9 Construction Best Practices to Grow Your Business
Written by: Kelsey Hainley and John Meibers
Growing a construction business requires more than just ambition; it necessitates strategic planning, attention to detail and a commitment to excellence. Implementing best practices is paramount in a competitive industry that demands precision and reliability.
This article outlines key strategies construction companies can employ to foster growth, enhance reputation and secure a solid foundation for the future.
1. Understand Your Job Costing
In order to expand your construction business, you must understand your firm’s operational processes and areas for improvement. The best way to learn this is through your job cost reporting.
Through accurate job cost reporting, you can get a detailed breakdown of an entire project, track expenses in real-time and easily calculate future profitability. By analyzing job cost reports, you can determine the actual cost of a project versus the estimated cost. This information is crucial for making informed decisions about future projects, such as adjusting project bids, identifying areas where cost savings can be made and improving construction project management and resource allocation.
Additionally, job cost reporting can help construction companies identify project performance, inefficiencies and areas to improve their operations. For example, if a particular project consistently incurs higher-than-expected labor costs, the company can investigate why and implement changes to improve efficiency and reduce costs in the future.
2. Invest in Your Construction Business
Construction firms must invest in their business to expand it. This can be done in multiple ways, including hiring and training, marketing, new equipment, technology and software.
Hiring and Training Employees
Investing in hiring and training employees, both in the office and the construction crews, is key to ensuring you are hiring the right people and retaining top talent. Putting time and effort into the hiring process is key since the total cost to hire a new employee can be three to four times the position’s salary. A skilled and motivated workforce is essential for delivering high-quality projects and maintaining client satisfaction.
Strategic hiring ensures you have the right talent to tackle diverse projects and adapt to evolving industry trends. By attracting experienced professionals and providing continuous training, you foster a culture of excellence and innovation within your team. This not only enhances productivity and efficiency but also enables you to take on more complex and larger-scale projects.
Additionally, a well-trained workforce is crucial for adhering to stringent safety standards, reducing accidents and minimizing project delays. Ultimately, the investment in hiring and training improves project outcomes, client trust and a solid foundation for long-term business growth.
Investing in marketing is paramount for the expansion of your construction business. It serves as the bridge between your exceptional services and potential clients.
A well thought-out marketing strategy helps raise brand awareness, establishes credibility and positions your business as a leader in the industry. You can reach a wider audience and attract projects that align with your expertise through targeted advertising, compelling website content and an engaging social media presence.
Effective marketing efforts can differentiate your business from competitors and highlight your unique value proposition. This increases your chances of securing new construction contracts and fosters long-term client relationships, ultimately driving sustained growth and profitability in the highly competitive construction sector. You can also use marketing tactics to attract new employees by highlighting opportunities and benefits your company offers.
New Equipment, Technology and Software
Investing in new equipment, technology and construction software is pivotal for expanding your construction business.
Tools such as construction management software, improve efficiency, precision and competitiveness in a rapidly evolving industry. New or advanced equipment and technology, such as Building Information Modeling (BIM) and project management software, can increase productivity and quality, reduce costs both in the short- and long-term and enhance safety—all while giving you a competitive advantage, allowing you to win more or new work.
New, or updated software can streamline your operations, enhance effective communication and coordination among project stakeholders, improve productivity and drive business growth. Moreover, staying at the forefront of technological advancements demonstrates your commitment to quality and positions your business as an industry leader. Embracing innovation also opens doors to a wider range of projects and clientele, as many project owners now seek construction contractors with access to the latest tools and methodologies.
By strategically investing in equipment, technology and software, you equip your business for sustained growth, a competitive edge and successful projects.
3. Build a Talented Team
Your team is the backbone of your construction business. To expand your business, construction managers need to build a talented team of professionals who share your vision and values.
Hire a diverse group of construction professionals with the right skills and experience and provide them with ongoing training and development opportunities, while also defining their roles and responsibilities.
Strategies to hire and retain key employees include educating younger generations on career opportunities, reviewing your benefits and focusing on safety—ensuring they are not putting their life on the line just to work for you. A motivated and skilled team that is aligned with your mission and values can help you deliver high-quality projects, make the construction process run smoother and achieve your business objectives.
4. Be Selective to be Profitable
Construction companies should know when to bid, how to bid and when to pass on a job.
