company has set ambitious targets for reducing its carbon footprint and has developed innovative solutions for sustainable construction business model transformation.

Kiewit’s business model transformation has allowed the company to differentiate itself from its competitors, to position itself as a leader in integrated project delivery and safety, and to provide sustainable solutions that improve customer satisfaction and project outcomes. By emphasising digitisation and lean construction business model transformation, the company has also improved efficiency and reduced costs in its operations.

The Future of Construction Business Model Transformation 

The future of construction business model transformation will be characterised by increased adoption of digital technologies, sustainable practices, and innovative business models. As the industry evolves, we can expect greater integration of technologies like artificial intelligence , robotics, and advanced data analytics to optimise project management, resource allocation, and decision-making.

The shift towards environmentally responsible construction business model transformation methods will become more prominent, encouraging companies to adopt green practices and materials.

Collaboration across the supply chain and the emergence of new, flexible business models will also play a crucial role in addressing the dynamic needs of clients and the market, ultimately shaping the future of construction business transformation .

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7 Ways to Build a Successful Construction Business

Table of Contents

The stakes are high in the construction industry. Building homes and buildings is expensive, and safety issues are paramount. Customers tend to be cautious and highly involved in the construction process, which can potentially cause issues for construction firms. 

Construction company owners must be mindful of customer service, quality, costs and many more factors to find success and attract loyal customers. We’ll explore seven tips for building a successful construction business and highlight essential tools for everyday operations.

How to build a successful construction business

While the construction industry forecast is bright and shows no signs of slowing down, construction businesses face challenges and dangers that aren’t for the faint of heart. 

When building or growing your construction firm , pay attention to the following factors to protect your reputation and business and thrive in the industry.

1. Prioritize customer service in your construction business.

In the hiring process , seeking talented contractors is crucial. However, finding employees who can provide efficient customer service is also essential. 

Your clients will remember your team’s work and how your employees treated them during the construction process. Assemble a team who will respect your clients, display patience and show understanding when there are concerns or issues. This level of support will help you avoid customer service pitfalls and go a long way toward generating customer loyalty, earning repeat customers and gaining valuable referrals.  

2. Find your niche in the construction industry.

Contracting encompasses many niches. If you specialize in a particular area, make it known. Promoting your company as superior in a specific niche – for example, window installation or roof repair – is an excellent way to ensure you’re the one clients call when a window cracks or the roof starts to leak. 

Even if you’re a general contractor, you can still offer a broader spectrum of services while branding your company as “the best” in a specific niche.

3. Market your construction business.

Marketing your construction company is crucial. While acquiring clients through word-of-mouth advertising is great, developing a robust regional and local marketing strategy will further grow your business. Use fundamental branding tools to help get your company’s name out there so people think of you when they need a contractor.

4. Cover your bases by insuring your construction business.

A company needs business insurance , especially when working with heavy machinery and electric tools is on the daily agenda. Ensure you have general liability insurance and coverage for potential injuries, property damage and lawsuits. These days, choosing insurance policies is straightforward, especially when finding affordable, specialized insurance policies for your industry.

5. Stay involved in your construction business.

This step comprises two parts:

• Stay available to your customers. No matter what, you must remain available to your customers. Construction can be a confusing process for those unfamiliar with it, so your clients may have questions or want to be clued in on how things are going. The more time you set aside to hear them out and alleviate their concerns, the more comfortable they’ll feel hiring you in the future or recommending you to a friend.
• Show up at construction sites. Staying involved also means personally showing up to supervise on-site. Obviously, you can’t be everywhere at once. Still, your clients and employees must know you’ll be popping by regularly. Your presence shows customers that they’re a priority and will remind your employees that they must always do their best work.

6. Don’t cut corners in your construction business.

It might be tempting to go with less expensive materials. However, remember that saving now often means spending more later. 

Ensure all equipment is up to the task and can withstand the test of time. For example, investing in stainless steel screws might be smart when working in a location vulnerable to wet weather conditions. Customers may not be well versed enough in construction to know the difference, but they’ll certainly notice if things start to rust or break down.

7. Be organized in your construction business.

It’s essential to keep your business organized . For example, maintain thorough bookkeeping to ensure you stick to your budget and get paid for your work promptly.

It’s also wise to track how much time and energy you dedicate to your services. This will prevent you from spreading yourself too thin and taking on too many clients or tasks at any given time. It might seem like more customers are always better, but that’s only true if it doesn’t require you to sacrifice the dedication you can give to each one.

The business tools needed to run a construction company

To have effective and efficient construction and customer communication processes, you need industry-specific tools. Here are some essential tools you’ll need:

Construction estimating software

Estimating the cost of labor and materials – plus your profit – is a crucial element of your construction business. If your price is too high, you won’t get much business. If it’s too low, you will lose money or need to revise your estimate, leading to poor customer satisfaction. 

Construction estimating tools provide reasonable, comprehensive estimates you can modify if material prices change or the project’s scope shifts. The best construction estimating software includes modules for scheduling, client communication, invoicing and project management, in addition to price estimation. 

Construction POS systems

Point-of-sale (POS) systems are generally associated with retailers. However, construction POS systems allow you to accept customer payments via smartphones and tablets, and provide robust payment and customer-tracking features. 

