How to Run a Construction Company

There are three separate entities that a construction company has to satisfy in order to remain in business for an extended period of time. Licensing by the state, county and city can be the first hurdle the construction company must conquer. There are licensing test that must be taken and passed in order to get the license to operate. When this is acquired, the insurance that most clients will demand you have can be obtained to cover the job liability. Having the license will also allow bidding on jobs and doing subcontracting work.

Subcontracting work is the second entity that needs to be satisfied. A general contractor on a project will contract work to qualified businesses based on licensing, reputation and price. The better the general contractor, the better the jobs that can be found this way. Solid general contractors are better to work for as their checks should be delivered on time and will clear the bank. If you are new to the contracting business, make sure you ask around about any general contractor you are thinking of working for or with. Some big companies have lousy pay practices and can put a small contractor in a world of hurt very quickly.

The third entity to satisfy is the final customer. Some contractors will only work for the final customer as these are the payers for the job, and the terms can be ironed out, completed and the check will be paid. There is no middleman in the way, like there can be with a general contractor.


Employees you can count on


Solid construction companies with excellent reputations have people working for them that are very good at what they do, are great with the customer and finish the job as agreed or earlier. If they are well treated by the owner of the business, they will always go the extra mile for the boss. Respect and trust are a two way street. Good employees demand it and good employers will make sure it is part of the operating plan of the business. If you lose your quality people, you will suffer on the job and could end up out of business. Some owners just cannot seem to get this idea through their thick head. But the proof is just watch the construction companies with good reputations and see how their people act on the job. They are pros and do the work with skill and expertise. There is an obvious respect between the owner and his people. If you ask around it becomes quite apparent which companies’ people want to work for. Pay is only part of the answer. On site treatment of the employee is also an important element of the job. Mutual respect and trust are a big part of why some companies always have a list of people who want to work for them.

If there is a problem, it should be settled in private. Public dressing down is very poor management by the owner. No one wants to be embarrassed on the job. On the other hand public recognition of a job well done will never be frown on if the owner is sincere in the praise. Skilled, smart employees can make a company stand out and poor employees can quickly ruin a company with the people who hire. This one element of a construction company must be constantly handled in a professional manner and certainly not like a plantation owner.

Hiring experience is never cheap and training new employees has its own cost. Successful companies have come to the conclusion that a mix of both gives the best result. In any hiring agreement, make sure there is a trial period stated and a time certain evaluation date. This lets both parties know that there is a probation period that must be completed.


Bidding jobs, carefully to win


A job is up for bid that sounds like it is right up your alley. Make sure all the job details are clear and any questions you have are answered before committing your company. Go over the bid with a find tooth comb to find any math errors or mistakes in entry in the spreadsheet. Let the bid sit for a few hours or days if you can and then look at it again with fresh eyes. If there are obvious contingencies, make sure they are noted as part of the bid. Do not assume that something is understood as common practice. This can get a construction company in financial difficulty very quickly. If there are time constraints, make sure that the contract states how the scheduling will be handled and how it will be agreed upon. Scheduling problems can escalate in a construction job and throw all kinds of plans and money up in the air. If there is a dispute, the way it will be resolved should be included in the bid.

Cover the possibility of rising material costs in the bid. Commodity prices can soar over night and could have a very serious effect on your cost for the job. Construction firms have been damaged when copper prices or fuel prices suddenly go crazy.
Office staff and the telephone

Make sure your phone calls are answered in a friendly and professional way. When a possible customer calls in to your business, how they are treated on the phone will make an impression. Poor phone technique can leave a bad impression. Let the staff and those who answer the phone know explicitly how you want the phone answered and then test it yourself to see if it is being put into effect. If a specific staff person is needed to answer a question, try to do it then or let the person calling know how soon an answer will be available. People are willing to wait, usually, if they know that the answer will be coming in a reasonable time frame.

Quality staff work is another sign of a well-run business. Details are the nuts and bolts. These should be handled efficiently and with accuracy. Once a good staff is put in place, the business should seem to run on its own. Compliments will go a long way to keeping it that way.


Conclusions


Constructions companies can be moneymakers and financial disasters. Running a construction company takes planning and careful attention to detail by all involved in bidding a job. Bad bids cost money that could kill the profit for a year or more. The money in any bid is in the details. The secret is to understand the terms of the bid and make sure that is exactly what you are quoting on. Special considerations should be noted and specifically agreed to before accepting a contract.

If there are time constraints or time penalties for the job, make sure you know the details of who sets the constraints and what will happen if there are situations that cannot be foreseen. Scheduling delays are the biggest danger here and who sets the schedule must be spelled out. Your contract should set the time needed to do your job if the job site is ready. Conflicting schedules for your work and another are the problem for the general contractor and should not be held again