Growing a construction business IS EASY if you follow certain proven strategies.

Our team has worked with over 1,400 General Contractors, Developers, and Subcontractors, nationwide and we’ve seen what works and what doesn’t.

This year we helped Handymench secure a US Government contract to build the US Embassy in Jerusalem.

We also helped Don Williams of Builder Solution Group in Arkansas win over 8 projects this year.

And we helped Xavier Miranda from The Go2Guy secure a $4.2 million drywall project for Jackson Hospital West in Miami, FL.

Primarily we are a construction estimating firm, but because of the nature of our business, we are tied into the sales and negotiations part of the business, and we often help our clients with lead generation, along with the sales and follow up for their jobs.  We provide a valuable construction takeoff service for busy contractors

We also have our own construction division here in South Florida so we practice every strategy you’re about to read.

What we’re going to cover

We’ve compiled 29 strategies under 4 sections for you to implement.   We’ve organized them for you so you can jump to the section you need the most right now.

  1. Lead Generation Strategies
  2. Estimating and Bidding Strategies
  3. Value Building and Follow up Strategies
  4. Project Management and Business Strategies

Setting your Goals and Fixing Existing Issues

Before starting, you need to set a few short and medium-term goals so you can implement the correct strategies.  There is no order, but typically you want to build a lead system so you can estimate more jobs, eventually winning you more jobs, and then being fast and efficient in the construction portion of it.

1. How fast do you want to grow?  Are you looking to explode, or want a steady increase?  Keep in mind every company has growing pains.  If you grow too fast, it can get stressful!

2. Where is the “noise” coming from in your business? Where do you see the most challenges and issues in your business?  Is it with your field supervision?  Are you missing out on projects because of time?  Is your estimating team making mistakes because they are going too fast?  These are the things you need to focus on first.

3. When you get more leads, do you have a plan to estimate these projects? It’s going to take time and effort to get leads.  How are you going to estimate them?  Will you do it yourself?  Do you have a team?  Most contractors are smaller operations, and using estimating services is a great way to get those projects bid ASAP.

Lead Generation Strategies

1. Use Lead Generation Services

The most important part of growing your construction business is getting the right construction leads.

Here are two methods for you to use to get leads instantly.

Our favorite strategy to get the best leads is going to start with using commercial and residential lead generation services.

These are services like:

The services will get your foot in the door to bid projects for architects, owners, general contractors, homeowners, and developers that are actively looking for you.

The trick is not to focus so much on the project and focus on the opportunity to develop a relationship with the prospect.

It gives you a chance to meet the decision-makers, and start comparing your pricing with your competition.

If you’re just starting out, you can sign up with all of the services for their free trial, and you will get a few leads per month for free.  These sites are going to get you the volume you need to takeoff construction projects at a high volume.

2. The Title Page Method

The title page method is a method I devised for our clients that triple or quadruple the chances of winning a job.

In short, it’s 3x or 4x your chances of winning.

Find out who else is bidding the job, and send them your bid.

Here’s how you do it

1. Head over to your set of plans, and go to the title page or sometimes the title block.

2. Find the section that says Project Information, or Consultants, or similar.

project information title page

3. Call the Architect, Owner, and/or Owner Representative and find out who the bidding General Contractors are.

4. Call them and ask them if you can send them a bid AND ask to get on their bid list.

By doing this you’ve just multiplied your chances of winning by 3 or 4.  You also get a chance to start bidding for a new General Contractor.

Why it works:

If you are a Subcontractor and you are bidding for your General Contractor, you are probably bidding against three other Subcontractors.   Now your General Contractor is probably also bidding against two or three other General Contractors trying to win that same job.

What if you sent your bid to our building general contractors? Most projects have three or four bidding general contractors. That means starting off you only have a 10 or 11% chance of winning the job.

Those are terrible odds.  Means you have to bid 11 jobs to get ONE.

If you send your bid to all the bidding general contractors,  you instantly multiply your chances of winning because  it guarantees that the winner will have your bid.

3. The Double Dipping Method

The Double Dipping method is another method I devised for our clients to help them win more jobs.

Bid as both a General Contractor AND Subcontractor

As a General Contractor, you’ll have direct access to the Owner, which gives you the best shot of winning a job, but overall there are less projects out there.  So your options are limited.

What’s the solution?  Bid as both a GC and Sub.

When using Lead Generation Services, you’ll have access to a bunch of projects.  I recommend using the Title Page Method you just learned above and ask the Owner to bid their job.

If they say yes, you can bid directly to the Owner AND you can bid to the bidding GCs for the trades of your choice.

You probably already have a good list of Subcontractors.  Create a partnership where you can supply materials and management, and they only need to supply the labor.  You often can get much better pricing from them with this arrangement.

This is the Double Dipping method

4. Visit Clients and meet decision-makers

Visiting potential clients will strengthen your business relationship and will open the door to current opportunities they have on their desk.

Go to Google Maps and make a list of potential clients and start visiting their offices and introducing yourself.

Ask to meet the Owner or Principal.  Try to get a meeting with the decision maker right then an there.  Let them know you’re serious about working with them.  Present your qualifications and expertise.

     Pro Tip: Set up a CRM to track these leads (more on this later in this article).

Back to Google Maps:

Type the following:

“Type of client” + near me

“Type of client” + zip code

“Type of client” + city

Example:

Architects near me

General Contractors 33196

Realtors Miami

etc…

You’ll get a result that looks similar to this:

google maps

Use the list below as an idea generator for types of potential clients to visit.  Make it a point to collect their business cards, leads emails, etc. to later add this to your CRM and follow-up.

For General Contractors

  • Developers
  • Realtors (Commercial and Residential)
  • Previous Clients
  • Architects
  • Interior Designers
  • Property Managers
  • Mortgage Brokers
  • New Construction Project or Developments (ask for the main person in charge)
  • Construction Management Firms (or large GCs that usually hire Sub-GCs)
  • Owners Representative Firms
  • Mall Leasing Offices (ask how to become a preferred contractor)
  • Universities and Colleges (ask how to become a preferred contractor)
  • Large Residential Developments (they are usually run by property managers, or they need contractors for renovation projects often)
  • Empty Tenant Spaces at Malls and Strip Malls (ask the leasing agent to be updated on these spaces – this a great opportunity because if the space becomes filled soon, you’ll be fresh in their minds.)
  • Suppliers and Vendors (they come across all the projects since other contractors call to get pricing. They can tell you who is bidding. You might need to negotiate a finders fee for these types of leads)
  • For the services mentioned above, sign up as a GC AND as a subcontractor for all trades. When GCs start blasting out emails to all the subcontractors in the area, you’ll get an email and you can contact the owner as a potential GC bidder.

For Subcontractors

For Subs, make a Master List of the following types of clients and start visiting.

Bring your business cards, brochures.

Make it a point to collect their business cards, leads emails, etc.