Many construction POS systems help track inventory so you can reorder efficiently and avoid project delays. They can also track business metrics like sales and profitability and help with scheduling. If you have subcontractors, you can track their time and scheduling as well.

Construction payment processing tools

All successful businesses must be able to receive and process payments promptly. Construction projects typically involve several large periodic payments. Getting paid without delay is even more critical because you must order materials for the next construction phase. 

While you might receive many payments by check, construction companies should also accept credit cards and other payment forms. Accepting multiple payment methods can boost customer convenience and payment efficiency.  

Smart helmets

Safety is a significant issue on construction job sites; it always pays to protect your workers, subcontractors and others visiting the site. Smart helmets are a high-tech way to improve safety. These helmets are hard hats with sophisticated tools built in, including sensors, tracking tools and augmented reality . 

Smart helmets can warn wearers of potentially dangerous conditions or alert team members if help is needed. They can monitor workers’ health in real time to avoid potentially disastrous accidents. The augmented reality feature helps with site planning and provides a visual overlay without the need to carry around site plans or blueprints, allowing workers to use their hands for balance and stability.

Virtual reality 

While architects and engineers may be used to 2D blueprints and renderings to visualize completed projects, it’s more challenging for clients. Imagine being able to virtually walk clients through what their new home or office will look like. Virtual reality in construction is at an early stage, but it’s poised to become a significant competitive advantage and game changer in the industry. 

In addition to using virtual reality to improve client interaction and sales, construction firms can use it for training, reducing labor costs and improving efficiency.

Evyatar Sagie contributed to this article.

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Construction Company Business Plan

Growing a construction company is much more difficult and taxing than completing projects.

From acquiring a new project to meeting deadlines, managing the budget, and many more things in between- you will find yourself drowning in responsibilities when you start a construction company.

A construction business plan can come to your rescue in such burdensome situations. If prepared well, it can become a reference point for your company as it continues to grow.

Confused about how to write a business plan?

Well, this article will serve you perfectly. It will help you understand the contents of the business plan and offer a sample template for your construction company.

So let’s build a solid construction company business plan with this detailed guide.

Let’s dive right in.

Key Takeaways

• Venture into the market by conducting thorough industry and market analysis.
• Widen the scope of your service offerings to cater varying needs of your target audience.
• Create a detailed operations plan to get thorough guidance in your business operations.
• Conduct a SWOT analysis to identify your competitive edge over the competitors.
• Determine your marketing strategies to launch your business and get it popular amongst your target market.
• Define your business objectives, goals, and mission values to create a foundation for essential business policies.
• Account for various project costs, operating costs, and office expenses to form realistic cash-flow projections.

Why do you need a construction company business plan?

Apart from the fact that investors and banks would ask for a business plan when you seek funding, here are a few more reasons you need a business plan.

• A business plan offers a roadmap to your business. It acts as a guiding block that has answers to all your how, when, where, and what.
• It helps in determining the exact target market for your business and formulating strategies to cater accordingly.
• There are millions of construction companies competing in the industry. You can identify your strengths through a business plan and design a competitive edge to stand apart.
• A well-rounded plan prepares you for emergencies that may arise in your business by making a plan for every situation.
• A whole lot of business processes repeat every day. A business plan helps bring consistency by establishing SOPs for various business activities.

And of course, you get your desired funding with a solid business plan that vouches for the potential of your construction company.

Key components of a construction business plan

Writing a business plan gets much easier with a structurally defined flow. Well, let’s have a look at key components that a construction company business plan must have.

Executive Summary

A brief summary of an entire business plan that will encourage the readers to read further.

Company Overview

A brief company description including every detail from company structure to its mission statement and future goals.

Market Analysis

A thorough analysis of the construction industry and your target market. It also includes sections for competitor analysis, future market trends, and scope of growth.

Construction Services

Outline the construction services that your company will offer. Highlight any additional services that will make you a distinct player.

Marketing and Sales Strategy

It includes a strategic plan to achieve success through marketing and sales. Determine the best course of action for your business.

Management Team

Introduce key personnel in managerial and leadership roles. Discuss their roles, qualifications, experience, and expertise.

Operations Plan

A detailed plan that streamlines the everyday operations right from construction methods to hiring employees.

Financial Plan

A financial plan highlights the prominent figures and key reports of your construction company by making necessary financial projections.

Let’s dive further into these topics and get a detailed understanding of writing your business plan.

Related Construction Company Resources

• Construction Company Marketing Plan
• Construction Company Financial Plan
• Key Stats for the Construction Sector
• Start-up Cost For Construction Company
• How to Start a Construction Business

A step-by-step guide to creating a construction company business plan

A poorly written plan serves no purpose. However, with this step-by-step guide, you will uncover every detail that goes into making a fantastic and purpose-serving business plan.

1. Get a business plan template

Writing a comprehensive business plan is taxing and time-consuming. But if you do it well, you will have a guidebook for running your construction company.

Now, there is a lot that needs to be considered, planned, and accounted for as you start writing the plan. Even if you closely follow a construction business plan outline, there are higher chances of you losing track or getting stuck at certain sections.

This is why you need a business plan template to give a solid structure to your business idea. With industry-relevant examples and a guide, the Upmetrics business plan template is easy to edit and customize.

Whether you own a general contracting firm or specialize in residential construction or specialty trades- we have plenty of construction-related templates for you to choose from.

