Whether it is a Good or Bad Market… Develop a Methodology for the Projects You Pursue.

Tim Marsh stated many times, “I can lose LESS money by just sitting on the porch.  Its not what you go after, its what you don’t”

Your choice of what to pursue in construction is a driver of success.  But more importantly what you choose NOT to pursue will have a greater impact on success in the long run. Whether it is an argument, a new job, a project, or a new market, it is always better to know when to stay away than when to pursue.  Ego and fear will affect your desire to choose an approach that will have a negative long-term impact.  Leave them at the door… step back and see the current situation, potential results, and evaluate your capabilities and limitations.  Make your decisions based on the facts not the emotion.  There will always be risk, but make it a calculated risk.  Because sometimes the best learning experience comes from the things you didn’t go after.

Volume and Profit

In good and bad markets, the pressure to go after more projects is always looming.  More volume more fee right?  For those of you chuckling right you know the answer.

Some may say, “this is perfect time and the size we need”.  Others may say, “we are low on backlog and need the fee”.

Although it may seem counter-intuitive…The lowest priority in deciding on a project is money… The highest priority is actually the ability to build it.  Here’s why…If you can build it the money will take care of itself (if you have a good estimate), if you can’t build it you will lose money faster than if you had’t taken the project at all.

Focus On Building It

But, let’s define some things you must have to “build it” right:

  1. Supervision and trades experienced in the type of construction that can build it safely, have a vision for the end product and can foresee issues during the project,
  2. A good estimate
  3. Good quality
  4. Maintain schedule
  5. Able to maintain a good reputation with clients, architects, and trade contractors.

There are times you need volume just to keep the doors open, but even that can spiral out of control… so let’s set that one aside for a moment.

Lists of what to do and what not to do are a done a dozen. Straight up? There is not a one size fits all formula for choosing a project. So, we are going to go through specific questions to ask yourself about your project that are critical to consider during the selection of that project. The market is constantly changing for subcontractors, staff, and delivery methods. Be sure to take an honest look at each of these ideas before you select a project to pursue. If you can truly say that the majority of them is in place, the odds are in your favor for a successful project.

4 Areas to Consider When Selecting a Project

1 – What will it take to build the project

The first of 4 areas to review is related directly to building.  If you have the resources and can truly build it, you are 80% down the path to selecting a good project.

  • Do you have the capacity staff that is skilled in that type of project or complexity.Estimating
    • Supervision
    • Direct Labor availablity
    • Office support – contract accounting, yard, etc…
  • Are skilled trade contractors available to perform that type of project or complexity. Do they have capacity?Estimating
    • Supervision
    • Equipment
    • Manpower
  • Do you have experience in the delivery method for the project?Design Build
    • CM Muti-Prime
    • CM at Risk
    • Design Bid Build
    • Negotiated
  • Have you worked with or do you know the client?Expectations
    • Change order and litigation history
    • Do they want to participate or just have you handle everything?
  • Have you worked with or do you know the design team?Expectations
    • Change order and litigation history
    • Do they want to participate or just have you handle everything?

2 – External forces

There are many outside forces that you do not have control over.  You should review these  forces and provide for contingencies to minimize their affect.

  • MarketBid Market
    • Material and supply availability
    • Man power availability
    • Requests from long term clients
    • Physical distance from your main office to the project & structure to support it

3 – Internal forces

There are many internal forces unique to your company that need to be review as to how they will fit with the project.

  • Does the projected profit, general conditions, etc… needed for your company allow you to be competitive?
  • What is your current Back Log and respective Burn Off
  • What is your Bonding Capacity
  • Do you have direct work capacity?
  • Are you maintaining your goal for Diversity of market sector, project type and delivery method

4 – Long Term and Short Term Strategy

  • What direction is your company going do you need to develop different resources
  • Is the market sector long term or short term.

Throughout the process be diligent, ask questions, be honest with your answers.  Leave emotion and ego at the door and make an informed decision based on the facts.  Once you have decided, bring in your passion and competitive spirit and go after the project with all you’ve got!!!!

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