  • General Contractors (ask to get on their bid list)
  • Construction Management Firms (sometimes they hire subs on smaller projects directly)
  • New Construction Projects (ask for the person in charge and ask if they need your trade for any jobs)
  • Interior Designers (some designers do some of the finishes directly.  They might be able to hire you directly.
  • Property Managers
  • Mall Leasing Offices (ask how to become a preferred contractor)
  • Universities and Colleges (ask how to become a preferred contractor)
  • Large Residential Developments (they are usually run by property managers, or they need contractors for renovation projects often)
  • Older Residential Communities (that might need paint or other remodeling)
  • Realtors (Commercial and Residential – their clients always need remodels in new spaces or homes)
  • Suppliers and Vendors (they come across all the projects since other contractors call to bid them.  They can tell you who is bidding. You might need to negotiate a finders fee for these types of leads)
  • Previous Clients

Pass by and visit and say you were in the neighborhood and that you wanted to meet them.

Ask to be put on their bid list, and ask what projects they have coming up.  They might have a project you can take last-minute.

5. Add the Government as a client

The Government is always building!  At the Town, City, County, State, Federal, and Military levels.

And another perk of working of the Government – there is no such thing as a recession or ups-and-downs.  They will always have money to build.  And their contracts are always wage-scaled.  So your contracts are typically going to be 2x or even 3x higher than private jobs.

The only downside – there is a lot of competition.  But it’s worth it overall.

First go to your local County, City, and State Building Departments and sign up as a Government Contractor.  They’ll likely have some pre-qualification forms and requirements to submit.

To find out local building department, head over to Google and type one of the following:

Town + building department

City + building department

County + building department

Next, sign up as a US Government Contractor on a federal level.

USA.Gov – https://www.usa.gov/become-government-contractor

BidNet – https://www.bidnet.com/

GSA – https://vsc.gsa.gov/RA/toolBox.cfm

Fed Biz Opps – https://www.fbo.gov/

Estimating and Bidding Stategies

6. Develop a system to estimate projects on autopilot

The more bids you put out, the more chances of getting jobs you have. Now I’m not a fan of just bidding for whoever. But rather it’s important to bid the right clients and bid them extremely accurate.

The most important part of a construction company is your estimating department. It is the engine that drives your entire company.

Consistency is key. Whatever you bid today, you’ll  see the results 3-6 months from now.  

We actually help our clients estimate their entire projects so they can continue focusing on running their companies, and building their business.

We highly recommend you get yourself an in-house Estimator employee to help you with your estimating. But we know that most contractors in America tend to be smaller operations and it’s difficult to afford a $2000 a week salary sometimes.

7. Hire an Estimating Firm

The solution is to hire an estimating firm like us to manage your construction takeoffs and estimates.

Imagine if you can just submit your plans and place an order, and a detailed estimate is submitted to you in a few days. How valuable is that to your business?

If you are just starting out or your funds are limited, you might not be able to hire an in-house employee, so hiring an estimating firm is a must.

You can submit a plan only when needed, so it’ll keep your costs low.

Now, if you happen to be a do it yourself are, then here is the way to estimate your projects.

8. Use Digital Takeoff Software

Digital takeoff software allows you to quickly calculate linear, area, and counts in your profit very accurately.

Estimating by hand take way too long, and sending your bids to Subcontractors puts you in a risky position trusting your Subcontractors to bid accurately.

Here are two recommended of software:

First, load the plans to software.

Next, scale the drawing and start measuring using the Linear Tool, Area Tool, or Count Tool.

area takeoff

Planswift will keep track of the measurements for you.

Next, export to Excel so you can add to your template.

Add to your template or spreadsheet so you can add your pricing.

Here is a simple template to get you started:

Download your estimating Excel template

Next, to estimate the project you are going to need a database of pricing.

9. Use Database Pricing

Databases like National Construction Estimator offer you highly accurate pricing tailored to your project’s zip code.

This is what we use in our office.

We use the numbers from the database and make modifications to labor and material pricing based on field conditions.

Companies like Craftsman and RS Means have research teams and consultants to create their databases.  They are based on actual contractors and suppliers providing pricing to them.

Then provide Area Modifiers to adjust for pricing for each zip code.  We’ve seen material prices tend to be pretty close throughout the nation, but labor fluctuate widely.

Areas like New York and Boston have labor rates nearly double the national average.  Meaning projects can be 50% more expensive than other parts of the country.

10. Write a great proposal 

Once you’ve spent the time to estimate a project, it is important to write a winning proposal.

Here is an example of what a proposal should look like.

sample proposal

Include a detailed summary of what your are going to include, and everything you are going to exclude.   Take this time to be thorough.  If something seems obvious to you, it might not be obvious to your client.

Anything that might be confused or unclear, note it under your inclusions and exclusions.

Have a section for your total amount, followed by your payment terms, and any other provisions you want to add.

For example, you can add things like:

  • Excludes overtime and weekend work.
  • Excludes wood framing
  • Includes Level 4 Drywall Finish

If you have Alternates or want to suggest using lower cost materials, or want to separate certain costs outside of your base bid, you can use a section for “Alternates”.

Lastly, make sure your proposals are well formatted, well written with good grammar, and looks aesthetically pleasing.   Clients will see your proposal and relate it to your ability to perform the work.

Value Building and Follow Up Strategies

11. Build up your perceived value over time

It’s a big myth that the low bidder always wins the job.

What actually win the job is going to be your perceived value and expertise in this specific project that you are bidding on.

Now, if you are one of those contractors that bid the job and never really follows up, the only thing the owner or your client has to go by is your price.

Building your perceived value is essentially going to be a combination of implementing many of the strategies in this guide.   What you want to do is add value and trustworthiness over time.

Continue reading on how to build your value.

12. The Audition Method

Bid Low with new clients to get in front of decision makers 

Our best strategy when getting clients opportunities with new clients is the audition method.

Imagine if an actor is trying to get a part for a movie. The director needs to see their abilities before hiring them  to see if they are good for the part.

This is the same in construction.   If you weren’t bidding for a new client, they don’t really know who you are so they are not really inclined to take your bid seriously.

But what if your bid was very long? Maybe even the little bitter? This will get you an audition for the part. It doesn’t mean you’re going to get the part because  clients actually higher on value versus price, but it will give you a great shot.

This message gets you in front of the decision maker and that’s why it’s called the audition.

13.The Interview Method

The interview method goes hand-in-hand with the addition method.

Once you get your foot in the door and have your audition with your client, the interview is what is going to set you up as an authority, a specialist for their project, and will build a huge level of trust with your client.

Everyone thinks clients hire based on price,  but that’s not true. They only hire on price if that’s all they have to go by.  But if you are the highly specialized contractor, that almost guarantees a successful project.  They are likely to pay a little bit more than the little better.

The audition is the bid you submit the sparks the interest because of price, and the interview method is the part where you offer special suggestions and value engineering for this project.

Your goal is to convey value and authority IN PERSON.  This doesn’t work as well over the phone, and definitely not through email.

First you need to spark interest and make them need to call you to clarify some of your scope.  You do this with your price, and you include some qualifications that don’t give away your method.