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2. Write an executive summary

The executive summary is a concise yet insightful description of your entire business plan.

This one-page document summarizes the most important questions that a reader might have and offers a peek into what they are about to uncover. Investors take a brief glance at your executive summary before deciding whether to proceed further or not.

An executive summary must outline the following details of your construction business in persuasive consecutive paragraphs.

• The exact business opportunity
• The target market
• The problem and the solution to it
• Products and services offered by you
• Market size and growth potential
• Financial highlights
• Management team

Maintain a personal storytelling tone while writing this section and encapsulate every minute detail that can make a difference.

But wait, don’t start writing yet. Write your executive summary only after you are done writing an entire plan. This will help you summarize effectively.

3. Prepare a company overview section

This section of a business plan will focus entirely on the details of your construction company.

From the type of construction company to the construction company’s goals- everything in this section is about your company description.

To begin with, highlight the type of construction business you will start. For instance, a residential construction company, general contracting company, industrial construction company, or specialty trade construction.

Clarify, if this will be a new business or an extension of existing business. If the business is already operating, offer a brief description of the business history.

After that, highlight the business structure of your construction company. Are you going to be a sole trader or start a limited liability company (LLC) or a limited partnership firm? The business structure you choose will decide how the finances and taxes will work in your business.

Now, this section is your chance to weave magical stories around your construction company. Present the mission statement, company’s objectives, and future goals over here.

For instance,

Mission statement : Syncore aims to become a trusted name for sustainable residential construction projects in Arizona by 2028. With our commitment to the highest quality standards, we will penetrate the market with our premium budgeted solutions.

Business goals :

• Onboarding and signing 15 construction projects in a span of 6 months.
• Generating revenue of $2 million by 2025.

Like this, you will write this entire section in parts by offering a brief overview of your construction business.

4. Conduct a competitive and market analysis

In this section of a business plan, you begin with industry analysis and then narrow it down to your particular market segment. This is important to show your potential investors that there are promising opportunities in this market.

Using market research practices determine the target market for your construction business. Create a buyer persona to identify what your ideal customer will look like.

Further, highlight your competitors in this competitive construction industry. Using SWOT analysis and PESTEL, determine the strengths and weaknesses of competing construction companies. In this section, you will also highlight your strengths to gain a competitive edge over existing players.

Don’t limit your market study to merely understanding the current scenarios. Extend the research and identify future trends and growth possibilities in your targeted market.

If you are a residential construction company focused on sustainable building practices, you must include the following details in your market analysis section.

• How large is the construction industry?
• What segment of the construction market will you capture?
• Who will avail of the construction services?
• What is the spending capacity of your target customers?
• Who are the top competing construction companies?
• What are the emerging trends in the industry and how will you leverage those?
• What is the growth potential of your target market?

Focus on quality market research as this will form the base of your further projections and strategies.

This screenshot of the construction business plan example highlights only the market size for HDFL construction. You can also include details like competitors analysis, growth potential, and market trends here.

5. Describe your construction service offerings

What construction services will you offer your potential clients?

Offer a detailed answer to this question, as you write a business plan section for service offerings.

Overall, this section should highlight every service offering that will bring you money. This could include services like,

• General contracting services
• Design and Engineering
• Construction
• Renovation and remodeling
• Project management
• Specialty services i.e. concrete work, HVAC installation, Roofing services
• Maintenance and repairs

Offer a brief understanding of these service offerings and highlight construction jobs you will specialize in. For instance, remodeling of kitchen and bathroom.

Now, will your construction company sell any construction materials for profit? If so, include details for that as well.

It’s important to consider the breadth of your service offerings to keep the customers coming back.

Overall, this section is your chance to prove to potential investors that your services can stand solid in the competitive construction industry.

6. Propose marketing and sales strategies

According to the IBIS world report , there are more than 3,787,470 construction businesses in the USA. Starting a construction company will add one more to this list, but hey- How do you wish to make a brand that your target audience can recall easily?

All the market assessment and understanding of your potential clients will come in handy at this stage as you make your marketing plan and sales strategies.

Take an opportunity to lay out your sales plan in this section. If you have existing customers, explain how you plan to retain them.

After you are done making your sales strategies, touch the marketing aspect.

Firstly, identify the way you want your brand to be recognized- as an ordinary construction firm, a luxury construction company, a sustainable solutions firm, or an affordable construction company. This will help you make a marketing plan.

Your marketing strategy should answer the following questions:

• Which marketing channels will you use-  Online, offline, or a mix of both?
• How will you generate more leads?
• Online marketing methods- search engines, social media, Email marketing, content marketing, etc.
• If you are going to be utilizing social media platforms- which ones?
• How much will you budget for paid ads?
• Will you use billboards, pamphlets, and newspaper advertisements to market your business?

Keep in mind the marketing channels where you can find your potential customers. For instance, you are more likely to find conversions through Email campaigns than social media campaigns, if you are finding clients for commercial construction.

All in all, in this section you have to draw potential investors’ attention with your sales and marketing strategy.

7. Introduce your management team

Everyone is aware of the cutthroat competition in the construction industry. Knowing that you need an able team to transform your business plan into a successful venture.

After laying out your marketing strategy, it’s time to introduce the key management and leadership team to your business plan.