When bidding, it’s also important to know how to look for growth. This could mean going after more local jobs, more out-of-state jobs or expanding the services you offer so you can go after different types of construction projects.
By being selective, you can better manage your resources to ensure you can successfully complete a job on time and within budget. It also allows companies to control their costs better by avoiding jobs that are outside of their expertise or capacity.
Lastly, being selective when bidding helps companies minimize their exposure to risk and focus on jobs that are likely to be profitable. Not all construction projects are profitable and some carry a higher risk of losses or legal disputes. Remember, you don’t necessarily have to do more work to grow; you just have to make smart, strategic decisions.
5. Quality is Key
When it comes to winning projects, it’s not always about price. Quality and quality control lies at the very foundation of a successful expansion in the construction industry, as it heavily relies on reputation and referrals.
Clients expect structures that endure the test of time, ensuring safety and functionality for years to come. Consistently delivering superior quality satisfies not only your current clientele but also garners invaluable referrals and repeat business, acting as a powerful engine for growth. Quality work also leads to satisfied customers—likely resulting in repeat work and cost-savings in the long run, with less chance of repairs or rework, leading to fewer delays and increased efficiency.
Moreover, in an increasingly stringent era of regulatory compliance, maintaining rigorous quality control measures is non-negotiable. Adhering to industry standards safeguards against potential legal ramifications and demonstrates a commitment to excellence, enhancing the business's credibility.
6. Play to Your Strengths But Know How to Adapt
To succeed in the construction industry, it is essential to identify your niche. This means finding a specific area of construction where you excel and can differentiate yourself from your competitors to win more jobs. It could be a particular type of construction project or a unique service you provide.
You can establish a strong reputation and build a loyal customer base by focusing on your niche. However, you must have the ability to adapt so you don’t limit your opportunities, especially with the fluctuations of the economy. You can do so by listening to your customers, expanding your services and staying up-to-date on construction industry trends.
7. Safeguard Your Company
Risk management and insurance represent a cornerstone best practice for expanding a construction business. In the dynamic and complex construction industry, unforeseen events and challenges are inevitable.
By proactively identifying, assessing and mitigating potential risks, a construction company establishes a sturdy foundation for growth. This practice instills confidence in stakeholders, demonstrating a commitment to responsible and reliable operations. Moreover, insurance coverage acts as a vital safety net, providing financial protection against a wide array of potential liabilities, from accidents on the job site to unforeseen damages or legal disputes. It not only safeguards the business's financial health but also enhances its ability to take on larger and more complex projects, opening doors to new opportunities for expansion.
8. Grow Your Network
Networking is essential for expanding your construction business. Attend industry events for organizations such as the Construction Financial Management Association (CFMA) and National Association of Women in Construction (NAWIC), join local business associations and build relationships with other professionals in the construction industry. This can help you establish partnerships, secure referrals and gain access to new markets. It’s also important to keep track of and manage the relationships you are creating. You can easily do this by using Customer Relationship Management (CRM) software.
9. Update Your Business Plan
A well-designed business plan can help you identify potential risks and opportunities and establish a clear roadmap for your expansion efforts. This plan should outline your goals, strategies and resources needed to achieve your expansion objectives. It should also include a detailed financial analysis, market research and competitor analysis.
However, creating a business plan is not a one-time event. You must update it to stay relevant and competitive in the industry. Some aspects you should focus on updating consistently are short- and long-term goals, annual critical numbers, organizational structure, employee benefits and company initiatives.
Overall, with the right strategies, growing your construction business can bring many benefits, including increased revenue, diversification of services, improved reputation, access to larger projects and opportunities for expansion.
Kelsey Hainley, Construction Industry Marketing Manager
Kelsey is a seasoned content marketer with a wealth of experience in the construction and engineering industries. Kelsey joined Deltek in 2022 and has honed a deep understanding of construction industry trends, driving impactful content strategies and enhancing brand visibility.
John Meibers, VP & GM of Deltek ComputerEase
John Meibers is the Vice President & General Manager of Deltek ComputerEase, the leading provider of accounting, project management and field-to-office software for the construction industry. Prior to joining ComputerEase more than 20 years ago, John spent a decade working for a large mechanical contractor.