Contractors and Owners LOVE methods to reduce costs, increase speeds in construction, and way to get better materials at a lower price.

In your scope of work description you might include a standard description like:

  • Includes 5/8″ Stucco with 4″ EIFS Bands per plan.

But later in your “Alternates” section, you can add something in red like:

  • Deduction for Alternative EIFS Trim Installation:   ($30,000)

You highlight this IN RED to bring attention to it.  If it works, you’ll get a phone call saying:

Potential Client:  “Hi John, I got your proposal and I saw your alternate for EIFS trim installation.  What does this mean?”

You:  “It’s an alternative method to reduce the costs.  I saw a detail that shows an installation method that can be improved.  We can use a better type of trim.  I’ve gotten pricing from my supplier.  If you want to get some additional information, I’d like to set up a meeting.  I’ll even get some additional documentation from my supplier”.  We’ll need this to submit for an alternate.

Just having this conversation over the phone will start building your authority.  The thing is if you’re talking to an estimator, they aren’t the final decision maker.  The final decision maker is usually either the Project Manger or Owner.  So you need to convey this expertise to them.

That’s why you need to set up a meeting.  If they ask you for details over the phone, say you’re going to get them from the supplier and you’ll get back to them.

Once you get what you need, instead of sending through email, print the documents and GO VISIT them. Ask to meet the Project Manager and Owner.  Then make your pitch.   You’ll be talking to the decision-makers.

Guess what happens after your meeting?  They might say:

PM/Owner:  “We have a few other projects we were awarded that I want you take a look at…..”

This is the Interview Method.

14. Exposure Method

Get in contact multiple ways and channels

The strategy here is to get in touch with your client whether by phone or visiting, and building multiple touch points in your client – contractor relationship.

Let me introduce you to a very valuable, and little known psychology principle that you can utilize to influence your client in a positive way.

It is called the “Mere exposure” effect.

In marketing, it is recommended that you have multiple instances of contact with your client whether it be a phone call, visit, ad, or email.

Whenever there are multiple points of contact with someone or your brand, we tend to subconsciously start liking it or them.

It’s a very simple principle that you can follow that will, at a minimum, quadruple the chances of you getting the job.

15. Offer Value Engineering and Expertise

The next thing you can do to increase your perceived value is offer value engineering or a better quality method for the same price for their construction project.  This is part of the Interview Method above so make sure to include Value Engineering and your expertise.

In sales, you have to “Always Be Closing”.   In construction, the similar method is “Always Demonstrate Expertise”.  Owners and GCs like working with solid contractors who are experts in their field.  There are way too many contractors who just know enough to do the job and don’t really offer any additional value other than their labor.

Be different.  Be the one that helps the GC or other trades coordinate the job.

Several years ago when I worked at a Caroni, a drywall company, we were delayed in putting up the ceiling because of coordination issues with the duct work.  The GC was having trouble figuring out the required space for the duct to determine the final ceiling heights.

Because of my background as a Superintendent, I opened up the Mechanical plans and figured out the vertical space requirements using the height of the ducts, required strap height, an additional gap for installation purposes, etc.

This established ME, therefore Caroni as an expert, and this company to this day is working with Caroni on a large majority of their projects.

I’m not taking credit for Caroni’s continued success, but doing this over time on all jobs is going to make you THE BEST contractor they’ve every worked with.

You should have the mindset that you are the best in your industry.   And if you’re not, you need to get the experience and training through courses, in-field training, or my favorite, the “Google.com and Youtube University”.  It’s amazing what you can learn from other experts on Google and Youtube.

16. Branding makes you appear more professional and trustworthy

Lastly, another way to build up your perceived value is branding your company.

Consider branding your company with a professional logo, website, company shirts for you and your employees, high-quality business cards, professional looking templates, and brochures if you are in the residential market.

You can do all of this on Fiverr.com, and Vistaprint.com for your print media and shirts.

You’re going to need this for your sales, prospecting, and negotiations.

If your’e in the residential market, this is going to set you apart BIG TIME from your competitors.

In the commercial space, it’s going to be an added too to increasing your value.  The key is to have everything branded, even your proposals, change orders, and T&M tickets.

Project Management and Business Strategies

17. Build a great management and admin team

It is important to build a good team that meshes well when trying to build your construction company.

You are going to need a good Project Manager, Superintendent, Foreman, Accountant/Book Keeper.

If you are a GC, most of your required staff will be in your office helping you manage.

Your Project Manager will likely spend half of his or her time managing administrative duties, and the other half managing the field alongside the Superintendent.

Your Superintendent should be a highly skilled professional that has a solid character and understands how to manage the workers.  Working in this field supervisory role requires a specific personality type that can handle the field crews. Supervising these guys can be rough, so it’s important you have a levelheaded person with great people skills.

18. Build a great field team

Make sure your skilled labor is skilled.

Train your team in the field and invest in them.  You should have a General Superintendent that is responsible for the entire Field Operations including training.

19. Use Subcontractors and Pieceworkers

You can hire skilled workers as piece-workers on a subcontracted basis, or you can bring in hourly labor from Subcontractors.  These companies can provide you their regular workers but on an hourly basis, with a few dollars on top for profit.

DO NOT use construction agencies to staff your project. In my experience, getting these types of workers is a waste of money and will make you look very bad.

I learned my lesson once with a drywall crew of four that only hung about 10 sheets entire day. When I called to complain to the agency they told me it was too bad and I was the responsible to make the payment.

20. Use project management software

Most contractors use an Excel sheet, and some handwritten notes to run their companies.

If you really want to modernize and grow your company, you are going to have to invest in a very good project management software.

The software packages allow you to keep contract information, change orders, or applies, and all of your buildings.

Two project management software programs we’ve used and can confidently recommend are:

There are a ton of them and some are industry-specific, so I highly recommend you reach out to the sales departments and watch a demo so you can see how we can help you.

21. Do Your Billings on time 

One of the challenges most contractors have is preparing their invoices and monthly billings. Even though this is what gets you paid, it’s tempting to put other things in front of it; especially emergencies and issues on the job site.

Most contractors fall into the trap of doing everything, or almost everything in their company.  This is a big mistake.  If you do, you’ll be responsible for remembering and doing your billings on time.  Most of the time you’ll be busy with other things and you’ll forget and miss the window and you’ll need to wait until next month to get paid.

The reality is this needs to take top priority above everything you do.

When I worked at Caroni, the 20th of the month was the most important day of the month and we would stop all operations in the office until the billings got done. This gives you a sense of how important it should be.  If you need help with the billings you can probably get it through a project management software.

22. Use a schedule of values to bill for your projects

One of the best tips to grow your company is to use a schedule of values to bill your project.

There is often disagreement on the percentage of work that is completed when you are sending your invoice.

Architects and owners representatives will say “You’re not at 50%. Please revise your invoice to 25%”.

This is bad because you have a lot of money invested in the project in labor and materials and if you are not getting paid what you were asking for, you will likely be behind on payments to your suppliers.

The way you get around this is breaking down your project into measurable parts so that as each part is completed, it is very easy to see an exact percentage versus a judgment percentage.