It’s okay to brag about the talented individuals you have in your company. From construction heads to project managers, highlight the achievements, experience, and expertise of these people and prove their asset-worthiness for your company.

Also, draw the hierarchical map to give potential investors an idea of your organizational structure.

This is your time to prove that you have both the means and manpower to run a successful company.

8. Outline your operational plan

You may know construction, but do you know how to run a construction business?

As someone said, “ Seamless operations are the silent engine of extraordinary business achievements”

Before even taking the first project, it’s important to define operations and SOPs for different business activities. Make it so thorough that it can act as a guidebook whenever a problem arises in your construction company.

As you write a business plan for this section, focus on answering the following questions:

• What construction materials will you use?
• What will be the supply chain process in your construction company?
• Who will oversee the project management on site?
• What will be the timeline for completing projects?
• What will be health and safety protocols for construction workers?
• What will be the process of construction work?
• How will the communication flow within an organization?
• What technologies and equipment will you use?
• How will you ensure quality work?
• How will you hire employees?
• What accounting software will you use?

This is just a general gist of questions that can help you prepare this section. Consider it as a living document that will undergo various changes as the business commences and grows.

A thorough operations plan will lay a clear groundwork for running a company. Moreover, it will instill investors’ faith in your ability to run a construction company.

9. Create a financial plan

Writing a sound financial plan is a challenge but nothing that your determined mind can’t handle.

Whether you plan to raise funds or get bank loans, you need a sound financial plan. Investors will analyze this section and only if they find your business financially viable, will they invest.

In this section, you will make financial projections and estimates for your construction company. This includes forecasting sales, estimating startup costs , projecting overhead costs, and making a pricing plan.

Using the startup costs projection, determine how much funding is essential to start your own construction company.

Also, prepare different reports like income statements, cash flow statements, balance sheets, and break-even analyses using the projections made earlier.

To make a financial plan more relevant, consider various progressive and aggressive situations.

Lastly, prepare graphs, charts, and diagrams to make this section visually appealing and easy to grasp.

Now, stop. Don’t start writing a financial plan yet. You need a financial forecasting tool from Upmetrics to help you with projections and calculations of cash flow, sales, revenue, and everything else. Simply enter the data and it will make detailed and precise calculations for you.

Trust us, you don’t want to scratch your heads writing the entire plan from ground level.

And that’s it! With all this information you pretty much know everything that a construction business plan must have.

Construction Industry Highlights 2023

Now that you are almost set to open a construction company, here are a few industry statistics that might interest you.

• Market size : The US construction market sector was valued at 1.8 trillion US dollars in 2022.
• Growth of the virtual construction market : The global BIM market is 7.9 billion US dollars . North America is projected to be a market leader capturing 30% of this market.
• Rise in prefabrication and modular construction : Healthcare facilities followed by hotels/motels and educational institutions are most likely to avail of modular construction facilities.
• Major concerns : The leading concerns encircling the construction industry are inflation and supply chain disruptions faced by nearly 90% of constructors.
• Sustainable and green building : There is a continuous increase in demand for sustainable and green building solutions. As for 2021, the green building market in the USA was reported to be approximately 83 billion dollars .
• Growing investment in smart cities : According to IDC, the investment in smart cities is expected to grow to 203 billion dollars by 2024.

From sustainability to tech-centric processes, the construction industry is making huge shifts in trends. Both, small businesses and large have to evolve according to changing times to keep themselves relevant.

Download a sample construction business plan

Facing difficulty writing a business plan? Well, we have a perfect resource for you.

Download the Upmetrics sample business plan template. Our template offers step-by-step instructions and prompts to ease the entire plan writing process. It’s designed to meet modern market needs and is perfectly detailed with construction-relevant examples.

The Quickest Way to turn a Business Idea into a Business Plan

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A lot of us struggle when it comes to translating our ideas into a solid business plan. But not with Upmetrics.

Upmetrics is an intuitively designed business planning app with more than 400+ sample business plans . Our business planning tool features AI assistance that will transform your business writing process. Not only that, it allows you to design, collaborate, and share your business plan in real-time with your team.

So what are you waiting for?

Let’s Build your plan with our business plan builder.

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Table of Contents in Business Plan

Frequently asked questions, what kind of market research should i include in my construction business plan.

The market research for your construction business plan must include the following details:

• The market size of your targeted market, i.e. commercial construction, residential construction, etc.
• The target audience of your services and their buyers’ persona
• Top competing firms and companies offering similar services
• Emerging trends in your market
• Growth potential for your firm

Is a SWOT analysis necessary for a construction company business plan?

Absolutely yes. There are more than a billion construction companies in the USA itself. Starting another business won’t guarantee success unless you have a business that can withstand the dynamic competitive environment. SWOT analysis will make you aware of the company’s strengths, weaknesses, and the opportunities it can avail

What are the initial startup costs for a construction company?

It is possible to start a construction company with as little as $10,000. However, if you plan to set up a mid-sized construction company, expect to spend anywhere around $50,000-$250,000 on getting a basic setup. This includes accounting for licenses, insurance, office setup, construction materials, and payroll for the initial months.

Can I get government grants for a construction business?

Yes, you can apply for government grants to start your construction business. Check the local, federal, and state regulations to see which grants are applicable to your business. Check the eligibility and apply accordingly.

How often should I update my construction business plan?

