13 Tips & Best Practices to Succeed in the Business of Construction

Construction, a $12 trillion industry, is a critical component of the world’s economy that continues to expand. The industry’s growth and diversity present nearly unlimited opportunities for contractors and other businesses to establish successful brands.

Despite a wealth of opportunities, the challenges inherent to everything from hiring and onboarding to sales and marketing can curtail the growth of even the most innovative and talented organizations. Success in the construction business requires a focus on quality and continuous improvement that embraces new tools, trends, and practices.

Business of Construction Tips Summary:

1. Refresh business plans: Ensure that business plans become “living documents” that reflect the latest goals, services, and capabilities of the organization.
2. Find your niche: Construction businesses should develop areas of expertise to differentiate themselves from the sea of competitors.
3. Industry standards: Staying current with ISO, OSHA, and other regional standards is essential for risk management, quality, and worker safety.
4. Brand marketing: In addition to multi-channel marketing plans and search engine optimization (SEO), successful construction businesses understand the value of direct referrals and customer testimonials.
5. Advanced software: BIM management, project management, and cost management software tools, along with other innovative construction software solutions, help businesses of all types and sizes improve their efficiency and profitability.   
6. Quality focus: A reputation for quality in the business of construction can be developed through effective QA and QC tools and practices.
7. Selective bidding: Smart companies learn how to be successful in construction by choosing the right opportunities based on their potential profitability and fit.
8. Collaboration: Communication within and between teams, with construction software providing a shared source of real-time data, is essential in today’s fast-paced industry.
9. Networking: Building lasting relationships through successful projects, meetings, and industry events leads to valuable opportunities and information exchanges. 
10. Sustainability: Proficiency with green building practices and the use of eco-friendly materials can be a difference-maker as more clients seek out sustainable alternatives.   
11. Data analytics: Emerging artificial intelligence (AI) and machine learning (ML) tools help businesses turn available data into better business decisions.  
12. Compliance: Staying current with the latest standards and regulations is among our most important construction tips, since it helps to avoid legal issues while improving the company’s reputation.
13. Continuous improvement: Successful companies learn from both successes and failures, using data, collaboration, and creativity to improve future results.

How to Succeed in the Business of Construction

There are no ironclad rules for how to run a construction company. However, many of the most profitable, respected, and growth-oriented businesses share common traits that, taken together, help lay out a roadmap for success. As they cultivate a highly skilled and stable workforce, create a clear company vision, and maintain a commitment to customer satisfaction, every construction business can improve its long-term prospects by adhering to a few basic principles.

1. Refresh your business plan

A business plan can be much more than a checkbox activity. The best business plans are living documents that reflect the organization’s latest goals and describe how they will be achieved. This might include services offered (now and in the future), target markets, pricing structures, and plans for integrating new software and digital construction technologies, like Building Information Modeling (BIM) or aerial drones, into the organization.     

A well-written business plan should also encompass the monetary aspects of the business, including expense management and revenue goals, along with a competitive analysis that focuses on company strengths, weaknesses, and opportunities relative to the competition.  

2. Find a niche

To stand out in the sea of construction business competition, each company should spend time defining what it does best and how these unique skills and strengths might help it attract clients or expand into new markets. For example, a flooring contractor with expertise in hardwood resurfacing might leverage the experience of its staff to expand from small residential projects into more lucrative industrial renovations. Businesses lacking a specialty might consider a strategy change to fill a market void.

3. Keep up with industry standards

The business of construction is closely tied to many standards and regulations related to building codes, worker safety, quality control, construction risk management, and technology implementation, just to name a few. Staying current with these standards helps prevent roadblocks that can stall progress and deter current and future customers. Important standards to stay informed on include:

• ISO 9001 International quality management system standards
• Relevant OSHA standards for building codes and safety regulations
• Environmental standards, including ISO 14001 and local laws
• Leadership in Energy and Environmental Design (LEED) standards for sustainable building designs

4. Be smart with marketing

The most successful companies realize brand marketing is essential to their growth strategy. The internet has layered social media and search engine optimization (SEO) into multi-channel marketing plans, and these new tools present opportunities to use marketing dollars wisely and grow the business organically.

In the construction business, referrals and testimonials from satisfied customers can become the most valuable marketing tools of all. This social proof can be woven into websites, Email campaigns, and advertising materials as part of an overall strategy to attract new customers.

5. Invest in software

The scope and diversity of modern construction projects make advanced software essential for companies of all sizes. While civil engineering and architectural firms benefit from revolutionary BIM management software to move core processes into the virtual realm, smaller businesses gain a competitive advantage from software designed to improve cost estimation, communication, and project management in construction projects. 

RIB Software has created a full suite of construction solutions to address the challenges of today’s industry, including RIB BuildSmart for next-level cost management and accounting, RIB CostX for seamless quantity takeoff and estimation from either 2D or 3D files, and RIB SpecLink for centralized specification management and collaboration, among many others.

6. Focus on quality

Speed, efficiency, and competitive pricing are valuable metrics, but quality may be the most important factor in the highly competitive construction business. A focus on quality ensures projects meet specifications and safety standards with minimized rework or delays. These results lead to satisfied clients, positive word-of-mouth, and repeat business. A reputation for consistent high quality will often allow companies to submit higher bids and still win contracts based on reputation.

7. Don’t jump into every opportunity

As you learn how to grow a construction business, staying busy might seem important since you must keep workers engaged and revenue flowing. This tendency makes it hard to be selective with bids and projects, but pursuing too many opportunities can stretch resources too thin or move the business too far from its comfort zone, ultimately leading to poor performance and long-lasting damage to its reputation. Opportunities should be carefully selected based on a combination of fit and potential profitability; professional bid management software can help evaluate and select the best bids for your business.