23. Bill a large portion of the Contractor up front

Once you create your schedule of values, the first thing you should do is bill for 10% for mobilization.   For bigger projects, you might have to use only 5% mobilization.

This covers upfront costs you’ll need to cover such as equipment rentals, set up fees for scaffolding, lifts, etc.  This also covers pre-construction costs such as estimating, administrative task like contracts, meetings, site visits, etc.

These are all real costs that often occur BEFORE a contract is signed.

Many developers and general contractors don’t really like when you add a lot in the beginning because it takes control from them and gives it to you. However, they should be reasonable in allowing you to bill for more upfront since it does often take between 30 and 90 days to get your first check.

24. Maximize Change Orders

Change orders are the lifeblood of this business.

Once you sign a contract, any extra labor, material, and loss of productivity due to things outside of your control are billable.  This is called a Change Order.

Essentially, you are creating an addendum to your contract.

Many contractors are afraid to bill for change orders because they feel that their client will think they are nickel-and-diming them, and it will affect getting future work from them.

I have found  that billing for change orders is part of the business, and it does not affect your relationship with your client. As a matter of fact, I’ve developed a simple strategy to make  you look like a hero even when submitting a change order.

You first have to recognize that there are different types of change orders.

Owner changes

Owners and Architects are notorious for asking to change things throughout the  progress of construction. This happens because they are actually seeing their project in front of them and start noticing things that they didn’t before. These are change orders or you could bill heavy for. You can bill heavy because these are optional changes.  You don’t need to competitively bid, so you shouldn’t bill cheap.

Mistakes by the General Contractor

Here is the hero part….

General contractors sometimes will make mistakes in the projects, often related to sequencing of the job. For example, they might ask the drywall company to close up a wall and later find out that the electricians were not finished. So the electricians need to cut up the wall and  and then it has to be patched.

If you bill heavy here, the General Contractor will be the one footing the bill.  So I like to bill these change orders at cost or for a very small profit. And I let the General Contractor know that I am doing this to help them.

Additional requirements by inspectors

Sometimes inspector show up on the job and noticed things that are not to code even though they were approved during the plan review phase. This cost goes directly to the Owner.  I wouldn’t go too heavy here. I would just charge a decent rate for this work.

Conflicts in Design

Conflicts are guaranteed.  We’ve estimated or built over 3,000 projects, and I’ve never seen a perfect set of drawings.  That’s why we build in a contingency in all estimates.  As a General Contractor and Subcontractor, you bill relatively light here.

Damages to your work that will be back charged 

It is inevitable that someone will damage your work on the job. Depending on the relationship I have with the other contractor the damage my work, I would bill accordingly.

I would try not to bill too much here because I wanted to keep the job site amicable, but sometimes I would have a difficult contractor they really just didn’t care about our work.

I once  put up an acoustical ceiling as directed by the General Contractor, and a few days later, the Mechanical Contractor ripped out the entire ceiling because it was in the way of his ductwork.

This guy expressed a blatant disregard to our work and basically destroyed everything we created.  So when I submitted the change order to the General Contractor that was backcharging this idiot,  I calculated my total cost with profit and I multiplied that number by three.

To summarize, charge your change orders based on the type of change order.

25. Protect your company with the right insurances

There are two types of insurance every construction company needs to have:  General Liability Insurance, and Worker’s Compensation insurance.

General liability insurance

This is the type of insurance that covers your Company  from things caused directly by your construction project. For example, if there is a plumbing leak over the weekend and it causes major damage to other parts of the building, this is covered in General Liability Insurance.

Worker’s Compensation insurance

This is  The most important insurance you can have. It protects you financially for taking care of the costs for injuries by your workers. One of the ways contractors try to get around this is by using a Worker’s Compensation exemption. This only works to cover you and any officers of your company. If you have workers and they get injured you will be financially liable for any medical expenses, payroll expenses for time off, and any lawsuits arising from that injury.

My insurance agent told me of a case that a worker for a roofing company fell off and became a quadriplegic. Ten years later, the claim is still paying for that person’s living  arrangements.

And filing bankruptcy will likely not remove those types of liabilities from you. So make sure you cover your self.

There is also a lot of fraud when it comes to jobsite injuries. So take away the headache and pay the few hundred bucks a month that it costs to cover your employees.

26. Diversify by offering multiple services and trades

One of the best ways to grow your constructs company  is by offering multiple trades. If you are a subcontractor, consider investing in bidding for drywall and painting. Maybe even the doors.

If you are a General Contractor,  you probably have a lot of subcontractor connections that you can build a partnership where you can get the projects and hire them for just the labor, and they can give you special pricing to help you win those jobs.  This is an extension of the Double Dipping Method.

This diversifies you in a market that is notorious for its ups and downs.

27. Finance bigger jobs with credit lines

As you start growing your construction company, you are going to find it very difficult to finance the projects.

Most general contractors don’t have this problem because the subcontractors are really the ones that finance the projects, especially if it’s a net 30 or net 45 type of project. But even general contractors are going to find difficulty in covering things like general conditions, equipment rentals, direct labor, etc.

A credit line is designed to help you bridge the gap between the expenses from this months work, and the check that usually takes two months to get there. I’m not a big fan of taking credit, but if you have solid construction contracts,  and it’s a reliable client, there is minimal risk.

Just be careful that you don’t over extend yourself because I’ve actually even seen companies take on too much work that they can’t finance and go out of business.

28. Get Bonded and pursue larger jobs

This one is a no brainer. Many larger projects are going to require bonding. Bonding essentially means if you do not perform on the project or you walk off on job, the bonding company will foot the bill to replace you. Now, a lot of contractors think this bond will cover them if they make a mistake on the price I need to walk away, but that’s not true. A bonding company will foot the bill temporarily while they pursue legal action on the company did not perform which is you.

Basically if you do a good estimate, run the project and perform the way you were supposed to, you will never have an issue with bonding. But this will get you access to government projects, multiple story building projects, and just high value projects in general.

29. Specialize in a niche

If you specialize in a specific niche, you can position yourself as an expert so that everyone who is going to be performing that type of project comes to you.

For example, building a restaurant is not the same as building a high-rise. Building a luxury residence is not the same thing as building a cheap motel. Play on your strengths  and try to focus on those specific projects.

Remember the part earlier that we were talking about building up your perceived value? If you are an established expert in a specific type of construction, you already get the title of expert without really having to prove yourself.

If you’ve built 50 restaurants already and you have pictures that you can show your clients, it is natural to assume that you know how to build theirs.

Conclusion

Growing a construction business will require a significant amount of time and effort.  But the rewards can be great.

If you build a great team, implement these strategies and principles, you’re pretty much guaranteed success.

Many of these methods are not new, but surprisingly, most contractors are not doing them. We are living in a time where there is so much competition that you’ll need to be different to stand out.

If you implement these strategies, compared to your competition, you’ll stand out in a way that will cause you to win jobs like crazy.