A business plan is a living document that can guide you toward success if mapped properly. Ideally, you should update your business plan every 4-6 months to make it relevant. Set aside time to do so as a renewed plan will offer deep and meaningful insight into your business goals.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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Built to Build: Blog

How to organize your construction business for success.

As soon as you read the words ‘ organizational chart,’ your brain conjures up an image of some complex flowchart in the back of an employee handbook.

You’ll think, “I don’t really need one of those for my construction business,” especially if you own a small business.

But, you would be wrong.

YOUR ORGANIZATIONAL CHART SHOULD SHOW AND TELL

Most construction businesses, like many businesses in general, don’t have an organizational chart. 

If they do have one, they only show the internal structure of the business.

They don’t tell the people within that structure how decisions are made.

Here’s my simple definition of an organizational chart:

a visual representation of how a business makes decisions.

Your organizational chart should be a decision-making machine for your business.

TIME, MONEY, EFFORT IS LOST WITHOUT AN ORGANIZATIONAL CHART 

Owning and operating a construction business without this decision-making machine is like trying to build a project without a set of plans.

Sure it can be done, but it will come at a cost.

You’ll waste time by trying to solve problems on-the-fly. You’ll waste money because mistakes will be made, which in turn, will increase the inefficiencies of your production.

Think of the organizational chart for your construction business as the set of plans and the scope of work for your business.

3 STEPS TO CREATING YOUR ORGANIZATIONAL CHART

The hardest part of designing your organizational chart is knowing where to start.

Use the sample ORG CHART TEMPLATE  to start laying out the visual representation of your business.

The X-axis represents the Divisions of your business, and the Y-Axis represents the Roles within your business.

STEP 1: DEFINE THE DIVISIONS OF YOUR CONSTRUCTION BUSINESS

If everything depends on you, the business owner, then you will remain the bottleneck of your organization.

If you want to remove yourself as the bottleneck, then step one of creating an organizational chart that works is to define the divisions of your business.

Most construction companies have at least three divisions: Operations, Administration, and Financial.

You may have more, and that’s fine.

If this is the first time you’ve ever attempted to create an organizational chart for your construction business, then keep it simple.

List the Divisions of your construction business along the X-axis, and define them by how they serve your business.

For example:

Operations is HOW WE PRODUCE THE WORK/PRODUCT/SERVICE.

Administration is HOW WE COORDINATE COMMUNICATION BETWEEN THE OTHER DIVISIONS.

Financial is HOW WE MEASURE THE PROFITABILITY OF THE BUSINESS.

STEP 2: DETERMINE THE ROLES IN EACH DIVISION

Before you start stacking up all the current jobs in your construction business within your newly defined Divisions,  create one more layer of organization along the Y-axis of your chart.

Along the Y-axis, determine the Roles within your organization.

Roles for your organization might be executive, director, manager, leads, support, or entry levels. (see the sample org chart above).

PRO-TIP: Roles define the responsibilities of the individual Positions – which is the final step.

Executive Role – responsible for the successful execution of their respective division to achieve the desired outcome of the business owner(s).

Director Role – responsible for leading and supporting the managers within a division.

Manager Role – responsible for communication and coordination of the various teams for which they are responsible.

Lead Role – responsible for leading a team(s) to produce the work and training others on the team(s) 

Support Role – assist the Leads, Managers, and other personnel to accomplish assigned tasks to achieve team goals

Entry Role – performed assigned tasks and contribute to the success of the team(s) 

Each Role on your organizational chart is a level within your organization.

STEP 3: DESIGN THE POSITIONS

Now that you have defined the Division within the organization along the X-axis, determined the Roles (or Levels of Responsibilities) along the Y-axis.

The last step will be to design the individual Positions and give them a name. 

Don’t make this hard.  

The name of the executive, director, and managerial positions will most likely come from a combination of the name of the Division and Role.

For example: 

The Chief Financial Officer (CFO) is the executive-level position for the person responsible for the financial division of the company.

The Director of Operations (DOO) may report to the Chief Operations Officer (COO), and the Project Managers report to the Director of Operations.

The names for the executive and director positions are pretty standard across most businesses. You will have more specific position names for the Lead, Support, Entry, and even Assistant positions.

Don’t discount the power of the job title or position name. Check out this article where I discuss how having clearly designed job titles help create engaged employees for your construction business.

HIRE THE POSITION, NOT THE PERSON 

A structured and well-designed organizational chart shows how each position supports the business’ operations at each level and within each division.

Do you know what you don’t need to show on the organizational chart?

Answer: your employees’ names

Names change as your company grows. The functional role of the position does not.

That’s the biggest mistake many construction business owners make when they attempt to create an organizational chart. They think about the people who currently do “that job”.

Instead, you need to think about what the job is, what it’s called, and how it serves the overall business.

If you design a position around a person, and that person leaves, then you are left with an impossible task. You have to find another person just like the one that left.

But if you design the position and list the duties and responsibilities and show how that position serves the overall business, then you can recruit people to fill that position based on competency and character you require. You won’t have to rely on personality and the previous person’s experience.

Positions won’t change, but the people will.

Forget the names. Focus on the position.

THE BENEFITS OF AN ORGANIZATIONAL CHART   

An organized business is a more efficient business. You’ll experience fewer inefficiencies, increased communication, and you’ll have happier employees.

