How to Level the Commercial Construction Playing Field

How to Level the Commercial Construction Playing Field

David vs. Goliath Businesses:

How to Level the Commercial Construction Playing Field

By Vince Fudzie

At the beginning of every year numerous pontificators are charged with predicting the future, only to have those predictions rescinded and recast throughout the year. Yet it’s probably still best to run your business based on educated predictions and forecasts than none at all.

According to data from several prominent sources such as FMI, AIA and Dodge, everyone seems to believe that any growth in 2015 will be bolstered by a broader range of sectors. And it’s probably safe to say that U.S. construction starts will be somewhere between the estimated $654 billion in 2014 and the 2015 estimated $612 billion – give or take a billion or two.

Based on our own increased volume of new bid opportunities, I can safely say that there appears to be an uptick in the amount of construction starts going into 2015.  Unfortunately, even though we have been extremely competitive on our bids, there have been a couple of recent occasions where we were the low bidder from an invited list, and we still were not awarded the project.

Case in Point: On one recent bid we were invited to participate with two other general contractors. The first contractor was a hundred-year-old behemoth, which I will call Company T, and the other was a captive entity of a large healthcare system, which I will call Company M. As such, both competitors had very deep pockets and extensive resumes doing large-scale projects of which this was not one.

Other than that, we were all pretty equally yoked. We had comparable bonding, insurance, people and more importantly, lots of successful relevant experience. The bid tab indicated that we were lower – by 7 percent or $275,000 from Company T.

So what would make a customer spend an extra $275,000 on a project that we have numerous times proven ourselves more than capable of doing?

Whatever the reasons it simply burns my britches, but instead of complaining about the unfairness of it all, I want to spend time talking about how we all can mitigate such occurrences in the future. In essence, what can we, as small to midsized contractors, do to level the playing field when competing against our older cousins? Spending some time in the new year developing the right strategy will soon have you chopping your larger competitors down to size.

1. Recruit the Best and Brightest

One of the advantages of being smaller is that you typically can’t afford to spend thousands to hire and train the best and brightest young minds, but you can afford to hire them later in their careers. Many such employees may have become disenfranchised by the bureaucracy, politics and inefficiencies found in larger firms. Therefore, create a culture that is appealing to the best people your company can afford and maintain an environment to keep them.

2. Engage Industry Leading Service Providers

If you are going to effectively compete, you need to employ the same caliber of service providers as your larger competitors. This way no potential customer can call this aspect of your business inferior. Whether it’s insurance, banking, bonding or any other needed service, make sure they are leaders in the industries they represent.

3. Develop a Solid Subcontractor Network

Having a competitive and knowledgeable subcontractor network is essential to not only quality bids, but also to maintaining the highest level of knowledge in the various trades of our industry. This level of knowledge will become invaluable as you work to be an industry leader on par with bigger players.

4. Try Something Exceptional

This is where you need to think outside the box and do something that will put you on the radar in your market area. This could be sponsoring a major event or actively supporting a charitable organization in the community.   Remember you don’t have to be a behemoth to do exceptional things that will endear you to potential customers and the community.

5. Determine Your Value Proposition

Have you spent time establishing a value proposition that truly adds value to customers? If not you need to get on it. As a smaller competitor there are numerous attributes that you possess that adds value to each project. You just need to spend time seriously determining exactly what they are. Once you have determined the value you bring, you must actively convey it to potential customers and decision makers prior to your next bid opportunity.

6. Exceed Expectations

Once you have leveled the playing field and successfully won a project, it is imperative that you not only meet but exceed the expectations of your new customer.

Exceeding expectations will not only create loyalty with the customer but will also create a new advocate for you and help establish your company’s reputation.

In a nut shell, you level the playing field by being on par with the larger competitors in all possible areas – personnel, knowledge, service, and subcontractors – and then beat them in the areas where you are unique and/or add value.

Vince Fudzie MBA, CPA, CIRA, is the Managing Member of Triune. Founded in 1997 with headquarters in Dallas, Triune is a leading, integrated design-build General Contractor in the Southwest region of the country.

The Punch List is Triune’s proprietary blog for discussing issues and providing insights specific to the commercial construction industry. Copyright 2015 TMV, LLC (Triune).  Any and all rights reserved.

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