Published On: November 15th, 2019 / Categories: Featured Articles /

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Growing a construction business IS EASY if you follow certain proven strategies.

Our team has worked with over 1,400 General Contractors, Developers, and Subcontractors, nationwide and we’ve seen what works and what doesn’t.

This year we helped Handymench secure a US Government contract to build the US Embassy in Jerusalem.

We also helped Don Williams of Builder Solution Group in Arkansas win over 8 projects this year.

And we helped Xavier Miranda from The Go2Guy secure a $4.2 million drywall project for Jackson Hospital West in Miami, FL.

Primarily we are a construction estimating firm, but because of the nature of our business, we are tied into the sales and negotiations part of the business, and we often help our clients with lead generation, along with the sales and follow up for their jobs.  We provide a valuable construction takeoff service for busy contractors

We also have our own construction division here in South Florida so we practice every strategy you’re about to read.

What we’re going to cover

We’ve compiled 29 strategies under 4 sections for you to implement.   We’ve organized them for you so you can jump to the section you need the most right now.

  1. Lead Generation Strategies
  2. Estimating and Bidding Strategies
  3. Value Building and Follow up Strategies
  4. Project Management and Business Strategies

Setting your Goals and Fixing Existing Issues

Before starting, you need to set a few short and medium-term goals so you can implement the correct strategies.  There is no order, but typically you want to build a lead system so you can estimate more jobs, eventually winning you more jobs, and then being fast and efficient in the construction portion of it.

1. How fast do you want to grow?  Are you looking to explode, or want a steady increase?  Keep in mind every company has growing pains.  If you grow too fast, it can get stressful!

2. Where is the “noise” coming from in your business? Where do you see the most challenges and issues in your business?  Is it with your field supervision?  Are you missing out on projects because of time?  Is your estimating team making mistakes because they are going too fast?  These are the things you need to focus on first.

3. When you get more leads, do you have a plan to estimate these projects? It’s going to take time and effort to get leads.  How are you going to estimate them?  Will you do it yourself?  Do you have a team?  Most contractors are smaller operations, and using estimating services is a great way to get those projects bid ASAP.

Lead Generation Strategies

1. Use Lead Generation Services

The most important part of growing your construction business is getting the right construction leads.

Here are two methods for you to use to get leads instantly.

Our favorite strategy to get the best leads is going to start with using commercial and residential lead generation services.

These are services like:

The services will get your foot in the door to bid projects for architects, owners, general contractors, homeowners, and developers that are actively looking for you.

The trick is not to focus so much on the project and focus on the opportunity to develop a relationship with the prospect.

It gives you a chance to meet the decision-makers, and start comparing your pricing with your competition.

If you’re just starting out, you can sign up with all of the services for their free trial, and you will get a few leads per month for free.  These sites are going to get you the volume you need to takeoff construction projects at a high volume.

2. The Title Page Method

The title page method is a method I devised for our clients that triple or quadruple the chances of winning a job.

In short, it’s 3x or 4x your chances of winning.

Find out who else is bidding the job, and send them your bid.

Here’s how you do it

1. Head over to your set of plans, and go to the title page or sometimes the title block.

2. Find the section that says Project Information, or Consultants, or similar.

project information title page

3. Call the Architect, Owner, and/or Owner Representative and find out who the bidding General Contractors are.

4. Call them and ask them if you can send them a bid AND ask to get on their bid list.

By doing this you’ve just multiplied your chances of winning by 3 or 4.  You also get a chance to start bidding for a new General Contractor.

Why it works:

If you are a Subcontractor and you are bidding for your General Contractor, you are probably bidding against three other Subcontractors.   Now your General Contractor is probably also bidding against two or three other General Contractors trying to win that same job.

What if you sent your bid to our building general contractors? Most projects have three or four bidding general contractors. That means starting off you only have a 10 or 11% chance of winning the job.

Those are terrible odds.  Means you have to bid 11 jobs to get ONE.

If you send your bid to all the bidding general contractors,  you instantly multiply your chances of winning because  it guarantees that the winner will have your bid.

3. The Double Dipping Method

The Double Dipping method is another method I devised for our clients to help them win more jobs.

Bid as both a General Contractor AND Subcontractor

As a General Contractor, you’ll have direct access to the Owner, which gives you the best shot of winning a job, but overall there are less projects out there.  So your options are limited.

What’s the solution?  Bid as both a GC and Sub.

When using Lead Generation Services, you’ll have access to a bunch of projects.  I recommend using the Title Page Method you just learned above and ask the Owner to bid their job.

If they say yes, you can bid directly to the Owner AND you can bid to the bidding GCs for the trades of your choice.

You probably already have a good list of Subcontractors.  Create a partnership where you can supply materials and management, and they only need to supply the labor.  You often can get much better pricing from them with this arrangement.

This is the Double Dipping method

4. Visit Clients and meet decision-makers

Visiting potential clients will strengthen your business relationship and will open the door to current opportunities they have on their desk.

Go to Google Maps and make a list of potential clients and start visiting their offices and introducing yourself.

Ask to meet the Owner or Principal.  Try to get a meeting with the decision maker right then an there.  Let them know you’re serious about working with them.  Present your qualifications and expertise.

     Pro Tip: Set up a CRM to track these leads (more on this later in this article).

Back to Google Maps:

Type the following:

“Type of client” + near me

“Type of client” + zip code

“Type of client” + city

Example:

Architects near me

General Contractors 33196

Realtors Miami

etc…

You’ll get a result that looks similar to this:

google maps

Use the list below as an idea generator for types of potential clients to visit.  Make it a point to collect their business cards, leads emails, etc. to later add this to your CRM and follow-up.

For General Contractors

  • Developers
  • Realtors (Commercial and Residential)
  • Previous Clients
  • Architects
  • Interior Designers
  • Property Managers
  • Mortgage Brokers
  • New Construction Project or Developments (ask for the main person in charge)
  • Construction Management Firms (or large GCs that usually hire Sub-GCs)
  • Owners Representative Firms
  • Mall Leasing Offices (ask how to become a preferred contractor)
  • Universities and Colleges (ask how to become a preferred contractor)
  • Large Residential Developments (they are usually run by property managers, or they need contractors for renovation projects often)
  • Empty Tenant Spaces at Malls and Strip Malls (ask the leasing agent to be updated on these spaces – this a great opportunity because if the space becomes filled soon, you’ll be fresh in their minds.)
  • Suppliers and Vendors (they come across all the projects since other contractors call to get pricing. They can tell you who is bidding. You might need to negotiate a finders fee for these types of leads)
  • For the services mentioned above, sign up as a GC AND as a subcontractor for all trades. When GCs start blasting out emails to all the subcontractors in the area, you’ll get an email and you can contact the owner as a potential GC bidder.

For Subcontractors

For Subs, make a Master List of the following types of clients and start visiting.

Bring your business cards, brochures.

Make it a point to collect their business cards, leads emails, etc.