Your organizational chart should show and tell your employees their roles and responsibilities and how they serve the overall business.

In my previous article , I wrote that your employees want to know “What’s next?”

The best way to show your employees a path to success, or ‘what’s next’ is to create, display, and update your organizational chart.

Your organizational chart is a decision-making machine.

“It is a tool that any employee can use to learn who to go to with questions, key information, and concerns.” – Bruce Eckfeldt

ORGANIZE YOUR CONSTRUCTION BUSINESS TO ATTRACT YOUR NEXT BEST EMPLOYEE

If you want a step-by-step Hiring system, including how to design an organizational chart that functions like a decision-making machine, then apply for a program  in the Built to Build Academy®. 

You’re going to struggle until you have these systems in place.

JOIN THE SYSTEM BUILDERS™ COMMUNITY FOR FREE

Wish you could connect with like-minded business owners, ask questions, get feedback, and receive a ton of free resources to manage the “business side” of your construction business?

Then click here, join the System Builders™ online community for free , and get access to a ton of free trainings, resources, and your new peer group of professional contractors.

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6 Ways to Scale Your Construction Business

There comes a point in many construction business journeys when it’s time to start thinking about growth. How are you going to take on new projects and clients while maintaining the strong foundation you’ve built? 

While scaling may not be right for every construction business, it’s important to be prepared for future growth with a solid foundation to set you up for success at scale, should you choose to pursue it. Whether you’re a small or large construction firm, we’ll share a few key strategies for preparing to scale—or, at the very least, how to scale efficiencies across your organization to keep your business strong.

3 Challenges to Scaling Your Construction Business

Just as establishing the fundamentals of a construction business can come with any number of hurdles, there are various potential challenges to scaling an organization. From labor shortages to data silos and a lack of consistency, here’s a look at the difficulties that may arise when embarking on your construction business’ scaling journey.

1. Labor Challenges

The ongoing labor shortage has been a challenge for the construction industry for many years, especially when it comes to specialty contractors. This shortage has remained a pressing concern, even in the face of the COVID-19 pandemic, with a recent AGC survey finding that, despite significant construction project delays and cancellations, a majority of firms (52%) reported encountering difficulties in hiring hourly craft workers. With such limited resources, it can be difficult for firms to take on new construction projects and expand their businesses.

2. Manual Processes & Silos

Regardless of the myriad advancements in construction technology over the years, many firms still use manual processes and paper to conduct day-to-day business operations. This of course increases the time it takes to carry out daily business functions, but it can also open construction businesses up to more risk, with the potential for mistakes presenting the possibility of serious delays and loss of client trust, among other concerns.

Moreover, manual processes can create data silos, which can hinder scaling initiatives with disconnected data, information, and teams. Such silos produce a number of challenges to improving efficiency and operations.

3. Lack of Consistency

Another challenge to scaling a construction business is inconsistency when it comes to project and business operations. Many firms suffer from a lack of internal standards, processes, and templates, making it difficult to create repeatable and scalable operational best practices.

How to Scale Your Construction Business: 6 Keys to Success

Despite the myriad challenges presented by labor shortages, manual processes, and a lack of consistency, there are many tools construction firms can use to scale their businesses. Read on for the six keys to scaling your construction business, and start your growth journey with confidence and a strategic approach.

1. Remove Data and Communication Disconnects

Scaling your construction business starts with removing disconnects across your teams, partners, and processes to optimize collaboration and efficiency. On any given construction project, there can be 50+ companies coming together to collaborate. Having disparate systems among these project partners can create any number of problems, which is why the goal is to have everyone on the same page when it comes to project documents and processes. Simply put, everyone should know what they’re trying to accomplish to ensure they are building the right things.

Achieving this kind of data and communication connectivity requires a digital platform and strategy for centralizing as much project information and communication as possible. When construction firms can digitize and manage their data collectively and efficiently, all in one place, with consistency and cohesion they can start to scale their businesses while adding value to their end clients.

Employing connected construction software—e.g., a platform that allows you to connect data and teams across project phases—is an essential solution for removing disconnects in project data and communication.

2. Connect Workflows and Automate

Another benefit of a connected construction platform is that it connects workflows among all team members on a project.

Connected workflows are important to clients due to the fact that many current construction industry workflows exist in silos, causing the aforementioned problems of inefficiency and loss of trust. The construction technology landscape has an abundance of different workflow solutions, but few end up being integrated to communicate with each other.

On any construction project, there’s a lot of work to be done across various teams and different organizations. In order to deliver the end product—to build the building—all of these teams and organizations must be able to work together.

Connected workflows drive better outcomes on construction projects in the way they share data across different project units in a highly efficient manner—much more so than manual processes. This matters a lot to construction businesses trying to scale, as efficiency is vital when you are in a highly competitive situation looking to grow your organization. In order to be competitive and meet all of the expectations of existing and new clients, you can’t afford to operate in an environment where your workers are disconnected.

For this reason, connected systems that truly connect workflows are a necessity to scaling a construction business. Many times, automation plays an important role in connected workflows, as automated processes with a central system will reduce manual work and enable you to meet project demands—and future demands—better and faster.

Additionally, a connected construction software that integrates with other critical project and business systems will help remove silos and improve workflow connectivity.

Want to learn more about creating connected workflows? Check out this blog . 

3. Standardize Processes

If you want to scale your construction business, repeatable processes and workflows are a must.