8. Boost collaboration

Collaboration between contractors, clients, construction project managers, and workers has been emphasized in recent years, and rightfully so. Collaboration and real-time data sharing help to improve efficiency, reduce errors, and overcome the silos and delayed communication processes that can plague layered and complex industries. Clearly defining team roles and responsibilities is important in improving collaboration in construction projects by minimizing confusion and miscommunication.

9. Expand your network

Relationship-building and networking allow businesses to evolve and expand by meeting potential clients, hearing about new opportunities earlier, and exchanging ideas with owners of similar businesses. Construction networking happens organically when different businesses and specialties collaborate on a successful project. Still, the conferences, meetings, and events offered by many trade organizations can accelerate network-building.

10. Embrace sustainability

With the building industry responsible for nearly 40% of all global carbon emissions and a similar proportion of total energy consumption, sustainable construction practices are becoming popular for many clients. Early adoption of green practices like water conservation, waste reduction, and the use of eco-friendly building materials gives businesses a competitive edge over competitors who are slower to adopt these green practices.

11. Leverage data analytics

Data management and data analysis are becoming part of nearly every industry with the advent of AI and machine learning (ML), and the business of construction is no exception. Advanced data analytics are used to predict the cost, integrity, and sustainability of BIM designs, and they can also be leveraged to create more accurate schedules and identify potential safety risks. These capabilities help to improve the efficiency and profitability of growing companies. To leverage their data effectively, businesses must invest in innovative construction analytics software to visualize key information in real-time and make strategic, data-driven decisions.

12. Stay informed about compliance

Keeping up with the latest industry standards and regulations helps businesses stay in compliance and avoid fines, legal action, and increased insurance premiums that can hurt the bottom line and the company’s reputation. Construction software can make compliance easier by providing complete libraries of current standards, compliance checklists, and a centralized location for the permits, licenses, inspection reports, and safety certifications that demonstrate compliance.

13. Have a continuous improvement mindset

Keeping up with industry standards, incorporating data analytics and other advanced software tools, and adopting sustainable building practices are all examples of the continuous improvement mindset found in many successful businesses, especially the ones following lean construction principles.

Continuous improvement also requires a willingness to review past failures (and successes) and brainstorm new ways to improve safety, quality, and efficiency by adapting working methods or adopting new tools and technologies. This self-reflection and openness towards new ideas ensure that even the most successful businesses are moving forward rather than standing still.

FAQs about the Business of Construction

If there is one thing the millions of construction companies around the world share, it is a desire to learn and improve as they satisfy existing customers, attract new business, and build a solid reputation. Our list of frequently asked questions reflects this universal desire to learn how to be successful in construction: 

How do construction companies manage cash flow?

Construction companies often face high upfront project costs, ongoing payments to contractors, consultants, and specialists, and material and equipment costs that must be balanced by completed work. These factors make it important to control expenses and manage cash flow by obtaining accurate and realistic estimates, negotiating favorable contractor and supplier payment terms, and streamlining construction change orders that can stall project progress.  

Tracking financial KPIs and expenses in real-time and using analytics to predict shortages or surpluses are among the cash flow management methods utilized in the business of construction. Cloud-based cost management software solutions provide a higher level of cash flow visibility and insight while helping to automate construction job costing, expense tracking, and invoicing processes. 

What kinds of insurance does a construction business need?

Insurance coverage was absent from our list of construction tips, but it is another important consideration for both new and existing businesses. Most AEC companies have general liability policies in place to cover any property damage or bodily injury claims during a project. Industrialized nations in Europe, North America, Australia, and Asia also mandate workers’ compensation insurance to cover lost wages and bills for employees injured on the job.

Depending on the type of business and the scope of work they perform, they might also secure equipment insurance to cover the loss, damage, of theft of expensive machinery, professional liability (E&O) insurance to protect against negligence claims for design errors, or builder’s risk insurance to protect building sites and materials from fires, floods, and other extreme conditions.    

How does embracing sustainability benefit a construction business?

The decision to embrace sustainable building practices was once based mainly on environmental stewardship and personal goals, but increased demand from governments, clients, and consumers makes sustainability a wise financial choice as well. Green building practices, including waste reduction, offsite fabrication, and the use of recycled building materials, minimize expenses during construction, while features like renewable energy integration, rainwater harvesting, low-VOC materials, and biophilic designs reduce operating costs while increasing property values.

Sustainable methods help businesses improve their reputation and attract a broader range of customers. Government mandates and embodied carbon limits in many parts of the world also make it essential for businesses to integrate green practices into their portfolio and utilize software tools to monitor and report on their sustainability metrics.  

Why is the mindset of continuous improvement essential in construction?

Most business leaders understand that standing still in a competitive market is not an option. A continuous improvement mindset requires a commitment to small and incremental changes that lead to major improvements over time. This mindset from the lean construction framework allows businesses to stay competitive as buildings become more complex and budgets and timelines are compressed.

Continuous improvement focus areas in construction encompass objectives like quality, safety, and productivity, where improved performance also leads to satisfied clients and a more engaged workforce. Along with environmental monitoring, value stream mapping, and data-driven decision-making, waste reduction is among the continuous improvement principles that also has an impact on cash flow and sustainability. 

Conclusion

Many common traits are found in the most successful and dynamic businesses in the construction industry, but no two companies are alike. Each requires its own specialized toolkit to suit its industry niche, culture, and goals. RIB Software has developed innovative construction software solutions for every process and specialty, from bid leveling and takeoff to project and resource management. Like our customers, we have adopted a continuous improvement mindset to ensure the latest trends and features are embedded within our solutions.

Join the 23,000 companies in 100+ countries who have trusted us as their digital transformation partner, and get your free demo for RIB’s toolkit today!