  • General Contractors (ask to get on their bid list)
  • Construction Management Firms (sometimes they hire subs on smaller projects directly)
  • New Construction Projects (ask for the person in charge and ask if they need your trade for any jobs)
  • Interior Designers (some designers do some of the finishes directly.  They might be able to hire you directly.
  • Property Managers
  • Mall Leasing Offices (ask how to become a preferred contractor)
  • Universities and Colleges (ask how to become a preferred contractor)
  • Large Residential Developments (they are usually run by property managers, or they need contractors for renovation projects often)
  • Older Residential Communities (that might need paint or other remodeling)
  • Realtors (Commercial and Residential – their clients always need remodels in new spaces or homes)
  • Suppliers and Vendors (they come across all the projects since other contractors call to bid them.  They can tell you who is bidding. You might need to negotiate a finders fee for these types of leads)
  • Previous Clients

Pass by and visit and say you were in the neighborhood and that you wanted to meet them.

Ask to be put on their bid list, and ask what projects they have coming up.  They might have a project you can take last-minute.

5. Add the Government as a client

The Government is always building!  At the Town, City, County, State, Federal, and Military levels.

And another perk of working of the Government – there is no such thing as a recession or ups-and-downs.  They will always have money to build.  And their contracts are always wage-scaled.  So your contracts are typically going to be 2x or even 3x higher than private jobs.

The only downside – there is a lot of competition.  But it’s worth it overall.

First go to your local County, City, and State Building Departments and sign up as a Government Contractor.  They’ll likely have some pre-qualification forms and requirements to submit.

To find out local building department, head over to Google and type one of the following:

Town + building department

City + building department

County + building department

Next, sign up as a US Government Contractor on a federal level.

USA.Gov – https://www.usa.gov/become-government-contractor

BidNet – https://www.bidnet.com/

GSA – https://vsc.gsa.gov/RA/toolBox.cfm

Fed Biz Opps – https://www.fbo.gov/

Estimating and Bidding Stategies

6. Develop a system to estimate projects on autopilot

The more bids you put out, the more chances of getting jobs you have. Now I’m not a fan of just bidding for whoever. But rather it’s important to bid the right clients and bid them extremely accurate.

The most important part of a construction company is your estimating department. It is the engine that drives your entire company.

Consistency is key. Whatever you bid today, you’ll  see the results 3-6 months from now.  

We actually help our clients estimate their entire projects so they can continue focusing on running their companies, and building their business.

We highly recommend you get yourself an in-house Estimator employee to help you with your estimating. But we know that most contractors in America tend to be smaller operations and it’s difficult to afford a $2000 a week salary sometimes.

7. Hire an Estimating Firm

The solution is to hire an estimating firm like us to manage your construction takeoffs and estimates.

Imagine if you can just submit your plans and place an order, and a detailed estimate is submitted to you in a few days. How valuable is that to your business?

If you are just starting out or your funds are limited, you might not be able to hire an in-house employee, so hiring an estimating firm is a must.

You can submit a plan only when needed, so it’ll keep your costs low.

Now, if you happen to be a do it yourself are, then here is the way to estimate your projects.

8. Use Digital Takeoff Software

Digital takeoff software allows you to quickly calculate linear, area, and counts in your profit very accurately.

Estimating by hand take way too long, and sending your bids to Subcontractors puts you in a risky position trusting your Subcontractors to bid accurately.

Here are two recommended of software:

First, load the plans to software.

Next, scale the drawing and start measuring using the Linear Tool, Area Tool, or Count Tool.

area takeoff

Planswift will keep track of the measurements for you.

Next, export to Excel so you can add to your template.

Add to your template or spreadsheet so you can add your pricing.

Here is a simple template to get you started:

Download your estimating Excel template

Next, to estimate the project you are going to need a database of pricing.

9. Use Database Pricing

Databases like National Construction Estimator offer you highly accurate pricing tailored to your project’s zip code.

This is what we use in our office.

We use the numbers from the database and make modifications to labor and material pricing based on field conditions.

Companies like Craftsman and RS Means have research teams and consultants to create their databases.  They are based on actual contractors and suppliers providing pricing to them.

Then provide Area Modifiers to adjust for pricing for each zip code.  We’ve seen material prices tend to be pretty close throughout the nation, but labor fluctuate widely.

Areas like New York and Boston have labor rates nearly double the national average.  Meaning projects can be 50% more expensive than other parts of the country.

10. Write a great proposal 

Once you’ve spent the time to estimate a project, it is important to write a winning proposal.

Here is an example of what a proposal should look like.

sample proposal

Include a detailed summary of what your are going to include, and everything you are going to exclude.   Take this time to be thorough.  If something seems obvious to you, it might not be obvious to your client.

Anything that might be confused or unclear, note it under your inclusions and exclusions.

Have a section for your total amount, followed by your payment terms, and any other provisions you want to add.

For example, you can add things like:

  • Excludes overtime and weekend work.
  • Excludes wood framing
  • Includes Level 4 Drywall Finish

If you have Alternates or want to suggest using lower cost materials, or want to separate certain costs outside of your base bid, you can use a section for “Alternates”.

Lastly, make sure your proposals are well formatted, well written with good grammar, and looks aesthetically pleasing.   Clients will see your proposal and relate it to your ability to perform the work.

Value Building and Follow Up Strategies

11. Build up your perceived value over time

It’s a big myth that the low bidder always wins the job.

What actually win the job is going to be your perceived value and expertise in this specific project that you are bidding on.

Now, if you are one of those contractors that bid the job and never really follows up, the only thing the owner or your client has to go by is your price.

Building your perceived value is essentially going to be a combination of implementing many of the strategies in this guide.   What you want to do is add value and trustworthiness over time.

Continue reading on how to build your value.

12. The Audition Method

Bid Low with new clients to get in front of decision makers 

Our best strategy when getting clients opportunities with new clients is the audition method.

Imagine if an actor is trying to get a part for a movie. The director needs to see their abilities before hiring them  to see if they are good for the part.

This is the same in construction.   If you weren’t bidding for a new client, they don’t really know who you are so they are not really inclined to take your bid seriously.

But what if your bid was very long? Maybe even the little bitter? This will get you an audition for the part. It doesn’t mean you’re going to get the part because  clients actually higher on value versus price, but it will give you a great shot.

This message gets you in front of the decision maker and that’s why it’s called the audition.

13.The Interview Method

The interview method goes hand-in-hand with the addition method.

Once you get your foot in the door and have your audition with your client, the interview is what is going to set you up as an authority, a specialist for their project, and will build a huge level of trust with your client.

Everyone thinks clients hire based on price,  but that’s not true. They only hire on price if that’s all they have to go by.  But if you are the highly specialized contractor, that almost guarantees a successful project.  They are likely to pay a little bit more than the little better.

The audition is the bid you submit the sparks the interest because of price, and the interview method is the part where you offer special suggestions and value engineering for this project.

Your goal is to convey value and authority IN PERSON.  This doesn’t work as well over the phone, and definitely not through email.

First you need to spark interest and make them need to call you to clarify some of your scope.  You do this with your price, and you include some qualifications that don’t give away your method.