Take, for example, the practice of submitting RFIs in several different formats. It’s highly likely that information will be lost. Conversely, using a template for the RFI process helps mitigate the pain points of identifying and submitting requested data, and offers improved consistency and transparency for answering future RFIs. This is especially true when you employ reliable connected construction software that offers numerous ways to standardize your forms and processes, ultimately improving your organization’s speed and efficiency.

4. Enhance Flexibility and Customization

In addition to standardized templates, you’ll also want flexibility and customization when it comes to connected construction software.

Flexibility allows your team and projects to remain agile—able to embrace change, if needed, and expand or decrease workloads where it’s necessary.

You will also want business systems that work for your unique needs, not those you’ll have to adapt to in order to make things work. That’s why it’s crucial to look at the level of customization available in your connected construction software. When attempting to figure out if the software will meet your exact needs, you might want to connect with your sales or or support representatives. Quality technology partners will have a dedicated support team to help you find the solutions that are best suited to your growing construction business’ needs.

5. Build Trust

Perhaps an often overlooked quality of construction businesses attempting to scale is industry reputation. Are you known as an honest, reliable organization? Trust is critical to improving your standing with partners and clients, which can ultimately lead to winning more new and repeat business.

Construction industry research backs this up , finding that construction companies with the highest levels of trust have more repeat business, driving gross margins 2% to 7% higher than those of organizations without high trust. What’s more, at firms where trust is very high, the majority (57%) of one recent survey’s respondents reported that more than four out of five of their projects are repeat business.

6. Enhance Data Insights

Insights and analytics will shed light for your construction business on potential risk areas and opportunities for future growth. Solutions using predictive analytics, machine learning, and artificial intelligence are well positioned to drive major changes regarding how engineering and construction firms bid on and execute projects, according to McKinsey & Company . 

In particular, predictive analytics can help construction firms decide whether they should bid on a project, and if they do, how much. These tools are also able to help determine if subcontractor bids are reasonable, break down the costs and profitability of prior jobs, and alert you to whether a construction project is likely to run into problems.

Scaling Your Construction Business Starts with a Solid Foundation

Whether you’re ready to scale your construction firm, or you still see scaling as a future endeavor, setting a solid foundation is always a smart business decision. You can establish this foundation and better position yourself to scale by removing data and communication disconnects with connected construction solutions, connect workflows and automate, standardize processes, enhance flexibility and customization, build trust, and optimize data insights. These key initiatives will allow you to overcome common growth hurdles and scale your construction business to reach new heights.

Grace Ellis

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10 Keys to Construction Business Management

162 articles

Everyone loves to profess how difficult the construction industry is. These critics like to point out how this business chews up companies and spits them out. While there are plenty of people out there criticizing the business, not enough of them are offering construction business management solutions. Instead of teaching business owners how to manage a construction business, these nay-sayers just point out the challenges. 

Instead of painting a picture of doom and gloom, this article discusses some critical tips on how to manage a construction business. From workforce and cash flow, to marketing and risk management, these tips will help business owners run more efficient and profitable businesses. 

Table of Contents

10 top principles of managing a construction business

This line of work has some unique challenges, but construction business management isn’t entirely different from managing businesses in most other industries. These tips from leaders in almost every industry prove it.

1. People need motivation

“Management is nothing more than motivating other people.” – Lee Iacocca

For a company to grow, its people need to feel motivated. They need a company vision and direction they can believe in. Establishing a company goal that everyone can work toward together can be a critical motivating factor.

Create a mission statement that describes exactly what your company believes in. This statement can provide the concrete evidence most people need to feel good about what they’re doing. 

Also, as the company achieves its goals, share the success with your workforce. Recognize those folks for their hard work and thank them for aligning with you on the way to the top. Recognition goes a long way toward motivating your employees.

2. Business policies remove uncertainty

“Surround yourself with the best people you can find, delegate authority, and don’t interfere as long as the policy you’ve decided is being carried out.” – Ronald Reagan

If a business plan is a roadmap to success, your business policies make up the GPS that keeps the business on course. Learning how to manage a construction business entails putting these policies together so you can streamline decision-making.

It’s essential to have an employee handbook or set of policies to follow, but there are other policies to put in place as well: 

• Develop a credit policy that determines who you’ll extend credit to and how much risk you’re willing to take. 
• Put a collection policy in place that establishes when to send invoice reminders and when to turn accounts over to a collection agency. 
• Establish a policy that clearly outlines how to handle lien rights. Will you send preliminary notices on all your projects or just the risky ones? (Hint: Send them on every project). Also, when is the threshold for filing a mechanics lien ? 

Nailing down the who, what, when, where, and how of all these policies will create faster decisions with consistent, measurable results.

3. Your employees are your most valuable asset

“Train people well enough that they can leave. Treat them well enough so they don’t want to.” – Richard Branson

Your business can’t go anywhere without the right people, so kick the “everyone is replaceable” mindset to the curb. You need to show your people that they matter. Give them the tools they need to succeed and the opportunity to better themselves. 

Not every business has the means to reimburse tuition or provide company trucks. But little things matter as well : Allowing employees to leave early for family events, offering training, throwing holiday parties, and other small bonuses all say a lot about how much you value your people. Also, recognizing employees who go above and beyond will motivate them to work harder and produce for you. 