Contractors and Owners LOVE methods to reduce costs, increase speeds in construction, and way to get better materials at a lower price.

In your scope of work description you might include a standard description like:

  • Includes 5/8″ Stucco with 4″ EIFS Bands per plan.

But later in your “Alternates” section, you can add something in red like:

  • Deduction for Alternative EIFS Trim Installation:   ($30,000)

You highlight this IN RED to bring attention to it.  If it works, you’ll get a phone call saying:

Potential Client:  “Hi John, I got your proposal and I saw your alternate for EIFS trim installation.  What does this mean?”

You:  “It’s an alternative method to reduce the costs.  I saw a detail that shows an installation method that can be improved.  We can use a better type of trim.  I’ve gotten pricing from my supplier.  If you want to get some additional information, I’d like to set up a meeting.  I’ll even get some additional documentation from my supplier”.  We’ll need this to submit for an alternate.

Just having this conversation over the phone will start building your authority.  The thing is if you’re talking to an estimator, they aren’t the final decision maker.  The final decision maker is usually either the Project Manger or Owner.  So you need to convey this expertise to them.

That’s why you need to set up a meeting.  If they ask you for details over the phone, say you’re going to get them from the supplier and you’ll get back to them.

Once you get what you need, instead of sending through email, print the documents and GO VISIT them. Ask to meet the Project Manager and Owner.  Then make your pitch.   You’ll be talking to the decision-makers.

Guess what happens after your meeting?  They might say:

PM/Owner:  “We have a few other projects we were awarded that I want you take a look at…..”

This is the Interview Method.

14. Exposure Method

Get in contact multiple ways and channels

The strategy here is to get in touch with your client whether by phone or visiting, and building multiple touch points in your client – contractor relationship.

Let me introduce you to a very valuable, and little known psychology principle that you can utilize to influence your client in a positive way.

It is called the “Mere exposure” effect.

In marketing, it is recommended that you have multiple instances of contact with your client whether it be a phone call, visit, ad, or email.

Whenever there are multiple points of contact with someone or your brand, we tend to subconsciously start liking it or them.

It’s a very simple principle that you can follow that will, at a minimum, quadruple the chances of you getting the job.

15. Offer Value Engineering and Expertise

The next thing you can do to increase your perceived value is offer value engineering or a better quality method for the same price for their construction project.  This is part of the Interview Method above so make sure to include Value Engineering and your expertise.

In sales, you have to “Always Be Closing”.   In construction, the similar method is “Always Demonstrate Expertise”.  Owners and GCs like working with solid contractors who are experts in their field.  There are way too many contractors who just know enough to do the job and don’t really offer any additional value other than their labor.

Be different.  Be the one that helps the GC or other trades coordinate the job.

Several years ago when I worked at a Caroni, a drywall company, we were delayed in putting up the ceiling because of coordination issues with the duct work.  The GC was having trouble figuring out the required space for the duct to determine the final ceiling heights.

Because of my background as a Superintendent, I opened up the Mechanical plans and figured out the vertical space requirements using the height of the ducts, required strap height, an additional gap for installation purposes, etc.

This established ME, therefore Caroni as an expert, and this company to this day is working with Caroni on a large majority of their projects.

I’m not taking credit for Caroni’s continued success, but doing this over time on all jobs is going to make you THE BEST contractor they’ve every worked with.

You should have the mindset that you are the best in your industry.   And if you’re not, you need to get the experience and training through courses, in-field training, or my favorite, the “Google.com and Youtube University”.  It’s amazing what you can learn from other experts on Google and Youtube.

16. Branding makes you appear more professional and trustworthy

Lastly, another way to build up your perceived value is branding your company.

Consider branding your company with a professional logo, website, company shirts for you and your employees, high-quality business cards, professional looking templates, and brochures if you are in the residential market.

You can do all of this on Fiverr.com, and Vistaprint.com for your print media and shirts.

You’re going to need this for your sales, prospecting, and negotiations.

If your’e in the residential market, this is going to set you apart BIG TIME from your competitors.

In the commercial space, it’s going to be an added too to increasing your value.  The key is to have everything branded, even your proposals, change orders, and T&M tickets.

Project Management and Business Strategies

17. Build a great management and admin team

It is important to build a good team that meshes well when trying to build your construction company.

You are going to need a good Project Manager, Superintendent, Foreman, Accountant/Book Keeper.

If you are a GC, most of your required staff will be in your office helping you manage.

Your Project Manager will likely spend half of his or her time managing administrative duties, and the other half managing the field alongside the Superintendent.

Your Superintendent should be a highly skilled professional that has a solid character and understands how to manage the workers.  Working in this field supervisory role requires a specific personality type that can handle the field crews. Supervising these guys can be rough, so it’s important you have a levelheaded person with great people skills.

18. Build a great field team

Make sure your skilled labor is skilled.

Train your team in the field and invest in them.  You should have a General Superintendent that is responsible for the entire Field Operations including training.

19. Use Subcontractors and Pieceworkers

You can hire skilled workers as piece-workers on a subcontracted basis, or you can bring in hourly labor from Subcontractors.  These companies can provide you their regular workers but on an hourly basis, with a few dollars on top for profit.

DO NOT use construction agencies to staff your project. In my experience, getting these types of workers is a waste of money and will make you look very bad.

I learned my lesson once with a drywall crew of four that only hung about 10 sheets entire day. When I called to complain to the agency they told me it was too bad and I was the responsible to make the payment.

20. Use project management software

Most contractors use an Excel sheet, and some handwritten notes to run their companies.

If you really want to modernize and grow your company, you are going to have to invest in a very good project management software.

The software packages allow you to keep contract information, change orders, or applies, and all of your buildings.

Two project management software programs we’ve used and can confidently recommend are:

There are a ton of them and some are industry-specific, so I highly recommend you reach out to the sales departments and watch a demo so you can see how we can help you.

21. Do Your Billings on time 

One of the challenges most contractors have is preparing their invoices and monthly billings. Even though this is what gets you paid, it’s tempting to put other things in front of it; especially emergencies and issues on the job site.

Most contractors fall into the trap of doing everything, or almost everything in their company.  This is a big mistake.  If you do, you’ll be responsible for remembering and doing your billings on time.  Most of the time you’ll be busy with other things and you’ll forget and miss the window and you’ll need to wait until next month to get paid.

The reality is this needs to take top priority above everything you do.

When I worked at Caroni, the 20th of the month was the most important day of the month and we would stop all operations in the office until the billings got done. This gives you a sense of how important it should be.  If you need help with the billings you can probably get it through a project management software.

22. Use a schedule of values to bill for your projects

One of the best tips to grow your company is to use a schedule of values to bill your project.

There is often disagreement on the percentage of work that is completed when you are sending your invoice.

Architects and owners representatives will say “You’re not at 50%. Please revise your invoice to 25%”.

This is bad because you have a lot of money invested in the project in labor and materials and if you are not getting paid what you were asking for, you will likely be behind on payments to your suppliers.

The way you get around this is breaking down your project into measurable parts so that as each part is completed, it is very easy to see an exact percentage versus a judgment percentage.

23. Bill a large portion of the Contractor up front

Once you create your schedule of values, the first thing you should do is bill for 10% for mobilization.   For bigger projects, you might have to use only 5% mobilization.

This covers upfront costs you’ll need to cover such as equipment rentals, set up fees for scaffolding, lifts, etc.  This also covers pre-construction costs such as estimating, administrative task like contracts, meetings, site visits, etc.

These are all real costs that often occur BEFORE a contract is signed.

Many developers and general contractors don’t really like when you add a lot in the beginning because it takes control from them and gives it to you. However, they should be reasonable in allowing you to bill for more upfront since it does often take between 30 and 90 days to get your first check.

24. Maximize Change Orders

Change orders are the lifeblood of this business.

Once you sign a contract, any extra labor, material, and loss of productivity due to things outside of your control are billable.  This is called a Change Order.

Essentially, you are creating an addendum to your contract.

Many contractors are afraid to bill for change orders because they feel that their client will think they are nickel-and-diming them, and it will affect getting future work from them.

I have found  that billing for change orders is part of the business, and it does not affect your relationship with your client. As a matter of fact, I’ve developed a simple strategy to make  you look like a hero even when submitting a change order.

You first have to recognize that there are different types of change orders.

Owner changes

Owners and Architects are notorious for asking to change things throughout the  progress of construction. This happens because they are actually seeing their project in front of them and start noticing things that they didn’t before. These are change orders or you could bill heavy for. You can bill heavy because these are optional changes.  You don’t need to competitively bid, so you shouldn’t bill cheap.

Mistakes by the General Contractor

Here is the hero part….

General contractors sometimes will make mistakes in the projects, often related to sequencing of the job. For example, they might ask the drywall company to close up a wall and later find out that the electricians were not finished. So the electricians need to cut up the wall and  and then it has to be patched.

If you bill heavy here, the General Contractor will be the one footing the bill.  So I like to bill these change orders at cost or for a very small profit. And I let the General Contractor know that I am doing this to help them.

Additional requirements by inspectors

Sometimes inspector show up on the job and noticed things that are not to code even though they were approved during the plan review phase. This cost goes directly to the Owner.  I wouldn’t go too heavy here. I would just charge a decent rate for this work.

Conflicts in Design

Conflicts are guaranteed.  We’ve estimated or built over 3,000 projects, and I’ve never seen a perfect set of drawings.  That’s why we build in a contingency in all estimates.  As a General Contractor and Subcontractor, you bill relatively light here.

Damages to your work that will be back charged 

It is inevitable that someone will damage your work on the job. Depending on the relationship I have with the other contractor the damage my work, I would bill accordingly.

I would try not to bill too much here because I wanted to keep the job site amicable, but sometimes I would have a difficult contractor they really just didn’t care about our work.

I once  put up an acoustical ceiling as directed by the General Contractor, and a few days later, the Mechanical Contractor ripped out the entire ceiling because it was in the way of his ductwork.

This guy expressed a blatant disregard to our work and basically destroyed everything we created.  So when I submitted the change order to the General Contractor that was backcharging this idiot,  I calculated my total cost with profit and I multiplied that number by three.

To summarize, charge your change orders based on the type of change order.

25. Protect your company with the right insurances

There are two types of insurance every construction company needs to have:  General Liability Insurance, and Worker’s Compensation insurance.

General liability insurance

This is the type of insurance that covers your Company  from things caused directly by your construction project. For example, if there is a plumbing leak over the weekend and it causes major damage to other parts of the building, this is covered in General Liability Insurance.

Worker’s Compensation insurance

This is  The most important insurance you can have. It protects you financially for taking care of the costs for injuries by your workers. One of the ways contractors try to get around this is by using a Worker’s Compensation exemption. This only works to cover you and any officers of your company. If you have workers and they get injured you will be financially liable for any medical expenses, payroll expenses for time off, and any lawsuits arising from that injury.

My insurance agent told me of a case that a worker for a roofing company fell off and became a quadriplegic. Ten years later, the claim is still paying for that person’s living  arrangements.

And filing bankruptcy will likely not remove those types of liabilities from you. So make sure you cover your self.

There is also a lot of fraud when it comes to jobsite injuries. So take away the headache and pay the few hundred bucks a month that it costs to cover your employees.

26. Diversify by offering multiple services and trades

One of the best ways to grow your constructs company  is by offering multiple trades. If you are a subcontractor, consider investing in bidding for drywall and painting. Maybe even the doors.

If you are a General Contractor,  you probably have a lot of subcontractor connections that you can build a partnership where you can get the projects and hire them for just the labor, and they can give you special pricing to help you win those jobs.  This is an extension of the Double Dipping Method.

This diversifies you in a market that is notorious for its ups and downs.

27. Finance bigger jobs with credit lines

As you start growing your construction company, you are going to find it very difficult to finance the projects.

Most general contractors don’t have this problem because the subcontractors are really the ones that finance the projects, especially if it’s a net 30 or net 45 type of project. But even general contractors are going to find difficulty in covering things like general conditions, equipment rentals, direct labor, etc.

A credit line is designed to help you bridge the gap between the expenses from this months work, and the check that usually takes two months to get there. I’m not a big fan of taking credit, but if you have solid construction contracts,  and it’s a reliable client, there is minimal risk.

Just be careful that you don’t over extend yourself because I’ve actually even seen companies take on too much work that they can’t finance and go out of business.

28. Get Bonded and pursue larger jobs

This one is a no brainer. Many larger projects are going to require bonding. Bonding essentially means if you do not perform on the project or you walk off on job, the bonding company will foot the bill to replace you. Now, a lot of contractors think this bond will cover them if they make a mistake on the price I need to walk away, but that’s not true. A bonding company will foot the bill temporarily while they pursue legal action on the company did not perform which is you.

Basically if you do a good estimate, run the project and perform the way you were supposed to, you will never have an issue with bonding. But this will get you access to government projects, multiple story building projects, and just high value projects in general.

29. Specialize in a niche

If you specialize in a specific niche, you can position yourself as an expert so that everyone who is going to be performing that type of project comes to you.

For example, building a restaurant is not the same as building a high-rise. Building a luxury residence is not the same thing as building a cheap motel. Play on your strengths  and try to focus on those specific projects.

Remember the part earlier that we were talking about building up your perceived value? If you are an established expert in a specific type of construction, you already get the title of expert without really having to prove yourself.

If you’ve built 50 restaurants already and you have pictures that you can show your clients, it is natural to assume that you know how to build theirs.

Conclusion

Growing a construction business will require a significant amount of time and effort.  But the rewards can be great.

If you build a great team, implement these strategies and principles, you’re pretty much guaranteed success.

Many of these methods are not new, but surprisingly, most contractors are not doing them. We are living in a time where there is so much competition that you’ll need to be different to stand out.

If you implement these strategies, compared to your competition, you’ll stand out in a way that will cause you to win jobs like crazy.

Published On: November 15th, 2019 / Categories: Featured Articles /