When your company atmosphere is one of appreciation and empowerment, you’ll attract the best employees .

When labor shortages arise , your company will be in the best position to grow as it will be fully staffed with top-tier talent. And, when those job alerts come through their email, they’re a lot less likely to submit a resume — even if the job pays a little more — because they know they’re appreciated where they are.

4. Effective marketing requires a deep understanding of your customer

“Running a business without marketing will kill it.” – Paul Cookson

It doesn’t matter if you’re a new homebuilder, an established commercial contractor, or an international infrastructure outfit: You need to market your business . How you go about marketing your business will depend on your customer.

Homebuilders and remodeling contractors often rely on advertising where their customers can find it, such as billboards, social media, and mailers. Those methods won’t work for commercial contractors. Instead, they need to focus on building relationships that lead to repeat business and referrals. For public works-type contractors, developing a team full of go-getters that can submit and win bids is the best form of marketing. 

Whichever your business model, be sure you’re focusing your marketing efforts where they can make the biggest impact. 

5. Cash flow is king

“We were always focused on our profit and loss statement. But cash flow was not a regularly discussed topic. It was as if we were driving along, watching only the speedometer, when in fact, we were running out of gas.” – Michael Dell

It’s true for all industries, but in construction, cash flow is the key to survival. Companies with positive cash flow can grow and take on more projects, while those without it struggle to keep the lights on. 

There are several ways to improve and manage cash flow , including minimizing unnecessary overhead and improving accounts receivable collection practices. Also, reducing the amount of time it takes to get paid by protecting and leveraging lien rights will keep the cash coming in. 

6. Automation can improve efficiency — or make it worse

“The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” – Bill Gates

Implementing new technology and processes is a great way to grow, but you have to hammer out the details first. Be sure that everyone on your team knows what their job is and how to do it. Take a look at your processes, identify their weaknesses, and improve upon them. Once you’re able to nail these details down, consider adding automation such as construction management software to your game plan.

But, recognize that magnifying inefficiencies isn’t always a bad thing. If you don’t know something’s not working, you might receive a baptism by fire. However, if you stay nimble and prepared to improve, weakness exposed by automation can be a benefit to your construction business management outlook.

Learn more: The Benefits of Automation for Your Construction Business

7. You can’t eliminate risk, but you can manage it

“Risk is a function of how poorly a strategy will perform if the ‘wrong’ scenario occurs.” – Michael Porter

It doesn’t matter what industry you’re in, there is always risk to deal with. In construction, materials delays can cause schedules to overrun, employees can get hurt, customers can decide not to pay, and many more scenarios could play out. These are all bad, but you can limit how they impact your business.

First, be sure to carry all the insurance policies you need, including business insurance, general liability, and worker’s compensation. Also, be sure to include negotiation clauses in your contracts to prevent delays from costing you more than they need to. Finally, protect your lien rights to ensure you have recourse if a customer decides that they aren’t going to pay you.

Mechanics liens are the fastest and most effective way to get paid when a customer owes you money, so don’t give up your lien rights by not meeting your state’s requirements. 

8. Good accounting leads to better business decisions

“Accounting is the language of business.” – Warren Buffet

Good, comprehensive accounting practices are critical to truly knowing how well your business is doing. You need to know your numbers, including profits, losses, and cash flow, but also how much each day on-site costs and where the money comes from. 

Make accounting reports your best friends. Produce financial reports for managerial review on a regular basis. Also, use accurate job costing software to determine the health of your projects and cash flow reports for the health of your business . Without these critical reports, it’s hard to say how well your business is actually doing.  

9. Use financing to grow

“Business, that’s easily defined: It’s other people’s money.” – Peter Drucker

Leveraging the power of financing can be critical to learning how to manage a construction business. By utilizing other people’s money, you can front the cost of new jobs, secure necessary equipment, and push your company forward. 

And, one of the benefits of smart financing is protecting cash flow. By using credit judiciously for things like materials financing or equipment purchases, you can ensure you have more money coming in each month than going out—the true key to managing a construction business’s cash flow .

10. Profit is a result, not a reason

“Business must be run at a profit or it will die. But when anyone tries to run a business solely for profit, then also the business must die, for it no longer has a reason for existence.” – Henry Ford

If you focus only on profit, you’re missing the big picture . Businesses need reasons to exist, fueled by vision and purpose. This mindset allows the leadership to make smart decisions for the good of the company’s future rather than maximizing profits in the very moment at the cost of growth. 

For example, awarding a contract to the lowest bidding subcontractor might not (almost never) be a great idea. Likewise, working for a GC with a bad rep because you’re light on work could be a disaster. Or you could make the mistake of hiring someone without the necessary skills or drive to do the job because they cost a few dollars less per hour. Worse yet, taking a bad financing deal that sounds good in the moment instead of weighing out your options can lead to big issues.

Develop a company vision and live by it . Allow it to steer your decisions so the company grows in the long run, not just in the short term. 

Construction issues aren’t as unique as you might think

Those tips are applicable to any industry, not just the one erecting buildings and paving highways. Construction business management might look different on the surface, but the core values of running a successful business still apply. By valuing and motivating people, protecting cash flow, managing money, and managing risk, you’ll how the nuts and bolts of how to manage a construction business, or any business, down in no time.

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Tom Scalisi

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